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Chowder  

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ABT, AFL, APD, ARCP, ARLP, AT, BDT, BF.B, BMO, BP, BRK.A, BRK.B, C, CBRL, CINF, CL, COP, CTL, CVX, D, DE, DIA, DRI, ED, ENB, EPD, EXC, FSP, FTR, GD, GE, GILD, GIS, GPC, HCBK, HCN, HGIC, IBM, INTC, JNJ, KMB, KMI, KMP, KO, KRFT, LEG, LINE, LNCO, LO, MAA, MCD, MDLZ, MDT, MHR, MKC, MMM, MMP, MO, NFLX, NHI, NLY, NNN, O, OHI, PBI, PEP, PG, PM, PNY, PSX, RIG, RY, SBSI, SDRL, SDY, SNY, SO, SPY, SYY, T, TE, TGT, TIP, TOT, TUP, UHT, UNP, UNS, UTX, VIG, VVC, VZ, WAG, WEC, WM, WMT, WU, XLU, XOM
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  • Rating Opportunities In The Utilities Sector [View article]
    The rating number for D by S&P is skewed over the recent spin-off of DM. Numbers are always skewed for a period of time over mergers, acquisitions or spin-offs.

    A classic example that can be clearly seen if you have access to F.A.S.T. Graphs is MO when they spun off PM.

    Your rating system lacks one of the most important components of investing in utilities, the regulatory environment where the utility resides. Rate increases are vital for utility companies to be successful. Since prices are regulated, utilities must be able to earn a decent ROE or ROIC.

    Some of the companies you mention weren't in the more regulatory friendly states a number of years ago, but even regulators found out that service wasn't up to par during natural disasters and they had to hear about it from the public.

    D had the highest response ratings, and got their customers back online quicker than any other utility following Hurricane Sandy. Regulators love that! D has an easier time of getting rate increases through.

    I own 8 utility companies but I don't want them all in the same geographical region. I have them spread all across the US. Some of the names you mentioned had a better choice for me in their general part of the country.

    I have a higher quality standard than most people. My utilities had to have a 1 or 2 rating for safety by Value Line and/or a BBB+ rating by S&P, so some on your list didn't qualify for me.
    Mar 19, 2015. 08:18 AM | 6 Likes Like |Link to Comment
  • Buh-Bye Wal-Mart, Hello Emerson Electric, Qualcomm And AbbVie [View article]
    When I was a trader, getting "hero" price was vital for success because of the short-term nature of the trade and I had to overcome fees and slippage.

    As a long-term investor, I had to make the mental adjustment between the ego gratification of getting my hero price or simply owning a high quality company.

    There are too many people here that could confirm they have lost out on getting a good price, for what would have been a successful investment, while waiting to get hero price.

    In my opinion, although getting one extra share, or getting a better price at a nickel or quarter, which might provide a nice little reward over time, all it takes is missing out on one successful investment to wipe out dozens of little rewards.

    Mike has commented on his LMT investment several times, so I don't think I'd be out of place in mentioning how he missed out on LMT around the $75 range over 25 cents. Now it sits at $202. How many extra shares or an extra nickel savings would it take to offset that? He didn't lose out totally though as he eventually ended up buying it but at higher prices.

    FWIW, experienced traders never use round numbers on limit orders. When I was a rookie, I had that round number bias and I would place my limit orders at a round $50 or $55. I've actually had my hero price hit and not get filled.

    Sometimes there were so many orders in ahead of mine that there weren't enough shares available at that price to fill them all. People love round numbers and the price wouldn't stay there long enough to fill them all.

    Talk about frustration! I nailed the low of the day and still didn't get my trade on. After that, I would use $50.06 or $50.12 to help insure the trade went through. Problem solved.
    Mar 19, 2015. 07:49 AM | 5 Likes Like |Link to Comment
  • S&P 500 Telecom Services Sector: AT&T Vs. Verizon - Who Wins The Battle Between Growth, Yield And Value? [View article]
    varan, when you say XLU would have more money than T or VZ, would that be more income generated or more in the form of market value (total return)?
    Mar 18, 2015. 02:51 PM | 1 Like Like |Link to Comment
  • S&P 500 Telecom Services Sector: AT&T Vs. Verizon - Who Wins The Battle Between Growth, Yield And Value? [View article]
    Based on your objectives, I would agree. XLU doesn't meet my objectives and as far as I'm concerned, it's all about me. ... Ha!
    Mar 18, 2015. 09:36 AM | 2 Likes Like |Link to Comment
  • Buh-Bye Wal-Mart, Hello Emerson Electric, Qualcomm And AbbVie [View article]
    No grox, I haven't. They aren't on my watchlist and I don't wish to make it bigger. ... Ha!

    Since they are Canadian companies, and I don't want to own Canadian companies, they wouldn't make my watchlist.
    Mar 17, 2015. 03:12 PM | 1 Like Like |Link to Comment
  • Buh-Bye Wal-Mart, Hello Emerson Electric, Qualcomm And AbbVie [View article]
    Robert, those sectors on the Endangered Dividend list have been listed for several years. It's just one of the reasons I have been pounding the table about "quality" over the last few years.

    If I'm going to own a company in any of those sectors, I need the higher end of investment grade financial quality ratings to minimize the chances of a dividend cut. Most of those sectors I have avoided all together.

    In the MLP sector I own KMI, EPD and MMP. Other than maybe PAA, there aren't many more I would be willing to own long-term. In the energy sector, my choices are CVX and XOM. That isn't to suggest that others will cut their dividends, but I do believe the dividends, and the growth of those dividends, are safer with those listed above.
    Mar 17, 2015. 10:20 AM | 2 Likes Like |Link to Comment
  • S&P 500 Telecom Services Sector: AT&T Vs. Verizon - Who Wins The Battle Between Growth, Yield And Value? [View article]
    @varan ... I apologize if my comment led you to believe that the public portfolio I managed held those positions for 10 years. They haven't been held them that long and that's not what I was trying to imply.

    622 said, and I quote ... >>> The payouts on RSP and SPY have grown nicely over time. Their total returns over the past 10 years have been much higher than for most high dividend paying stocks. <<<

    The key words to me were 10 years for most high dividend paying stocks. Rather than cherry pick a handful of companies, I chose the ones held in my public portfolio to show what they have done over the past 10 years to rebut 622's comment. Nothing more. His analysis is incorrect.

    I do expect those holdings to match or beat the total returns of SPY over the next 10 years though.

    I know you and 622 like to compare the last 5 years because it supports your agnostic dividend views. I can't speak for others, but most of the dividend paying companies in the public portfolio I manage are defensive in nature and are not expected to outperform in a raging bull market like we've had the past 5 years.

    I do not expect the market to continue that torrid pace. I do expect the companies we own to catch up and surpass the SPY over the next 5 years, especially when the reinvested dividends have had time to compound and add to the total return equation.

    If this doesn't happen, and I fail to match or beat market returns, even though beating the market isn't my objective, my failure to do so will still pay me well for the effort. I will double the market in income generated by my assets over what the SPY will produce.

    Project $3 Million, the portfolio you referenced in your comment, belongs to a 30 year old person, who has a long time to reside in the accumulation phase.

    Warren Buffett says it makes no sense for net buyers to rejoice over higher prices for companies they expect to build positions in. I sit here, looking at valuations, hoping that prices will fall so that I can continue to purchase companies at a discount to fair value.

    The companies I hope to continue purchasing "need" to under-perform the market in order for us to meet out long-term objectives. Why would I sit here and cheer for higher prices when that puts companies out of our buying range? That's crazy thinking!

    You and 622 with your short-term relative performance figures are certainly welcome to invest any way you wish, but some of us are looking out far further than that.

    Dividend growth investing is a long-term strategy that uses the power of compounding reinvested dividends to create long-term total return. Judging this strategy on a short 5 year time frame, especially one in which will not keep pace over the next 5 years, is more crazy thinking, but I wish you both well with your strategies. I'm sure yours is much more effective than that of 622's, at least the recommendations you've made in the past compared to his.
    Mar 17, 2015. 10:07 AM | 7 Likes Like |Link to Comment
  • S&P 500 Telecom Services Sector: AT&T Vs. Verizon - Who Wins The Battle Between Growth, Yield And Value? [View article]
    @622 ... >>> The payouts on RSP and SPY have grown nicely over time. Their total returns over the past 10 years have been much higher than for most high dividend paying stocks. <<<

    Really? ... I don't know which companies you looked at, but in looking at the companies I purchased for the public portfolio I manage, I see something all together different.

    Using 2005, and each company is on their fiscal year, through the end of 2014, a 10 year period, using the numbers provided by S&P Capital IQ I have the following:

    Income stream on a $10 K Investment each:

    MMP ..... $9,735.49
    EPD ...... $8,398.61
    HCN ..... $7,259.39
    O ......... $6,666.63
    T ......... $6,070.09
    MCD ..... $6,004.50
    SO ....... $5,102.93
    D ......... $5,010.36
    CVX ..... $4,966.77
    GIS ..... $4,623.23
    VZ ....... $4,492.51
    LMT ..... $4,370.92
    DE ...... $4,064.97
    KO ...... $3,794.44
    KMB .... $3,640.71
    CL ....... $3,541.83
    MO ...... $3,368.27 (then add the PM split) another $3,502.41
    ROST ... $3,243.87
    DEO .... $3,202.86
    XOM .... $3,177.89
    PG ....... $3,163.82
    PEP ..... $3,125.02
    ADP .... $2,942.99
    SYY .... $2,530.16
    JNJ ...... $2,920.21

    SPY ..... $2,156.04 (your selection)

    IBM ..... $2,138.37
    RSP ..... $1,790.43 (only 9 years of information available, again your selection.

    That's a lot of income to give up in order to own the S&P and RSP. and then worry about when it's the right time to sell.

    Total Return on the same investment, annualized rate of return:

    ROST .. 20.9%
    MMP ... 19.6%
    LMT .... 14.5%
    DE ...... 12.5%
    EPD .... 12.3%
    CL ...... 11.5%
    HCN ... 10.2%
    O ....... 10.0%
    GIS .... 9.7%
    O ........ 9.6%
    CVX .... 9.1%
    KO ..... 8.5%

    RSP ... 8.4%

    ADP ... 8.3%
    DEO ... 8.2%
    PEP .... 7.6%
    KMB ... 6.9%
    XOM ... 6.8%

    SPY .... 6.5%

    T ........ 6.4%
    SO ..... 6.1%
    IBM ... 5.8%
    PG ..... 5.7%
    VZ ..... 5.1%
    SYY ... 2.7%

    The holdings in my portfolio not only crushed SPY and RSP in income over the last 10 years, but as a group, they beat in total return as well.

    I'll stick with what I'm doing and I might consider ETF's when Warren Buffett does. Otherwise, I'll stick with building the monthly cash flows from dividends arriving in the portfolio every month.


    Mar 16, 2015. 06:31 PM | 6 Likes Like |Link to Comment
  • S&P 500 Telecom Services Sector: AT&T Vs. Verizon - Who Wins The Battle Between Growth, Yield And Value? [View article]
    @622 ... I think the point you and others continue to miss is that a lot of people don't wish to sell shares to generate cash to live off of. They want to live off the dividend and leave the principal alone.

    When you sell shares, the amount of income then generated is lower while the shareowner collecting the dividend only continues to see the income stream rise.

    Additionally, you need favorable market conditions to sell and favorable market conditions don't always exist.

    With dividend growth investing, my income goes up whether the market is up, down or closed!
    Mar 15, 2015. 11:09 PM | 9 Likes Like |Link to Comment
  • Portfolio Construction In The Utility Sector [View article]
    Yes, DM. I was reading up on them last night and saw they are expected to grow their quarterly distribution at a compounded annual rate of 22% in the coming years.

    I have been getting that with MMP and having reinvested the distributions back into MMP has truly impacted the income thrown off by them. I would expect the same with DM.

    I'm thinking sub $33 might be a good price? Your thoughts George?
    Mar 15, 2015. 06:35 PM | 1 Like Like |Link to Comment
  • Buh-Bye Wal-Mart, Hello Emerson Electric, Qualcomm And AbbVie [View article]
    @kolpin ... SDRL was actually an easy dividend cut to identify ahead of time. Mike Nadel wrote an article comparing HSY and SDRL and it basically was a comparison of which one was safer to own for a dividend growth investor, especially one in or near retirement. His warning was that SDRL was not recession tested, written on Aug 12, 2014, well before the dividend suspension by SDRL.

    His article here ...
    http://seekingalpha.co...

    I owned SDRL at the time and after reading his article, and having made several comments in the comment stream, I decided to go ahead and review SDRL right then, instead of waiting until year end.

    I was receiving a very handsome dividend from SDRL and it was disconcerting that I had to make the decision to lock in my profits and let SRDL go. I made that announcement in Mike's comment stream and others questioned my decision. Some wondered if it was an emotional one. It wasn't. The Jefferson Research reports at the time helped me see the quality ratings dropping and with the announcement by a company official that tough times were ahead, it took about 2 seconds to make a decision.

    I have been through oil bust cycles before and I learned you'd better own the top dogs, and you'd better stay away from upstream companies during an oil bust cycle.

    Years ago when oil dropped to $10 per barrel, (98-99?), I was 100% invested in oil service stocks and many of them no longer exist today as they did then. Some were acquired like Global Marine, Merle and Santa Fe. Others simply didn't make it like Grey Wolf and Trico Marine.

    The companies that get hit hardest are upstream companies and that means all of the upstream MLP's, especially LINE and LNCO are at risk.

    BP's dividend although currently covered by cash flow, is also at risk. Many believe BP as we know it won't exist several years from now as they continue to sell off assets due to the Horizon spill. Some believe XOM will make a play for BP.

    COP over the last 20 years has frozen the dividend on 4 occasions, but they have not lowered it in that time.

    When I sold COP back in 2012 (I think is was), I didn't own XOM. I made the decision to finally get back into XOM, which I had sold over a decade ago, to prepare for this oil bust cycle, and I've been building that position in my portfolio and look to build it up in Project $3 Million.

    CVX and XOM are the companies I want to own through the bust cycles. Back when oil was down to $10 per barrel, CVX and XOM continued raising the dividend, COP didn't.

    I wouldn't be surprised to see XOM and CVX lower the dividend growth rate, as I expect them to do what they did last time, use the extra cash to buy out some of the companies in dire straights, and those companies are coming our way before this cycle is over.

    I look for the MLP's to lower their dividend growth rates due to renegotiated contracts with upstream companies. Those long term contracts are useless if the choice is a new contract at lower prices or go bankrupt. The MLP's will have to renegotiate. That will mean lower revenues for the MLP's.

    Again, we are going to find out that owning quality is what will separate the wheat from the chaff. Almost everything goes up in a bull market, only the strong survive a prolonged bear market, and oil bust cycles seem to last too long when you're swimming in it. ... Ha!

    Other companies, besides BP and LINE/LNCO with the dividend at risk are PWE, SPH, PCG and WIN just to name a few. I'm sure there are more, I just haven't come across them in my research for prospective ownership. When I stick with high quality companies, I rarely see where a dividend is in danger, and when it is, a lot of the time it's because the company is going to make a major acquisition, a lesson I learned with PFE.
    Mar 15, 2015. 06:21 PM | 4 Likes Like |Link to Comment
  • Buh-Bye Wal-Mart, Hello Emerson Electric, Qualcomm And AbbVie [View article]
    Robert, off the top of my head, I think there's a good chance that LINE and DRI could cut the dividend.
    Mar 15, 2015. 01:40 PM | 2 Likes Like |Link to Comment
  • Buh-Bye Wal-Mart, Hello Emerson Electric, Qualcomm And AbbVie [View article]
    @zoralsurgeon ... I sold COP when they froze the dividend and purchased additional shares in MO with the proceeds. It turned out to be a very good exchange, but only because oil prices are down. COP was actually doing fairly well.

    As it stands though, COP is up 2.56% from when I sold them and MO is up 43.73% in the same time frame, not counting dividends on either one.
    Mar 15, 2015. 01:28 PM | 2 Likes Like |Link to Comment
  • Buh-Bye Wal-Mart, Hello Emerson Electric, Qualcomm And AbbVie [View article]
    CVX and XOM have projects coming on line this year and next which will boost cash flows even more.

    They are also cutting back on buying their shares, especially XOM, and are accumulating cash for potential bottom of the cycle purchases.

    I'm not concerned with either one.
    Mar 15, 2015. 08:59 AM | 1 Like Like |Link to Comment
  • Buh-Bye Wal-Mart, Hello Emerson Electric, Qualcomm And AbbVie [View article]
    Those quality ratings are what signaled dividend cuts to me on several companies over the last year or two.

    When I see earnings quality, operating efficiency and balance sheet quality ratings go from Strongest to Strong to Weak to Weakest, what more of a red flag does one need to tell them the company is having problems financially?

    I saw SDRL do exactly that and I was out with a profit months before the dividend was eliminated. Okay, suspended for now. Good luck with that if one is still holding.

    It's just one more piece of information that check's the temperature of a company's financial performance.

    Sometimes those ratings drop due to acquisitions or mergers. That's okay! One needs to delve into the reason for weaker ratings. Sometimes you find out they will be temporary and other times more serious. Common sense is in order.
    Mar 14, 2015. 08:21 PM | 2 Likes Like |Link to Comment
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