Buying Dividend Stocks | Podcast Episode #322

0:07
Hey, I’m Ryan Mallory and this is my swing trading the stock market podcast. I’m here to teach you how to trade in a complex ever-changing, world of Finance, learn what it means to trade, profitably and consistently managing risk, avoiding the pitfalls of trading. And most importantly, to let those winners run wild, you can succeed at the stock market and I’m ready to show you how, hey, everybody, this is Ryan Mallory with swing trading the stock market in this podcast episode.

0:37
We’re going to talk about dividend stocks, not something I talk a lot about or hardly ever but one listener picked up on me mentioning the fact that I have different accounts for different strategies. So yes I consider myself a swing Trader predominantly but I do have a dividend portfolio.

0:55
So for the purposes of this episode we’re going to call the guy who wrote this email, we’re going to call him buck good old Florida, red nickname and the reason why I give these people floor Red nicknames part of its to be funny, but the other part of it is to conceal their identity because a lot of people don’t want their names out there, so Buck writes.

1:12
Hi Ryan. I’ve been listening to your podcast for about two years now. Thank you for providing your knowledge and experience a few episodes ago. I heard you mentioned that you have several brokerage accounts, one of which was a dividend account. I am looking to diversify a bit more by investing in dividend. Stocks, could you please explain your dividend investing strategy?

1:31
Like how you choose which stocks to invest in? And if for when you might Ever sell it. That’s a good question. Good question. I think it’s a fitting episode for this podcast. But first, I gotta say and I wanted to talk a little bit about this. I took my first vacation completely away from the market and over 13 years.

1:48
Haven’t done it any time, I go on vacation, I take my laptop, I take everything with me and during the day. People might go out and do something fun. I’m back at the cabin, or the hotel, or wherever it might be. That I’m having a vacation and I’m working because I’ve been so glued to the market over the years and trying to miss a whole week of trading.

2:05
Or Price action in the stock market, it was quite intimidating. So about eight months ago, I decided, you know what? I’m going to do it. I’m going to book a cruise, and I’m going to go ahead and take a full week off. And I was really as soon as I booked the cruise, I was like, man, I am really looking forward to taking a full week off.

2:21
I couldn’t even imagine what that’s like. Well little did I know that I would be booking it during the first bank financial crisis. Since 2008 2009 when the Great Recession took place. But nonetheless, I said you know what? I’m going to go ahead with it.

2:37
Well I didn’t take the complete week off that I would have liked to have done. You had Silicon Valley Bank blowing up, the thread of a ton more Banks blowing up. So there is the bed stepping in with a new program treasury ensuring or the FDIC ensuring, all the bank deposits, it was absolute chaos, of course on Monday because I did have some short positions still in play.

2:58
I made sure to watch the market on Monday, so I didn’t get completely away from it on Monday but after Monday, I was able to enjoy the rest of the Golf didn’t look at the market at all and just enjoyed my time with the family. And the reason why I bring that up is because yeah I’ve done podcast episodes talking about hey it’s good to take out time away from the market at times but I don’t know if I’ve ever really practiced.

3:18
What I preached in that regards as much as I should have yes I took vacations but I never really disconnected from the market and I can tell you firsthand what a mental release it is to be able to just take some time away from the market.

3:34
It Refreshes you, it gives you more perspective and it’s not that hard to get caught up on what happened over the previous week. Pretty much my ride home from the cruise port over the course of a couple hours. I was able to get caught up right away with everything that happened with the SP, the NASDAQ, the headline events that affected the markets what was going on and this was during a period of time, that was one of the more volatile periods in the stock market or more uncertain times in the stock market of the past decade, because you had Banks failing and that’s some of the worst headline risk, you can deal with, but I was able to get Back into the swing of things come Monday morning when I went back to trading.

4:09
So the whole point of this little rant here that I’m given, is that make sure that you give yourself some time away from the market because it really is healthy and good for the mind. It was really good for me to take a step back and get a clearer perspective on things.

4:24
The think about it when I was sitting on a balcony, looking over the ocean as we were going to the next Island. It was a really good time. So I appreciate you guys understanding. And To me, the opportunity to be able to take some time off and spend it with the family and I give me a hard time about doing that. I do appreciate that, so one of you get that out of the way.

4:42
So on this podcast episode what we’re really talking about is dividend stock. And so, over the years, I wouldn’t say that I have made a dividend portfolio, a major part of my trading strategy and it’s probably been a neglected area over the years, but I do think that there’s a lot of value.

4:59
And especially reinvesting, those dividends and building up a portfolio over time. That can I had a nice steady income. Now, let me just tell you right out of the gate. I consider myself to be a pretty good swing Trader. I don’t know if I necessarily consider myself a great dividend Trader, or a great investor and dividend stocks, not by a long shot.

5:19
So everything I’m saying in this episode, don’t take it to bang, it’s just my approach to Dividend investing. Now, when I’m investing these dividend stocks. Yes. If they go, you know, way up from where I bought into it. That’s great. I’m not gonna argue with that. Is that my goal? No, my real goal, my real point of emphasis, Is to buy Quality Companies or ETFs that are providing a really good yield.

5:41
And one day when I retire, if I retire because nothing’s for certain in this world, I would like to be able to enjoy the fruits that proceed from those dividend stocks in the terms of a dividend. So again, I’m not a dividend stock expert by any means, do your own due diligence.

5:59
Take everything that I say, with a grain of salt. I just feel like it’s a good topic that we can talk about my approach to this. Well, so each year I decide how much money I’m going to put into the dividend account. How much money I’m going to invest and just to make matters.

6:14
Simple let’s say the account has a hundred dollars and in the new year I decide hey I’m going to put $50 into that account this year and put it towards a basket of different dividend stocks that I really like not that first day of the trading year. Am I going to go ahead?

6:30
Even if I put all $50 in it on day one, is that something that I’m going to? Invest right out of the gate. No. In fact what I’ll do is incrementally by a basket of stocks each and every week so that I’m dollar cost averaging into the positions.

6:46
I don’t want to try to time the market bottom or for find the perfect place and time to get into the stock or ETF that I’m investing in for dividends. No really what? I’m just trying to do is just consistently, add to the portfolio over time. Now if I get into a dividend stock and let’s say it represents like 5% of my portfolio.

7:05
In a hundred dollar portfolio. I have five bucks in stock ABC and that stock has a dividend yield of let’s say 5% and then all of a sudden the stock doubles or triples in price which would be great. Am I going to necessarily keep adding to a stock where the dividend yield? Now when I’m getting into it is only like two and a half or one and a quarter percent.

7:24
No, I’m not going to do that at that point because I’m again my objective is to have good quality dividend stocks. And the other thing too, is at the end of the day, I want, Want my dividend place to be paying out a good stream of dividends throughout the course of the Year.

7:42
Some of them, we quarterly some will be semi-annually. Some of them will be annually, some of them will be quarterly. Most of them are quarterly, but I’m not necessarily trying to, like, get a double bagger or a triple bagger, or a major gain out of this place. I really just want these stocks to provide a good income, you’re in, and you’re out.

8:00
So, with that being said, I’m not going to have a huge stake of my money all in one stock. The biggest position that I have in my dividend portfolios 8%, and that’s as much as I’m going to really add to that stock and over the course of the years to come, that position will actually continue to get smaller as I increase my position and capital and other stocks.

8:21
And then I have some stocks that only represent point three percent of My overall portfolio. And the reason why I don’t really care about there being such a small exposure, and some of these stocks and yes, that one that I only have like point three percent of my portfolio and is one that I just recently We started building a position in, but even if it was just a 0.3 percent that wouldn’t bother me because really, I’m looking at the big picture.

8:43
I don’t want any dividend play to wear if they were to cut their dividend and I had one just recently, with Intel to wear if the stock pulls back as a result of them cutting their dividend and that does happen. I don’t want it to affect the entire portfolio in a really bad way. It needs to have a very small impact to my portfolio and as a result, I would say most of the positions.

9:04
And Ends up. My portfolio are about three to four percent of the overall portfolio value. Now, do I ever sell any of them? Yeah, I do sometimes. I regret selling them. One of them in particular, was CVX. I got into CVX, I think it was like 80 or 90 dollars a share.

9:22
And I don’t remember the exact numbers, but it was around 80 or $90 a year and it was pain like an eight percent dividend at the time. I thought, man, that is really, really good. I’m just going to go ahead and buy it. It’s a reputable company. Good balance sheet. Buy and Hold. And then in 2022, the stock CV X goes from like, $80 up to like, 160 170, dollars a share.

9:43
I went ahead and sold, it was 100% gain, it wasn’t the worst decision, but then I saw a climb up a little bit more, and I had a little bit of a sellers remorse there, but it’s still on my list for a stock to buy if Energy prices are ever to pull back and gives me the opportunity to get in it. A lower price that is definitely something.

10:00
I think that I would want to take advantage of but I’m willing to wait for that so that I can get Much better dividend yield for my money. Now, something that also yields a good result is Swing trading. The stock market? Yes, you’ve heard me talk about it. If you’ve listened to the show in the past and if you haven’t signed up for it, what are you waiting for?

10:18
Sign up for swingtradingthestockmarket.com, this is where you get all my stock market research for swing trading each and every day. Now, I don’t talk about my dividends in that, but I do talk a lot about swing trading, providing my watch list, providing updates on big tech, stocks providing updates on the overall Market daily watchlist.

10:33
Really, really ache. Quality service that it when you sign up for it. You’re also supporting this podcast and allow me to continue to provide you guys with future episodes. So, check that out at swingtradingthestockmarket.com. Now, in my dividend portfolio, the other thing that I want to make mention of is that I tend to focus much more on value plays than growth.

10:56
Now, CVX definitely turned into a massive growth play with the huge break out that it had in 2022. But was I necessarily expecting that? No, I was expecting. It needed to be more of a value. Play nonetheless, some of the stocks that I that I focus on. I focus on a lot of your utilities that tends to be your utility places.

11:13
Well, there’s others like Verizon and Walgreens, you know, stock symbol V Z for Verizon Walgreens WBA, mmm, which is 3M. You also have companies like Dow and lyb, which is lion do.

11:28
So, a lot of stocks that are kind of boring in nature. They’re not your exciting Shopify, or X or DraftKings, kind of plays. These are your really boring economic Necessities like Kraft, Heinz or 3M or some of the chemical plays utilities.

11:45
We’ve got to have light, but again my focus isn’t to hit home, runs on individual plays and just make a killing off of them. My focus is to create a portfolio. That’s extracting a lot of dividends from, as many different sources as possible. I even have TLT in my portfolio and that does even really have a huge yield to it, but I have it in there nonetheless, because The very stable play.

12:06
And then the other thing that I try to do as well as have a focus on different sectors as well, I don’t have as much tech place in there. Like, I mentioned earlier, I have a position until they cut their dividend, but while I didn’t necessarily like that they cut their dividend, it didn’t have a huge impact to my portfolio because it’s such a small part of it, but I have re it’s, I have bonds.

12:26
I have auto companies have industrial Staples Communications financials and financials is a perfect example. Why you don’t want like a In portfolio of just all Financial plays. Because what did you see happen this past week? Yes there’s some financials that pay out some decent dividends but you might have gone your head handed to you.

12:44
If you were caught in some of them this past week that was showing some uncertainty with the banking crisis that we now find ourselves in the middle of and I don’t just do individual stocks but you know, besides stocks I also do some ET sa do some ET ends. But the one thing I always try to do because I want to keep building this portfolio up.

13:01
It’s not where I want it to be. Just yet. So I reinvest those dividends. Now one of the things that a lot of people will do is they will go just look for the stocks with the highest dividend yields and they’ll go by those. But oftentimes stocks with high dividend yields are a red flag.

13:16
So when they start getting over 10%, okay, there might be a problem there. Even like, seven or eight percent. I can sometimes be suspicious of all, want to still do my due diligence, but when they start getting over 10%, you want to make sure that this isn’t a company that’s at a high risk of getting their dividend cut. You want to look at the balance sheet.

13:32
Make sure that This is something that they can actually continue to sustain in the future. You want to see how are their revenues, how are their earnings, are they likely to cut their dividend anytime in the near future because that might be one worth avoiding. Now, again, I can’t stress this enough. I don’t consider myself a subject matter expert on dividends.

13:49
I’m just talking a little bit about it because that’s what Buck asked me to do. And so I’m just telling you my perspective on it, how I’m doing it, I’m not saying it’s the right way by any means. But it’s a long-term approach where I just want to have a bunch of value companies. That are providing some good stable dividend returns as a result.

14:06
And there’s a reason why I keep everything in different accounts because if I have my dividend account in the same bucket of capital as my swing trading account, which would also be in the same bucket of money as my long-term account will, then I’m putting myself in a situation to where, if I’m having a bad day, my long-term Investments, but I really good day shorting the market in my swing trading account that can really play games with you.

14:29
You can almost start making decisions for your swing trading, based off of your Or your long-term account. And that’s not really how I swing trade, that’s not the way I think, is the right. Way to swing trade. I think, when your swing trading it needs to be based on the stocks at your swing trade, not what’s going on in your long-term account or what’s going on in the dividend account or what’s going on in your bond portfolio, and that’s why I segregate them.

14:50
My long-term account is not something that I feel like, I need to check each and every day, same goes with my dividend account, but my swing trading. Yes, I managed that every single day, I’m looking at the stocks. I’m looking at how I’m going to play it, my going to start taking. Partial profits here, my going to let my winning trades, run a little bit longer.

15:06
My going to cut the losing trade here and move on to the next trade. Those are all decisions that need to make without the influences of my other strategies being in the same pool of money as my swing trading. So that’s why, I think it’s important to keep them segregated.

15:23
So, I hope you enjoyed this podcast episode to summarize. Some of what we’ve already talked about. Yes, each year. I decide how much money I’m going to add to my dividend account. And then throughout the course of the I just slowly dollar cost average myself and two different. Dividends that I want to continue to grow a position.

15:40
I don’t let one particular stock have a huge influence on the portfolio and the and it’s really about the collective amount of dividends that I’m collecting from the portfolio, whether it be quarterly, weekly monthly semi-annually or annually? What I want is for there to be an income coming in through them. Now right now, I’m reinvesting them and to back into the stock but one day I’ll use it as an income and they tend to be more value oriented than growth.

16:03
Doesn’t mean that I won’t ever invest in a dividend stock. That’s more growth oriented. But my main focus is on value. Like, Kraft, Heinz. And some of these really, really boring names. So that was a good question from buck. And if you want your questions to be answered on this podcast episode, send me an email at ryan@shareplannercom.

16:20
I do read your e-mails. I do try to make an episode out of every one of them that I receive unless it’s just something that I really don’t have anything to offer on. Sometimes, I’ll at this time of the year, I’ll get questions about taxes. I’m not an accountant so I can’t really answer any of those. It’s something to do with the stock market.

16:41
I love answering those questions, so keep seeing them, my weight, check out, swingtradingthestockmarket.com, and make sure to leave a five-star review. If you’re listening to this podcast and enjoy it. I really means the world to me. It encourages me to keep doing what I’m doing. So, make sure to leave that five-star reviews. Thank you guys and God bless.

17:00
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17:18
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