I do have a question regarding the index data prior to 2012: does that index represent a possibly flawed backtest, or a backtest done properly (using data as available at the time)? The reason I ask is that I tried to research the index, and I cannot find the data presented in the article. It's not anywhere on S&P's site that I can find.
I'm pretty sure that S&P did not actually have such an index in 1990. So the data must have been produced via a backtest or some sort of reconstruction. My question is, was the backtest or reconstruction done properly?
This REIT Is Approaching Bubble Territory [View article]
No offense taken. Analyst estimates are the best we have. As to the question under consideration here, if you think analyst expectations for O are too rosy, that just reinforces the idea that O's stock price is several years ahead of its intrinsic value. Dave
Survey Says... These Are Dividend Growth Investors' Most Widely Held Stocks [View article]
No hard stats. My impression is that some are waiting in cash, but that many (probably the majority) keep right on investing as cash becomes available. My own approach is if one of the stocks on my short list is available at a good valuation, I buy it. I haven't run into the situation (yet) where absolutely nothing that I wanted to own (or own more of) was not fairly valued or undervalued when I had cash to invest. Dave
Survey Says... These Are Dividend Growth Investors' Most Widely Held Stocks [View article]
Hi GM, As I mentioned on your other note, I will consider updating this, but at the moment I have other things ahead of it in line. The 5th anniversary of my Dividend Growth Portfolio is approaching, and I want to do an article about that. Dave
>>"With the indicated dividend yield on SPHD of 3.12%, nearly double the dividend yield of the S&P 500 of 1.66%, income investors can purchase this ETF, and expect to continue to have lower volatility than the broader market."<<
It is quite common for dividend growth investors, picking individual stocks, to have current yields across their portfolios of 3.5% to 4% or more. It is hard to tell whether this ETF is targeted more to the needs of investors seeking income or investors seeking total returns. The information on yield and distributions is sparse. That seems odd, since in rebalancing, the stocks with the highest yields are chosen first.
>>"The purpose of actively investing in equities is to generate a positive return above what you could have earned simply by investing in the market, or alpha."<<
This is an unjustified generalization if it refers to price return. If it refers to the "return" that matches the investor's goal, then I believe it is accurate.
The difference is important. The "return" that many investors want from stocks is income. They will pick and choose among individual stocks to create an optimum income stream. "Optimum" can differ from investor to investor. Some favor high yields; others high dividend growth rates; still others favor stability and predictability. Many want a good combination of all three.
This article seems predispositioned to a goal of above-market price returns measured over short time frames. The author never states that as his goal, but there are clues: The definition of alpha itself and the strange reference to earnings announcement dates are two of them.
The author also projects his own behaviors onto his readers. He says that he manuipulates screens to make sure that Samsung shows up among his outputs. He appears to think that most investors apply similar biases when constructing screens. I have never done anything like that in my life. If you want your investing to be fact-based, then all facts are "friendly," and you consider them in a fashion that is as free of bias and emotion as you can make it.
Why Dividend Stocks Still Make Sense [View article]
Any time I read a bit of advice like "you should," I skip right past it, and frankly I view the rest of the article more skeptically. The writer does not know me, my situation, or my goals. He has absolutely no way to know what I should or shouldn't do. Rightly or wrongly, I consider phrases like that to be red flags on the writer's analytical skills. I like to read analysis that has some granularity, and generalities like that go in the opposite direction. Dave
This REIT Is Approaching Bubble Territory [View article]
On FASTGraphs, using the forward-looking graph "Estimated Earnings and Return Calculator", which looks out almost 6 years, O at its present price does not "catch up to" its currently "justified" valuation by the end of the graph. Thus it is more than 6 years ahead of itself, which includes figuring in for its estimated growth rate.
Many people investing for capital gains and/or total returns would consider that to be significantly overvalued, and thus might consider selling O for cash that has a better opportunity for gain over the next 6 years than O seems to present.
This REIT Is Approaching Bubble Territory [View article]
Rich, That's a good comment if for no other reason than you present your thinking in terms of probabilities and likelihoods. I wish sometimes that more investors thought about investing in those shades of gray rather than in black/white dichotomies. Dave
Realty Income Is Simply A Great REIT And Nowhere Close To A Bubble [View article]
Funds from operations. It's a standard measure of profit in REITs. GAAP earnings are not considered properly reflect REIT profitability. If you google the term, you'll find tons of definitions and examples.
Realty Income Is Simply A Great REIT And Nowhere Close To A Bubble [View article]
Hi Rhianni,
My O is up 97% (that's a blended result from two purchases in 2008), and I consider it to be overvalued at its current price. If I sold for capital gain, I'd need to know first what I was going to do with the money, as I am still accumulating dividend growth stocks. I don't have an outstanding alternative among the stocks on my watch list. I don't want to hold cash, my stategy is to keep the income coming in and growing, and I don't want to trigger a capital gains tax unless I would significantly improve my portfolio by making a swap.
So after review, my decision at this time is not to sell. If O's yield had dropped to 2% or something like that, then the alternatives would look more attractive in comparison, but that's not the case at the current time.
Realty Income Is Simply A Great REIT And Nowhere Close To A Bubble [View article]
There is a tendency, observed often here at SA, to apply labels (like bubble) to a group of stocks, group of investors, sector, the entire stock market, or the entire bond market. That's usually fine. A macro view is worthwhile for some purposes. It's a nice to see a national weather map, it helps put your local weather in context.
But "average national weather" tells you nothing about your local weather. Labeling becomes less fine, and even misleading, when the author turns around and uses the label to characterize one of the elements of the group that the label was applied to. I have had debates with authors or commenters who want to characterize all individual investors by the group characteristics of investors; or all stocks by the current performance of "stocks" (or an index such as the SP500).
When that sort of reverse engineering takes place, the labeling is less than useless, it can be extremely misleading.
Are REITs in a bubble? I don't care. I don't own "REITs." I own two REITs, O and OHI. I have portfolio guidelines for what to do when a holding is overvalued or extremely overvalued: I take a look at them and decide whether to do anything in response to that condition.
Sometimes I do something (as richjoy is selling O to take his profits and reinvest that money in different opportunities), and other times I do nothing. I don't buy more at those prices (I don't drip), but I don't necessarily sell either.
I have no intention of selling O as long as it continues to pay its dividend every month and raise it every quarter. That's why I own it, that's what I bought it to get. I am fine with its yield. I'm not seeing more attractive opportunities for the money if I sell it. And I have great confidence in the likelihood that they will continue to raise their dividend after the way they handled the 2008 period. The increases were miniscule, but they were symbolically important.
Dripping Works: A Real-World Example [View article]
mt, You need to go back to the articles on dividend growth investing from 2008. The story was the same. Don't paint this group as over the moon on stocks as if we are part of a giant sector rotation or a bunch of imbeciles finally willing to take o n risk after hiding from the market for 4-5 years. This is a long-term strategy, and it works. We've been doing this through up markets, down markets, some people for decades. Your view seems to be anchored to very short time frames. Dave
General Electric Looks As If It's Becoming The Shareholder-Friendly Company It Once Was [View article]
Chuck, once again SA misses an obvious opportunity to designate one of your articles as an Editor's Pick. Meanwhile, elsewhere on SA today, I read a brief EP article on a new ETF that has no track record (although its underlying index does).
For a while, I was thinking that your incredibly instructive articles were being overlooked because you often cover several stocks, thus landing in the dreaded Quick Picks and Lists category. But this article focuses on just one stock, and I think the analysis is exemplary.
Perhaps they think you lean on FASTGraphs too much, forgetting that you invented them.
Anyway, thanks for the fine examination of GE. Personally I don't trust them yet, but you make a very good case on their behalf.
A New Market Beating Dividend Fund [View article]
I'm pretty sure that S&P did not actually have such an index in 1990. So the data must have been produced via a backtest or some sort of reconstruction. My question is, was the backtest or reconstruction done properly?
Does anyone actually know?
Dave
This REIT Is Approaching Bubble Territory [View article]
Dave
Survey Says... These Are Dividend Growth Investors' Most Widely Held Stocks [View article]
Dave
Survey Says... These Are Dividend Growth Investors' Most Widely Held Stocks [View article]
Dave
Periodic Table Of Dividend Champions [View article]
Dave
A New Market Beating Dividend Fund [View article]
It is quite common for dividend growth investors, picking individual stocks, to have current yields across their portfolios of 3.5% to 4% or more. It is hard to tell whether this ETF is targeted more to the needs of investors seeking income or investors seeking total returns. The information on yield and distributions is sparse. That seems odd, since in rebalancing, the stocks with the highest yields are chosen first.
Dave
Do Stock Screens Really Work? [View article]
This is an unjustified generalization if it refers to price return. If it refers to the "return" that matches the investor's goal, then I believe it is accurate.
The difference is important. The "return" that many investors want from stocks is income. They will pick and choose among individual stocks to create an optimum income stream. "Optimum" can differ from investor to investor. Some favor high yields; others high dividend growth rates; still others favor stability and predictability. Many want a good combination of all three.
This article seems predispositioned to a goal of above-market price returns measured over short time frames. The author never states that as his goal, but there are clues: The definition of alpha itself and the strange reference to earnings announcement dates are two of them.
The author also projects his own behaviors onto his readers. He says that he manuipulates screens to make sure that Samsung shows up among his outputs. He appears to think that most investors apply similar biases when constructing screens. I have never done anything like that in my life. If you want your investing to be fact-based, then all facts are "friendly," and you consider them in a fashion that is as free of bias and emotion as you can make it.
Dave
Why Dividend Stocks Still Make Sense [View article]
Dave
This REIT Is Approaching Bubble Territory [View article]
Many people investing for capital gains and/or total returns would consider that to be significantly overvalued, and thus might consider selling O for cash that has a better opportunity for gain over the next 6 years than O seems to present.
Dave
This REIT Is Approaching Bubble Territory [View article]
Dave
Realty Income Is Simply A Great REIT And Nowhere Close To A Bubble [View article]
Realty Income Is Simply A Great REIT And Nowhere Close To A Bubble [View article]
My O is up 97% (that's a blended result from two purchases in 2008), and I consider it to be overvalued at its current price. If I sold for capital gain, I'd need to know first what I was going to do with the money, as I am still accumulating dividend growth stocks. I don't have an outstanding alternative among the stocks on my watch list. I don't want to hold cash, my stategy is to keep the income coming in and growing, and I don't want to trigger a capital gains tax unless I would significantly improve my portfolio by making a swap.
So after review, my decision at this time is not to sell. If O's yield had dropped to 2% or something like that, then the alternatives would look more attractive in comparison, but that's not the case at the current time.
Dave
Realty Income Is Simply A Great REIT And Nowhere Close To A Bubble [View article]
But "average national weather" tells you nothing about your local weather. Labeling becomes less fine, and even misleading, when the author turns around and uses the label to characterize one of the elements of the group that the label was applied to. I have had debates with authors or commenters who want to characterize all individual investors by the group characteristics of investors; or all stocks by the current performance of "stocks" (or an index such as the SP500).
When that sort of reverse engineering takes place, the labeling is less than useless, it can be extremely misleading.
Are REITs in a bubble? I don't care. I don't own "REITs." I own two REITs, O and OHI. I have portfolio guidelines for what to do when a holding is overvalued or extremely overvalued: I take a look at them and decide whether to do anything in response to that condition.
Sometimes I do something (as richjoy is selling O to take his profits and reinvest that money in different opportunities), and other times I do nothing. I don't buy more at those prices (I don't drip), but I don't necessarily sell either.
I have no intention of selling O as long as it continues to pay its dividend every month and raise it every quarter. That's why I own it, that's what I bought it to get. I am fine with its yield. I'm not seeing more attractive opportunities for the money if I sell it. And I have great confidence in the likelihood that they will continue to raise their dividend after the way they handled the 2008 period. The increases were miniscule, but they were symbolically important.
Dave
Dripping Works: A Real-World Example [View article]
Dave
General Electric Looks As If It's Becoming The Shareholder-Friendly Company It Once Was [View article]
For a while, I was thinking that your incredibly instructive articles were being overlooked because you often cover several stocks, thus landing in the dreaded Quick Picks and Lists category. But this article focuses on just one stock, and I think the analysis is exemplary.
Perhaps they think you lean on FASTGraphs too much, forgetting that you invented them.
Anyway, thanks for the fine examination of GE. Personally I don't trust them yet, but you make a very good case on their behalf.
Dave