On April 8, in "Time to Build a Shopping List," I suggested a target yield of 5% for NNN, O, and WPC, which would be: $31.60 for NNN, $43.40 for O, and $65.60 for WPC. We're still well above those levels.
Now I'm asking myself if I would "nibble" if the yield on any of these three reached 4.8%, which would be $32.92 for NNN, $45.21 for O, and $68.33 for WPC.
These three triple-nets are solidly in the "hold" range, but the mREITs in my universe have dipped into my "buy" range.
The article set a 7% yield target for STWD, which has raised its dividend since the article to $1.84 annually. Thus I raised the target price for STWD to $26.29. On this morning's selloff, STWD dropped to $25.52, for a 7.2% yield. I haven't bought any more STWD today, but I'm watching it.
I'm also watching NLY. I like the triple-nets best and I like STWD's business model better than NLY's. The article set a 12.5% yield target for NLY, or $14.40. On this morning's selloff, NLY dropped to $14.05, for a 12.8% yield.
Was this morning's swoon a bump in the road or is this the first wave of renewed volatility?
I'm long NNN, O, WPC, STWD, and NLY. This week I initiated a position in Chambers Street Properties (CSG).
Brad--Pdog has raised a good question. It's tough to quickly track down FFO or AFFO for REITs. Your website/newsletter would do a great service by making a chart with those comparisons. I realize that EPS isn't always a reliable number for businesses in other sectors, but at least there are some GAP standards that make EPS a valid data point for investors and it is easy to find. Obviously, FFO or AFFO is much more relevant for REIT investors, but I need some help tracking that down and I'm sure I'm not alone. Thanks!
Optimizing Triple Net Lease REIT Investment: Time To Sell Realty Income [View article]
Thanks for your thoughtful article. Realty Income seems to have a bit more "beta" than some of the other REITs.
Through the years I've bought it during downdrafts and sold it when it seems overheated. In June 2012, I completely sold my position. I decided it was a mistake to completely eliminate the position because it is a great company and their merger with American Realty Capital changed the landscape. In February 2013, I found a new entry point at $44.40. Now I view O as a core holding, and I've set some "minimum" and "maximum" parameters based on yield--generally keeping it between 3% and 4% of the portfolio. It has appreciated 20.4% since that February purchase (at the current $53.47), so I have trimmed it a bit.
"I sold it in June, 2012 when it reached $37.80. The yield at that time was 4.6%, but by comparison the yield of National Retail Properties (NNN) was 5.9% and I thought O was a little ahead of itself. ...
"Last fall, Realty Income announced a merger with American Realty Capital Trust, Inc. As a result of the merger, in January, 2013, Realty Income announced a 19.2% increase in its monthly dividend, from $.15175 to $.1809167. This raised the annual dividend from $1.821 per share to $2.171. It also brought Realty Income's dividend yield back into the 5% range. As of February 21, NNN's yield was 4.7% and O's yield was 4.9%."
Even Though Ben Graham Would Not Buy This REIT Today, I Would [View article]
Well said. Everything took a hit in '08-'09, but your salient reminder is that the dividend never stopped growing. In retrospect, I would have rented a larger truck to back up to the loading dock for more shares of O at $15. (Long O.)
Opportunity Costs For Dividend Investors [View article]
Thanks, DGI. Good article as always. I believe the distilled wisdom you're sharing is, "Be reluctant to sell a stock with a growing dividend." As you indicate, however, sometimes pruning is appropriate and it is more art than science: "This is why a black and white approach is dangerous, while a more nuanced and selective approach is superior."
This was well said. The limitation of "black and white" rules was illustrated in the 1984 Ghostbusters movie:
Dana Barrett (Sigourney Weaver) is possessed by the paranormal Zuul, who tries to seduce Dr. Peter Venkman (Bill Murray). Venkman says "I make it a rule never to get involved with possessed people." After she lays a passionate kiss on him he says, "Actually, it's more of a guideline than a rule."
Founder, thanks for your reply. Metaphors have limitations as well as (hopefully) some teaching value. The world, including Mr. Market, has changed dramatically since Graham introduced us to his mythic figure. Even in Graham's late career there were far fewer than 50 million human brains participating in the market as buyers or sellers.
I think Graham's Mr. Market metaphor holds true regardless of the number of humans involved in the process. My image of him isn't that he's "nice," but instead capable of the whole range of human emotions, exaggerated by the "herd" mentality that pushes the market to extremes on the high side and on the low side--in a word, "moody." My main point is that we must be focused on our goals, our buying/selling disciplines, and particularly as dividend investors to be unemotional about market gyrations. In other words, "don't panic; stay focused; stick with your game plan (unless the fundamentals of a company have changed)."
You raise a crucial reality that was not part of Graham's world--computer algorithms invading the markets. I'm all for outlawing the worst of these practices, or taxing trades (as in Europe) just enough to make these computerized "raids" unprofitable. It is a plague, in my opinion. (When I view something as needing to be taxed, it must be really bad!)
As for the Mr. Market analogy, I believe the presence of high-speed, computer-driven trades simply amps up the "emotion" of the human participants in the market.
I think your main idea is that Mr. Market is not a benign figure (particularly in light of the computers that are spinning each day), and I concur wholeheartedly. He's out to take my money and make a profit by doing business with me. I believe my best approach to "him" is to take advantage of his innate nervousness. It's important for me to be less nervous than "he" is.
The Right Time To Sell Dividend Stocks [View article]
DGI, thanks for helping us put on our thinking caps. I believe it is wise to be reluctant to sell a stock that has a long history of raising its dividend, but if a stock becomes overvalued relative to its history and relative to other stocks that present better growth opportunities, then I believe it is prudent to trim the position and redeploy the capital.
I've made all the mistakes an investor can make, such as closing out a position too soon or holding on too long. I've arrived at a strategy that helps me trim overextended stocks by determining a percentage of the portfolio for each stock. This way, I can monitor the stocks that run up and those that pull back, trimming and adding when the gains or declines become excessive.
With a tip of the hat to Ben Graham, if Mr. Market expresses "irrational exuberance" regarding a stock, I'll sell him some of my shares. And, I'll gladly buy those shares back when he panics and wants to unload them at a bargain price.
Time To Add Apple To Your Retirement Portfolio [View article]
Doug, thanks for your helpful article. During all the media coverage of AAPL's rise to $700, I paid no attention at all because it was not a dividend stock. Even after they initiated the dividend, I was not interested because the yield was considerably lower than 3%, which generally is my minimum for initiating a position.
As AAPL's stock dropped, i began to pay more attention. For the first time I added AAPL to my "shopping list" (http://bit.ly/119Mg4w), with a target price of $353.33, which would be a 3% yield at the present dividend rate.
When AAPL was in the $450 range, I thought the price would likely not drop below $375 unless there was a major negative company event or some really bad macro economic news. So, I've viewed the $353.33 target as unlikely. Yesterday, when the price was in the $385 range I placed a limit order for an initial position in AAPL at $379.50. If it drops toward or through my $353.33 "target," I will buy some more.
A few days ago on CNBC's Fast Money, Guy Adami said the "best case" scenario for someone wanting to get into AAPL would be for a negative market response to AAPL's upcoming quarterly report (on Tuesday, April 23) that would create a "flush" of exiting shareholders so that "new money" could come in. I interpreted this scenario as a potential "final exit" of growth investors with a subsequent entrance of value investors. Adami's short term (fast money) analysis was in the back of my long term (slow money) mind.
All this is to say that I've come to your same conclusion about AAPL.
Are We In A REIT Bubble? [View article]
On April 8, in "Time to Build a Shopping List," I suggested a target yield of 5% for NNN, O, and WPC, which would be: $31.60 for NNN, $43.40 for O, and $65.60 for WPC. We're still well above those levels.
Now I'm asking myself if I would "nibble" if the yield on any of these three reached 4.8%, which would be $32.92 for NNN, $45.21 for O, and $68.33 for WPC.
These three triple-nets are solidly in the "hold" range, but the mREITs in my universe have dipped into my "buy" range.
The article set a 7% yield target for STWD, which has raised its dividend since the article to $1.84 annually. Thus I raised the target price for STWD to $26.29. On this morning's selloff, STWD dropped to $25.52, for a 7.2% yield. I haven't bought any more STWD today, but I'm watching it.
I'm also watching NLY. I like the triple-nets best and I like STWD's business model better than NLY's. The article set a 12.5% yield target for NLY, or $14.40. On this morning's selloff, NLY dropped to $14.05, for a 12.8% yield.
Was this morning's swoon a bump in the road or is this the first wave of renewed volatility?
I'm long NNN, O, WPC, STWD, and NLY. This week I initiated a position in Chambers Street Properties (CSG).
Retail REITs Look Awfully Sweet [View article]
Retail REITs Look Awfully Sweet [View article]
Optimizing Triple Net Lease REIT Investment: Time To Sell Realty Income [View article]
Through the years I've bought it during downdrafts and sold it when it seems overheated. In June 2012, I completely sold my position. I decided it was a mistake to completely eliminate the position because it is a great company and their merger with American Realty Capital changed the landscape. In February 2013, I found a new entry point at $44.40. Now I view O as a core holding, and I've set some "minimum" and "maximum" parameters based on yield--generally keeping it between 3% and 4% of the portfolio. It has appreciated 20.4% since that February purchase (at the current $53.47), so I have trimmed it a bit.
My February 22, 2013 blog describes the process (http://bit.ly/15Jqcok):
"I sold it in June, 2012 when it reached $37.80. The yield at that time was 4.6%, but by comparison the yield of National Retail Properties (NNN) was 5.9% and I thought O was a little ahead of itself. ...
"Last fall, Realty Income announced a merger with American Realty Capital Trust, Inc. As a result of the merger, in January, 2013, Realty Income announced a 19.2% increase in its monthly dividend, from $.15175 to $.1809167. This raised the annual dividend from $1.821 per share to $2.171. It also brought Realty Income's dividend yield back into the 5% range. As of February 21, NNN's yield was 4.7% and O's yield was 4.9%."
Long O and NNN.
Use Linn Energy To Build Income Now [View article]
Even Though Ben Graham Would Not Buy This REIT Today, I Would [View article]
Waiting Patiently For A Blue Chip REIT Pullback [View article]
Opportunity Costs For Dividend Investors [View article]
This was well said. The limitation of "black and white" rules was illustrated in the 1984 Ghostbusters movie:
Dana Barrett (Sigourney Weaver) is possessed by the paranormal Zuul, who tries to seduce Dr. Peter Venkman (Bill Murray). Venkman says "I make it a rule never to get involved with possessed people." After she lays a passionate kiss on him he says, "Actually, it's more of a guideline than a rule."
How Star Trek Shaped My Retirement Perspective [View article]
What Is Mr. Market's Mood Today? [View article]
What Is Mr. Market's Mood Today? [View article]
I think Graham's Mr. Market metaphor holds true regardless of the number of humans involved in the process. My image of him isn't that he's "nice," but instead capable of the whole range of human emotions, exaggerated by the "herd" mentality that pushes the market to extremes on the high side and on the low side--in a word, "moody." My main point is that we must be focused on our goals, our buying/selling disciplines, and particularly as dividend investors to be unemotional about market gyrations. In other words, "don't panic; stay focused; stick with your game plan (unless the fundamentals of a company have changed)."
You raise a crucial reality that was not part of Graham's world--computer algorithms invading the markets. I'm all for outlawing the worst of these practices, or taxing trades (as in Europe) just enough to make these computerized "raids" unprofitable. It is a plague, in my opinion. (When I view something as needing to be taxed, it must be really bad!)
As for the Mr. Market analogy, I believe the presence of high-speed, computer-driven trades simply amps up the "emotion" of the human participants in the market.
I think your main idea is that Mr. Market is not a benign figure (particularly in light of the computers that are spinning each day), and I concur wholeheartedly. He's out to take my money and make a profit by doing business with me. I believe my best approach to "him" is to take advantage of his innate nervousness. It's important for me to be less nervous than "he" is.
Thanks again for bringing up an important point.
The Right Time To Sell Dividend Stocks [View article]
I've made all the mistakes an investor can make, such as closing out a position too soon or holding on too long. I've arrived at a strategy that helps me trim overextended stocks by determining a percentage of the portfolio for each stock. This way, I can monitor the stocks that run up and those that pull back, trimming and adding when the gains or declines become excessive.
With a tip of the hat to Ben Graham, if Mr. Market expresses "irrational exuberance" regarding a stock, I'll sell him some of my shares. And, I'll gladly buy those shares back when he panics and wants to unload them at a bargain price.
Time To Add Apple To Your Retirement Portfolio [View article]
Time To Build A Shopping List [View article]
I described my thought process in a response to Doug Carey's article, "Time to Add Apple To Your Retirement Portfolio" (http://seekingalpha.co...).
Time To Add Apple To Your Retirement Portfolio [View article]
As AAPL's stock dropped, i began to pay more attention. For the first time I added AAPL to my "shopping list" (http://bit.ly/119Mg4w), with a target price of $353.33, which would be a 3% yield at the present dividend rate.
When AAPL was in the $450 range, I thought the price would likely not drop below $375 unless there was a major negative company event or some really bad macro economic news. So, I've viewed the $353.33 target as unlikely. Yesterday, when the price was in the $385 range I placed a limit order for an initial position in AAPL at $379.50. If it drops toward or through my $353.33 "target," I will buy some more.
A few days ago on CNBC's Fast Money, Guy Adami said the "best case" scenario for someone wanting to get into AAPL would be for a negative market response to AAPL's upcoming quarterly report (on Tuesday, April 23) that would create a "flush" of exiting shareholders so that "new money" could come in. I interpreted this scenario as a potential "final exit" of growth investors with a subsequent entrance of value investors. Adami's short term (fast money) analysis was in the back of my long term (slow money) mind.
All this is to say that I've come to your same conclusion about AAPL.