A recently had the honour of interviewing the blogger behind the awesome blog Passive Income Pursuit!
Passive Income Pursuit has been blogging since 2011 and his blog covers my favorite topic, dividend investing! So I invited him to share his investing knowledge and experience with us.
Kanwal: Tell me a little bit about yourself and your blog.
Passive Income Pursuit: I was laid off in January 2009, and while it was frustrating at the time, as my unemployment period continued on I realized there's so much more to go after in life than being stuck in an office. I used that time to improve my relationships, my body and continue to learn.
Before then the thought of retiring at sometime other than the traditional retirement age never crossed my mind. I just didn't think it was possible until I started reading and learning about investing and luckily came across dividend growth investing. I now feel so much more in control of my finances and the end game of financial independence is in sight.
One is to be a live journal chronicling my investing strategy. I think the best part about this is that it allows me to look back and see why it is I made a purchase or sell. One of the biggest factors with investment success is to avoid the big mistakes. I've made my fair share, but my blog lets me go back in time to see why I made the decision and correct the errors in my thinking.
The second purpose for my blog is to help teach and motivate others. I've met several people that have started to take control of their own investing because of my blog and I just hope to continue helping others. The funny thing is I get inspired by my readers probably more than they do from me.
Kanwal: What is your approach to investing?
Passive Income Pursuit: My main approach is to invest in quality companies that pay increasing dividends year after year. I was never really comfortable with the 4% rule and drawing down my portfolio value because all it takes is a few bad years to lower your standard of living for the rest of your retirement. Eventually I'd like to purchase some rental properties if the returns look good, but my core approach is dividend growth investing..
Kanwal: Why do you feel your approach is the best?
Passive Income Pursuit: What's not to like? It's a very straight-forward approach and I don't have to constantly worry about the companies I own. Most have been in operation for 70+ years and raising the dividend for 15+ years, some over 50 years. These companies have been through wars, recessions, stagflation, inflation and any of the other number of economic and geo-political scares and continued to grow their business and make more money for their owners.
I wouldn't say dividend growth investing is the best strategy because it all depends on your end goal. If you're looking to amass the largest portfolio possible the I'd go for growth stocks and deep value plays. But for the average investor it's a very simple strategy to follow and the key is to remain patient. You won't really see the fruits of your labor for a few years because compounding takes time.
Kanwal: What advice do you have for someone just starting to invest?
Passive Income Pursuit: Be a consumer. No not a consumer in the sense that you need to go buy things. But consume as many books and blogs as you can. There's so many great resources out there, you just have to look for them. As far as actual advice goes the keys would be to:
1. Determine a strategy you're comfortable with and want to follow, whether it's dividend growth investing, value stocks, growth stocks, index investing or any of the other possibilities, and stick with it. Don't go jumping from strategy to strategy.
2. Be patient because if you try and rush the process you'll make mistakes. Compound interest takes time to build, but when it does you'll be able to make more in a year than you were investing each year.
3. Make sure your financial house is in order before you invest. If you have loads of consumer debt, i.e. credit cards, pay those down first. You won't be able to make consistent 20% returns to counter the interest you're paying.
4. Avoid the financial news and talking heads. They make their money by getting viewers and are always talking of how the markets will crash or go sky high. The reality is that markets have cycles of boom and bust and if you think you can time those cycles perfectly you'll be the first one to do so. Much smarter people can't do it so you probably won't either.
5. Have a plan for what you'll do in the good times as well as the bad times that the markets provide. At some point in your investing lifetime the markets will crash, most likely a few times. Be prepared beforehand so you're not selling out of panic. A lot of investors got out of the market during the financial crisis and still haven't got back in. All of the easy gains have been made.
Kanwal: Any stocks that look interesting to you right now and why.
Passive Income Pursuit:
There's several companies that I like right now. If only I had more capital.
Chevron (CVX) - One of the largest oil and gas producers in the world and they have 26 consecutive years of increasing their dividend.
Wal-mart (WMT) - They're the world's largest retailer and have one of the largest distribution networks in the world and 39 consecutive years of increasing their dividend.
Target (TGT) - Another retailer, but they have much more room for growth than Wal-mart. Despite the recent concerns with the credit card breach and expansion to Canada, I think these are both just short-term issues. Over the next few years I think all will be forgotten about these hiccups. They have a 46 year streak in increasing their dividend.
Phillip Morris (PM) - Phillip Morris sells an addictive product on a global scale. While some investors have issues with investing in tobacco companies, they've proven to be some of the best wealth generators around. They only have a 6 year dividend growth streak, but they were spunoff from Altria in 2008 which has a 45 year streak.
Some higher growth candidates would be:
Visa (V) - Visa is the leader in credit card processing and most of the financial transactions are still made via cash. There's still a huge market for them to grow into. The yield is low but they've been growing it like crazy. Visa has a 7 year dividend growth streak.
Starbucks (SBUX) - Who hasn't heard of Starbucks? They found a way to charge $5+ for sugar, water, and a bean. Lots of people have to have their caffeine fix every morning and Starbucks is there to help them out. The expansion into tea via Teavana could provide a big boost for expansion especially into the Asian markets. They only have a 3 year streak, but I think it could be an opportunity like investing in McDonald's in 2000 when they were going through their struggles.
With both Visa and Starbucks the price needs to be more closely monitored because they trade at a growth premium. But the qualitative aspects of both companies are there to provide some awesome dividend growth streaks.
Kanwal: Thank you Passive Income Pursuit for taking the time to share your investing knowledge and wisdom!
Learn more about Passive Income Pursuit by visiting his blog
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