Boost Your Portfolio With Wells Fargo [View article]
Aren't you worried about the flat revenues and the fact that EPS increase since 2009 was only as a result of the reduction for provision for loan losses? Check my analysis below:
My Dividend Portfolio Looks Much Better Than Expected [View article]
The reason why I didn’t answer right away is because I do not believe you can learn much simply by me stating my total return performance year to date. A 5 month period is not a good measure of performance– if you think I suck as an investor because I am down vs S&P 500 – then that’s fine with me, but you probably have a lot to learn. I asked the questions to gauge Cross and why he is asking this question, because asking someone for performance is not something you hear every day. It indicated to me that he is better off spending his time learning more about why I do something vs what the outcome is. Based on his comment, he looked like a complete novice investor to me – and you need to shake those if you want to teach them anything. If that makes me argumentative, then so be it.
I also provided my original response, because the way I read the comment, it looked as if the person just read the title, and then had a comment, which was unrelated to the article. I seem to get those comments more frequently as of lately, which is very irritating. For example, I received a comment on my analysis of Vodafone from someone, who hadn’t read the article but made a comment about something that was already addressed in the article. Now I know Cross is probably not what I thought he/she is. His follow up seems good, although I disagree that he should have compared me to Bernie Madoff. I prefer to be compared to Warren Buffett. In terms of popularity of articles, you should look at pageviews, not comments.
I honestly do not see what value tracking my performance monthly/daily or even annually provides, because this is noise in long-term data set, that doesn’t provide much in actionable insight. Will I stop using DGI because I underperformed YTD – not at all. I actually outperformed market this year till early May, when a few of my stocks started going down.
DGI stocks perform their best when market is down or flat, and not as well in an up market. Now if 10 years down the road, I underperform S&P 500 by more than 1%/year, I might have room for concern. So I would say, give me 4 - 5 more years, before I can say with some level of certainty in my results to say whether the past 5.5 yrs I have been plain lucky . Of course, the caveat is that past performance is no guarantee for future results.
However, how do you translate the concept of total returns into an income stream in retirement? I turned to dividend investing, which works great. I select a company with rising EPS, rising DPS, at what I think are attractive valuations, and then hold on to it for as long as possible. I diversify, reinvest dividends selectively , monitor regularly and am fine selling if something goes wrong. I like the fact that dividends as part of total returns are always positive, and yet you also have a shot of generating capital gains and meet or beat the market averages. I like having my cheesecake and eating it too.
I think it is better to learn what my objectives are, what stocks I look for, holding period etc. My goal is to generate rising dividends. Using my process of not really paying much attention to performance vs market I have crushed it over the past 5 years, although this could likely not be the case going forward. Well-diversified portfolios of 30 stocks will very likely match returns of Dow, S&P 500 etc over time, which is what I would probably achieve. As a result, I would think I would do better in flat, slightly higher or declining markets, but do worse during rising markets. Of course, if you under perform by more than 1%/year for a period of say 5 - 10 years, you would likely be better off in index funds. After all, DGI takes more effort than indexing.
So, hope I explained my reluctance for providing my returns. I am not trying to be a smart-a$$, just sharing the answers to what I thought the right questions should have been.
My Dividend Portfolio Looks Much Better Than Expected [View article]
No, I do know my performance. I already told you that I know the number. But you refuse to listen. But I know that simply telling you a number is not going to add any value to you, but raise more questions. I also know that performance for 5 months is not indicative of anything. Do you even know what the purpose of dividend investing is?
The problem is, that as a dividend author, I do not want someone who simply reads the headline, and then comments.
I told you, answer my questions, and I will share my performance with you. I am not a mutual fund, but I keep track of it. Why don't you answer?
It is so simple, a caveman can do it -
Step 1: Answer the following questions below:
Did you even read the article - your question shows you haven't?
As an investor, what are you going to learn from me telling you I gained say 20% in a given time period, versus learning about a process of dividend investing?
Do you think you will learn everything there is to my investing strategy by reading just one article?
Do you think I would have gained over 13 thousand readers on this site since 2008, and 7000 on my personal site if I was peddling crap to the public?
Step 2: I will provide my performance numbers YTD, which I have.
The only reason I am not telling you the number, is not because I am hiding anything, but because it is evident that you have not read my article but you are commenting on the title, rather than content, and it is not evident why you need the number.
My Dividend Portfolio Looks Much Better Than Expected [View article]
No, I understood your question the first time, but find that it is not at all relevant to the article. Did you even read the article - your question shows you haven't?
As an investor, what are you going to learn from me telling you I gained say 20% in a given time period, versus learning about a process of dividend investing?
Do you think you will learn everything there is to my investing strategy by reading just one article?
Do you think I would have gained over 13 thousand readers on this site since 2008, and 7000 on my personal site if I was peddling crap to the public?
If you answer those questions, I have the numbers right in front of me
Are Dividend Investors Concentrating Too Much On Consumer Staples? [View article]
To clarify earlier comment, my primary focus is to select companies with rising DPS, that have rising EPS and bright prospects ahead, while purchasing them at an attractive price. It is funny how looking at quality companies with bright prospects, and rising EPS and DPS has lead to my outperforming the S&P 500 over the past five and a half years.
I try to avoid permanent losses in capital, that a few bad apples can produce, which is why I keep myself diversified. The rising dividend income is what will pay for my expenses in retirement, or whatever financial independence is called these days.
In fact, I would lose much more sleep if I fail to generate a sufficient stream of dividend income from my portfolio that keeps up with inflation, than if I underperform the S&P 500 over the next decade by 0.50%/annum
Are Dividend Investors Concentrating Too Much On Consumer Staples? [View article]
Hi Bruce,
Before I answer you points I want to make a clarification that many readers might overlook - I write at my personal website http://bit.ly/14xxhn8, and have chosen to have my content republished at SA and a few other sites. Actually, I have written over 1000 articles since 2008. Check my archive here if you do not believe me:
By the way, the archives include the answers to many if not all of your questions. To your other comment below, I do not need to publish my performance every month, quarter, year, because i am not managing OPM. When I do however, I would make sure to submit my complete audited financial and investment record in the brochure.
I have spoken about benchmarks before, and it is S&P 500. I benchmark returns and dividend income growth as well.
My goal is to at least match S&P 500 return over long periods of time. Since 2008 I have done much better than S&P 500. I was lucky, as I had a lot of cash in 2007- 2008, and many of my CD's matured in around 2009. I did not have the money to invest prior to 2007. Then I was lucky to buy the great dividend stocks at depressed valuations, and was lucky that this was a situation where everyone has been hungry for yield. I was also lucky that I had good health, decent employment to provide me money to put in the market and good family. I was also lucky because I ignore people that forecasted depression, hyperinflation, and other gloom. I like to do my own thinking/analysis, which is seldom understood/appreciated by others. This is my alpha.
I do care about total return. DGI stocks are the most misunderstood investment vehicle out there - now that is alpha. A company that trades at 100, earns $6-7/share and pays $3 in dividends, which can grow EPS at say 10%/year, will double earnings in 7 years. This company would likely double DPS and maybe even stock prices. That way in 7 years, this stock will probably still yield 3%, and have a similar P/E as before, but the stock price will likely be around 200 (all of this is within a range of course). Reality is that nothing is linear. However, I would much rather own a stock that pays 3% dividend and returns the other 7% through capital gains, than have a stock that will return 10% in capital gains only. If you live off your investments, it is much easier to rely on that 3% dividend in a bear market, than the 10% in cap gains ( which is average and could vary from plus to minus greatly)
I did not care about taxes for the first five years. I did this until my dividend income reached a certain threshold of covering half my expenses. Now that my income has risen, I am trying to minimize current tax liabilities. I am trying to max out 401K and IRA's today, because I am saving 30%+ on every dollar I put in those vehicles. I don't care that I will pay ordinary tax rates when I turn 70.5 yrs. I would have received my tax deduction TODAY, and then I would have several decades of tax-free compounding.
However it is wrong to believe that in situations where you compare investing in dividend stocks vs non dividend stocks at equal total returns, dividend stocks are inferior because of taxes. A non-dividend investor is not simply going to buy a stock, and hold on to it for 30 years, while the stock appreciates at 10%/annum like clockwork. Chances are that this investor will buy a stock, and then sell it or a portion of it later. However, I would much rather have a lot of taxable income that gets taxed at 30%, than have no taxable income at all. I would much rather be a highly paid lawyer making $200K and paying a ton in taxes, than be a cashier at a grocery store and pay almost no taxes.
I talk about my investment philosophy in each of the 1000 articles I have written. Investing is not just a few rules you can program into a computer. There are nuances, and as you get more experience, your strategy evolves. I have written 1000 articles, and I have about 100 - 150 articles in various stages of completion that I will publish sometime over the next 2 years. Some are finished, while others are just ideas and outlines of what I will talk about. The more I learn abt investing, the more ideas I get.
The one thing that shows me whether an investor is successful or not, is the willingness to do a lot of digging, reading, researching on their own. If they want to get all of their answers fed to them, without much effort, they would likely not be successful in the investing game. This is important, because you have to select a method that works for you - I have a friend who buys tech stocks, and he has done really well. He would never listen about dividend stocks, and I would never be comfortable owning his tech stocks. But yet, we both made very good money investing in what works for each one of us.
Are Dividend Investors Concentrating Too Much On Consumer Staples? [View article]
Hi Bruce,
Before I answer you points I want to make a clarification that many readers might overlook - I write at my personal website http://bit.ly/14xxhn8, and have chosen to have my content republished at SA and a few other sites. Actually, I have written over 1000 articles since 2008. Check my archive here if you do not believe me:
By the way, the archives include the answers to many if not all of your questions. To your other comment below, I do not need to publish my performance every month, quarter, year, because i am not managing OPM. When I do however, I would make sure to submit my complete audited financial and investment record in the brochure.
I have spoken about benchmarks before, and it is S&P 500. I benchmark returns and dividend income growth as well.
My goal is to at least match S&P 500 return over long periods of time. Since 2008 I have done much better than S&P 500. I was lucky, as I had a lot of cash in 2007- 2008, and many of my CD's matured in around 2009. I did not have the money to invest prior to 2007. Then I was lucky to buy the great dividend stocks at depressed valuations, and was lucky that this was a situation where everyone has been hungry for yield. I was also lucky that I had good health, decent employment to provide me money to put in the market and good family. I was also lucky because I ignore people that forecasted depression, hyperinflation, and other gloom. I like to do my own thinking/analysis, which is seldom understood/appreciated by others. This is my alpha.
I do care about total return. DGI stocks are the most misunderstood investment vehicle out there - now that is alpha. A company that trades at 100, earns $6-7/share and pays $3 in dividends, which can grow EPS at say 10%/year, will double earnings in 7 years. This company would likely double DPS and maybe even stock prices. That way in 7 years, this stock will probably still yield 3%, and have a similar P/E as before, but the stock price will likely be around 200 (all of this is within a range of course). Reality is that nothing is linear. However, I would much rather own a stock that pays 3% dividend and returns the other 7% through capital gains, than have a stock that will return 10% in capital gains only. If you live off your investments, it is much easier to rely on that 3% dividend in a bear market, than the 10% in cap gains ( which is average and could vary from plus to minus greatly)
I did not care about taxes for the first five years. I did this until my dividend income reached a certain threshold of covering half my expenses. Now that my income has risen, I am trying to minimize current tax liabilities. I am trying to max out 401K and IRA's today, because I am saving 30%+ on every dollar I put in those vehicles. I don't care that I will pay ordinary tax rates when I turn 70.5 yrs. I would have received my tax deduction TODAY, and then I would have several decades of tax-free compounding.
However it is wrong to believe that in situations where you compare investing in dividend stocks vs non dividend stocks at equal total returns, dividend stocks are inferior because of taxes. A non-dividend investor is not simply going to buy a stock, and hold on to it for 30 years, while the stock appreciates at 10%/annum like clockwork. Chances are that this investor will buy a stock, and then sell it or a portion of it later. However, I would much rather have a lot of taxable income that gets taxed at 30%, than have no taxable income at all. I would much rather be a highly paid lawyer making $200K and paying a ton in taxes, than be a cashier at a grocery store and pay almost no taxes.
I talk about my investment philosophy in each of the 1000 articles I have written. Investing is not just a few rules you can program into a computer. There are nuances, and as you get more experience, your strategy evolves. I have written 1000 articles, and I have about 100 - 150 articles in various stages of completion that I will publish sometime over the next 2 years. Some are finished, while others are just ideas and outlines of what I will talk about. The more I learn abt investing, the more ideas I get.
The one thing that shows me whether an investor is successful or not, is the willingness to do a lot of digging, reading, researching on their own. If they want to get all of their answers fed to them, without much effort, they would likely not be successful in the investing game. This is important, because you have to select a method that works for you - I have a friend who buys tech stocks, and he has done really well. He would never listen about dividend stocks, and I would never be comfortable owning his tech stocks. But yet, we both made very good money investing in what works for each one of us.
My Dividend Portfolio Looks Much Better Than Expected [View article]
Cross,
Did you read the whole article, or did you simply read the headline and then comment? I am just checking, because based on your comment it seems that way.
I honestly hesitated before responding to MV. His comments were driven not by facts of this specific company and allegations against it. The facts that are available to you and me today ( SEC filings, company presentations) clearly show that the arguments from Jacobson are not worth their salt. If the hedge funder has insider information however, that you and I are not privy to, then my analysis would not be worth even the digital bites it is written in. These days however, accounting firms take financial reporting a little bit more seriously than in the old wild wild west Enron times..
I clearly showed the rebuttal, point by point in this article. Anything else of who is more successful, went to shinier school, drives a shinier car, is BS.
- I guess, an intelligent person would ask themselves, what are Jacobson's motives for "going public" with his short? An intelligent person would also ask themselves, what percentage of Jacobson's ideas are profitable? And, a third question an intelligent investor would ask is at what point in time did the hedge fund cover their short ( will cover their short)
My motives for writing this article are to get traffic to my site, http://bit.ly/14xxhn8. I also own DLR, and wanted to check if Jacobson's comments had merit.
The Case For Owning Digital Realty Trust: When Hedge Funds Don't Know What They Are Talking About [View article]
Mjvcaj,
I explain in the article why the dividend is sustainable, and not paid out of the stock and debt being sold. Go read again what I am saying, and why the hedge fund person is feeding BS to the public. Please also do some research about the REIT legal structure.
I understand that reading financial statements is boring and tedious, but the numbers presented in the article clearly show why Mr Jacobson's arguments are complete BS.
In regards to Harvard, didn't Jeff Skilling, the Enron "Smart Guy" go there? Also, isn't Harvard the place that REJECTED Warren Buffett?
So Mr Jacobson is a billionaire - big deal. Last time a famous billionaire hedge fund manager was short a REIT in 2009, he was very wrong - check comments:
As far as loans are concerned, when companies sell bonds, they only pay interest on them, not principal. If you have factual evidence to show that DLR is paying off principal, along with interest on the majority of the debt it has sold, I would be happy to learn about it.
Because if you are correct, that means that DLR is an even better investment.
As far as market efficiency, markets are always inefficient - you have investors who don't know what they are doing ( ignoring basic fundamental info), you have others who trade on insider information, and you also have investors who openly manipulate markets with their statements.
Btw, how do you know I am not successful? As far as me being successful or not - I am much younger than Mr Jacobson, so I would say I still have time to prove myself.
Of course, in the grand scheme of things, is someone who manipulates people and earns billions doing that, truly successful?
Why Would I Not Sell Dividend Stocks Even After A 1000% Gain? [View article]
BY4,
SA accounts for 5% of my traffic. I receive a lot of comments and emails. A lot of comments on SA did sound unhappy.
I never try to be insulting on purpose.
One of my weaknesses is that any time i write something, I assume people know what is going on inside my head. Instead, I should be spelling things out, because I should never assume people know what is going on in my head.
I actually like when people challenge my thinking, because it makes me a better investor. I don't like it at the time when my ideas are challenged, but it is what makes me better. Now, not all ideas that are challenging me are worth learning from, but on aggregate they are ;-)
While I can tell you which stocks I think are cheap today, I struggle with selling stocks that are overvalued. It is a gray area as I am wiling to pay up to 20 times earnings for a stock. So when a stock trades at 24 times earnings, is it a sell? If I sell, what happens if I buy a stock that only looked cheap on the surface but dissapoints me down the road ( and therefore I would have been better off holding the original stock)?
I try to assign probabilities to different scenarios, but they are all totally unscientific. That's what makes investing more of an art than science - expectations and the fact that beauty that lies in the eyes of the beholder.
BF-B might look like a decent hold for me until it hits $75 - $80/share given current fundamentals through 2014 keep up as expected. Someone else might decide to sell BF-B, and buy something cheaper, like WFC. But what if BF-B earns $6/share in 10 years, trades at $120 and pays me $20 - $25 during that holding timeframe; while WFC fails to grow EPS and trades at $40 in 10 years, and distributes $15 in dividends during that period?
Is the P/E of 10 for WFC an illusion of margin of safety? Or is the P/E of 26 for BF-B unsustainably high because BF-B EPS are going down from here?
These kinds of decisions make me sleep like a baby - I wake up every hour and I cry over these decisions. (It's a joke, I sleep well at night actually)
Optimizing Triple Net Lease REIT Investment: Time To Sell Realty Income [View article]
I find it interesting that the author fails to mention that Realty Income raised dividends by 19.20% over the past year. The author does mention
"Back in September, LXP raised its dividend by 20% in one fell swoop. Such a raise is bigger than all of O's dividend raises in the last 5 years COMBINED."
I do agree Realty is overvalued today, but could be fairly valued below $42.
In addition, replacing Realty Income with GOOD might be pretty BAD, as you are running the risk of getting into an asset with lower quality.
Furthermore, real estate is all about location, location, location. The competitive advantage for Realty Income is that a profitable retailer at a certain location would likely renew the lease, or otherwise they would have to go to another place, and might lose customers in the process. A high traffic location is worth paying a decent rent for over time. Plus, given the long-term nature of Realty Income’s leases, even if rents are decreased down the road, that would happen in 10+ years on aggregate. How will the situation look like in over a decade?
General Mills Dividend Stock Analysis [View article]
General Mills Dividend Stock Analysis [View article]
Boost Your Portfolio With Wells Fargo [View article]
http://bit.ly/10CAZYD
My Dividend Portfolio Looks Much Better Than Expected [View article]
I also provided my original response, because the way I read the comment, it looked as if the person just read the title, and then had a comment, which was unrelated to the article. I seem to get those comments more frequently as of lately, which is very irritating. For example, I received a comment on my analysis of Vodafone from someone, who hadn’t read the article but made a comment about something that was already addressed in the article. Now I know Cross is probably not what I thought he/she is. His follow up seems good, although I disagree that he should have compared me to Bernie Madoff. I prefer to be compared to Warren Buffett. In terms of popularity of articles, you should look at pageviews, not comments.
I honestly do not see what value tracking my performance monthly/daily or even annually provides, because this is noise in long-term data set, that doesn’t provide much in actionable insight. Will I stop using DGI because I underperformed YTD – not at all. I actually outperformed market this year till early May, when a few of my stocks started going down.
DGI stocks perform their best when market is down or flat, and not as well in an up market. Now if 10 years down the road, I underperform S&P 500 by more than 1%/year, I might have room for concern. So I would say, give me 4 - 5 more years, before I can say with some level of certainty in my results to say whether the past 5.5 yrs I have been plain lucky . Of course, the caveat is that past performance is no guarantee for future results.
However, how do you translate the concept of total returns into an income stream in retirement? I turned to dividend investing, which works great. I select a company with rising EPS, rising DPS, at what I think are attractive valuations, and then hold on to it for as long as possible. I diversify, reinvest dividends selectively , monitor regularly and am fine selling if something goes wrong. I like the fact that dividends as part of total returns are always positive, and yet you also have a shot of generating capital gains and meet or beat the market averages. I like having my cheesecake and eating it too.
I think it is better to learn what my objectives are, what stocks I look for, holding period etc. My goal is to generate rising dividends. Using my process of not really paying much attention to performance vs market I have crushed it over the past 5 years, although this could likely not be the case going forward. Well-diversified portfolios of 30 stocks will very likely match returns of Dow, S&P 500 etc over time, which is what I would probably achieve. As a result, I would think I would do better in flat, slightly higher or declining markets, but do worse during rising markets. Of course, if you under perform by more than 1%/year for a period of say 5 - 10 years, you would likely be better off in index funds. After all, DGI takes more effort than indexing.
So, hope I explained my reluctance for providing my returns. I am not trying to be a smart-a$$, just sharing the answers to what I thought the right questions should have been.
My Dividend Portfolio Looks Much Better Than Expected [View article]
DGI TR S&P 500 TR
2008 -11.76% -36.80%
2009 23.35% 26.36%
2010 18.75% 15.05%
2011 14.32% 1.90%
2012 12.99% 15.99%
2013 14.13% 15.36%
My Dividend Portfolio Looks Much Better Than Expected [View article]
The problem is, that as a dividend author, I do not want someone who simply reads the headline, and then comments.
I told you, answer my questions, and I will share my performance with you. I am not a mutual fund, but I keep track of it. Why don't you answer?
It is so simple, a caveman can do it -
Step 1: Answer the following questions below:
Did you even read the article - your question shows you haven't?
As an investor, what are you going to learn from me telling you I gained say 20% in a given time period, versus learning about a process of dividend investing?
Do you think you will learn everything there is to my investing strategy by reading just one article?
Do you think I would have gained over 13 thousand readers on this site since 2008, and 7000 on my personal site if I was peddling crap to the public?
Step 2: I will provide my performance numbers YTD, which I have.
The only reason I am not telling you the number, is not because I am hiding anything, but because it is evident that you have not read my article but you are commenting on the title, rather than content, and it is not evident why you need the number.
I hope that is clear.
My Dividend Portfolio Looks Much Better Than Expected [View article]
As an investor, what are you going to learn from me telling you I gained say 20% in a given time period, versus learning about a process of dividend investing?
Do you think you will learn everything there is to my investing strategy by reading just one article?
Do you think I would have gained over 13 thousand readers on this site since 2008, and 7000 on my personal site if I was peddling crap to the public?
If you answer those questions, I have the numbers right in front of me
Are Dividend Investors Concentrating Too Much On Consumer Staples? [View article]
I try to avoid permanent losses in capital, that a few bad apples can produce, which is why I keep myself diversified. The rising dividend income is what will pay for my expenses in retirement, or whatever financial independence is called these days.
In fact, I would lose much more sleep if I fail to generate a sufficient stream of dividend income from my portfolio that keeps up with inflation, than if I underperform the S&P 500 over the next decade by 0.50%/annum
Are Dividend Investors Concentrating Too Much On Consumer Staples? [View article]
Before I answer you points I want to make a clarification that many readers might overlook - I write at my personal website http://bit.ly/14xxhn8, and have chosen to have my content republished at SA and a few other sites. Actually, I have written over 1000 articles since 2008. Check my archive here if you do not believe me:
http://bit.ly/17k5bAt
By the way, the archives include the answers to many if not all of your questions. To your other comment below, I do not need to publish my performance every month, quarter, year, because i am not managing OPM. When I do however, I would make sure to submit my complete audited financial and investment record in the brochure.
I have spoken about benchmarks before, and it is S&P 500. I benchmark returns and dividend income growth as well.
http://bit.ly/18Kdkfo
My goal is to at least match S&P 500 return over long periods of time. Since 2008 I have done much better than S&P 500. I was lucky, as I had a lot of cash in 2007- 2008, and many of my CD's matured in around 2009. I did not have the money to invest prior to 2007. Then I was lucky to buy the great dividend stocks at depressed valuations, and was lucky that this was a situation where everyone has been hungry for yield. I was also lucky that I had good health, decent employment to provide me money to put in the market and good family. I was also lucky because I ignore people that forecasted depression, hyperinflation, and other gloom. I like to do my own thinking/analysis, which is seldom understood/appreciated by others. This is my alpha.
I do care about total return. DGI stocks are the most misunderstood investment vehicle out there - now that is alpha. A company that trades at 100, earns $6-7/share and pays $3 in dividends, which can grow EPS at say 10%/year, will double earnings in 7 years. This company would likely double DPS and maybe even stock prices. That way in 7 years, this stock will probably still yield 3%, and have a similar P/E as before, but the stock price will likely be around 200 (all of this is within a range of course). Reality is that nothing is linear. However, I would much rather own a stock that pays 3% dividend and returns the other 7% through capital gains, than have a stock that will return 10% in capital gains only. If you live off your investments, it is much easier to rely on that 3% dividend in a bear market, than the 10% in cap gains ( which is average and could vary from plus to minus greatly)
I did not care about taxes for the first five years. I did this until my dividend income reached a certain threshold of covering half my expenses. Now that my income has risen, I am trying to minimize current tax liabilities. I am trying to max out 401K and IRA's today, because I am saving 30%+ on every dollar I put in those vehicles. I don't care that I will pay ordinary tax rates when I turn 70.5 yrs. I would have received my tax deduction TODAY, and then I would have several decades of tax-free compounding.
However it is wrong to believe that in situations where you compare investing in dividend stocks vs non dividend stocks at equal total returns, dividend stocks are inferior because of taxes. A non-dividend investor is not simply going to buy a stock, and hold on to it for 30 years, while the stock appreciates at 10%/annum like clockwork. Chances are that this investor will buy a stock, and then sell it or a portion of it later. However, I would much rather have a lot of taxable income that gets taxed at 30%, than have no taxable income at all. I would much rather be a highly paid lawyer making $200K and paying a ton in taxes, than be a cashier at a grocery store and pay almost no taxes.
I talk about my investment philosophy in each of the 1000 articles I have written. Investing is not just a few rules you can program into a computer. There are nuances, and as you get more experience, your strategy evolves. I have written 1000 articles, and I have about 100 - 150 articles in various stages of completion that I will publish sometime over the next 2 years. Some are finished, while others are just ideas and outlines of what I will talk about. The more I learn abt investing, the more ideas I get.
The one thing that shows me whether an investor is successful or not, is the willingness to do a lot of digging, reading, researching on their own. If they want to get all of their answers fed to them, without much effort, they would likely not be successful in the investing game. This is important, because you have to select a method that works for you - I have a friend who buys tech stocks, and he has done really well. He would never listen about dividend stocks, and I would never be comfortable owning his tech stocks. But yet, we both made very good money investing in what works for each one of us.
Are Dividend Investors Concentrating Too Much On Consumer Staples? [View article]
Before I answer you points I want to make a clarification that many readers might overlook - I write at my personal website http://bit.ly/14xxhn8, and have chosen to have my content republished at SA and a few other sites. Actually, I have written over 1000 articles since 2008. Check my archive here if you do not believe me:
http://bit.ly/17k5bAt
By the way, the archives include the answers to many if not all of your questions. To your other comment below, I do not need to publish my performance every month, quarter, year, because i am not managing OPM. When I do however, I would make sure to submit my complete audited financial and investment record in the brochure.
I have spoken about benchmarks before, and it is S&P 500. I benchmark returns and dividend income growth as well.
http://bit.ly/18Kdkfo
My goal is to at least match S&P 500 return over long periods of time. Since 2008 I have done much better than S&P 500. I was lucky, as I had a lot of cash in 2007- 2008, and many of my CD's matured in around 2009. I did not have the money to invest prior to 2007. Then I was lucky to buy the great dividend stocks at depressed valuations, and was lucky that this was a situation where everyone has been hungry for yield. I was also lucky that I had good health, decent employment to provide me money to put in the market and good family. I was also lucky because I ignore people that forecasted depression, hyperinflation, and other gloom. I like to do my own thinking/analysis, which is seldom understood/appreciated by others. This is my alpha.
I do care about total return. DGI stocks are the most misunderstood investment vehicle out there - now that is alpha. A company that trades at 100, earns $6-7/share and pays $3 in dividends, which can grow EPS at say 10%/year, will double earnings in 7 years. This company would likely double DPS and maybe even stock prices. That way in 7 years, this stock will probably still yield 3%, and have a similar P/E as before, but the stock price will likely be around 200 (all of this is within a range of course). Reality is that nothing is linear. However, I would much rather own a stock that pays 3% dividend and returns the other 7% through capital gains, than have a stock that will return 10% in capital gains only. If you live off your investments, it is much easier to rely on that 3% dividend in a bear market, than the 10% in cap gains ( which is average and could vary from plus to minus greatly)
I did not care about taxes for the first five years. I did this until my dividend income reached a certain threshold of covering half my expenses. Now that my income has risen, I am trying to minimize current tax liabilities. I am trying to max out 401K and IRA's today, because I am saving 30%+ on every dollar I put in those vehicles. I don't care that I will pay ordinary tax rates when I turn 70.5 yrs. I would have received my tax deduction TODAY, and then I would have several decades of tax-free compounding.
However it is wrong to believe that in situations where you compare investing in dividend stocks vs non dividend stocks at equal total returns, dividend stocks are inferior because of taxes. A non-dividend investor is not simply going to buy a stock, and hold on to it for 30 years, while the stock appreciates at 10%/annum like clockwork. Chances are that this investor will buy a stock, and then sell it or a portion of it later. However, I would much rather have a lot of taxable income that gets taxed at 30%, than have no taxable income at all. I would much rather be a highly paid lawyer making $200K and paying a ton in taxes, than be a cashier at a grocery store and pay almost no taxes.
I talk about my investment philosophy in each of the 1000 articles I have written. Investing is not just a few rules you can program into a computer. There are nuances, and as you get more experience, your strategy evolves. I have written 1000 articles, and I have about 100 - 150 articles in various stages of completion that I will publish sometime over the next 2 years. Some are finished, while others are just ideas and outlines of what I will talk about. The more I learn abt investing, the more ideas I get.
The one thing that shows me whether an investor is successful or not, is the willingness to do a lot of digging, reading, researching on their own. If they want to get all of their answers fed to them, without much effort, they would likely not be successful in the investing game. This is important, because you have to select a method that works for you - I have a friend who buys tech stocks, and he has done really well. He would never listen about dividend stocks, and I would never be comfortable owning his tech stocks. But yet, we both made very good money investing in what works for each one of us.
My Dividend Portfolio Looks Much Better Than Expected [View article]
Did you read the whole article, or did you simply read the headline and then comment? I am just checking, because based on your comment it seems that way.
The Case For Owning Digital Realty Trust: When Hedge Funds Don't Know What They Are Talking About [View article]
http://bit.ly/17FWEaN
I honestly hesitated before responding to MV. His comments were driven not by facts of this specific company and allegations against it. The facts that are available to you and me today ( SEC filings, company presentations) clearly show that the arguments from Jacobson are not worth their salt. If the hedge funder has insider information however, that you and I are not privy to, then my analysis would not be worth even the digital bites it is written in. These days however, accounting firms take financial reporting a little bit more seriously than in the old wild wild west Enron times..
I clearly showed the rebuttal, point by point in this article. Anything else of who is more successful, went to shinier school, drives a shinier car, is BS.
- I guess, an intelligent person would ask themselves, what are Jacobson's motives for "going public" with his short? An intelligent person would also ask themselves, what percentage of Jacobson's ideas are profitable? And, a third question an intelligent investor would ask is at what point in time did the hedge fund cover their short ( will cover their short)
My motives for writing this article are to get traffic to my site, http://bit.ly/14xxhn8. I also own DLR, and wanted to check if Jacobson's comments had merit.
The Case For Owning Digital Realty Trust: When Hedge Funds Don't Know What They Are Talking About [View article]
I explain in the article why the dividend is sustainable, and not paid out of the stock and debt being sold. Go read again what I am saying, and why the hedge fund person is feeding BS to the public. Please also do some research about the REIT legal structure.
I understand that reading financial statements is boring and tedious, but the numbers presented in the article clearly show why Mr Jacobson's arguments are complete BS.
In regards to Harvard, didn't Jeff Skilling, the Enron "Smart Guy" go there? Also, isn't Harvard the place that REJECTED Warren Buffett?
So Mr Jacobson is a billionaire - big deal. Last time a famous billionaire hedge fund manager was short a REIT in 2009, he was very wrong - check comments:
http://bit.ly/12HcTyC
As far as loans are concerned, when companies sell bonds, they only pay interest on them, not principal. If you have factual evidence to show that DLR is paying off principal, along with interest on the majority of the debt it has sold, I would be happy to learn about it.
Because if you are correct, that means that DLR is an even better investment.
As far as market efficiency, markets are always inefficient - you have investors who don't know what they are doing ( ignoring basic fundamental info), you have others who trade on insider information, and you also have investors who openly manipulate markets with their statements.
Btw, how do you know I am not successful? As far as me being successful or not - I am much younger than Mr Jacobson, so I would say I still have time to prove myself.
Of course, in the grand scheme of things, is someone who manipulates people and earns billions doing that, truly successful?
Why Would I Not Sell Dividend Stocks Even After A 1000% Gain? [View article]
SA accounts for 5% of my traffic. I receive a lot of comments and emails. A lot of comments on SA did sound unhappy.
I never try to be insulting on purpose.
One of my weaknesses is that any time i write something, I assume people know what is going on inside my head. Instead, I should be spelling things out, because I should never assume people know what is going on in my head.
I actually like when people challenge my thinking, because it makes me a better investor. I don't like it at the time when my ideas are challenged, but it is what makes me better. Now, not all ideas that are challenging me are worth learning from, but on aggregate they are ;-)
While I can tell you which stocks I think are cheap today, I struggle with selling stocks that are overvalued. It is a gray area as I am wiling to pay up to 20 times earnings for a stock. So when a stock trades at 24 times earnings, is it a sell? If I sell, what happens if I buy a stock that only looked cheap on the surface but dissapoints me down the road ( and therefore I would have been better off holding the original stock)?
I try to assign probabilities to different scenarios, but they are all totally unscientific. That's what makes investing more of an art than science - expectations and the fact that beauty that lies in the eyes of the beholder.
BF-B might look like a decent hold for me until it hits $75 - $80/share given current fundamentals through 2014 keep up as expected. Someone else might decide to sell BF-B, and buy something cheaper, like WFC. But what if BF-B earns $6/share in 10 years, trades at $120 and pays me $20 - $25 during that holding timeframe; while WFC fails to grow EPS and trades at $40 in 10 years, and distributes $15 in dividends during that period?
Is the P/E of 10 for WFC an illusion of margin of safety? Or is the P/E of 26 for BF-B unsustainably high because BF-B EPS are going down from here?
These kinds of decisions make me sleep like a baby - I wake up every hour and I cry over these decisions. (It's a joke, I sleep well at night actually)
Optimizing Triple Net Lease REIT Investment: Time To Sell Realty Income [View article]
"Back in September, LXP raised its dividend by 20% in one fell swoop. Such a raise is bigger than all of O's dividend raises in the last 5 years COMBINED."
For your reference: http://bit.ly/16AIzLH
I do agree Realty is overvalued today, but could be fairly valued below $42.
In addition, replacing Realty Income with GOOD might be pretty BAD, as you are running the risk of getting into an asset with lower quality.
Furthermore, real estate is all about location, location, location. The competitive advantage for Realty Income is that a profitable retailer at a certain location would likely renew the lease, or otherwise they would have to go to another place, and might lose customers in the process. A high traffic location is worth paying a decent rent for over time. Plus, given the long-term nature of Realty Income’s leases, even if rents are decreased down the road, that would happen in 10+ years on aggregate. How will the situation look like in over a decade?