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  • IBM: Reflating the Corporate Bubble, GE-Style [View article]
    Actually IBM never really used asset sales at the end of the quarter in order to hit quarterly numbers. GE did that.
    Seems to me that you are comparing apples to oranges here. Just because at GE buybacks cost the company billions without benefiting shareholders much, doesn't mean same is true for IBM. Last but not least it's not the dividends and buybacks that caused GE stock and earnings to collapse, but the fact that it was largely a financial company, cleverly masked behind a diersified industrial conglomerate.
    IBM hs more income streams than Apple. IBM rewards shareholders with dividends and buybacks. How does Apple reward it shareholders? What happens after everyone on this planet has an ipod or an iphone:-)

    Apr 30, 2009. 10:18 AM | 4 Likes Like |Link to Comment
  • High-Yield Canadian Royalty Trusts vs. Dividend Growth Stocks [View article]
    Thanks everyone for commenting on this post. While I am not a big fan of canroys I do agree that some allocation to them could be beneficial. What really concerns me are two things:

    1) Dividends fluctuate greatly with cash flow and earnings

    2) The 2011 Tax changes.

    While manay Canroys such as PWE claim to have substantial tax pools going till 2013, US investors could see their taxable income from Canroys fall substantially assuming distributions remain unchanged.

    A quote from Penn West's (PWE) 07 Annual Report goes as follows:

    "If structural or other similar changes are not made … For U.S. investors, the distribution yield net of the SIFT and withholding taxes would fall by an estimated 25.1 percent in 2011 and 23.8 percent in 2012 and beyond."

    The new Albertan Provincial Royalty Tax will hit the Trusts on their conventional production in 2009 with at least a 10 percent increase,

    Currently, there is only a 15 percent Canadian withholding for US investors, but you could get tax credits in the US to offset that.

    What truly worries me is that Canroy investors ignore these facts, which are pretty certain to occur nad instead keep HOPING that the US dollar and oil and nat gas prices would increase.

    Apr 30, 2009. 03:09 AM | 4 Likes Like |Link to Comment
  • 6 Elite Dividend Stocks [View article]
    D4L,

    That sounds like a great list. But with only 6 companies I wouldn’t bet the farm on it. In order to have at least some adequate diversification I won’t settle with less than 30 stocks in a portfolio from a variety of industries.

    Best Regards,

    Dividend Growth Investor

    Apr 29, 2009. 01:19 PM | 4 Likes Like |Link to Comment
  • Screening 3 Stocks for Dividend Income [View article]
    That's an interesting article DV. My only questions is did you make or lose money on your sale of Home Depot stock?

    Apr 22, 2009. 09:32 AM | Likes Like |Link to Comment
  • Dividend Stocks to Avoid [View article]
    Historically dividend cutters have underperformed the stock market and dividend grower and initiators have outperformed the stock market on average. As a dividend growth investor I buy stocks that keep growing their dividends and sell stocks that cut or eliminate their dividends. Why would I keep on hoping that GE would someday increase its dividends and waste my money at a company that doesn't deliver rising income for me when I could allocate my money at a company that delivers results?

    When GE starts delivering positive dividend growth I would once again consider initiating a position in the stock. The company might be a great buy at current levels, but your guess about future stock performance is as good as mine... I do hope sincerely however that you make money on your investments however.

    Best Regards,

    Dividend Growth Investor


    On Apr 21 10:58 AM sthpawil wrote:

    > I consider buying GE back when it was below $7 an incredibly smart
    > move on my part. In a few years when the dividend returns to its
    > normal level, the ROI will be huge since my cost basis is so low.
    > Between that and my capital gains, I don't see how anyone with an
    > ounce of common sense can make the argument that one should avoid
    > these stocks. Articles like this are very short sited and proof that
    > so called "experts" are people too and they make mistakes just like
    > the rest of us.
    Apr 21, 2009. 12:51 PM | 17 Likes Like |Link to Comment
  • Must-Know Info for Investing in Commercial REITS, If You Dare [View article]
    Cliff,

    That's a great article. I enjoy your insight into income producing stocks. As an owner of several REITs myself I am also monitoring the cash flow situation for my investments in order to gauge how sustainable the current dividend payments are.
    Apr 17, 2009. 05:16 PM | 2 Likes Like |Link to Comment
  • Must-Know Criteria for Picking Inflation Proof, High Dividend Stocks [View article]
    MLPs are a nice way to generate high yields.However one should not invest everything in MLPs, since concentration i one type of asset is asking for trouble.

    As for dividend investing in general however, one has to ask themselves how sustainable the dividends are before buying that income stock. Most investors were lured by double digit yields in certain canadian income trusts, only to have their dividends cut or eliminated and suffer huge capital losses in the process.

    Special structures such as Canroys, MLPs, Reits are a nice way to generate high current income. But what would happen if tax law changes are implemented which abolishes the current structure of these trusts/partnerships? This has alread happened in Canada in 2006, and after 2-3 years there is still much uncertainty about what would actually happen. If you are a retiree who depended heavily on the income from these Canroys, how would you feel with all that uncertainty?

    When you are investing, you have to visualize different scenarios and construct your portfolio accordingly. I own dividend aristocrats, MLPs, Certificates of Deposit,and some TIPs both in taxable and tax defered accounts, and know that I no matter where the market or the econony goes, I would keep generating enough income to sustain my standard of living.

    Apr 11, 2009. 09:05 AM | 7 Likes Like |Link to Comment
  • Beware 'Dividend Aristocrats' that Actually Offer Low Yields, No Real Income [View article]
    Cliff,

    A stock that yields 3% today but is growing its dividends at 12% for the next 12 years will provide a 12% yield on cost by 2021.
    Historically Dow Jones Industrials Index dividends have grown by 5-6% over the past century. It's true that we are in a bear market now and in a recession, but if you look REALLY long-term ( like 3-4 decades from now) I am confident the yield on cost on an investment in S&P 500 will be much higher and more tax efficient in comparison with the canroys you have been touting..

    Most of the Canroys which yield 12% today, were also yielding 12% 6 months ago despite huge dividend cuts in the sector. If you bought PGH at 18 in Jan 2008 when the monthly dividend was at 0.22, you could have thought that you were getting a good deal. Currently with a 0.08 monthly dividend you are actually getting something close to a 5% yield on cost. You MUST learn the difference between current yield and yield on cost before you bash the dividend growth stocks in general.

    And last but not least, do not chase yield blindly. Most of these income trusts pay variable dividends every month out of their cash flow. If oil and gas prices rise, your income rises. If oil/gas prices fall, your monthly income falls. The payout is very high as large portion of it is a return of capital, and you can't safely live off the income. Also In order for the canroys to grow they must sell more stock or debt, since they are paying most of their cashflow in dividends.

    Most Dividend Aristocrats on the other hand not only regularly increase dividends, but also buy back shares, thus making you stock worth more.

    Good Luck in your quest for income. What truly matters to dividend investors is not only current income, but the ability to maintain/sustain and even increase it over time.
    Apr 9, 2009. 01:33 PM | 3 Likes Like |Link to Comment
  • MLPs: Success Story in an Otherwise Dismal Quarter [View article]
    I second searcher. KMR is a very good choice for an IRA/ROTH IRA.. Furthermore Kinder Morgan( KMP and KMR) account for over one sixth of the Alerian MLP index..


    On Apr 02 10:45 AM searcher wrote:

    > Interested in KMP but in a tax advantaged account? Check out KMR.
    Apr 3, 2009. 03:35 AM | Likes Like |Link to Comment
  • Dividend Aristocrats Underperform the S&P 500 in Q1 [View article]
    Damurph,

    You are correct it should have read 2008, not 2009.

    Best Regards,

    DGI
    Apr 2, 2009. 12:23 PM | 1 Like Like |Link to Comment
  • 2011, A Canadian Tax Odyssey: Canadian Income Trust Investors' Guide [View article]
    Cliff,

    I enjoyed your article. However it seems that you are only looking at the best case scenario by saying the following:
    "when energy prices recover to 2008 highs and beyond, the yields and prices on these will also recover,"

    What happens to distributions from Canroys if tax rates go up to 30%-45% and if oil prices maintain their current levels? Then a 10% distribution would be cut to 5% - 7%, which won't be as good. What if distributions are cut even more by 20% - 30% due to fluctuations in oil/gas prices?

    One should always think about probabilities when constructing a portfolio. Concentrating your portfolio in just one sector, or one vehicle is a recipe for disaster in the making..

    I do agree that a portion of one's portfolio could be allocated to CanRoys.. But their fluctuations in income do not prove a dependable and stable income stream that normal oil and gas companies such as BP or CVS would provide.
    Apr 2, 2009. 10:48 AM | 1 Like Like |Link to Comment
  • Tobacco Company Yields are Smokin' [View article]
    I like and own PM ad MO..Tobacco is nice to own in a diversified portfolio consisting of other dividend paying representatives of other sectors. Otherwise a rapid change in the industry might leave you without a nest egg and dividend income. Just ask investors who were overweight financials in 2008 ...
    Apr 2, 2009. 10:26 AM | Likes Like |Link to Comment
  • Best High Yield Dividend Stocks for 2009, Q1 Update [View article]
    Lightway,

    Thanks for your comment. You definitely hit the jackpot with the tortoise/hare comparison. Dividend investing is a long-term process. I strongly doubt that a time frame of less than 15 years is indicative of whether the performance is sustainable or not.


    On Apr 01 10:18 PM Lightway wrote:

    > I'd expect that you would beat out the rest of the pack over time,
    > so make the time frame 3 years, and you would be the clear winner.
    > This is like tortoise vs. hare, they might beat you short term, and
    > that is understood, but you still placed well considering your picks
    > were income picks, and you're playing against players with more of
    > a speculative/growth focus.
    >
    > Nice work and thanks for posting your results.
    Apr 2, 2009. 03:09 AM | 1 Like Like |Link to Comment
  • Bucking the Trend, American Express Maintains Its Dividend [View article]
    Kewgardens,

    I would analyze BWL-A in a future post.

    Best Regards,

    DGI
    Apr 1, 2009. 09:56 AM | Likes Like |Link to Comment
  • Definition of CMO Trading: Look for People Dumber than You and Take Advantage of Them [View article]
    Well trading is always looking for people who are "dumber" than you in order to execute your edge.
    With dividends however you are not relying on the greater fool theory to make money- as long as you pick a solid dividend stock that would pay you a growing stream of dividend income, you don't need to worry about ever selling your stocks.
    Apr 1, 2009. 07:57 AM | 3 Likes Like |Link to Comment
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