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  • Kinder Morgan Partners: One Company, Three Ways to Invest [View article]
    KMI doesn't yield 1.90%. It's close to 4% - the quarterly distribution is 29 cents. KMR is trading at a discount to KMP, which is why I own it. KMI will grow dividends at a higher pace than KMP/KMR.
    Jun 20, 2011. 09:59 PM | 6 Likes Like |Link to Comment
  • Wal-Mart: Dividend Stock Analysis [View article]
    Well one decade ago the stock was overpriced:


    Now it is attractively valued. And you are getting paid a 2.80% yield that is growing in the double digits.
    Jun 17, 2011. 10:26 AM | 6 Likes Like |Link to Comment
  • Why Dividend Stocks Are Not a Separate Asset Class [View article]

    I agree you had a great first comment on the site.

    This article was not meant to discourage investors from buying income stocks. I just wanted to look at the data from an objective standpoint. Overall it is important to buy stocks which provide you with a growing income stream, which ensures that you don't have to sell in a bear market. However in terms of total returns, they would likely be close to those of the market. And that's ok, but the important thing is that you won't have to rely on 4% rule and worry about selling during a bear market. Because if the market goes down 50% on your second year of retirement and stays there, using 4% rule would mean you are spending 8% of your portfolio value, even though that's just 4% of your initial portfolio value.

    As far as fixed income is concerned, it is a safety net for your income. In a $1 mln portfolio, you could basically reinvest dividends for 4-5 years until you build a 250K allocation to fixed income like 10 or 30 year T-Bonds. If the whole portfolio provides 4% yield, that is a 50K annual income. 40K comes from dividends while 10K comes from bond interest. Most investors forget that dividends could get cut. So an allocation to fixed income provides some absolute floor to your dividend income in the WORST of the WORST case scenarios.

    I do love dividends and I do believe that dividend growth investing is the way to invest for retirement income. But at some point adding a 20 - 25% allocation to fixed income could actually provide a benefit and increase your chances of successful retirement.
    May 21, 2011. 09:19 AM | 6 Likes Like |Link to Comment
  • Understanding Compounding: Berkshire's Not-So-Hidden Dividend Contrarian Secret [View article]
    Actually I don't think Worldcom ever paid a dividend. Please provide some further documentation behind this claim.

    As for Tyco, it paid a dividend but didn't raise it for years. So investors would not have purchased it for the dividend.

    As far as the Waltons, they have been paying a rising dividend every year since going public. Somehow that didn't prevent Wal-Mart from becoming a retailer with $400 bln in sales. WMT is another example of having the cake and eating it too ( you get both growth and income).
    May 18, 2011. 11:04 PM | 6 Likes Like |Link to Comment
  • Are Dividend-Growth Stocks a Distinct Asset Class? [View article]
    While I found the article to be well-written and informative, I disagree that dividend stocks are a separate asset class.

    Dividend stocks are stocks/equities. They are correlated with the S&P 500 and if you look at the top 10 major constituents in this benchmark index by weight, you see that 7 are either dividend achievers or dividend champions.

    I have discussed this in my article "Dividend Growth Investing Gets no Respect":


    Dividend Growth Investor
    May 7, 2011. 11:41 PM | 6 Likes Like |Link to Comment
  • Philip Morris International: Dividend Stock Analysis [View article]
    I respect 36BNH's opinion on tobacco investing.However, I know for a fact that heavy alcohol consumption in countries like Russia, lead to short lifespans for average males there. I do not understand how investing in alcohol companies is then ethical?

    Many people in the US are obese and overweight, because of the food they eat or soft drinks they consume, (MCD, KFT, KO etc). An average american is more likely to die from eating unhealthy food than from smoking related issues.

    Personally, I do not try to look like an expert on what is ethical or unethical. If you think about it, many activities that companies perform could be deemed "unethical". Which is why instead of using flexible moral values, I try not to have them into consideration when I evaluate a stock.

    Furthermore, investors that own an index such as the S&P 500, have at least a 2% allocation to tobacco, most of which is in the form of PM and then MO, LO, RAI etc. Since many target date funds also own index funds, or mutual funds that invest in large cap stocks such as PM and MO, how should one invest?
    Apr 24, 2011. 10:19 AM | 6 Likes Like |Link to Comment
  • Reinvesting Dividends Pays Off [View article]
    Thank you for your comment. The issue with some investors is that tracking cost basis could be complicated when you sell, when you reinvest dividends in taxable accounts.

    The good part for the young investor was that this was their first dividend stock. The investor got hooked on receiving passive dividend income, so hopefully he would be able to achieve his financial goals.
    Apr 13, 2011. 01:28 PM | 6 Likes Like |Link to Comment
  • Coca-Cola: Dividend Stock Analysis [View article]
    The thing is that a large portion of the EPS for 2010 you are seeing is coming from a gain related to the purchase of CCE North American Operations.

    From the company's press release:

    "Fourth quarter reported EPS was $2.46, with comparable EPS at $0.72, up 9%, including a $0.02 dilutive impact to comparable EPS as a result of the Coca-Cola Enterprises ( transaction. Full-year reported EPS was $5.06, with comparable EPS at $3.49, up 14%. "

    So to summarize, I used EPS of 3.83, rather than 5,06 since the extra 1.20 dollars or so came from basically writing up the company's previous initial partial investment in the bottling plans when it acquired them in full. These are one time earnings events, so they should not be taken into consideration.

    Here's more from the press release:

    "As required by accounting standards, the Company revalued its 33% ownership of CCE to fair value at the closing date of the transaction to acquire CCE's North American operations, resulting in a $5.0 billion one-time non-cash gain in the fourth quarter of 2010."
    Mar 11, 2011. 11:23 PM | 6 Likes Like |Link to Comment
  • 9 Dividend Stocks Showing Investors the Money [View article]
    WMT management has a done great job increasing EPS and revenues over the pat decade. That's their job. They don't owe you increases in the stock price, because noone can control the stock price. They have done a great job increasing the dividend and buying back stock too.

    If someone purchased WMT in 2000 when it was trading at a ridiculous P/E ratio, they have only themselves to blame. There were plenty of other quality dividend stocks which were attractively valued in 1999-2000. Given the fact that the overall market is pretty much where it were one decade ago, I would say WMT investors did ok. I would love it if WMT price stays low for a while, so I could accumulate my position at decent prices.
    Mar 8, 2011. 07:51 PM | 6 Likes Like |Link to Comment
  • Top Dividend Stocks for 2010, 3Q Update [View article]
    I agree that UBTI is generally not an issue with MLP's in a ROTH, despite all the urban myths about it.

    EEQ is another type of share on EEP, that is similar to KMR and KMP. One thing to note with KMR and EEQ is that if your broker doesn't allow you to receive fractional shares, you end up getting cash and paying a short-term capital gain on the taxable account.
    Oct 5, 2010. 10:45 AM | 6 Likes Like |Link to Comment
  • Why Are Technology CEOs So Reluctant to Pay Dividends? [View article]
    This is a good article Ravi. The problem with tech stocks is that few have a "moat". Many are subject to rapid technology obsolescense, which causes them to re-invest most of their earnings back into the business just so they could maintain their share in the market. Also when they are faced with large cash hoards they could "diworsify" into industries they have no clue about, thus wasting shareholders money.
    Sep 13, 2010. 02:35 AM | 6 Likes Like |Link to Comment
  • The 'Four Percent Rule' for Dividend Investing in Retirement [View article]
    Thanks for commenting. The four elements and the stocks associated with each of them are just some from a wide universe of dividend growth stocks. I have never been able to pull the trigger on XOM due to the low yield, but I own CVX and BP.
    Mar 31, 2010. 07:35 PM | 6 Likes Like |Link to Comment
  • When Is the Right Time to Sell Dividend Stocks? [View article]
    I disagree with your opinion. All of the financial institutions which failed or were acquired cut dividends several months before failing.

    This link shows that WaMu cut dividends in April 2008, more than 6 months before it actually failed. And needless to say prices were much higher at the time..

    Mar 24, 2010. 12:03 PM | 6 Likes Like |Link to Comment
  • Critique Challenges Dividend Investing's Appeal [View article]
    I would much rather pick my own dividend stocks from a diversified list of industries, and have control over my strategy than have some Ivy League mutual fund manager charge me a percentage of my assets and mamke money off my hard earned assets even if I lose money. Investing using free stock brokerages like Zecco means that I have lower transaction costs than the lowest costing index fund.

    Dividend returns are more stable than stock price returns. It is much easier to rely on your dividend income than on whether the market is up 30% or down 30%.

    And if managers retain all of the cash, eventually they would start generating subpar returns on equity. Even Buffett is starting to see that as the size of Berkshire increases. I wouldn't be suprised if he started paying a dividend pretty soon..
    Feb 1, 2010. 11:38 AM | 6 Likes Like |Link to Comment
  • Four Inflation Hedging Investment Strategies [View article]
    The best inflation hedge available to investors is common stocks. Stock represent small portions of real businesses which buy and sell stuff/services to consumers. If a business sells a hot dog at $1 and it costs $0.50 to produce it, then it earns $0.50/hotdog. If inflation happens, a hot dog could sell for $2 and it could cost $1 to produce. At the same time the liabilities ( debt, accounts payable) of the business would be worth less, while its fixed assets would be worth more.
    Jun 26, 2009. 05:01 AM | 6 Likes Like |Link to Comment