Although summer is not quite officially over, the month of August is and that leaves us with four month to go to close out the remainder of the year. With just eight months of dividend income in 2018, I have reaped 48% more in dividend income YTD than what I received by this same point last year in 2017. Take a look below and view the results for August 2018.
In August I collected dividends from eight separate companies, one more than than the number of companies I collected from this same time last year - the newest addition during this time being The Procter & Gamble Co. (PG). In addition, all but two of the companies have increased their dividends during the past year, but despite the lack of two dividend increases, the net impact from rate increases among the remaining 6 who did raise rates amounted to a 5.2% increase. As with prior months, the reinvestment of dividends and infusion of new capital to buy additional shares, or open new equity positions as noted above for PG, resulted in the rather large volume increase of 45.4%. All counted, the YoY increase amounted to 50.7%, slightly more than the YTD trend noted above.
Lastly, here is an update on the P/Es & Dividend yields of the major market indexes. Despite being higher than historical averages, the market multiples have continued to expand. In closing, I'll leave a quote from the columnist, James K. Glassman, who recently reminded investors in an article for Kiplinger that despite the relatively high market valuation as a whole ("a time of euphoria"), investors can still exploit Mr. Market's mental disorder by selecting individual companies that are currently shunned by other investors.
In August I collected dividends from eight separate companies, one more than than the number of companies I collected from this same time last year - the newest addition during this time being The Procter & Gamble Co. (PG). In addition, all but two of the companies have increased their dividends during the past year, but despite the lack of two dividend increases, the net impact from rate increases among the remaining 6 who did raise rates amounted to a 5.2% increase. As with prior months, the reinvestment of dividends and infusion of new capital to buy additional shares, or open new equity positions as noted above for PG, resulted in the rather large volume increase of 45.4%. All counted, the YoY increase amounted to 50.7%, slightly more than the YTD trend noted above.
Lastly, here is an update on the P/Es & Dividend yields of the major market indexes. Despite being higher than historical averages, the market multiples have continued to expand. In closing, I'll leave a quote from the columnist, James K. Glassman, who recently reminded investors in an article for Kiplinger that despite the relatively high market valuation as a whole ("a time of euphoria"), investors can still exploit Mr. Market's mental disorder by selecting individual companies that are currently shunned by other investors.
Mercurial Mr. Market. The best metaphor for this phenomenon is “Mr. Market,” a concept invented by Warren Buffett’s mentor, Benjamin Graham. Mr. Market has emotional problems. Sometimes he’s euphoric and bids prices to the sky. Other times, he is depressed, fears the worst, and is willing to unload his portfolio at low prices. Right now, there is evidence that Mr. Market is on a sugar high.
The question for investors is, “What can I do with this warning?” To get to an answer, imagine you had bought an S&P index fund at the worst possible time, in mid 2007. In less than two years, the fund would have lost about half of its value. But in four years, it would have exceeded its previous peak. The S&P 500, which hit a low of 666 in March 2009, recently closed at 2875. That is the reason I believe buy-and-hold is the best strategy—even if you suspect tough times are ahead.
Graham’s advice was to exploit the mental disorder of Mr. Market by looking for stocks that, even in a time of euphoria, continue to be shunned by investors. Realize that these stocks will also be hurt in a market downturn, but they don’t have as far to fall.
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