stock analysis, dividend growth stock analysis, dividend researchYou have some money ready to invest.  You look over your watchlist to get an idea of what might be a good buy at the current moment.  Maybe you look into a couple different companies more closely while trying to decide where you want to put this current money you have ready for investment.  While looking through your list of companies, you find yourself interested in two or three options and have trouble deciding what to do.  This is what I call investing indecision or investing paralysis.

My Indecision Problem

Currently, I am experiencing this exact problem.  I have been sitting on some investable cash since the beginning of the month.  I have been looking over investing options and having trouble deciding exactly which company I’d like to buy for my portfolio for the long term.

As I look through my watchlist, I’ve been considering adding to my positions of either The Coca-Cola Company (KO) or possibly Altria (MO).  I go back and forth between the two options.  I’ll watch daily price fluctuations and think I might go ahead with one or the other because it is down for the day.  While I know I’m ready to put this money to use and buy some shares, I haven’t been able to settle on a decision of which company exactly to buy.

I’m a big fan of the operating results of Coca-Cola Company.  If you look over the past financials of this company, they are achieving great results year in and year out.  They are chugging along around a 9% growth rate of earnings and if this continues it will make shareholders very wealthy.  I think Coca-Cola is a wonderful company with bright prospects.  They are currently trading around a P/E of 19 with a dividend yield of 2.9%.

I also like Altria as a company.  Reviewing their historic performance results also reveals a very good company for shareholders to own.  I’m a little more gloomy on U.S. tobacco companies future prospects, but there has been a concern over this for at least the past two or three decades and yet big tobacco keeps rolling along.  Altria is currently a little cheaper in valuation as they are trading around a current P/E of 15.4 and a dividend yield of 5.45%.  Also I gotta admit that I like the higher dividend yield offered.

These aren’t my only two options.  While considering picking up more shares of Altria or Coca-Cola for my portfolio, I’ve also swayed occasionally to other options.  I’ve considered grabbing some more Phillip Morris (PM) as I like the fact that they are an international tobacco company and not just domestic U.S.  I’ve also looked at picking up shares in a company I don’t currently own to add diversification for my portfolio.  I’ve considered Cracker Barrel (CBRL), Darden Restaurants (DRI) and Clorox (CLX) among others.

What Would You Do?

It’s a tough decision.  For some reason I find myself unable to decide what to do and pull the trigger on buying shares in a company.  I know all of these are great companies that I won’t regret owning for the long term.  I’ve just been struggling to decide exactly what I want to do.

Do you ever have this problem?  What do you do when you are suffering from investing indecision?

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16 Responses to Dealing With Investing Indecision

  1. This is an issue for me from time to time, although if you have less capital available I’m sure it comes up much more often. I think in this situation, if you’re set on putting the capital to work pretty soon, then you also need to look at their own relative historical values. Say MO is on the low end of it’s typical yield/PE ranges whereas KO is on the high end, then MO would make for a better investment. Best of luck in your decision. I’ll be looking forward to see what you chose.

    • Dan Mac says:

      Thanks for your input JC. I agree with you that is a good way to make a decision. I’ll have to look into historical valuations closer to see which one would win out.

      It’s a tough decision for me. I keep going back and forth. I like MO because of the higher dividend yield and the fact that I currently have a small position in the company.

      I like KO though because it is such a great company and the near 2% drop today makes me want to snatch up some shares. However, I currently already have a larger position in KO.

      Both are great companies and I don’t think I can go wrong either way. I just need to make a decision one way or the other and go with it.

  2. Manefla says:

    Why don’t you split your capital between both companies?

    I’m being tempted to enter to MO too.

    • Dan Mac says:

      Thanks for the suggestion Manefla! If I had a little more capital to deploy right now I would defiantly grab both companies. But usually I like to keep my buys around at least $1k to keep my commission costs down below 1%.

      Good news is we are getting towards the end of the month and I will have some more capital to deploy next month so can possibly grab both companies then. Unless I make decisions difficult for myself and start looking at other companies!

      • Manefla says:

        Agree, I try also make buy of €800 / $1000.

        I recently added KO at $38,5, so I think know it’s time for me to add MO.

        • I always have this issue of indecisions. This is why I am considering sharebuilder with their automatic $1 trades ( 12/month).

          If you put at least $2K/month in dividend stocks, the total commission comes up to less than 0.60%.

          However, you can make up to 12 investments.. So your “indecision” can be avoided. And, it is very likely that you would be able to buy the same companies in the next month.. Therefore, you would be able to buy companies over time, buy all of the ideas you have, keep commissions low, and have a peace of mind that it won’t run away from you.

          • Dan Mac says:

            Interesting DGI. So with Sharebuilder, do you mean that one can spread the $2k/month amongst 12 different companies? So like $166 per company maybe. And commisions still amount to only 0.6%? That sounds like something worth looking into.

            Another question I have about that. Are these purchases automated for you or do you get to go in and decide when you want the purchase to happen? For example, with my employer I have to get approval before each trade I make due to working in the investment industry. I always assumed I wouldn’t be able to do that with Sharebuilder so I have never looked too deeply into them.

            Thanks for your input!

        • Dan Mac says:

          Good thinking Manefla. I also actually just purchased some KO shares last month. Possibly I might decide to buy more shars of MO since KO is already my larger position. That could be one good way to help make my decisions by looking at portfolio weightings along with valuations.

          • Manefla says:

            Dan, I think we are all, or at least try to be, dividend growth investors because of the increasing stream od passive income. So, since some time ago, it’s more important to me the income weighting rather than the portfolio weighting. Don’t you think so? I mean maybe my KO weighting should be two times the MO weighting, because the KO yield is more or less the half MO yield.
            With all that being said, I have to disclosure that 45% of my passive income comes from one single stock (yes, I am very unbalanced and a bit idiotic, but it’s a good company and I’m trying to fix this situation.)

  3. Integrator says:

    I’m suffering from more general market indecision at the moment. Things have run up far too much for my liking in general. I’ll probably look to remain on the sidelines in the hopes of better value in the new year. Besides which I’m over my capital allocation target for the year, thanks largely to significant buying early in the year :)

    • Dan Mac says:

      I agree the market has run up quite a bit this year but I tend to look at individual companies and I still feel there are some decent values or at least fair values available. I like to put my money to work as early as possible if I can find a good company to buy at a decent price.

  4. Dan Mac – I am not sure I can be of much assistance with respect to buying KO or MO, as right now I find KO a little expensive, and I do not buy tobacco stocks.

    On a more general note, I suspect that from time to time most investors have either been afflicted with indecision (paralysis by analysis) or perhaps worse, the dreaded “buyer’s remorse”!

    I must say that lately I have been waging an internal battle with the indecision, debating selling Novartis (NVS) and replacing it with JNJ. As a Canadian, I have to pay a significant dividend withholding tax on NVS that does not apply to JNJ, so if I made the switch I would get an approximate half percent pop in yield. Beyond that, I like JNJ’s diversity outside of health care/pharma.

    Then why don’t I make the switch? Two reasons I think. The first is the age old quest to obtain a better entry price. The second is that I bought NVS last January at about $56.00, and it closed today near $76.00, which is an approximate 35% gain. The truth is that at times is just simply difficult to sell a winner.

    I have also been considering selling International Flavors & Fragrances (IFF) for some time and replacing it with either AT&T or GE, both of which would give me a significant yield increase. The truth is that when I bought IFF last January it was yielding only 2.2%, which today would not meet my entry yield criteria. That being said, IFF has moved from my $53.00 purchase price to approximately $83.00, a tidy little 57% gain.

    I suspect that by year’s end I will have sold NVS and/or IFF. Good luck with your decision, and you can always take comfort in that, if past history is any indication, you will do well in the long run whether you choose KO or MO.

    Take care.

    • Dan Mac says:

      Thanks for your comments Dining on Dividends! It seems like indecision is a problem we all are faced with every once in awhile. I wonder if the problem for me is that I now currently own many of the companies I’d like to have in my portfolio. So mostly I am now just adding to my positions. Also I don’t really feel in this market there is a clear cut great value opportunity available. I’m mostly looking at what I consider to be fair valuations which don’t get me super excited to jump on any certain company.

  5. I’m in the exact same scenario right now, torn between beginning a position in PM or adding to my current positions of Nestle or Exxon (although I am also invested in Breitburn and KMI so I may need to stay away from the oil/gas sector for now). The amount of research I’ve done is simply making my decision even more difficult. On top of that, all the lawsuits against JPM are causing dips which make me want to add to that as well. You have a 45% weighting in one position? Mind if I ask what it is?

  6. […] Dealing with investing indecision (Dividend Growth Stock Investing) […]

  7. Martin says:

    It is an interesting question, what I would do in this situation. In the past I had this problem as well, but thanks to my stock count per account value (which basically means that I can only have a certain number of companies based on the value of the portfolio – for example a value of 5 – 10k of portfolio allows me to have only 4 companies, once I get to 10 – 15k I can increase to 10 companies, etc.) I do not have this problem too often, But when that happens I then look at the yield and growth. Which company gets me more compared to invested money? If KO gets me a better yield and growth than MO, then I would buy KO and continue saving for MO. Due to my allocation rules my next purchase must be MO so KO is not overallocated. This method makes my investing more like programmed “if-else” function and that then leaves the indecision out of the equation.

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