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Alex Trias  

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  • 11 Reasons To Be A Dividend Growth Investor [View article]
    Thanks for saying so. SeekingAlpha has been a fantastic source of ideas for me - both the articles but even moreso from the comment threads. It's a wonderful community of investors trying to help other investors.
    May 29, 2015. 11:03 AM | 1 Like Like |Link to Comment
  • 11 Reasons To Be A Dividend Growth Investor [View article]
    RAKJ - I have no quibble with free advice. Some of the discount brokerages offer quite a lot of useful training and seminars - I go to those myself. I was quibbling with some of the situations I hear about where people are paying 1% of their net worth annually to advisors. When it comes to getting free information, I'm 100% for it.

    TO your other points, US citizens still pay US federal taxes irrespective of where they live (the only exception as far as I know being US citizens who move to Puerto Rico). You avoid state level income taxes if you move abroad, but you could accomplish the same thing by moving to a no-income tax state such as Florida. Unlike most European countries, Portugal does not impose local taxes on non-Portugal source income - for up to ten years if you qualify. Move to France, and you'll be feasting on French and US income taxes. I am still and will always still be paying an ample share to our Great Nation... just not to the great State of Maryland.

    In answer to your other question, I couldn't repeat much of what I did because mostly, I benefitted from dumb luck and the generousity of others. I bought an apartment in a shady part of downtown Manhattan in 1994, and when the area became trendy, I sold it for five times what I paid. In advance of that, I guarantee you that had no idea whatsoever that would happen. I just stuffed the proceeds into dividend growth stocks sometime in 2002 at the bottom of the tech bubble. Timingwise, more dumb luck. I didn't know if the stocks were cheap or expensive. They paid dividends and I'd heard about the companies. Third, I inherited a few hundred thousand from my grandparents. I didn't expect that, and most certainly didn't earn it. I didn't spend a dime of it, and put it all into an index fund and promptly forgot all about it.
    The only thing I can claim even a little credit for is the fact that I worked for years as an attorney at a couple of white shoe Wall Street law firms, and then as an attorney at a medium sized Washington DC law firm. Dumb luck got me into Yale Law School, too - my dad was an alum, and I did well on my LSAT since I'm dyslexic and got to take it untimed. I graduated with no debt because I started working full time while I was still in law school. I had almost no living expenses, either, since I owned an apartment and ate at cheap Thai restaurants, and bought a home in the DC area with no mortgage. I was that guy in the cheap suit who rode the bus to work. I put all my savings into dividend stocks and real estate over the course of years and years.
    The only advice I can give based on my personal experiences is to have cheap tastes, eschew debt as you would a nasty venerial disease, invest your savings once a month and avoid trading. It helps to have a lucky windfall or two - just don't spend them.
    May 29, 2015. 08:15 AM | 2 Likes Like |Link to Comment
  • 11 Reasons To Be A Dividend Growth Investor [View article]
    I sell if a company lies to shareholders. I used to own shares of ARCP. When it turned out they had misstated some information on their financials, I sold every last share within minutes. With dividends cuts, I'm more flexible. I actually bought more GE when they cut the dividend because I thought it was smart for them to hold onto capital. Wells Fargo? Same thing. I figured they didn't really make a choice to cut the dividend. Most of the time, though, I'd say a dividend cut is usually a precursor to MORE dividend cuts. A huge red flag in my book.
    May 29, 2015. 07:44 AM | Likes Like |Link to Comment
  • 11 Reasons To Be A Dividend Growth Investor [View article]
    Grisly - the only reason to sell something is if can't afford to not sell it. If you own a business that produces positive cash flow that is sufficient for your needs and that will probably grow faster than your needs, what do you care about alternative opportunities? Lucky you - you can afford to ignore them!

    Comes now the big question: if you can afford to ignore something, why on Earth would you pay attention to it? Time is, quite literally, money, isn't it? Even the Fed can't print more of it.
    May 28, 2015. 07:03 PM | 1 Like Like |Link to Comment
  • 11 Reasons To Be A Dividend Growth Investor [View article]
    Well, financial planners are expensive. What value do they add? I advise a few folks, and the advice goes something like this: spend less than you earn and every month put the savings into about ten different lines of business you understand and that pay you regular and growing income. A chimpanzee could give this advice. Cheaper than a financial advisor, to boot. No offense to the chimpanzee.
    May 28, 2015. 06:50 PM | 4 Likes Like |Link to Comment
  • 11 Reasons To Be A Dividend Growth Investor [View article]
    Thanks! I have written a few, but honestly, it's the comment threads on SeekingAlpha that I find most thought provoking. No disrespect to the authors - of which I am one. SeekingAlpha readers are sort of ten knotches above what I've seen on other sites. That's why I put most of my attention on comments these days.
    May 28, 2015. 06:41 PM | 3 Likes Like |Link to Comment
  • 11 Reasons To Be A Dividend Growth Investor [View article]
    Nice article, Sure Dividend. I'd only add the following points:
    (1) owning individual stocks enables you to have a zero turnover rate, which is the definition of "long term" investing. No fund I am aware of has a zero turnover rate.
    (2) When the next bear market comes, dividend growth investors will have steady cash coming in each month or quarter to buy stocks at cheaper prices. Since buying dividend stocks when prices are low provides more attractive yields, dividend growth investors will feel wealthier as stocks crash - they're busy watching their dividend growth will go up exponentially as they reinvest (and if they're like me, they don't even look at the bottom line on their brokerage statements). Dividend growth investing makes it easy to be greedy while others are fearful - it makes low prices your friend.
    (3) But who knows when the next bear market will come? Dividend growth investors don't have to care. With steady dividends coming in, and a penchant for spending less than I own, I reinvest dividends every month. I don't even know what the market closed at today. I don't know because I don't care. I see which of my companies is down this month, and I buy more. Then I go back to doing whatever else it was I was doing before.
    (4) It's low stress. I don't even THINK about which stocks may be up or down this year or this month, or even in ten years. Price is relevant ONCE to a dividend growth investor: the day you buy. Example. I know Stanley Black and Decker makes good hammers, and has paid a dividend for over a century. I will never sell the stock IRRESPECTIVE of price. Why? They make good hammers and pay a steady dividend. I'll check back on the stock price from time to time whenever I have extra dividend income to invest. Otherwise, I will just tune out the share price movements, read the annual reports and news stories - and take an occasional trip to the hardware store to make sure their tools are still better than the cheaper Chinese knock offs. Trying to predict the unpredictable future is very stressful - particularly when you feel like your financial future is at stake. All I need to predict is whether hammers will go out of style. You get the picture on why I am way less stressed out than most investors.
    May 28, 2015. 05:59 PM | 6 Likes Like |Link to Comment
  • Why You Shouldn't Put Too Much Weight On Dividends [View article]
    I'm not talking about a 401(k) or IRA verses taxable - I'm talking only about taxable accounts and whether it's better to pay tax today on a dividend, or tax on capital gain in the future. For all sorts of reasons that are beyond the scope of my comment, maxing out contributions to a tax-deferred account makes vast amounts of sense. I don't think that is the debate in this article.
    May 20, 2015. 11:52 AM | 2 Likes Like |Link to Comment
  • Why You Shouldn't Put Too Much Weight On Dividends [View article]
    I practiced tax law on Wall Street for years, and you'd be surprised by how many people get confused by the issue of tax deferral. Look.

    Take $100 today, assume it grows at 10% for ten years, and then at the ten year mark it gets taxed at 35%. You have $168.59 in ten years.

    Now take $100 today, minus a 35% tax imposed right now. That leaves you with $65 today. Assume that $65 grows for ten years at 10%, and you get.... $168.59.

    Go ahead and pick different tax rates, or compounding periods, or rates of return. It doesn't matter because the answer will always be the same: the future value of a return taxed today but not in the future is precisely the same as the future value of a return taxed in the future but not today.

    So, you wonder, is there ANY benefit for tax deferral? Only if (1) you expect tax rates in the future to fall (if you think that, I have a bridge to sell you); (2) you expect to die, and the asset in question will get a stepped-up tax basis and thereby escape capital gains taxation (and I wouldn't count on that loophole to exist forever); or (3) you intend to borrow against the capital value of the asset and the underwriter doesn't take into account deferred tax liabilities applicable to the asset (which is less common these days than it was in the 80s and 90s). All things being equal, absent those three factors, investors shouldn't care whether they get a dividend today and pay tax now, or get a dividend or capital gain in the future and pay tax then.

    But all things are not equal. You can't predict the magnitude or timing of a capital gain, whereas a good, reliable, steady dividend is money you can plan a budget around to some degree. With enough good, steady, reliable dividends, you can potentially live entirely off portfolio income, and become a "sale-free" investor. That's a really important thing, because those 30,000% returns are typically quite rare unless you can hold off on selling for 70 years or more.

    So, if you really are looking for betterment services, don't overestimate the value of tax deferral and underestimate the value of dividends.
    May 19, 2015. 09:11 PM | 45 Likes Like |Link to Comment
  • Navios: Not For Novices, But The Dividends Are Safe [View article]
    The author states that Navios earned 75m in 2014, and paid 139m in dividends. GAAP does not reflect the company's dividend capacity, because it takes into account tax-preference items such as accellerated depreciation expenses. Instead, you want to look at the operating surplus, which reflects net cash in the door minus capital maintenance and refurbishment expenses. The operating surplus is 150.2 million for 2014, well ahead of the 139m of dividends, and well ahead of the 2013 operating surplus.

    Turning point - I wrote to the CEO last year to ask about share buybacks. I didn't hear back, but other readers made a great point, which is that it could look pretty shady for a company to issue stock at $15 a share, and then turn around and buy it back from shareholders at $11 a share a short while later. One reader pointed out that the CEO is a rare "real handshake" sort of person, who goes out of her way to deal honestly with shareholders and customers alike, and who avoids transactions that could have any appearance of questionability. Shareholders can simulate buybacks by simply reinvesting their dividends and buying more shares of NMM each quarter - the approach I personally have taken.

    I honestly think that the best way to guage the health of the company is to just track how well the equity per share has grown since the company went public. GAAP earnings are fluffy, easy to manipulate year to year, but the truth cannot hide on a comparison of balance sheets year to year. For NMM, equity per share growth closely tracks the dividend growth - strong support for the sustainability of the dividend over the long-term.

    Last of all, the CEO is a trustworthy and very, very capable businesswoman. She says the company is committed to the dividend and interested in raising it. She knows better than any of us whether the company is in a position to make that statement, and isn't likely to make promisses that she can't keep and that will get her fired. On it's own, what I said might sound naive, but the balance sheets and operating surplus metrics lend support to the CEO's statements.
    May 19, 2015. 11:52 AM | 2 Likes Like |Link to Comment
  • Stress Test For Dividend Growth Investors [View article]
    You're absolutely correct that making important decisions when markets are tanking 50% is probably not the best. Once, I was stuck in the hospital for days straight. I was practically delusional from days worth of painkillers and nights devoid of sound sleep (nurses kept prodding and checking my vitals and so forth), and one night, at about 4:00 am, I took it upon myself to check myself out of the hospital. As I was getting dressed, a young doctor stepped into the room to ask how I was doing and what I was up to. After I gave my wild-eyed response, he patiently said "well, it's a good idea to avoid making decisions at night." Sage advice for health purposes, and equally sage advice when extrapolated to making financial decisions during market turmoil.
    May 11, 2015. 12:59 PM | 1 Like Like |Link to Comment
  • Stress Test For Dividend Growth Investors [View article]
    Nice way to realize some losses for tax purposes, while using falling prices to ratchet up your yield. I didn't sell GE even when they cut the dividend (I thought cutting was prudent). But I agree with the idea that dividend cutting is a great reason to dump a company.
    May 11, 2015. 11:42 AM | Likes Like |Link to Comment
  • Stress Test For Dividend Growth Investors [View article]
    Bartender, I'll take the same again.
    May 11, 2015. 11:23 AM | Likes Like |Link to Comment
  • Stress Test For Dividend Growth Investors [View article]
    If you are comfortable living off a salary, you should be twice as comfortable living off dividend income. First, most companies would rather fire workers than cut dividends. The dividend at these companies is safer than a paycheck from the same company - chances are, the company you work for currently might fall into this camp as well. Second, you cannot diversify salary sources as easily as you can diversify dividend income. I own 60 different dividend aristocrats, dividend champions and dividend achievers - but ever since I was 15 I never worked at more than one employer at a time.

    The best way to test your mettle is to get into a healthy (and time tested) habit of spending less than you earn (whether from your portfolio income, social security, pension, rental properties, or part-time salary), and reinvesting the savings each month or each quarter IRRESPECTIVE of market conditions. If you're willing to downsize or move to a lower cost jurisdiction when you retire, you might be surprised how much you can cut spending without sacrificing happiness.

    Good luck!
    May 11, 2015. 11:19 AM | 2 Likes Like |Link to Comment
  • Stress Test For Dividend Growth Investors [View article]
    Best way to withstand the stress is to do what you're doing: focus on portfolio income rather than principal price, and use the market downturns as a chance to buy more income producing assets at a cheaper price. Hopefully you'll watch your income grow far faster during times of "stress" than during bull markets. The nice thing about a DGI portfolio is that it makes it more likely you will have extra income to keep buying more shares throughout the downturn when prices are cheap.
    May 11, 2015. 11:08 AM | Likes Like |Link to Comment
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