Cliff Wachtel CPA

5 High Yield Canadian Royalty Trusts

FYI atlantic power corp, website: atlanticpowercorporati... also fits the criteria for sustainable high yield in CAD. Also it is converting to a corp but will continue to pay same yield. very worth while, though perhaps a bit pricey now, as is the rest of the market.

5 High Yield Canadian Royalty Trusts

As I've written here on SA in the past, despite changes to tax laws coming, the better among these represent among the best combinations of income AND USD diversification. Still trying to find something like these with sustainable high yields in AUD and EUR. As I uncover them, I'll post info on them, so consider following me if you don't already

Weekly Preview: Key Clues from Global Markets (Part II)

Interesting, what sources do you use coming to this conclusion, sounds well worth checking out. Thanks for your comments, Cliff


On Jul 12 09:08 AM Thomas MacLeod wrote:

> Have you noticed that emerging mkt debt and junk bonds have hardly
> moved over the last 6 wks? These mkts led the s&p into the crash
> last year. I think these are more important indicators of risk than
> equities

Stocks to Help You Avoid the 7 Deadly Sins of Income Investors

Didn't use stock screeners. Those that have cut have been the energy producers. Have repeatedly mentioned their divs tied to energy price for good and bad, and most have had multiple cuts in order to preserve capex projects. At current prices risk is priced in but divy not as safe as infrastructure or electric power funds.

Perhaps I should have repeated that. What 'homework' did I neglect? Curious to know. Thanks for your comments, Cliff


On Apr 30 10:01 AM Living4Dividends wrote:

> Cliff - excellent article, well-written. You certainly picked a list
> of high dividend yielders. As others have pointed out, some have
> already cut their dividends. That's the problem with using stock
> screeners: A company announces a dividend cut, but the yahoo still
> displays the old dividend rate. A little more homework would have
> been in order.
>

Beware 'Dividend Aristocrats' that Actually Offer Low Yields, No Real Income

Virtually all stock prices follow the market, thus it's hard to see how a lower yield by itself makes a stock any safer. Safety, defined as the businesses' ability to at least maintain its divy and grow it at least at pace with real inflation, is grounded in the firm's ability to maintain and grow earnings (in some cases, cash flow) with sustainable payout ratios and debt levels. Anything else, DRIPs included, is secondary. Some div aristocrats have that, but their yields are mostly so low, even with their increases, that they leave little or negative real returns. Thus you really only profit from them if their price appreciates. That, as noted above, is largely a bet on the overall market. A bad bet, under current conditions.
Thanks for your comments, Cliff


On Apr 09 08:58 AM Airelon Trading wrote:

> It amazes me the author has a thesis to "beware" of a dividend aristocrats
> in THIS environment, and not once, mentions the ability of dividend
> aristocrats to safely compound their own returns through DRIP.<br/>
>
> And if it's one thing you want in THIS of all environments it's "safe"
> and "compounding"

Must-Know Criteria for Picking Inflation Proof, High Dividend Stocks

interesting, worth looking into. Thanks for your comments, Cliff


On Apr 13 09:34 PM Lin wrote:

> Cliff
>
> Re thorium , check out thoium power , thpw , based in Virginia ,
> it is fast tracking blueprint for making thorium campatable with
> commercial reactors . They also have a " consultting sid , helping
> other countries initiate " safe nuclear power . India + Arab countries
> are working with them . This is the anwser !

Must-Know Criteria for Picking Inflation Proof, High Dividend Stocks

Glad you're enjoying the series and finding it useful.

Check about putting the Canadian stocks in tax deferred accounts - I don't give tax advice in this venue, but I believe you lose the 15% tax credit if the stock is held in a tax deferred accounts. However, I don't know if the dividend treatment varies for DRIPs. Cliff


On Apr 11 01:32 PM arthurofchicago wrote:

> Thanks Cliff. I am really enjoying your series.
> I agree with your basic philosophy and have/will acquire some of
> your recommended stocks as I complete my own dd.
>
> Question: Can anyone tell me how/whether stock DRIP programs are
> taxed by the Canadian government. I ask because I am buying for my
> IRA account. I understand that I can’t get a U.S. tax credit on taxes
> levied on paid dividends for stock held in my tax deferred account
> but was hoping a direct dividend reinvestment program might be possible
> work around.

Must-Know Criteria for Picking Inflation Proof, High Dividend Stocks

Agreed. As long as stock prices stay down, BP's usually low yield is high. Big oils are rarely a bad bet, even less so with a good yield. Cliff


On Apr 12 09:15 AM Buy and Hold Plus wrote:

> BP looks like a good long term holding. Plus, BP is doing a lot of
> research into alternative energy, unlike XOM. Sooner or later, we
> will run out of oil. We can argue the live long day whether we've
> reached peak oil or if it's to come, but the bottom line is that
> oil is a finite resource. Companies that position themselves for
> that inevitable day when oil is no longer easily available will do
> better than those that say, yeah, it's coming, but we're just going
> to keep on drilling.

Must-Know Criteria for Picking Inflation Proof, High Dividend Stocks

Thanks for your kind words. Will try to continue to be of help.Cliff


On Apr 11 12:35 AM Mahant wrote:

> I like your strategic thinking and thorough analysis which you keep
> updating on a timely basis. Lots of thanks.

Must-Know Criteria for Picking Inflation Proof, High Dividend Stocks

Exactly. The nature of their business demands high capex and thus debt. Given the steady revenue streams, they can afford to have higher debt than other businesses, though tight credit could trim capex for growth and thus slow dividend growth. Earnings down this year? They and everyone else. Virtually all stocks will go up and down with the market. The best of these are core holdings. Their virtual monopoly positions to both suppliers and consumers of gas and oil give them pricing power to pass on costs and keep up with inflation to some extent (depending to varying degrees on regulators). Thanks for your comments.Cliff


On Apr 10 11:55 AM jamookey wrote:

> Cliff,I don't know if you are aware that some of your fellow authors
> there at ALPHA aren't that keen on mlps.Some say they are too leveraged,some
> think earnings may not keep up this year.I agree with you,I do like
> the mlps.They are always highly leveraged,but that has been the case
> for the last 8 years that I have researched and invested in them.However
> they still seem to raise if not maintain their dividends no matter
> what the economy does.The price of oil does not determine the rate
> they charge for using their pipelines.Good luck and thanx for the
> article.

Must-Know Criteria for Picking Inflation Proof, High Dividend Stocks

Thanks for your well thought out input. Dividends follow earnings and cash flow. Since these recomended mlps are virtual monopolies in their areas of operations for an essential product for both suppliers and buyers, that suggests that they have pricing power and will be able to pass along higher operating costs to their customers- i.e. keep earnings and cash flow up with inflation.

Regarding their SHARE PRICES, that's something else. They will follow the market. Market risk exists for any stock shares. These aren't the only inflation hedge, but are far easier to to manage than real estate and pay income while you hold them. Cliff


On Apr 15 01:05 AM Yodaorange wrote:

> Cliff, I disagree with the premise that companies with high dividend
> yield, plus high dividend growth companies like these will do well
> in a high inflation environment. It sounds good that dividend growth
> can beat inflation, but it leaves out the fact the falling PE's will
> more the negatively compensate for rising dividends.
>
> For example, in the 1973-1974 bear market, BP lost ~ 70% &amp; ATT
> lost ~ 30% from peak to trough. When you have that magnitude of capital
> losses, it is difficult for the dividend growth to overcome it.
>
>
> I do not think any of the MLP's existed back then so we can not say
> for sure how they will react, but there is no basis to think they
> will not take serious share price hits if inflation spikes again.
>
>
> Thanks, YO

Must-Know Criteria for Picking Inflation Proof, High Dividend Stocks

True, I prefer energy too. Still, diversification is a good thing. Check the rural telecoms I mentioned in Part 3. Thanks for your kind words, Cliff


On Apr 10 02:35 PM living4dividends wrote:

> Cliff - Thank you for your article. l eagerly read any article on
> dividends and yours provided some food for thought.
>
> I don't think ATT meets your criteria of "Steady high yields". T's
>
> Div payout ratio is 73.9. Any ratio below 60 is considered a safe
> number. As well, since P/E is highly manipulated in most stocks.
> I assume that FCF is one measure of dividend strength I invert the
> P/FCF to come with a yield FCFYLD:3.0%. I don't know how AT&amp;T
> can support the dividend going forward.
>
> Verizon with its 5.73% yield is the same story with a P/E of 14.24,
> Div Payout of 77.97% and FCFYLD of 4.8%
>
> BP, on the other hand is a good pick with a juicy 8.38% yield 3.79
> P/CF, the worrisome thing about BP is its P/CF of 26.51 giving a
> FCF yield of 3.8% I like its low P/E of 6.23 and its low div payout
> ratio of 48.84
>
> CNOOC can support its yield. It is a bit low.
>
> The others are MLPS - I avoid those for the the same reasons mentioned
> by your first commenter.

Must-Know Criteria for Picking Inflation Proof, High Dividend Stocks

As you said, the quality MLPs are core holdings. Thanks for your input, Cliff


On Apr 13 06:49 AM mark joseph wrote:

> Careful beating up on the MLP's. They have always been levered heavy,
> as they have lots of expansion demand in the marketplace. If this
> leverage were as dangerous as some suggest it would have shown in
> the test of time. To the contrary, since 1991, MLP's have returned
> an average of 16% with dividends reinvested. As a group they have
> never had a down year (since the 80's). Show me where else that can
> be said. That is a long stretch of time with some amazing ups and
> downs in both the general marketplace as well as the energy marketplace.
>
>
> MLP's have steadily increased their dividends during this crisis.
> Pipeline MLP's are the most consistent of the bunch with the price
> of oil having no effect on their model for better or worse. Even
> more institutional fund ownership has historically been below 10%
> but growing 8-10% a year, hence the contrarian capital appreciation
> while the rest of the market crashed. If funds continue to rush in
> this manner you will be rewarded with a double digit , growing dividends,
> and growth in your capital.

Must-Know Criteria for Picking Inflation Proof, High Dividend Stocks

Worth looking into. Who are the major players in the field? Cliff


On Apr 13 01:12 AM PeteE wrote:

> Yes Friar, We could improve our national energy profile substantially
> by building Thorium based Nuclear power plants. We have over 2 millenium
> supply of Thorium in the US alone. Thorium does not create the plutonium
> waste that Uranium does and does not have the threat of meltdown
> that uranium poses. We need cheap, unlimited electrical energy. From
> there we can make hydrogen, or Browns Gas, to run vehicles or go
> all electric. We need a national energy policy based on cheap unlimited
> electric power and solar and wind are poor choices next to Thorium
> powered nuclear. Google Thorium and get up to speed on it. It is
> the answer.

Must-Know Criteria for Picking Inflation Proof, High Dividend Stocks

Never meant to suggest risk free. If you're an industry insider you have insights I don't don't. Still, big communications has so far been for large cap companies, which I imagine couldn't help but act like big bureaucracies, for better or worse. The upside is that they have, so far, had the capital needed to compete. Curious to hear your views on which telecoms are good. Heck, someone has to provide the service.

Thanks for your comments, Cliff


On Apr 13 11:24 AM bricki wrote:

> I've seen the telecom industry from the inside, and I wouldn't touch
> it with a 10-foot pole. Companies like T and VZ are ripe to become
> the GM's of the 2010's at the hands of internet innovators. Their
> traditional cash cow, copper land lines is losing subscribers at
> a 7-10% yearly rate. VZ has a decent program going with FIOS but
> they aren't gaining customers as fast as they thought they would
> from cable companies because they haven't made it attractive. Two
> year contracts? You have got to be kidding. T's UVerse is a flat
> out bad technology. The new cash cow, wireless, is under pressure
> from the innovators at the FCC to make bandwidth open, and Obama
> has appointed people sympathetic to that viewpoint.
>
> These companies are slow, hide-bound, top heavy dinosaurs who cannot
> compete with the mammals of the internet age. Long term they represent
> something to watch for shorting opportunities, not risk free inflation
> hedges.