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Dividend Sleuth

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  • Periodic Table Of Dividend Champions [View article]
    Peter Lynch called the Moodys (now Mergents) Handbook of Dividend Achievers his bedtime reading. Most of the tools over my workbench are rarely used but it's nice to have one when I need it.

    I keep a stock folder on my computer desktop for quick reference. One mainstay is David Fish's monthly Excel spreadsheet update. Today I dropped DVK's periodic table into that folder. As I get older I appreciate easy reference tools to jog my memory.

    Now, what were we talking about?
    Apr 2 07:56 PM | 19 Likes Like |Link to Comment
  • Prospect: Portfolio Debtor Files For Bankruptcy, Meet New Century Transportation [View article]
    I did not know Mr. Galler prior to his first article about PSEC. He was honest about his motive: a NICK shareholder who, upon doing his due diligence of the proposed deal and of PSEC, believed the NICK was not getting a good deal and he questioned PSEC's claims of "no non-accrurals." I was a PSEC shareholder and in the wake of all that came to light, I decided to shift to BDCs that are internally managed. (I am long TCAP and MAIN and I am considering opening a position in HTGC.) This saga reinforced my conviction about the importance of diversification.

    It's never fun to see a writer criticize a company in which one has invested. I have weathered the Kevin Kaiser/Hedgeye criticisms of LINE/LNCO and KMP. So, I understand the emotion. Rather than name-calling, such as "shill," "trash-talker," "paid by the shorts," "tool of the shorts," "manipulating the market for (his) gain," etc., I think the question is simply whether the facts Mr. Galler presents are accurate. In these matters, I find the light of truth to be more helpful than the heat of emotion.

    It is my understanding that Mr. Galler sold his stake in NICK. I have no reason to believe he is less than honest when he says he has no position or interest--direct or indirect--in PSEC. From what I have been able to discern, he is fiercely independent and is no shill or tool for anyone.

    I want the best for PSEC. As I indicated in an earlier article and comment, my wife is long PSEC. So I have an indirect interest in PSEC's success and I hope this discussion will result in a stronger company that is more forthcoming about non-accruals and write-offs. Events such as those brought to light by Mr. Galler "come with the territory" for BDCs. A BDC does not need to dance around the reality of bad loans. Shareholders can handle the truth. I wish everyone the best!
    Jun 13 08:50 PM | 17 Likes Like |Link to Comment
  • Dave Van Knapp Positions For 2014: The Best Dividend Growth Stocks Will Pay Out More This Year [View article]
    "In retirement ... purchasing power is of primary importance. Dividend growth investing builds and maintains purchasing power that keeps pace with inflation. ...

    "Dividend growth investing also has a psychological appeal. Managing the emotions of investing is a huge part of success no matter what your strategy is. I have found that focusing on the dividend side of the equation pretty much insulates me from worrying about fluctuations in the market. So long as my income generation is safe - which I help insure by monitoring it - I find that I don't worry about market prices."

    Great interview, DVK. This excerpt is worth posting on the bulletin board, as are your "Cliff Notes." Thanks!
    Jan 10 07:36 AM | 17 Likes Like |Link to Comment
  • Kinder Morgan Energy Partners Makes A Strategic Error [View article]
    With apologies to Paul Revere:

    One if by pipeline,
    two if by sea.
    Haul it by a short line,
    or truck it for a fee.
    Dec 24 06:44 PM | 17 Likes Like |Link to Comment
  • Have The Short Sellers Taken Down Linn Energy? [View article]
    My Barron's online subscription was $52 in 2007, $99 in 2008, $129 in 2009, and $149 in 2012. I received word last month that the subscription price was being raised to $199 in 2013. Given the flip-flop about LINE/LNCO (http://on.barrons.com/...), my frustration with their portfolio feature's functionality, and a 33.5% subscription increase in 2013, I decided Barron's was no longer a sleep-well-at-night resource. I'm long LNCO but I dropped Barron's.
    Jul 2 09:33 PM | 17 Likes Like |Link to Comment
  • How Much Dividend Income Growth Do You Need? [View article]
    Factoids: "When a train leaves Denver traveling at 40 miles an hour and another train leaves Chicago traveling at 30 miles an hour...." I'm better at round numbers. Questions like that convinced me to major in Political Science. It's much harder to quantify b.s.

    I'm working on my CAGR calculations. I hope to be finished by Memorial Day.

    You make my head hurt. Thank you. Please keep writing.
    Feb 16 06:44 PM | 16 Likes Like |Link to Comment
  • Prospect's Growth Hides Bad Underwriting [View article]
    Bob, LZG is long Nicholas Financial and he disclosed his purpose in writing at the end of the article--to influence the merger vote: "I hope current Nicholas shareholders, as potential Prospect Capital owners, carefully review my analysis and vote accordingly."

    Perhaps LZG, who describes himself as "long only," normally does not offer a negative view of a security. He may be like the parent who normally does not criticize the local young men until one of them wants to marry his daughter.

    Long PSEC.
    Mar 3 01:58 PM | 14 Likes Like |Link to Comment
  • Linn Energy: How Low Can It Go? [View article]
    Yesterday my "add to" price for LNCO was $32.94. After this morning's announcement of the informal SEC inquiry I held off making a purchase until it reached $30.66. My new "add to" price is $27.00. I'm still waiting to be convinced that there is substance in Hedgeye's assertions.

    We are all familiar with Barron's negative articles about LINE/LNCO in 2013. These articles were a dramatic reversal of the bullish July 11, 2012 article by Dimitra DeFotis, "An Energy Stock that Plays It Safe." (http://bit.ly/YtddPg) Here's a key paragraph:

    "With swaps and puts, Lynn has hedged most of its oil exposure through 2016 at prices between $90 and $100 per barrel, and it has hedged most of its gas exposure through 2017 at prices between $4.50 and $5.50 per cubic foot on average. If the price of either commodity spikes dramatically, Linn's strategy forgoes some upside, but limits its downside risk considerably and thus gives investors a secure outlook on that juicy yield."

    And, here's the conclusion: "...Linn's yield is a desirable needle in the haystack of low rates, and Linn's hedging program sharpens the outlook for future yield growth."

    Since LINE's accounting procedures have remained basically the same for several years, either Barron's missed something in 2012 that they discovered in 2013, or someone prevailed on them to change their minds. I believe Barron's owes its subscribers a review of internal conversations and correspondence related to its reversal from bull to bear between 2012 and 2013.

    (I sold LINE in October, 2012 to buy LNCO.)
    Jul 2 08:26 PM | 13 Likes Like |Link to Comment
  • Why Realty Income's Portfolio Risks Are Exaggerated [View article]
    Thanks for the nice article. A $60 fair value would provide a 3.6% yield at the current dividend. That seems stretched. One easy way to monitor Mr. Market's assessment is to track NNN, O, and WPC. I hold all three of these in my retirement income portfolio and they are core, long-term holdings. Periodically I will add additional shares to my core "minimum" amounts when I think one or more is undervalued.

    NNN should probably trade at a discount to O because of the relative credit quality of its tenants are slightly lower than O's. But it is a very well managed REIT and it will soon be a Dividend Champion, so it gets extra points on my scorecard for that. In any case, if you consider these three long-term dividend growing, triple-net REITs as relatively equal in strength, you can track their relative yields over time and you can find buying opportunities.

    NNN currently yields 4.5%, which in my opinion is a fair value. My portfolio allocation goal for NNN is 2.0% and it is currently underweight at 1.2%. (It is at the minimum goal I've set for it.) If it gets to a 5.0% yield, I will try to add shares up to the 2.0% weighting. If it dropped in price to a 5.5% or 6.0% yield, I would overweight it.

    O currently yields 5.0%, which in my opinion is a better value, somewhat underpriced relative to NNN. My portfolio allocation goal for O is 3.0%, and when its price was weak awhile back I added more shares. It is now at 5.2% of the portfolio. To the "fair value" point, I would peg fair value in the current environment at a 4.5% yield, which would be $48.67. If the price increased to the point that the yield was less than NNN's, I would shift some money. At $60, I would be back to my minimum position in O.

    WPC currently yields 5.5%, which in my opinion is the best value at present. It is my best long-term holding. Some investors see their tenants as being more risky, which likely accounts for the yield variance. I think WPC is a very solid, well-run REIT. I would put fair value for WPC at a 4.5% yield, which would be $79.55 at the current dividend. My target portfolio allocation for WPC is 3.0%. Recently, WPC traded at a 6.0% yield, and I became overweight at 6.6% of the portfolio. Currently, WPC is my largest holding and KMP is number two at 6.5%.
    Jun 7 11:36 AM | 12 Likes Like |Link to Comment
  • Own These World's Leading Brands And Never Fear A Recession Again [View article]
    Several of my friends have tried both stocks and mutual funds. Some have had more success with funds and some have had more success with stocks. I've had better success, and much more fun, with stocks. Kostohryz makes a good point that managing one's own money requires a great deal of work, and many people do not have the inclination to do so. For those who are not interested, not willing, or do not have the time, the Bogle index fund approach makes sense. On this issue, I vote with Chuck. I'd rather research a good dividend growth stock than play golf. My stock-picking is more consistent than my golf swing and I sweat less.
    Jun 6 09:54 PM | 12 Likes Like |Link to Comment
  • Linn Energy: Where Are The Naysayers Now? [View article]
    Jim said on air that he regrets missing this move in LINE/LNCO.
    Jul 2 11:28 AM | 11 Likes Like |Link to Comment
  • Is American Realty Capital Properties' 8% Dividend Yield Built To Last? [View article]
    Thanks for another helpful article, Brad. ARCP is currently 2.5% of my retirement income portfolio. The recent drop in price is tempting. For me, it's a matter of weighing the merits of prudent diversification vs. the opportunity to take advantage of a potential bargain (if ARCP is successful in their partnership with Golden Gate). So far, I have resisted adding to my ARCP position because of the risks you have identified.

    I translate your term "selective buying opportunity" as, "If you want to flavor your portfolio with some Salsa and have disposable risk capital, this may be for you. If you're investing 'SWAN' (sleep well at night) money, don't go overboard." Is that a fair translation?
    May 30 07:06 AM | 11 Likes Like |Link to Comment
  • 10% Dividend Payer Linn Energy's Plan For A Big 1031 Exchange Could Lift The Stock Considerably [View article]
    Alex, I think the way you think. I'm long LNCO at 29.49 and my focus is dividend income, not price appreciation. But, after the Siege of Hedgeye and the Battle of Barrons, many people who are long LINE or LNCO at higher prices are particularly conscious of, and perhaps sensitive to, price action.
    May 7 08:02 AM | 11 Likes Like |Link to Comment
  • Stocks For 2014: Something For Everyone: Part 1 [View article]
    "...it's a mistake to try to time the market. ...

    "...good common stock investments are available in all general market environments."

    Thanks for sharing your experience and your wisdom with us, Chuck. I appreciate your consistent and creative reminders that "it is a market of stocks and not a stock market."

    I'm thankful for the vast amount of market data that is available at our fingertips (such as FAST Graphs). Yet, much of our financial media paints in broad strokes and is focused on short-term momentum and market-timing. Thanks for urging us to move beyond generalizations to study individual stocks with due diligence.
    Jan 10 06:33 PM | 11 Likes Like |Link to Comment
  • Realty Income: What Ails This Monthly Dividend Champ? [View article]
    "The current weakness in its share price seems to be more related to a shift in market sentiment than to anything specifically related to Realty Income or its operations."

    I think you nailed it. The 52-week price range is $36.58 to $55.48. As far as I can tell, the company's story is essentially the same now as it was when it was trading in the mid-$50s. In retrospect, O was ahead of itself in the mid-$50s. The present price appears to be is a classic buying opportunity. The financial media has been focused on the Fed's tapering so the risks are well-known. At the current levels, the odds seem (to me) to favor the upside, but it means buying in the face of lots of interest-rate fear as in many minds, REITs are lumped in with fixed-income securities. (Long O.)
    Jan 9 12:01 PM | 11 Likes Like |Link to Comment
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