Dividend Tree Investment Process

The purpose of my starting this blog spot is to share my journey in achieving my investment goals. In the process, I expect to continue my learning process by discussing contrasting views, and hopefully make smaller mistakes. Continuing with my motto of keeping things simple, this page describes my seven step investment process in a broader context. I foresee that over a period of time, this page will act as index page for my complete investment process.

Step 1: My Investment Goals

Here I am discussing and setting my investment target for dividend portfolio.

Step 2: My Investment Principles and Rules

In this post, I describe the rules I use to manage my dividend portfolio. This is a starting point because I do realize that these are intangible rules. In future, I will need to make tangible rules.

Step 3: My Risk Profile

I will discuss about my risk profile with reference to my investment time frame and capacity,

Step 4: My Investment Buckets – An Overview

This is an overview of my complete investment strategy and different investment buckets. I have defined my investment buckets based of my objectives. These are not an asset allocation for my investments.

Step 5: Dividend Portfolio Performance Matrices and Measuring Progress

Here I plan to present the performance measures I use in evaluating my dividend portfolio. I will discuss different matrices such as my benchmark, cash flow, YOC, annualized XIRR, portfolio value, and asset allocation.

Step 6 (a): Dividend Portfolio Building – Generate Watch List

I plan to discuss the parameters I use for stock screening and stock selection. I use qualitative and mild quantitative procedure. I generate watch list based on these screening and selection process.

Step 6 (b): Dividend Portfolio Building – Accumulation

Depending upon the available funds at a given point in time, I start accumulating the security. I can accumulate a new security or add to existing one.

Step 6 (c): Dividend Portfolio Building – Dividend Reinvestment

I believe dividend reinvestment is a lifeline of dividend-based portfolio. I will discuss its significance and how I execute it.

Step 7: My Exit Plan

When I started investing using a dividend-based approach, I had a very fixed view that I will be buy-and-hold investor because it is a long term process. But Year 2008 changed that view. It is prudent to remove an apple gone bad.

This provides a summary-level procedural framework for my investment process. Once I finish writing about each process step, it will provide detailed insight into my investment process for dividend portfolio.

A customary caveat: This is my investment process compatible to risk I am willing to take, the resources I have, and the amount of time I am willing to spend on managing it. I am here to share my journey and hopefully generate constructive critic from the readers (kudos is also welcome – we all need it!).

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