Welcome back, Dividend Talk community! In this week’s episode, Derek and the European Dividend Growth Investor (EDGI) dove deep into the strategies, lessons, and hard-earned wisdom behind managing and growing our portfolio.
Broadcom: The One That Got Away
The team reflected on Broadcom’s stellar performance. EDGI admitted it’s the stock they “missed out on” despite its impressive track record as a serial acquirer. With AI revenues up 220% and a recent 11.3% dividend hike, Broadcom has cemented its place as a dividend powerhouse. However, Derek raised concerns about rising costs, wondering if Broadcom’s strategy might eventually drive customers to seek alternatives.
Dividend Hikes: Christmas Presents for Investors
It’s the season of giving, and dividend hikes were aplenty! Here’s a quick rundown of increases that caught our eye:
- Broadcom: Up 11.3%
- Pfizer: Up 2.4%
- Zoetis: Up 16%
- WD-40: Up 10%
EDGI aptly described these as “Christmas presents” for dividend investors, emphasizing the importance of organic growth in driving long-term returns.
Key Listener Questions.
- Building a Portfolio from Scratch: Is valuation crucial when starting out? Derek argued it depends on your investment size. For smaller amounts, focus on quality over valuation. But if you’re deploying significant capital, valuation becomes more critical to avoid early losses.
- Dividend Growth Goals: EDGI shared his strategy of aiming for a 3.25% starting yield with 6% annual growth, adding that dividend safety trumps valuation for long-term success.
- The team tackled questions on renewable energy stocks, with Brookfield Renewable Partners (BEP) making an appearance. While EDGI hasn’t pulled the trigger yet, he stressed the importance of diversification without overloading on specific sectors.
The Path to Financial Independence
EDGI offered an inspiring update on his journey toward financial independence, revealing a 71% expense coverage ratio through dividends. His ultimate goal? Cover all expenses without sacrificing quality of life. Derek chimed in with his perspective, emphasizing balancing investments with life’s big decisions, like moving house.
Timestamps
- 1:19 – Broadcom Earnings (AVGO)
- 5.23 – Kroger Merger declined (KR)
- 7.30 – Dividend Hikes
- 10:17 -EDGI Strategy
- 33:00 – Derek’s Strategy
- 46:00 – Listener Questions
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