Hey Everyone
A couple of questions for this of you who are buy and holding stocks long-term,
Do you buy stocks that you want to go up in price or stocks that you hope will give you the best yearly dividend yield?
What process do you go through when deciding which stocks to buy?
Long-term for me had two meanings - I always used to hold a basket of stocks long-term but was never intent on holding each member stock long-term. My individual holding times were certainly longer than what we would call trading but I always wanted a rising share price: the dividend was an extra filter, not an objective for me.
My investment strategy (long-term holdings) is based around dividends. But, Iām not looking for companies that provide the highest dividends because that could be a trap. Some companies who are not doing well will jack up their dividends to draw in buyers. I look for well established, stable companies. If you are to go with a strategy like this the you should start by Googling āDividend Aristocratsā, this will give you a list of these companies. Then youāll want to sort them into their different sectors and drill down from there. Be sure to diversify and buy from more than one sector.
All my stocks pay me dividends, most quarterly. And when I receive the dividends theyāre reinvested back into that company immediately. This is called āDRIPā and you can set this up through some brokers automatically. I do it manually.
Also, donāt use leverage with an investment account, the fees will eat up your hard earned profits.
Get a book called The Naked Trader. It is recent and is a good read on the subject off investing / trading in UK shares.
Robbie Burns
The Naked Trader - Robbie Burnsā trading diary
When I think about my ālong termā portfolio, I think 10-20 years horizon.
Instead of buying single stocks, Iām focusing on broad diversification. So I go with Index ETFs covering hundreds of stocks with only few positions.
The process is easy - I have list of few indexes I want to include in my portfolio (something like 70% S&P 500, and 30% divided between Nasdaq, MSCI World Quality Index and some Eurostoxx). After each month Iām looking at my budget and decide on amount to fuel the portfolio (divided to buy two times per month). I donāt want to spend time on analysis of single stocks and juggling the portfolio composition. I want to cover the market and go with average return for years.
Matty, thank you for this insight. I will be certainly googling āDividend Aristocratsā.
Iām currently investing Ā£50 a month into shares but just kind of winging it and not many have paid out very well. Such as lemons like Virgin Orbit and Mullen Automotive!