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Alex Trias  

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  • A Dividend Investor's Dilemma: Take Profits Or Let It Ride? [View article]
    The biggest returns come over multi-decade time horizons. You might make 15% one year in a given stock, but hold that stock for fifty years? 15% will look like PEANUTS. The only way investors can access those stunning multi-decade returns is to hold a stock for multiple decades. Try to time in and out of positions based on arguable valuation metrics, and you're never going to taste what it's like to make a 18,000% profit. Of course, not all of your investments will do that well over a 50 year time period, but if only one or two do, you'll be glad you never tried to time your exit strategy.
    Feb 15, 2015. 10:44 AM | 2 Likes Like |Link to Comment
  • Dividend Growth: Is It Really The Right Strategy For You? [View article]
    Doug - that's a great way to teach kids about investing. My kid doesn't have Hasbro, but does own a bunch of businesses that he understands and that offer products or services that he sees every day - Starbucks, McDonalds, Disney, etc. He also owns some train companies like CNI - probably got the idea watching Thomas the Train. We also sit down once a month to tally up the dividends he has earned, and I let him pick what to invest the dividends back into, as long as he can explain why he has picked one thing verses another. I also make a point of sitting down with him whenever one of his investments crashes, so he can see that as an opportunity to buy more instead of reason to panic. Finally, I've been teaching him about understanding the difference between wanting and needing, and why it is good to save $ and invest it, instead of using it to buy stuff just because other kids have it. I helped him to visualize this by explaining that getting money is like getting an apple. You can eat it, or you can plant it and in about twenty years get an entire apple tree. At that point, you can eat a few apples, plant the rest, and in twenty more years, you've got an apple tree forest. Keep planting, and you get the idea of what happens next. This image resonated with him pretty well, and I think it's helped him to see actual results of how his dividend income has grown over the years, thanks to company dividend increases but also thanks in very large part to reinvesting dividends, planting apple after apple. I'm glad we started this early, because it takes years to see really significant results.
    Feb 15, 2015. 10:38 AM | 9 Likes Like |Link to Comment
  • Dividend Growth: Is It Really The Right Strategy For You? [View article]
    Not sure everyone feels happy about buying their baby a cigarette maker to go along with her bottle and teddy bears. Although that gives me an idea for a great new children's toy: a stuffed toy in the shape of a pack of cigarettes! You know, to go along with the martini glass-shaped baby rattle?

    But returning to your point, yes, MO is probably the best performing stock on the entire US market. Any business with potent dividend growth and a huge ick factor, where investors are permanently bearish on the company's future, is probably destined for stock greatness.

    In fact, I regret to inform that I bought my own child shares of RAI and MO. I preach the evils of cigarettes on an almost daily basis, but these are excellent investments, and one of the things I want to teach is that you keep your emotions and biases OUT of investment decisions.
    Feb 14, 2015. 09:06 AM | 10 Likes Like |Link to Comment
  • Dividend Growth: Is It Really The Right Strategy For You? [View article]
    Great article. I'd argue that for a young investor starting out, a dividend growth strategy is even more of a no brainer than it would be for an older investor, all things being equal. The younger investor has the luxury of a far longer holding period. For example, imagine a young investor bought McDonald's stock in the mid 1980s, when it traded for a bit over $5 a share and paid an annual dividend of 6 pennies. Thirty five years later, that same stock pays $3.40 a share - a dividend that more than pays for the initial investment every two years. And if that same investor religiously reinvested those dividends over 30 years into more shares of McDonald's, growing her income generating base? Fuggetabodit. The younger investor can harness the power of compounded dividend growth to dramatic effect in ways older investors don't have the luxury to do.

    The best time to start down the path of dividend growth investing? The answer is "the day you are born." It's why I bought my kid shares of about ten or twelve dividend achievers when he was a baby. 65 years of compound income growth produces almost ludicrous results - enough so that a relatively tiny investment today can ultimately pay for a baby's eventual retirement. Would that I'd had this epiphany while still in diapers - and I mean the first time I was in diapers, not the ones I will be wearing sometime in the hopefully distant future. Would that we had all had it prior to learning how to walk, when it could have made such a profound difference to our retirement. Talk about no brainer.
    Feb 13, 2015. 09:09 PM | 41 Likes Like |Link to Comment
  • So Much For Navios Maritime Partners' 'Life Raft' In My Previous Update [View article]
    They are a Marshall Islands company, not Greek. They are based out of Monaco, and their shipping operations are worldwide.

    As far as the equity issuance goes, the prospectus discloses that the company's business model is to distribute FFO, not retain it. NMM is a typical master limited partnership in this respect. The prospectus is quite explicit as far as the company's focus on funding expansion through new share issuance and debt issuance, and distributing extra cash from operations to shareholders.

    The new share issuance is beneficial to existing shareholders. Navios has an exceptional record when it comes to acquiring assets at distressed prices, and converting those assets into highly income productive sources for the benefit of shareholders.

    There is less reason to second guess the wisdom or rationale of recent stock price movements. The stock market behaves like a manic depressive drunkard, barking out prices indiscriminately. Oftentimes, market prices for the stock have nothing to do whatsoever with the intrinsic value of the business. If you're a value investor who likes to buy great businesses at fabulous prices, you can thank the heavens for any weakness in NMM's stock price. What could be better than rising profits (and distributions) and falling share prices?!?!

    I suppose there is a temptation to look the gift horse in the mouth. Surely, there must be some rational reason to explain WHY the stock goes down - surely a falling share price implies that the business is worth less? Over the years, I have seen companies grow their market caps into the billions, even though the company owns assets consisting of nothing but a sock puppet and a web page. I have seen companies trading at a market cap that is significantly lower than the amount of cash the company has stocked away in a bank. These cases simply confirm that from time to time, stock prices has nothing whatsoever to do with the value of a business, and more to do with things like, I don't know, trading momentum or technical analysis or who knows what. I prefer to simply own great businesses that can stand the test of time (the shipping industry is thousands of years old) with excellent management (Angelika is the best in the business), steady and growing profits and a commitment to put cash in shareholders' pockets four times a year. The cheaper I can buy something like that, the happier I am, and if the stock market wants to reward me with a price discount, I am only too happy to oblige.
    Feb 11, 2015. 09:51 AM | 3 Likes Like |Link to Comment
  • What Happens To REITs If (More Like When) Inflation Goes Wild [View article]
    Well, I guess we're like Superman and Bizarro Superman, because I'm generally about forty years behind my time.

    Look forward to reading your next article, Reuben.
    Jan 18, 2015. 11:03 AM | 2 Likes Like |Link to Comment
  • 5 Dividend Stocks For Simplifying The 4% Rule [View article]
    Robert - that's a great article! Thanks for the link. There are plenty of companies that never cut dividends in 2009 or 2010. I own Stanley Black and Decker and Dupont, for example, these companies haven't cut dividends ever in the past 100 years! Amazing.

    But if you're like me, you're the type who wears three belts, two pairs of suspenders, safety pins his pants up, all the while keeping a steady eye upwards to check for killer asteroids. The bulk of my portfolio consists of dividend paying companies with twenty years or longer histories of growing dividends, but I sleep much better at night knowing I can ride out periods when dividends might contract.
    Jan 18, 2015. 11:00 AM | 1 Like Like |Link to Comment
  • 5 Dividend Stocks For Simplifying The 4% Rule [View article]
    I agree - looking at a ten or twenty year history of dividend consistency is a great start, but does not guarantee anything when it comes to future dividends. I'd only add that in picking dividend stocks, the investor should focus on industries that have nothing to do with one another, or that are inversely correlated (for instance, owning oil stocks like Chevron and stocks of companies that do well when oil prices are falling - utilities, perhaps). I'd also add that you want income sources apart from traditional dividend stocks - maybe rental real estate, preferred stocks, REITs, MLPs, and bonds. Even for an investor who hates bonds (like me), I don't know why you'd would want to invest 100% of your assets into just one asset type.

    I'd also suggest that investors who want to go heavy into dividend stocks might consider keeping some cash handy at all times to get them through protracted periods when some companies they own might be cutting or even eliminating dividends - like what we saw in 2009 and 2010. It really pays to assume the worst can happen and prepare for the worst well ahead of time - particularly if you're heavily allocated towards equities.
    Jan 17, 2015. 05:02 PM | 1 Like Like |Link to Comment
  • What Happens To REITs If (More Like When) Inflation Goes Wild [View article]
    I'd be at least as worried about deflation. Falling commodities prices, negative yields on various European government bonds, to say nothing of the ultra low yield on US Treasuries. These, and other, factors seem consistent with market expectations of deflation or price stagnation, and are not consistent with market expectations for price inflation in the foreseen future.

    Great article, but perhaps a couple of years ahead of its time.
    Jan 17, 2015. 04:38 PM | 2 Likes Like |Link to Comment
  • Royal Bank Of Canada: Solid Buy On Commodity Pullback [View article]
    From 2001 to 2002, the price of oil dropped from $35 to about $20, and RY held up pretty well during that selloff. Has anything much changed since then to suggest RY won't do as well during this latest oil price upheaval? Perhaps RY has more energy-related loans in it's portfolio?
    Jan 14, 2015. 10:18 AM | Likes Like |Link to Comment
  • Why Buy Long-Term Treasuries? Dividend Growth Retirees Should Consider It For Ballast [View article]
    Great article, George. A financial advisor I spoke to recently suggested that instead of owning a combination of DGI stocks and Treasuries, investors should consider holding ONLY dividend stocks and utilizing some of the distributions to purchase put options as a means of protecting capital. His backtest suggested that an investor would capture more upside this way, with comparable downside. Not really a strategy that interests me at all, personally, but thought I'd pass it along since it touches on your topic of capital preservation/ DGI. Thanks!
    Jan 14, 2015. 09:59 AM | 2 Likes Like |Link to Comment
  • The World's Largest Net Lease REIT Is Ripe For A Takeover [View article]
    Hey Mark_A, do you read the news? ARCP's financials were, in fact, misstated and withdrawn. Intentionally misstated, in fact. So what exactly does "cook the books" mean to you? Your comment is ridiculous.
    Jan 8, 2015. 03:31 PM | 4 Likes Like |Link to Comment
  • The World's Largest Net Lease REIT Is Ripe For A Takeover [View article]
    Nice article, Brad. What about all the unknown liabilities that ARCP faces (regulatory and criminal fines, shareholder litigation, etc.) Presumably, those unknown but probably very large liabilities would tag along like remoras were any other REIT to step in and buy ARCP (or any large bulk of ARCP assets). Wouldn't that be a significant deterrent to any company seeking to acquire ARCP or a majority of ARCP's assets? I mean, the question of unknown unknowable liabilities (along with some suspicion about the books getting cooked) was THE reason we wouldn't buy Lehman Brothers one fateful weekend in 2008. Lehman's books were pristine compared to ARCP's.
    On a related note, could ARCP adopt the classic "good bank, bad bank" structure, where they ring-fence some of their best properties in a newly formed "good REIT", and park the liabilities (and potential liabilities) in a "bad REIT?" If so, perhaps that would facilitate any sort of takeover by another player like O or NNN, would you think?
    Jan 8, 2015. 12:48 PM | 1 Like Like |Link to Comment
  • Peter Lynch On Dividend Growth Investing [View article]
    An acquaintance that I met some time ago finally got onto the subject of money. He's been retired for a number of years now and lives off his portfolio's dividends. What's interesting is that he has absolutely no background in finance or investing, and doesn't even find the subject all that interesting. His approach is that he has owns about 25 blue chip companies that are listed in the S&P500 and that all pay dividends. That's it. When he has extra cash lying around, he pulls the list, sees which company he already owns that is now paying the highest dividend, buys it, and goes back to doing whatever he was doing before. He says he only sold stock once in his, to help pay for a daughter's wedding. Every single other transaction he's ever engaged in with regard to his portfolio is a buy
    Dec 25, 2014. 05:51 PM | 4 Likes Like |Link to Comment
  • The Case For Navios Maritime Partners' Stock Buybacks [View article]
    The slide seemed to coincide with a downgrade by Morgan Stanley. At that point, many shipping firms had already had dramatic share price decreases, and NMM, belatedly, joined the party. Much of the sell off seems fueled by the concern that lower commodity prices may signal weaker demand, and hence, less need to ship products. I also read that with lower fuel prices, shippers may start to run their vessels at faster speeds - effectively increasing the number of available shipping days. The last straw was a notion that with the recent collapse in shipping rates measured by the Baltic Dry index, Navios will have a tougher time renegotiating leases that are set to expire next year and that are currently above market. This may lead to a decrease in earnings and, simultaneously, dividend cuts at some point down the road. It's impossible to look at a stock with a 17% yield and not feel that what the stock market is saying is that the dividend is far too high to last.

    Of course, much of what the market "says" is complete gibberish. I agree with you that the best time to buy into a business is when the erstwhile owners are willing to sell it to you at any price. I certainly feel better buying NMM at $10 or $11 a share than, say, $20 a share (where it was trading just a few months ago). I'll tell you what, I'd be much, much happier if the stock dropped to $5 a share, although I'm not holding my breath. The way I see it, if you can buy an expertly run business in an industry that is absolutely critical (and that's been around for a couple thousand years) at a price that's well below the actual value of the business, you're in luck. The market, in it's infinite wisdom, often offers prices for companies that are nothing short of lunacy. That's fine news for investors, as long as you're comfortable focusing on stuff like earnings and dividends, rather than share prices.
    Dec 25, 2014. 04:59 PM | 1 Like Like |Link to Comment
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