Dividend Tree Investment Principles and Rules



In the earlier post I discussed about the goals that I have for my dividend portfolio. In order to achieve that goal, I have come up with few investment principles and rules that I follow and strictly abide by. While I have been dabbling with investing for sometime now, I always had certain criteria at the back of my mind. I never had it formalized and documented resulting in lack of investing discipline. Therefore, in this post I will present (and hence formalization) my investing rules and regulations. I came up with these rules after quite a bit of reading on personal finance and understanding the implications on my financial goals. These are the rules that I use for managing my dividend portfolio. The dividend tree investment principles are:



1. Maintain portfolio asset allocation that is diversified in asset class, industry sectors, style maps, and geographical region.

2. Focus on growth of portfolio’s dividend cash flow – companies that consistently pay and grow dividends.

3. Invest in companies that I understand, has good fundamentals, and industry leading position.

4. Make use of ETFs and/or index funds for asset allocation purpose.

5. Any individual security should not be more than 5% of dividend portfolio.

6. Buy only at discount – do not buy at historically high levels.

7. While buying a security do following:

Identify the role it plays in the dividend portfolio.

Monitor its progress with respect to its role.

Exit the security from dividend portfolio if it does not meet its role.

8. Dividend growth investing is long term process. Do not react on media news and sky-is-falling scenarios. Be patience and remember that “slow and steady wins the race”.



These rules provide me the framework for my portfolio management and help me adhere to my overall objective. Since this blog spot is also a platform to continue the learning process, I will be open to adapting these rules, depending upon comments and feedback I receive from like-minded individuals.

7 Responses to “Dividend Tree Investment Principles and Rules”

  1. sir i dont understand ur 5th point any security should not be 5% of total dividend portfolio.

    can u explain me or mail me regarding this.

  2. Ben Moreno says:

    Hello,

    My name is Ben Moreno. I came across your blog while searching for strategies on assessing dividend stocks. I just wanted to introduce myself and let you know that I run a similar blog. It is all about monthly dividend stocks. I think you have a nice blog here and I will be subscribing.

  3. S. Markley says:

    I really like your website. I will be visiting often. If you wouldn’t mind, I’d appreciate your opinions of the following:

    1. How much of your money is in cash?

    2. Do you hold equal %ages among all your asset allocations?

    3. Are you concerned about the financials/real estate you are holding?

    Thanks!
    Just an individual investor

    • Dividend Tree says:

      S Markley,

      cash position is variable depending upon projected need. we are planning few big ticket items so currently close to 20%. I would like to keep around 7 to 8%.

      Asset allocation are not equal. You may read my latest post to get a fair idea.

      Financial/real estate my current holdings are low risk. I am long term investor (10+ years and beyond), so i worry only if there is scare of company going bankrupt or nationalized. Other than that, I am OK with them. I manage risk using allocation.

      Thanks for your comment.

  4. Dividend Tree says:

    Deborah: Thanks for stopping by.

    Best Wishes,
    DT

  5. Cristina says:

    I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

    Deborah

    Term Life Insurance

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