The Question from Mia
Our granddaughters are continuing to learn about investing. How do I know this? Because their questions indicate that they are thinking about the things I have written and said. Here is the latest question from Mia: “Here is my statement for the month of September. I also have a new question for you; How do I know if one of my dividends is cut?”
Why The Question is Important
Investors should expect their investments to do two things: 1) Grow in value. If I paid $10 for a share of Ford, I would like to be able to sell the shares at some time in the future for more than $10. If the investment can grow at least 10% every year, excluding dividends, I gain buying and giving power in the future. 2) Dividends should be consistent, and for most investments, growing. I know the shares might be worth more or less in the future, but I can reduce the cost of my investment if the company pays me cash on a regular basis. This can be invested or used for expenses and gifts. You don’t have to sell an investment to get cash.
One Tool is Seeking Alpha (SA)
Before I paid for Seeking Alpha, I created some model portfolios using the free version. This can be done on a computer by going to the SA website. Link: https://seekingalpha.com
The advantage of this approach is that it can be used for ETF’s and for individual stocks like AAPL, F, and NFLX. If any of the ETFs or companies have news related to dividends, you will receive an email notifying you of the dividend. Here is an example or an email I received this week:
Creating a Portfolio on Seeking Alpha
You will have to sign up for a SA account to use the portfolio. There should be no cost for doing this. Seeking Alpha also has an iPhone app and one for Android. The basic plan is sufficient for beginning investors. It includes, “Build and manage a portfolio of stocks or ETFs, Receive stock news & analysis email alerts, Receive earnings & transcripts email alerts, Read personalized news & articles, and Use our calendar to see when your stocks report.”
The following screen images help you see the steps to create a sample portfolio. I called the new portfolio Mia-Investments.
A Tool for ETF Dividend Increases or Decreases
At least once every year, I like to check the progress of an ETF like VYM, SCHD, DGRO, and DVY. One great tool for that is ETFREPLAY. LINK: https://www.etfreplay.com/yield.aspx
The tool is simple to use. The following screens illustrate how I use it. You can start by looking at the default when you go to the link. The comparison is for two ETFs: XLU and SPY. Scroll down and you will notice that on the bar graphs it looks like the dividends decreased in 2021. That isn’t necessarily the case. The dividends for the fourth quarter have not been declared. Therefore, sometimes it is better to look at the numbers in the tables.
One other caution is in order: The bar graphs and tables do not show the rate of the increase or decrease. You can do those calculations in Excel or with a calculator. Also, don’t try to compare two ETF’s with greatly different dividend payouts. For example, comparing FTEC with VYM will make VYM look better. That is only because FTEC’s dividend per year is less than a dollar, while VYM’s is approaching $3 per year. Of course, while the graphs may be deceiving, the table below the graphs is correct.