I am hooked on dividend growth investing. For those of you who are not familiar with this strategy, dividend growth investing is pretty simple; when they are value priced, purchase shares in companies that have a long history of paying increasing dividends.
You’ll need to do three things to be really successful at this strategy.
3 Tips To Get The Most Out Of Dividend Growth Investing
1. Purchase shares at really attractive valuations – meaning you buy stocks when they’re on sale, like after a bear market (March 2009 being a prime example). There are a few ways to evaluate when a stock is a “good buy”.
You can use a low P/E Ratio, the Graham Approach, a Value Ratio, or simply look at High Dividend Yield, to name a few. Check out Stingy Investor for the most up-to-date listing of these methods.
2. Have the discipline to wait for share valuations to become attractive before you purchase them – this means that you could potentially hold your cash for years waiting for the right opportunity.
3. Have the patience to allow your dividend income to grow over time – you are not going to start off making $50,000/year in dividend income, but over time with a dividend growth investing strategy your growing dividends will compound and you could be earning that kind of investment income in retirement.
Tom Connolly, of the Connolly Report is the guru on dividend growth investing. The matter-of-fact way of describing his methods are priceless, and the entire website is just a gem to read. Here’s a quote from Tom on the dividend growth strategy:
When they are value priced, I buy common shares of companies with a good record of dividend growth and hold them for the rising income. In 2008 our dividend income rose in spite of the turmoil by 9.9%. Did your income rise by 10% last year. Our income will be up again in 2010 too.
Our retirement plan is working. It’s not the value of the capital that’s so important, it’s the income it generates…tax advantaged income…secure income. Dividend reductions from good dividend growers are rare events.
Also, check out Lowell Miller’s The Single Best Investment, and Stephen Jarislowsky’s The Investment Zoo. Both of these books highlight dividend growth stocks as a great way to build your investment portfolio and give you growing dividend income in retirement.
The dividend investor website is terrific for researching a company’s dividend paying history, and it looks like they have recently updated their data history. They were only showing dividend growth investing history as far back as 2000, but now it looks like it goes back to at least 1990.
The stock market can be wildly unpredictable, but dividend growth investing can be remarkably stable. Fortis (FTS) has increased its dividend for 37 consecutive years. If you bought FTS in 2005, you would now be earning 18% yield on cost from those shares.
Is it any wonder why I want to replace my employment income with dividend income in retirement?
I always check my investment statements for accuracy on a monthly basis and compare them to my transaction slips. I don’t really expect any fraudulent activity on my account but mistakes can be made, even by a large discount brokerage such as the one I use.
As an example, when I first opened my Tax Free Savings Account with them I was assured that the annual $50 fee would be waived if (1) I kept a combined total balance of over $100,000 in all my accounts or, (2) I signed up for on-line investment statements instead of mailed paper investment statements.
Review Your Investment Statements
Since I qualified on both counts I thought nothing of it again. Until that is I reviewed my statement a year later and saw a fee of $52.50 (including GST) hidden among my transaction fees.
A representative informed me that I had not integrated my three accounts (direct trading, RRSP and TFSA) like this was my own fault.
But one advantage of the integrated total was reduced trading fees ($9.99 vs $29) which is what I was paying so I knew the three account totals had been combined. Another time an expected dividend was not recorded in my account and I knew the company had not suspended their dividends.
Even minor errors such as these should be reported. You don’t want to ignore your investment statements or sit on an error and then have to try to sue the firm when things don’t work out to your satisfaction, such as the case recently reported in the news.
Reviewing your investment statements is an important part of being a good, informed investor. You can’t know you’re on track or make any necessary adjustments to your portfolio if you don’t look at what’s been going on.
And you can’t build your investments expecting everything will turn out in your favour by accident or luck, and then cry about how bad the market is (or your advisor is) when you’ve lost money. Be responsible for your own wealth.
In my previous career, I worked in the hotel industry. Most hotel chains have an employee rate program starting at $39 – $69 per night to stay at their sister hotels. Since I’ve left the industry I have had a difficult time transitioning myself to paying the standard rate. It can be painful, but it doesn’t have to be. Here are my top 5 tips on how to save money on hotel rooms:
How To Save Money On Hotel Rooms
1. Ask your friends & family – Just as hotels have preferred rates for their employees, they also have “friends and family” rates that are typically only $20 – $30 more than the employee rate. Most hotel employees are used to being asked for this favour, so if someone you know works in the industry, why not ask them yourself?
2. Use your corporate/government/association affiliation – The next best rate to try would be a preferred corporate rate or government rate. Or if you belong to an association like a professional sales association or an engineering association, ask the hotel for your preferred discount. Also, if you are a CAA/AAA member, you will likely save 10%.
3. Know your market – Most resort locations and sports destinations will be busy on the weekends, but they start to empty out on Sunday/Monday. Plan your trip away from the peak times and into the weekdays to save 15% – 40% off your rate. Conversely, most corporate locations and meeting hot spots are busier mid week (Tues-Thu), especially downtown hotels. You can book at some beautiful downtown locations on the weekend for 50% off their regular rate.
4. Book in advance – The trend in most hotel chains is to offer an advanced booking discount on their website. If you book more than 14 days in advance, you may be entitled to a 15% – 20% discount. Book a week in advance and receive 10% – 15% off your rate. Please note that hotels build in “fences” where the deeper the discount offered the more conditions apply to your booking. For example, the 14 day advanced purchase rate will likely have a “no-cancellation” clause, and will capture your funds immediately upon booking, rather than at checkout.
5. 3rd party websites – Take a look at Expedia.ca or Travelocity.ca to get an idea of the rates being offered in the location you are looking for. All hotels need to offer “rate parity” to these 3rd party websites, meaning that the lowest rate offered on the hotel website will also have to be offered on Expedia and Travelocity.
Now here’s the trick; hotels pay 22% booking fees for every reservation made through these 3rd party websites (similar to travel agent commissions). Check the lowest rate on Expedia and then call the hotel directly and ask for a discount. Savvy hotel operators will know that they will net more profit by offering you a $10 or $15 discount over the phone than they will by allowing you to book on Expedia.
Ex. You book a $100 rate on Expedia – the hotel nets $78. If you book an $85 rate with the hotel directly – everyone wins!
There are many other ways to save money on hotel rooms, including using Hotwire.com & Priceline.com, and belonging to a hotel rewards program, like Delta Privilege. Maybe I’ll save those for a future post…
So there you have it, 5 tips to get the best value out of your next hotel stay. What are some of the ways you save money on hotel rooms?