Dividend growth investing
Dividend growth investing
Contributor since: 2014
REIT's are taxed at the ordinary tax rate as opposed to the qualified tax rate. This is why we put our REIT's in tax advantaged accounts.
MLP's go in taxable accounts, REIT's go in tax advantaged accounts.
I meant Magner's.
I have a soft spot for anyone that has the courage to make real time calls going forward and no respect for the hindsight critics. ... There it is.
I can't learn a damn thing from the critics, I can learn a whole lot from the real time calls.
Buffalo Wild Wings will show the early rounds of 6 nations, but you'll have to request it. They have about 40 TV screens and I always get them to show 2 or 3 games at the same time that I might be interested in. You may have to settle for a normal sized TV as opposed to the big screen for rugby.
They won't be showing the Wales match this weekend, but Italy and England will be shown on BeIn Sports which is channel 620 on Direct TV, which BWLD has access to. The game will be shown at 8PM on Sunday night. I already have it set up to record in case I miss it.
The finals for 6 nations will only be shown on Premuim Sports which is restaurant/pub access only and they have to charge a cover charge. Very few pubs round these parts will pay for the finals. BWLD won't because there is no way they are going to have us pay a $20 cover charge to enter their restaurant.
Magnum's? It might be a DEO product.
I subscribe to M* and unable to access the bond credit rating page, but I look at S&P anyway so I don't know how long the M* page has been down.
You know Mikee, you just reminded me of something that Cramer was talking about the other night. He was burned on that Bear Sterns call because he didn't have the correct information about the bad loans and derivative exposure.
He told viewers the other night that banks aren't reporting the number of oil related loans on the books they don't expect to recover, and without that information, it makes evaluating the banks that much more difficult.
He said to count on oil related loans defaulting, he just doesn't have a clue on how many or how large. He said the banks are keeping that information to themselves.
If you watch Cramer long enough, you get a feel from where he's coming from. If a CEO is willing to come on his show and responds to requests, Cramer is going to go lightly on him.
Cramer, like us, will take the CEO at their word about forward expectations, but then will come back and hit a little harder when its clear he was snowed, as were we.
He did have a CEO Hall of Shame at one time, but I'm betting CNBC made him stop. Like most fund managers, they pile into companies that just came out with good earnings and raised guidance.
He's all over GE as the one industrial to buy now, and for what it's worth, Immelt of GE was nominated as CEO of the year by M*. How's that for a CEO who was reviled about 6-7 years ago?
As many calls as he has to make daily in order for viewers to continue coming back, he's going to make a lot of bad calls, and a lot of good ones as well. I try to decipher what makes sense to me based on what I'm trying to achieve, at the time I'm trying to achieve it.
What cracks me up is the sensitivity of some people who read the comment streams. If this were a pay for service, I'd understand it. It's free and people aren't forced to follow.
I don't know when that recommendation was made Mikee. I don't know the circumstances surrounding the call.
Cramer is no different that all of us, we all make mistakes, and like us, he too is learning from his.
The last recession was the third bank crash I had been through in my equity career and I decided no more. Today M* came out with a new group of companies rated 5 stars and most of them were in the financial's, and for those who don't know, 5 stars for equities is not a good thing normally. It indicates the company is well out of favor.
I would assume that if Cramer were pushed to recommend an unofficial company to own in financial's, it would be WFC like XOM in fossil fuels and MO in tobacco, theoretically speaking of course since he wouldn't want to get in trouble with the CNBC compliance department. ... Ha!
Cramer won't recommend the major fossil fuel companies because he doesn't think the next 6 months will provide enough return for his Mad Money crowd be excited about and stop e-mailing him when they don't.
He has clearly said that if one can maintain a long-term view, then XOM would be his choice of something to ease into.
He won't recommend tobacco stocks either, even if they are expected to double over the next year. Too many viewers concerned about political correctness as to what's a good investment.
He's not recommending financial's either, but again, he said if you want ownership in any of the sectors I mentioned, he said pick the companies with the strongest balance sheets.
Somebody had their comment removed due to us talking about beer. It wasn't me. I have not had a problem with any comment posted so far and that includes those who take the other side of what I say.
My comment was removed as well as I was part of the comment stream of the comment removed. I will repeat my response because it is investment related.
I switched from from drinking Bud Lite to Miller Lite. My son now owns TAP and Miller is a TAP product, as is Peroni and Stella Artois, all of which I drink. Since I drink a good number of brands offered by TAP, I might as well help generate revenue.
STZ may be a better investment going forward, but I don't like their product line, and if I don't like a company's product line, I don't think I'll have the discipline necessary to hold them in down times.
Brazo, there was nothing wrong with the F.A.S.T. Graph set up. Valuations were a little high for NEE which that graph confirmed.
What I did differently was apply some of my trading techniques to the situation. The first thing I looked at was "the condition of the market."
The utility sector had sold off on interest rate hikes scares and I thought those fears were unfounded. The utilities had already anticipated higher interest rates, had purged themselves of their least profitable assets, made acquisitions and mergers, and strengthened their balanced sheets to put them in the best shape since Enron. They were ready for what was ahead.
Then the market started selling off, still is as this is the worst start to a new year in decades, and under this scenario, with bond rates low, the flight to safety meant the flight to utilities.
It was the market conditions that generated my buy of NEE, not the valuations. It could come back to haunt me.
Brazo, I don't spend the whole $100 on Bud Lite's, I'm not there long enough to do so, but I can drink my share of beer. I do eat while I'm there and I do order food to take home. The Missus isn't a pub person so she stays at home, I just have to bring food home when I return. She loves their chicken tenders.
geekette, whether it's speculative, sentimental, or probably a combination of the two, the important thing to me is to not invest a lot of money into it.
I may take a full position initially on what I refer to as a core position, considering I have the cash to do it, but with supportive positions, and especially speculative positions, I ease in and then average up if the company is meeting the performance expectations.
And who pounded the table for utilities over the last few years? And who said to buy NEE?
Yeah, I thought so. ... Ha!
Free virtual beer and wings for all!
Thanks Mikee. I will proceed with making a purchase in the next week or so.
BWLD isn't going to stick solely to wings, they are going to branch out not only with more stores, but more product lines, sort of how YUM branched out with different fast food lines.
Should I mention that loss I locked in on BWLD was $104? ... Ha! Ha! I spend almost that much per visit. I'll mention my loss to management and get me a free beer on the next visit.
Can I assign the value of free beer and food I receive from them in the total return number of stock ownership?
Since we have been discussing BA, I thought I would post Morningstar's latest comments today, for those who have an interest.
Reports came out Feb. 11 that the Securities and Exchange Commission is investigating Boeing's BA program accounting practices, with a focus on the 787 and 747 programs. The stock is down considerably on the news. The investigation suggests that Boeing's accounting practices on the 787 in particular might have been too aggressive. On the other hand, reports state that the SEC investigation may still be dropped. If the inquiry does bear fruit, we think the most likely finding would be that earnings were overstated. We plan to reduce our fair value estimate due to the risk of an earnings restatement and the implication of lower future cash flows.
The BWLD loss to the portfolio was 0.07%. Since BWLD was a speculation play and not an investment, that loss is about as minimal as it can get.
Now others may not wish to speculate, but if they were to, what would you look for in a speculative type situation?
And MCD had to start somewhere, are we to assume no other restaurant company can become a MCD, a PNRA, a CMG as far as market cap goes?
I don't intend to hold BWLD that long to find out when I re-purchase it, it's a speculation play. But, it is considered a growth company with earnings expectations above 20% and that often times means you can capture some cap gains.
Given the small number of holdings you have, I think it is prudent to look to a new sector as opposed to owning CVX and XOM.
I own both, but I didn't add the second until I had about 30 companies.
I don't agree with others that say you should be exposed to all of the equity sectors, but I do think that the smaller the number of holdings you have, the more conservative the sectors should be that you invest in.
XOM and CVX are both cyclical's and all cyclical's have a hard time maintaining their earnings power during the down cycle which always increases the risk of dividend cuts.
I would rather load up on utilities and consumer companies which maintain their earnings power during recessionary times, than hold multiple cyclical's while holding a small number of companies.
Just a thought.
Initially I liked NNN for their real estate portfolio. I thought between them and O that I had a nice balanced real estate portfolio covering the US. As time went on, I liked the lack of noise associated with them than what I saw in other REIT's. I actually like how the price lagged the market as I was reinvesting those dividends while price stayed down and yield stayed up.
NNN did the job I intended it to do up to this year, allow me to accumulate over time at lower prices. Now that I'm in the distribution phase, it has my permission to increase in share price. ... Ha!
Pink, you give me a million dollars and I'll have it invested within a week. I did the same thing with our 401K money.
I know, the horror of it!
But that money went into my blue chip companies I hope to never sell, and if I have no intention of selling, I'm not going to realize the gains.
I was investing cash monthly regardless of market conditions and the way I looked at it was that I simply transferred my money, gains and all, from one account to another without tax consequences. I actually realized all of the gains in the 401K and used it to raise the cost basis of holdings which will lower the taxes due, in the event a situation does cause me to sell, as the money comes out of that account this year.
There is always going to be a company somewhere who will cut or eliminate a dividend. It's important to understand where those dividend cuts are coming from.
What was the credit rating of the company that cuts? What shape was the balance sheet in? What sector was it in? You can minimize the odds of a cut coming by focusing on quality.
You can expect cyclical companies to have more risk to a dividend cut than utilities or consumer staples.
The Escape Velocity Portfolio portfolio holds 52 companies. Of the 52, 2 do not pay a dividend ... ULTA and HYH which was a spin off from KMB.
There are 2 companies that initiated a dividend, thus were unable to show a dividend increase, although initiating a dividend was more than they were paying before. Those 2 companies were GILD and DG.
That leaves 47 companies eligible to increase their dividend in 2015 and all 47 did just that! The amount of dividend income paid in 2015 was 48% above that paid in 2014.
For 2016 I've had one dividend account announced, the two companies that initiated a dividend last year will have a full contribution of dividends this year to help offset the loss of income this year for the cutting company.
January saw a 10.5% income growth rate over January 2015, so that to is offsetting what would be missing from the one cut I have so far.
I'm of the belief the now 49 dividend paying companies in this portfolio will grow their dividends enough to not only offset the one cut announced, I believe I'll see double digit income growth this year as well.
M* says that LMT is selling at a 7.3% premium to fair value. S&P says it is an 8.2% premium to fair value.
Jefferson Research says:
Earnings Quality ... Strongest
Cash Flow Quality ... Strong
Operating Efficiency ... Strongest
Balance Sheet ... Strongest
M* says that NOC is selling at a 26% premium to fair value and S&P says the premium is 14.5%.
Earnings Quality ... Strongest
Cash Flow Quality ... Strongest
Operating Efficiency ... Strong
Balance Sheet ... Strong
I forgot to ask my son about RTN, but I do think I recall him telling me he's been to some of their schools as well.
We are on the same page. I have a double position in JNJ, I built it up during the recall stage and the performance since then has caused the position to be overweight by 2X, but I'm comfortable with that.
PG is a full position for me. I'm talking about my personal portfolio here. I'm fully invested and have no extra cash to invest, but if I did, I would add to PG.
I wasn't adding to HCN until the past week or so, I was adding to O six months ago, so that's the relevance to me.
O is more than a double position, HCN I just brought up to a full position, so again, in looking at performance, I have to look at it from where I made my buys and not compare it to what the chart shows you.
Cramer saying buy PG and JNJ any time they dip and he especially likes PG right here, right now.
One of the reasons I picked O as the number one company to own, in a survey done by Mike Nadel back in May 2015, is because they advertise themselves as The Monthly Dividend Company.
This company has no choice but to keep the share owner in mind. I find it hard to believe that any CEO that runs O wants to be the CEO who doesn't live up to that slogan. The board would probably throw him into the Pacific for shark food, and if they didn't, the share owners would.
Thanks kolpin, I get it now. I guess for those who invest in ETF's that might be important. I don't think I've ever compared a holding of mine to the sector ETF, it simply didn't matter. My objectives are different.
I might purchase a technology ETF one day for a young folk portfolio since I won't begin to think I understand technology product lines.
I'm with you Ron, I don't know what that means.
All I was trying to show is that when you focus on quality, and O is a quality REIT, that taking the consensus of most people 6 months ago, one wouldn't have held O and would have missed out on a company hitting all-time highs in a market that is declining.
Your time frame, and I realize you don't have much to go on, will distort what that portfolio is expected to do going forward. You can't expect well established blue chip companies to outperform in a bull market.
It's going to take a significant market correction and a few years of a sideways market for that portfolio to maximize it's cap appreciation.
While that portfolio will be making up ground here in the early part of 2016, keep in mind the income element of the total return equation will now start to make a difference because yields are rising, prices are falling, and dividends will be picking up more income producing shares.
It's a long-term portfolio!
Latest from M* on O.
Realty Income O ended another solid quarter and year, reporting 4.6% and 6.6% respective increases in adjusted funds from operations, or AFFO, per share. Results were mainly attributable to $1.26 billion in acquisitions for the year, the company's third most active, at an average yield of 6.6% and marginal in-place portfolio rent growth on flat but healthy occupancy. Along with management guidance of robust 4.0%-5.8% 2016 AFFO per share growth, Realty increased its annualized dividend to $2.382 per share, implying a 4.2% dividend yield on current market pricing. We are maintaining our $50 fair value estimate and narrow moat rating. The company has prided itself on delivering steady, dependable results throughout the years, producing a reliable dividend and total return enjoyed by investors. Given the low to nonexistent rent escalations in its long-term leases, however, Realty has historically relied on acquisitions to increase income. We believe the company's proven methodology and execution have worked well to create a safe, income-focused portfolio while carrying a dividend payout ratio in the low 80% to mid-80% range. However, we also wonder when increasing acquisition activity might become overly challenging for the company, with the continual increases in the gross dollars required to further increase the dividend.
CNBC just announced Saudi Arabia may be ready to cut back production.