Chasing Yield - March's Illogical Switch

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In January, my investment club voted to adopt a pure DGI strategy for 2016 even though we've spent years in GARP-mode, searching for growth at a reasonable price. In February, we were already struggling with our commitment. The concept of reallocating existing investments into growth-oriented non-income producers toward dividend payers was initially rejected. In our third month of chasing yield, we opted to execute what can only be described as an illogical switch. We swapped a high-dividend yielder for a lower yield. This may seem unforgivable to DGI advocates. But oddly, it made sense to us.
The club's first goal was simple -- increase annual income by 10%. By the end of our meeting in early February, we thought we'd already achieved it. But Acacia Research (Nasdaq: ACTG) dashed our achievement when it slashed its dividend to zero. Our decision at the March meeting set us back a bit more. Though we'd already voted in February to continue our quest and reach for another 10%, we'll end the first quarter 1.75% short of our initial goal.
A Quick Summary of January and FebruaryIn January, we reinvested in ONEOK (NYSE: OKE) because the yield was attractive; we did not yet have a "full" position and a reinvestment would lower our average cost. On December 21, 2015, ONEOK had confirmed it expected to have $675 million in cash flow available providing dividend coverage of 1.3 times. We surmised the company would still be offering a healthy... Read more