re: Dividend stocks and DRIPs as a long term investment vehicle

When you limit yourself to only a handful on individual securities, there is always more risk than maintaining a diversified portfolio. I think large cap companies that pay a consistently growing dividend are an important part of almost any portfolio, but only as a fraction of it. Depending on your age, allocating some of your portfoli to mid/small cap firms(that consistently beat large caps) or fixed income may be more appropriate. I'm not trying to discredit your strategy, I hold DRIPs with some of the companies you have mentioned in fact, but diversifying is an incredibly easy way to manage risk and there aren't many professionals that would disagree with me. The amount of research that goes into investing in individual securities is significant, and most people aren't capable of spending the required time.

Chris Farley agree and disagree, I own 4 businesses and still manage to find time to research how to invest my money...again I said earlier the growth in my portfolio size comes from my income, my investments are slow and steady and very low risk with a focus on building a perpetual rising income stream, that should be everyone's goal, small caps are hit and miss and I never wanna miss

To clarify, I wasn't necessarily saying that you don't have the time, but most people don't(nor the ability to truly understand the complexities of mega-cap companies). The people in these threads blindly following your strategy are no different than the boglehead sheeple you mentioned earlier. Everyone's situation is different, there is no perfect investment strategyq for everyone.

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The people in these threads blindly following your strategy are no different than the boglehead sheeple you mentioned earlier.

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Let me clarify this. There are a lot of excellent individual investors that utilize well constructed portfolios in what has become known as "boglehead" investment philosophy. Ie, low cost broad indexed investments and/or sliced and diced indexed investments constructed in tax efficient portfolios, which are then rebalanced as desired with minimal tax impact. They don't voluntarily give up tax free or tax advantaged accounts for no reason, either. Seriously, the acumen demonstrated on that forum by knowledgeable investors, not the newbs or run of the mill posters, dwarfs this board.

Me, I'm agnostic, and there are a lot of ways to make money investing. I do like to keep portfolio costs down, and paying 5-20 basis points to gain much greater diversification isn't a bad move, combined with individual holdings. Longer term, international small and emerging markets are looking like better options to me by the day instead of bid up dividend oriented domestic large caps. That said, if low volatility helps equity holders stay invested vs selling low it's not the worst thing in the world. Past performance is not guaranteed future performance, either.

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Understanding the power of compound interest

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I think this is the #1 thing all of us young investors need to remember

Are all of your DRIPs in a tax advantaged account?

I have a Roth, 401k, and taxable brokerage account. I have a lot of dividend stocks in my taxable account, and therefore pay taxes on the dividends every year. It's not a lot right now (few hundred a year), but over time as it grows, the taxes could eat me up. However, I'm a big fan of the strong performance of dividend stocks.

How do you feel about VIG or VYM? I've started to put some funds into these ETFs in lieu of investing entirely in the company stocks directly.

To all:

How much does it cost to set up a drip?

I mean Chris Farley everyone has their strategy, I have mine, and it's worked incredibly over these years. I understand what you are saying on this strategy isn't very reliable, I dont mind being FULLY RELIANT bc the United States government and every country on earth is just that on the taxes that tobacco generate and why tobacco will not only be here but booming for years.

Do you realize in the United States alone without tobacco taxes we would have to nearly double taxes on everyone to make up for the shortfall? That's why our president is raising the tax another 94 cents, he knows its not gonna stop anybody from smoking and he knows its an easy target to generate revenue. The tobacco master settlement is one of the largest windfalls every state gets money from annually, if altria goes up in smoke, so do so many government funded things you see all around you.

It's a dirty secret but tobacco taxes fund so much around you that you wouldn't believe it, i think you should read more on just how important cigarettes and tobacco are to our nation. If tobacco is a risky investment you're nuts, altria is literally a AAAA, yes 4-A bond if one ever existed. The tobacco taxes go and america is really in the dumpster

Internationally more countries have caught on and are raising their taxes on the product bc they know its addictive and people will pay.

Flat out if I had to buy 1 company and know it would never go bankrupt it would be either of the tobacco companies bc there is no way they go bankrupt, they turn too high a profit per item and the world governments reliance on them is crazy.

Read this link .....$32 billion dollars generated for our government in 2011...its funny bc when lawmakers know they have a shortfall they up tobacco taxes bc it will always be there, and there's room to grow for eternity. Take a look at the first link which states $32B in 2011 which is probably more today and the second link is how many states pay $32B in tax revenue.......only 24.....so tobacco pays thats much tax

LINK

LINK

If tobacco goes it would be equivalent to losing Louisiana's tax revenue or the entire tax revenue of the bottom 8 states.

I really dont see how you can wrong over the next 30 years if you own coke,pepsi,mcdonalds,visa,phillip morris,altria,exxon,chevron,conoco,shell,BP,general mills,diageo,mastercard,kinder morgan,intel,microsoft,wells fargo,JP Morgan

I mean thats as diversified as one needs to be and much more than I ever will be, and you save the management fees of an ETF

I got the drip free of charge. It did cost money to get rid of it though

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That some hard hitting logic riddled analysis right there.

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Was this meant to be sarcastic?