call the bottom. That's not to say we can't enjoy the benefits of buying at the bottom. So, how does a long-term buy-and-hold investor accomplish this?
It is really quite simple if systematically invest during the good times and the bad. Easy to say, and do, when things are going well, but many people have a hard time buying into a market that has been declining for an extended period of time. To the contrary, many investors sell their positions and move to cash when things look bad. Then move back into equities once they rise for a period of time. Sell at the bottom and buy at the top is not how to make money in the market.
Many observers point to March 2009, when the S&P hit its low, as the bottom of the financial crisis. If you were following a disciplined approach and bought that month, you most likely are sitting on some incredible gains. Consider the stocks I purchased in March 2009:
The Coca-Cola Company (KO)
- March 2009 Price: $19.845 (split adjusted)
- Recent Price: $43.05 up 119.20%
- Current Yield: 3.0%
- Yield-on-cost: 6.6%
3M Co. (MMM)
- March 2009 Price: $47.88
- Recent Price: $157.33 up 228.6%
- Current Yield: 2.6%
- Yield-on-cost: 8.6%
Wal-Mart Stores Inc. (WMT)
- March 2009 Price: $48.42
- Recent Price: $60.50 up 24.9%
- Current Yield: 3.3%
- Yield-on-cost: 4.0%
Buying at the bottom is great, but buying near the bottom isn't bad either. Consider these stocks that I picked up in April 2009:
Chevron Corp. (CVX)
- April 2009 Price: $68.97
- Recent Price: $87.17 up 26.4%
- Current Yield: 4.8%
- Yield-on-cost: 6.2%
McDonald's Corp. (MCD)
- April 2009 Price: $55.09
- Recent Price: $116.30 up 111.1%
- Current Yield: 3.1%
- Yield-on-cost: 6.4%
Granted, the technique works the other way also, in that systematically investing each month will guarantee you will buy at market highs (note I didn't say at the top). Comfort can be taken in that every protracted downturn will eventually produce an absolute bottom (i.e. a point that will never be touched again). However, throughout history highs have constantly been exceeded. Thus, there are no true tops, only recent highs. Any long-term dividend investor will tell you that the yields are better at the bottom, so forgive me for smiling the next time the market crashes.
Full Disclosure: Long KO, MMM, WMT, CVX, MCD in my Dividend Growth portfolio. See a list of all my dividend growth holdings here.
- 10 High-Yielding Dividend Aristocrats Not Afraid to Raise Their Dividends
- 8 Dividend Stocks With A Quick Payback
- 7 High-Rated Dividend Stocks With Above Target Returns
- 4 Dividend Stocks For Healthy and Wealthy Retirement
- 4 High-Yielding Utilities With A Growing Dividends
Tags: KO, MMM, WMT, CVX, MCD,
Popular Posts - Last 7 days
In an utopian world, the perfect dividend stock would be one that is both high-yield and provide a high dividend growth rate. Its share pri...
Dividend sustainability is paramount for the high-yield investor. Having a stock cut its dividend could potentially crush their income. A hi...
Linked here is a detailed quantitative analysis of Apple Inc. (AAPL). Below are some highlights from the above linked analysis: Company D...
As mentioned in previous articles, I love inspirational (and other) quotes . I see quotes as a portal to someone’s inner self. They reveal m...
Linked here is a detailed quantitative analysis of The Clorox Company (CLX). Below are some highlights from the above linked analysis: Co...
Each weekend I highlight any notable articles that I came across over the past week. Though I may not always agree with each of the articles...
Charlie Munger, Warren Buffett's friend and partner, is quite an investor in his own right. Munger is vice chairman of Berkshire Hathawa...
Presented below are are my Dividend Growth Stocks portfolio holdings. This is not a recommendation to buy these securities. I have classifi...
I couldn't begin to estimate how many different stocks are traded around the world on the various exchanges. Like everything else, there...
Linked here is a detailed quantitative analysis of Archer Daniels Midland Company (ADM). Below are some highlights from the above linked an...