An Interview with DivGro
A recently had the honor of interviewing the blogger behind the awesome blog DivGro!
FerdiS at DivGro has been blogging since 2013 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.
DivGro: Our family moved to the United States in 2002 when I was offered a position at a well-known animation studio in the Bay Area. A small part of my compensation package included employee stock options, which really is what started my investment journey.
I knew practically nothing about investing in the stock market. I read lots of articles on investing, looking up unfamiliar terms as I went along. In the beginning, I spent more time looking up terms than reading!
Later, I subscribed to a few monthly investment newsletters. Each newsletter tracked a portfolio and suggested stock picks, explaining why a particular stock was a good candidate. I found reading these newsletters informative and helpful. Soon I created my own portfolios to mimic those covered in the newsletters.
In 2012, I reflected on my trading activity. While successful, it seemed hyperactive as I spent a lot of time tracking stocks and looking for signals to act on. It was no longer fun. Fortunately, I stumbled upon several blogs on dividend growth investing (DGI). I enjoyed reading these blogs and appreciated the open and supportive community.
In January 2013, I started my own blog, DivGro. With modest goals initially, I soon became convinced that DGI was the best strategy for me. I sold all my non-dividend paying stocks and started to focus on DGI exclusively. Writing for DivGro has helped me to clarify my thoughts and to develop my own system for stock valuation. And, knowing that I would be reporting my trading activity helped me to become a more disciplined investor.
On a personal level, I enjoy hiking, photography, and traveling. My favorite vacation destination is Kruger National Park, but there are amazing places in the United States worth visiting too! I love Yosemite National Park and it is just a few hours drive from where we live.
Kanwal: What is your approach to investing?
DivGro: I'm a dividend growth investor. I look for stocks with a solid track record of paying and increasing dividends. I only buy shares if I believe the stock is undervalued and the dividend is relatively safe.
While generating a reliable and growing dividend income stream remains my primary goal, I also seek to boost dividend income with options. Selling covered calls allows me to collect extra income on stocks I already own. Selling put options allows me to set the price I'm willing to pay for stocks I want to own.
Kanwal: Why do you feel your approach is the best?
DivGro: My approach is best for me. The foundation is DGI, which requires patience and discipline. Options trading adds some excitement and allows me to boost dividend income without introducing excessive risk. The combination fits my personality.
Buying great dividend growth stocks when they're undervalued helps you get in on the ground floor. You start with a higher yield on cost, which will increase every time the dividend is increased. Also, you will benefit if the market recognizes the value of the stock and bids up the share price to meet fair value.
Kanwal: What advice do you have for someone just starting to invest?
DivGro: Thinking back to when I started earning income, it would have been great if someone could have convinced me to spend as little as possible and to invest as much as possible in dividend growth stocks. At the time, we had some debt and I convinced myself that it didn't make sense to invest in stocks while I carried consumer debt. Now I know better. Compound interest and living frugally are just two of the benefits of starting to invest as soon as you earn income.
If someone asked my advice, I would suggest one of two approaches. If you're so inclined, learn how to identify great dividend growth stocks that are undervalued and slowly build your own portfolio. If identifying and valuing stocks yourself is not for you, find a trustworthy source of DGI advice. Start slowly and build confidence in your advisor.
In either case, be patient and don't panic if the market pulls back. When that happens, see it as an opportunity to buy more shares! Think long-term!
Kanwal: Any stocks that look interesting to you right now and why.
DivGro: I write a monthly article series for Seeking Alpha in which I pick 10 dividend growth stocks worth considering. I use different screens to trim David Fish's CCC list and rank the remaining stocks using a proprietary ranking system.
The October edition has VF Corporation (VFC) ranked #1 and T. Rowe Price Group, Inc (TROW) ranked #2. I used the following screens:
- 0 ≤ Dividend Yield ≤ 8.0
- Debt to Equity Ratio ≤ 1.0
- Market Cap ≥ $1 Billion
- EPS% Payout Ratio ≤ 80%
Although I'll be doing November's analysis soon, I think either of the above-mentioned stocks is worth looking into.