An Interview with Dividend Power
I recently had the pleasure of interviewing the blogger behind the awesome blog Dividend Power
Dividend Power has been blogging since 2019 (but started writing about investing in 2006) 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.
Dividend Power: I am a U.S. based blogger that focuses on dividend growth investing or ‘DGI’ for small investors. I have been investing in stocks for about 20 years and even longer for mutual funds. I am mostly self-taught and learned through a do-it-yourself or ‘DIY’ approach. I do not have a formal finance or investment background or training. Most of my investing knowledge I gained through reading, writing, and personal experience.
The Dividend Power blog was an offshoot of my writings on Seeking Alpha (SA). I first started writing on Seeking Alpha in 2006. But life got busy and I stopped for a long stretch of time. I restarted writing articles on Seeking Alpha in late-2018. Writing articles provides a way for me to organize my thoughts on stocks. My writings attracted the interest of a leading dividend stock newsletter and other investing websites. I make contributions to these as well now.
I started the Dividend Power blog in July 2019 as an extension of my writing on SA. Eventually the blog started to grow. It now includes content original to the blog, abstracts of my articles on Seeking Alpha, a blog roll, and a free weekly newsletter. I recently moved over to self-hosting and a new theme for the blog. Since then the blog has grown rapidly. It now reaches thousands of readers per month and continues to grow. The DGI and FIRE blogging community has been very supportive in helping the Dividend Power blog grow.
On my blog, I tend to focus on large cap stocks with sustainable dividends and capital appreciation potential. I also believe in the Financial Independence Retire Early or ‘FIRE’ movement. I think that dividend growth investing can be a component of FIRE. It is not enough to just be frugal one must also build wealth. Most of the articles on the blog are about dividend growth investing. I have a fewer articles focused on FIRE and retirement at the moment. I will be expanding this area over the next few months.
In general, my blog content is organized into the following areas:
- Dividend Kings
- Dividend Aristocrats
- Dividend Champions
- Dividend Contenders
- Dividend Challengers
- Financial Independence
- Investor Education
My most popular article to date has been on Coronavirus Dividend Cuts and Suspensions. At the moment I am updating this article weekly since the list keeps growing. My articles on the Dividend Kings and Dividend Aristocrats are also popular.
Kanwal: What is your approach to investing?
Dividend Power: My focus is on dividend growth investing. In my research and thus articles I emphasize dividend growth, dividend safety, and valuation. I do have a preference for dividend growth so even if a stock is fairly valued, I may be bullish on it if the dividend growth potential is good. But I also look at dividend safety and the sustainability of the dividend. There are plenty of companies that may not have a safe dividend for different reasons. To me that means that the stock is at risk for a dividend cut or freeze. I try to avoid those. There are also companies that sometimes use debt to pay the dividend and conduct share buybacks. That can only be sustained for so long. Over the long run, earnings need to grow for the dividend to grow. Valuation is also important as overpaying for a stock can lead to poor returns.
Kanwal: Why do you feel your approach is the best?
Dividend Power: I do not know if my approach is the best. But it does work for me. Currently, DGI is very popular. There are many blogs and resources on it. The reason DGI works for some investors is that the concept is simple. Buy and hold stocks that pay a growing dividend and reinvest the dividend. Hence, this relies on the power of compounding. So, there is a time factor here. DGI works best over let’s say 10+ years for the accumulation period. After that one can think about living off the income without selling shares. However, a longer accumulation period is better from the perspective of generating passive income in the future.
Kanwal: What advice do you have for someone just starting to invest?
Dividend Power: Make sure that you have an emergency fund first. After that, I would recommend finding an investing strategy that works for you over the long run. Start early and let time be your ally to allow compounding. I would also say that they should gain knowledge about investing by reading and researching investing topics. Take responsibility for your investing.
Kanwal: Any stocks that look interesting to you right now and why.
Dividend Power: I was fairly bearish in late-January due to valuations. In fact, I wrote an article on how most of the Dividend Kings were overvalued since the aggregate price-to-earnings ratio was about 30X at the time. The recent selloff and bear market resulting from the coronavirus brought some stocks including the Dividend Kings down in valuation. But that was due to the expectation that many companies would have lower future revenue and earnings. I recently wrote a positive article on Coca-Cola (KO) when the price dropped below $40 per share and the yield went over 4%. The stock is a long-time Dividend King. The company has raised the dividend for 58 consecutive years. The CEO is fairly new and has made several moves to drive future growth. The stock price has come back up since late-March, but the yield is still over 3.5%. I think that 2020 will be a tough year for Coca-Cola but it should do well over the long-term.
Kanwal: Thank you Dividend Power for taking the time to share your investing knowledge and wisdom!
Learn more about Dividend Power and his blog by visiting Dividend Power!
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