Yes. Good comments -- DRIP. Diversification. Risk Tolerance. Yield is not everything.
Picking up a stock when it has been beaten up for no good reason, resulting in a higher than usual dividend yield, can work out well. But you want that company to be able to continue to pay and even to raise the dividend.
When I look at the ratio of the dividend-payout to the EPS, I can get pretty cozy when the dividend hovers around half. Some dividend investors will say 60% but, at that point, they might get a little concerned about the sustainability of the dividend and start watching more closely. Even if it is a company that has been around forever and is likely to stay around forever, a cut in the dividend can play some real havoc with a stock price for a while.
When buying individual stocks, you really need to pay attention and understand your own timeline and personal tolerance for risk. And that diversification thing is crucial.
And like I always say when I write this stuff, I have no idea what I am talking about. In fact, I have a shameless confession to make…..
Every now and then Trigger-Finger Boomer has to pay a little visit to sassy old Buyanhold Boomer. Such visits go like this…..
Trigger-Finger Boomer: WAKE UP! Get off that Talk of the Villages site and get your fat behind over to Yahoo Finance. Take a good look at stuff, stock by stock. Click on Key Statistics and that other stuff over there on the left side of the screen and figure out what all that info means NOW!
Buyanhold Boomer: Huh? What? Trigger-Finger Boomer! What are you doing here! You are one scary you-know-what when you barge in here and interrupt my emailing and my posting on TOTV and my checking to see what kind of chickflicks I can drag Mr. Boomer to.
Trigger-Finger Boomer: YOU HEARD WHAT I SAID. DO NOT MAKE ME REPEAT MYSELF. And keep in mind that I NEVER once told you that this choice of yours to invest in individual stocks would be like shooting fish in a barrel. NOW, DO EXACTLY AS I SAID.
Buyanhold Boomer: ok.
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Boomer
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