"JB" <highlinex[at]yahoo.com> wrote
Regarding VDIGX, Vanguard's Dividend Growth Fund
- quote -

This is helpful. Consistent with what you say, I see that
the Vanguard site states: "Effective December 6, 2002,
[VDIGX] changed its investment objective and concentration
policy. Prior to making these modifications, the fund was
called Vanguard Utilities Income Fund, reflecting its former
policy of investing in income-producing stocks of utilities
companies. The performance prior to December 6, 2002
reflects the fund's performance under its former investment
objective and concentration policy."

This would explain the long term graph of VDIGX at yahoo.
VDIGX did not track the S&P very well until about 2003
(doh). As I wrote earlier, I expect a true "dividend
achieving portfolio" to follow the S&P for the most part.

"Elle" <honda.lioness[at]nospam.earthlink.net> wrote in message
news:13qjhi41g2ofn5d[at]corp.supernews.com...
- quote -


Elle,

In those days the fund was a utilities sector fund. I've forgottem when
they switched to the current objective.

JB

<BreadWithSpam[at]fractious.net> wrote
On a fund's stock turnover rates:
- quote -

This may be the general trend. Yet I need more info to bet
it would always apply. I would have to know more about the
criteria for VIG and VDIGX. In particular, both are about
half giant caps and a third large caps. Weighting may mean
the two funds have considerable overlap every year. Meaning
turnover may be similar.

We may be overfocused on turnover, though. Buying VIG where
one may pay a bit more (or not; remains to be seen) in
capital gains each year may still be far superior to holding
a few individual positions or even 30 positions where one
periodically adjusts the portfolio.

- quote -

I am not sure. Does the mere fact that a fund has been
around a long time mean its turnover rate will not vary
much? In particular, turnover is going to depend on economic
conditions. Who is cutting a dividend, and so forth, will
depend on the climate for each sector blah blah. I think it
is too hard to say without seeing each of the last ten
year's numbers.

- quote -


That's what my eccentric, but often right on with stocks,
relative says. :-) The numbers above make the point even
better.

"Will Trice" <wtrice[at]notmonitored.com> wrote
On Moody's, Mergent and their Dividend Achievers stocks:
- quote -

My feeling through all this is that dividend achieving
stocks largely or entirely are simply a value stock (in the
Grahamian sense) portfolio. Graham style value stock picking
historically has been very successful, as Tad often points
out. Right now, I doubt cherry picking the timeframe would
have been necessary. Admittedly a more complete picture is
always nice. I would love to see a report on the 1989-1994
period or so in particular, since I think what's happening
today with banks mirrors that period well. It's largely an
academic matter but it might "soothe the beast" of those who
are cussing about buying into the S&P at a peak last summer.

[much more detailed message I sent this morning was
intercepted by moderator. I'll try to be more brief]

"Elle" <honda.lioness[at]nospam.earthlink.net> writes:

- quote -

VDIGX is actively managed and has been around a lot longer.
It's also got only about a fourth as many holdings, though
spread out more evenly between them (because VIG is weighted
on a modified market-cap scale). The upshot of all that is
that expected turnover in VDIGX should be substantially
higher than in VIG. And VDIGX's reported turnover number, since
it's long established and fairly stable fund, should be reasonbly
accurate. The reported turnover numbers (the variety of them)
for VIG probabl won't have much meaning until it stabilizes,
and given the (general) method of index construction, that
turnover should be pretty low.

That all said, I'm a bit surprised by the returns volatility
(and the two-years-in-a-row huge losses) for VDIGX and hope
that VIG will do better. The backtested index on Mergent's
site surely indicates that it would have.

Lastly, re: inflation hedge for these versus TIPS, these
funds both throw off dividend yields of around 1.9%,
substantially above the "real" yield across the whole
TIPS yield curve (even the 20yr tips only have 1.7%).
Given a reasonable expectation that these dividends will
grow at at least the rate of inflation, if one is satisfied
with the dividend (ie. one's expenses are tied to divs,
not principal), these should be a superior inflation hedge
over longer periods, bearing in mind, of course, normal
volatility of equity prices - which don't matter very much
as long as you don't have to sell any and can live off
those dividends.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting


======================================= MODERATOR'S COMMENT:
Much appreciated. Good post.

Elle wrote:

- quote -

Hmm, you're right. I guess that they applied their selection guidelines
going back ten years to see what the index theoretically would have
been. That seems kind of like they were cherry picking a time period
since they presumably could have gone back to 1979 when the Dividend
Achievers list was established and reported those results...

-Will

william dot trice at ngc dot com

"Will Trice" <wtrice[at]notmonitored.com> wrote
snip for brevity per moderation guidelines
- quote -

What's at
http://www.dividendachievers.com/Sit...y.php?preview=
seems to suggest otherwise.

I tried a few online stock quote graphing sites and cannot
get data on DAA or DVG going back further than about 2004. I
googled using the index names and overwhelmingly got hits
announcing Vanguard's new ETFs based on the indices.

I do see that Vanguard's much older "dividend growth" fund
is VDIGX. It has a turnover rate of 41%, according to the
Vanguard site and yahoo.

I think whether to attach much meaning to a single year's
turnover rate is another question.

Elle wrote:

- quote -

I believe Mergents bought the Dividend Achievers franchise from Moody's
(or perhaps Mergent was spun off of Moody's) back in 2004, so results
probably go back to the Moody's days.

-Will

william dot trice at ngc dot com

<BreadWithSpam[at]fractious.net> wrote
snip but comments noted. On the fund VIG:
- quote -

To me, the dividendachievers.com site is the best source on
this. It says the Broad Dividend Achiever Index was not
compiled until 2004. I gather that's the earliest it
compiled the Select Index as well. Mergent apparently
extrapolated back about ten years to gage how this index
would do against the S&P 500, so those charts at the
indices' fact sheets are a bit misleading as far as how far
the indices have been around.

I'd be inclined to believe that the turnover is what the
DividendAchievers.com site says (14%) or less, for the
reasons you suggest.

I would be interested in the current overlap of VIG and an
S&P 500 ETF such as SPY. If forced to bet, I'd say they
track pretty closely. It's large, old companies that make up
both, mostly. Sector weightings are not so far apart.

OTOH, using Shiller's data, the dividend achievement for the
S&P 500 has been nowhere near 15% per year. So there may be
a lot to funds like VIG. The charts at the Mergent web site
going back ten years sure suggest it.

- quote -

My take is Bodie is all about the safest approach to
retirement savings. Namely, one should first ensure one has
enough for retirement, without any risk and with some
planning for inflation, then if one has some left over, go
ahead and gamble (as Bodie might put it) on stocks. I do not
think he'd have any comment differing from this with regard
to dividend achievers. The underlying share price should be
about as volatile as the S&P 500, after all, and this is
Bodie's main concern.

I'm really not sure if he deserves the credit that Shiller
and Siegel get. I cannot get past his blind faith in the
inflation index on which TIPS relies. The guy expresses
nothing about planning for really rainy days, or how
uncertain one's future costs will be due to unforeseen
events. Investing in stocks for the long run is not just
about beating inflation. It's a lot of crude guesswork
evading precision. Like most real-world problems. Still, one
should plan the best one can, with the best assumptions
possible. I have doubts Bodie's are the best.

Maybe Bodie's thoughts should be bore in mind with the fact
that he is a PhD specialist in pensions. Which to me means
he's watching the abuses individuals heap upon their 401(k)
and IRA savings and saying, "Dimwits! Since corporations no
longer invest on your behalf in pension plans, and since you
will be tempted like the usual amateur to trade when you
should not, buy all TIPS!"

Re not posting right away: No sweat AFAIC. People respond or
do not respond. It's still the ultimate marketplace of ideas
here on the internet, IMO.

"Elle" <honda.lioness[at]nospam.earthlink.net> writes:

[Thanks for further looking into VIG, and my apologies for
not having gotten back to it sooner]

- quote -

It appears that that's likely a very misleading number.

- quote -

Yahoo and Morningstar are still showing 42%.
Vanguard's "Holdings page, as of 12/31/07" says 20% (now)
Vanguard's semi-annual report (7/2007) says 2% ("annualized")

The numbers are probably still evolving - this is a small
and relatively new fund still -
From 3/06 - 1/07 it grew from _zero_ to $274million
from 1/07 - 7/06 it grew from $274MM to $418MM

Bearing in mind that the reported turnover is derived
using the net assets as the denominator, a small and/or
very fast changing denominator may make a mess of those
numbers (depending on actual calculation details). It's
no surprise that we can't seem to get a very solid stable
answer from the various sources for this number right now.
In time, and given how the index itself is composed, I
don't expect turnover for this fund to be quite as low as,
say, the S&P500, but it should be substantially lower than
any typical actively managed (even a relatively low-turno) one.

- quote -

Which is a subset of the broader Div Achievers index, but
the details of the filter which narrows it down are apparently
not public.

Anyway, as an inflation hedge - a somewhat risky one, as
would be any equity investment - the more I examine VIG,
the more I like it. I'd really love to hear what Bodie
would have to say about it...




--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

"Will Trice" <wtrice[at]notmonitored.com> wrote
- quote -

Post-o by me. Per the Vanguard web site, VIG is "designed to
track the performance of the Dividend Achievers Select Index
[symbol DVG]. This index is a subset of the Broad Dividend
Achievers Index [symbol DAA] and is administered exclusively
for Vanguard by Mergent, Inc. The fund attempts to replicate
the target index by investing all, or substantially all, of
its assets in the stocks that make up the index, holding
each stock in approximately the same proportion as its
weighting in the index."

The dividendachievers.com site does not explain the
difference very well, if at all, from my quick check. DAA
holds 215 stocks. DAA holds 319 stocks. I'd be searching the
two sites (Vanguard's and dividendachievers.com's) like
anyone else to glean more info. I have yet to buy any fund
specialized in dividend growth, though I do consider them a
few times a year. About a year ago I did take note of some
div achievers ETFs offered by Powershares.com. In
particular, its international dividend achieving fund, PID.

Elle wrote:

- quote -

Sorry, I'm a little confused now. I see that Mergents has a Broad
Dividend Achievers index (which is the source I typically use) and a
Dividend Achievers Select index. Is there another or do you have an
extra word above? The reason I ask is that it would be a really good
match to one of the investment strategies I already use if it is the former.

-Will

william dot trice at ngc dot com

Will Trice wrote:
- quote -

I have never looked at VIG but I believe it's a relatively new ETF. If
that's the case you should look at the average assets month to month. If
they've grown a great deal during the period being reported, it inflates
the turnover figure.

-Tad

"Will Trice" <wtrice[at]notmonitored.com> wrote
- quote -

I think this requires further investigation, because now we
have the following turnover figures for VIG:

dividendachievers.com fact sheet = 14% for the year ending
Dec. 31, 2007
Vanguard VIG "Fund Holdings" site = 12% for year ending in
January
Yahoo's 42%
Your source for roughly 12/214 =~ 6% turnover

I think the point merits attention for those considering VIG
and like funds for a source of income that deals with
inflation etc. I am too lazy to look into this at the
moment. One of the regulars (I forget his name) at MIMF
could nail this in minutes, probably.

- quote -

I should have wrote that VIG duplicates the Mergent Broad
Achievers Select index. It's not merely based on it.

The five-year dividend growth rate of 15% given for the
index does impress. I go hunting for dividend achieving
stocks, examining five and ten year growth rates of
dividends. Given what's out there, any stock dividend rowing
annually on average at about 10% or more for both five and
ten years gets a "pass" from me for dividend growth. Meaning
10% is my crude anecdotal approximation for "above average"
dividend growth for large, old companies, based on a lot of
reading and quick calculating.

Re Ben Graham on banks, per my query:
- quote -

Thanks much for the citation. I took some of the phrases
above and googled for the source. I see this is from
Graham's tome _Intelligent Investor_ (1949). Your paragraph
above is also quoted at
http://seekingalpha.com/article/5355...ions-explained .
Also quoted at this site, from Graham's 1934 _Security
Analysis_:

"The securities analyst, in discharging his function of
investment counselor, should do his best to discourage the
purchase of stocks of banking and insurance institutions by
the ordinary small investor."

As the web site proposes, this surely reflects the times.
Namely, Graham wrote this in the Great Depression. As you
know, banks were not as well regulated and credit was
ridiculously rampant. And yet, I see some application today.
Perhaps, for the investor interested in dividend
achievement, we might argue that one be more conservative in
the fraction of one's portfolio allotted to banks. I would
want to continue to study the period from about 1990 to 1995
or so, when bank dividends (rationally, IMO) etc. took a
hit.

- quote -

His father :-) and subsequent experience with his own
investing. The relative is in his 80s and has been picking
stocks for 50+ years. He's a "Millionaire Next Door" type,
frugal and hard-working. Specifically, my relative says his
dad advised, "put your money as close as possible to the man
who is making things." I had written the relative I'd taken
a hit on my bank positions, and this was the gist of his
response. He added his father had not followed his own
advice rigorously. If the relative completely loathed
banking, he would have said so.

Elizabeth Richardson wrote:

- quote -

If I am choosing between any two places to put the money there is
"opportunity cost". Even when the choice is pretty clear. You've done
the math, you've proven by a wide margin that the choice you made was
wise and economically well reasoned. From my quote, "the next best
alternative" as suggested by Doug was the T-bond which had a much lower
return than the rent-return you are achieving. Drop the word 'lost'. It
may be what is confusing the issue.

As I have accepted your advice and am paying my mortgage at a rate to
coincide with the Mrs and my retirement, my opportunity cost is simply
the expected alternate return (had I used the money to invest in
whatever that next choice would be for me).
JOE

"joetaxpayer" <joetaxpayer[at]nospam.com> wrote in message
news:EdWdnRxfFI2CyzzanZ2dnUVZ_gadnZ2d[at]comcast.com...
- quote -

Well, I thought opportunity cost more like I choose to buy bonds rather than
stocks. When I would have made more money on the stocks than I made on the
bonds, the difference is lost opportunity cost. In the situation we have
been discussing, there is no such loss, and therefore no cost.

I know you're trying to help me see it differently, but I don't think there
is a different way of seeing it. I've never bought into the lost opportunity
cost theory of having a mortgage and investing in the stock market. It's
almost impossible to pre-pay your retirement shelter without having a
mortgage while you're young. But your house is shelter, not primarily an
investment. And it seems foolhardy to me to try to save enough when you're
young to support, in retirement, both normal living expenses and a mortgage.
I guess you're right. My lost opportunity cost by paying my mortgage is not
having to pay a mortgage. But that's a circular argument, no?

Elizabeth Richardson

Elizabeth Richardson wrote:

- quote -

I think the expression implies a choice, not a judgment. In your case,
you are indeed 'giving up' the 4.39% return Doug cites as opportunity
cost, but your math shows it was and is a smart decision.
I found this quote, "the opportunity cost of a decision is based on what
must be given up (the next best alternative) as a result of the
decision. Any decision that involves a choice between two or more
options has an opportunity cost."

JOE

"Douglas Johnson" <post[at]classtech.com> wrote in message
news:g2b2q396hqqui1pb52sji2a6drjvbh4rha[at]4ax.com...
- quote -

No, you still don't see. You have to have shelter, so if you don't own, you
have outgo. I have eliminated much of that outgo by owning free and clear.
Not having to pay most of my shelter costs puts that money in my pocket,
effectively giving me "income" from that capital on which you say I have
lost opportunity cost. Above, I say that effective income is at the rate of
return of 8.7% - twice the rate of treasuries, not a lost opportunity.

Elizabeth Richardson

"Elizabeth Richardson" <erichktn[at]worldnet.att.net> wrote:


- quote -

Well, 30 year treasuries are yielding 4.39%, so you have at least that
opportunity cost. You didn't mention maintenance, so your "income" is somewhat
less than that, especially if you reserve for roofs, appliances, carpets...

I'm not anti-owning, I do. I'm not against owning free and clear, I do. But I
don't see how it can be risk free and without opportunity cost. That kind of
asset doesn't exist.

-- Doug

"Douglas Johnson" <post[at]classtech.com> wrote in message
news:m3s1q31gp1asoujd4rmpj566cqvtudqto9[at]4ax.com...
- quote -

Ok, sales of similar housing in my area are $130k, but rents for a similar
house are ~1150/mo. My insurance and taxes are less than $200/mo, so my
"income" from my $130k is about 8.7%. If you're making that, then, yes, I
have lost opportunity cost. But remember, that's an absolutely risk free
8.7%, and I don't know where you can get a risk free 8.7% return, so I'll
continue to say a paid for house has no lost opportunity cost.

Elizabeth Richardson