How Do Dividends Influence Stock Investment Decisions?

[kyphysics]

Only 2 things I'd add:
2.) There's a quip from Joel Greenblatt that I like, which is basically: "investing in individual stocks without knowing how to estimate future cash flows for the underlying company is like running through a dynamite factory with lit matches -- you may get through it ok, but you're still an idiot."

I consider it a job to own single stocks - much more so than funds. So much more risk and things you have to know and constantly keep up with.

I think it is idiotic to not do the work. It's more like gambling then. rather than investing.

Single stock is trading, not saving, regardless of the aimed timeframe.
I'm doing this for ~ 8-9 years already, and maybe I can be considered as a decent junior, finally.
During my years I can't count anymore how many times I said it to some greenhorns on various forums that - please stop right now. Save your money and leave. It is just not for the current you.
Almost none did so. Almost all of them zeroed their account.

When Peter Lynch (who averaged ~29% in returns for Fidelity's Magellan Fund) asked his staff to see how much his investors made on average, they found it was ~5%. Why? Too many pulled out when they shouldn't have and stayed in when they should have sold. Even when you have a guy like Lynch "doing the work for you," you can underachieve.

One thing he says in One Up on Wall Street (yes, that relic of a book that I'm reading) is that it can only take 6 good winners out of 10 to have a very good portfolio of stocks. Your losers can never go below $0.00, so if you put $4,500 into a crappy company, you only lose that $4,500 (if you want to throw in opportunity costs with that money, then fine) if it totally gets wiped out. Whereas, your winners have no cap.

 

[russ_watters]

As for the original proposition in question, it was something I was playing around with. Searching for some stocks that might have this stability of price, stability of business, and a decent dividend. Maybe Cisco?

Cisco is a tech company.

 

[Vanadium 50]

I learn things even from those who are presumptuous and rude.

That remains to be seen, doesn't it?

I still stand by my "niceness" principles, though.

Just keep pokin' the bear. What could possibly go wrong with that?

During my years I can't count anymore how many times I said it to some greenhorns on various forums that - please stop right now. Save your money and leave. It is just not for the current you.

That's good advice. The OP has a number of problems and misconceptions, sadly reinforced by some of the shows and podcasts he listens to. First, as Russ says "if you don't know what you don't know, that's a big problem". Second, and almost as important, he's not said "Here are my goals" in a clear picture. If you don't know where you're going, any road will take you there. At best, he's outlined his tactical goals: he wants to invest with zero risk (preservation of capital) but he wants a higher yield than typical minimal risk investments: bank accounts, money market accounts, US Treasuries. He hasn't taken the next logical step: if such an instrument did exist, why wouldn't everyone jump from Treasuries to that instrument? And the step after that, which is that since US Treasuries are auctioned, why wouldn't the rates rise to match? Fundamentally, he's hoping to get a better deal than the experts and professionals get.

The problem with hoping to get a better deal than the experts and professionals get is "why?" Unless you think you're smarter or otherwise better at their job than they are, you're not going to get a better deal. That means the thing that looks like a better deal has more risk than you think. We see it here - the OP has said he wants to use a stock - a single stock - as a savings account (and this is a direct quote) "without much risk". Later he acknowledges that the particular stock isn't going to meet his goals, and counters with a different single stock. He's systematically underestimating risk, and that's why, as they say "pigs get slaughtered".

 

[Vanadium 50]

our losers can never go below $0.00, so if you put $4,500 into a crappy company, you only lose that $4,500 (if you want to throw in opportunity costs with that money, then fine) if it totally gets wiped out. Whereas, your winners have no cap.

While technically true, I don't see how this is useful. The same argument can be made for horse racing, but I don't think that's a sound investment.

 

[russ_watters]

This thread has run its course and is locked.