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  • Dividend Champions For July 2015 [View article]

    Basically, it's just telling you whether the dividend is growing faster than earnings over the last 5 years. I often calculated it myself but now I have it right there from a trusted source. I have no set range for the DEG metric. I use it in conjunction with the payout ratio and the various dividend growth rates and what I know about the company.

    For example, a company with a 20% payout ratio could certainly handle a DEG ratio much greater than 1.0 for a number of years before company capital needs and dividend sustainability comes into question. On the flip side, a utility with a 80% payout ratio and a DEG much over 1.0 would have me concerned about a cash squeeze if the board kept the dividend growth pace faster than earnings growth rate for too long into the future. In that case, you may want to check the FCF, the dividend history, and planned capital expenses to see if this may be the case.

    Of course, there are a lot of other financial statistics I look at as well as how the company is executing. The DEG ratio, to me, is just a spot check on management's willingness to share the profits with me as a shareholder without putting the dividend at risk.

    Ideally, I'd like to see a DEG ratio hovering around the 0.9-1.1 range with a decent earnings growth rate and, being a dividend growth investor concerned about my own income stream, a reasonable payout ratio. Deviation from that is not a deal killer unless it's down around 0.1 and the company has no specific challenges it's facing. For me, that would be stingy. A big acquisition or the recent slump in the oil patch would explain a low DEG ratio as the company is probably looking to conserve cash.

    Hope that explains it.

    Jul 2, 2015. 10:33 PM | 3 Likes Like |Link to Comment
  • My Bet On Seeking Alpha's Future [View article]
    As a reader I became a better investor. As a contributor I've sharpened my writing and critical thinking skills.

    Thanks to both of you for building Seeking Alpha to where it is today. Change and evolution can be a good thing for everyone and I look forward to what the SA staff, under Eli's guidance, implements in the future.

    To David, again, thanks and enjoy the free time you can carve out for yourself.

    To Eli, congratulations.
    Jul 2, 2015. 11:46 AM | 2 Likes Like |Link to Comment
  • Emerson Electric: Not A Utility, Not A Radio Company [View article]
    I worked with quite a few EMR products in my industrial days and was always aware of the quality and maintainability of their components. Somehow that never translated into stock ownership; perhaps being blinded by the bling of technology companies in those days.

    It wasn't until the Great Recession and my transition to dividend growth investing that I became more aware of its performance. When I found Mr. Fish's CCC list and saw the record it had, I did some digging and added it to my portfolio. Subsequently, I lost it to an early exercised covered call just before an ex-div date and it continued to climb from there. With the recent sell off to the fairly valued range once again, I added it to my wife's portfolio where it will stay.

    I was disappointed in the recent announcement about the Network Power division but assume management is using its judgement to position the company to meet their goals.

    Thanks for the informative article, DS.
    Jul 2, 2015. 01:01 AM | 1 Like Like |Link to Comment
  • Dividend Champions For July 2015 [View article]
    Once again, thanks Mr. Fish.

    When I look back at earlier versions of "the spreadsheet", I really appreciate the work and discernment in the development to its current format. The accelerated dividends at the end of 2012 and how you handled it is a case in point. The DEG (Dividend Growth/Earnings Growth) column has saved me some extra work when deciding upon an investment. It's been invaluable to me.
    Jul 2, 2015. 12:26 AM | 7 Likes Like |Link to Comment
  • Investing Is Not So Easy [View article]
    Mr. Papadatos, I don't think investing is supposed to be 'easy' but it really isn't that difficult. Look for quality, pay a reasonable price, diversify some, reinvest the dividends and practice patience. From what I've read, you'll probably outperform most individual investors over extended periods of time.

    I agree with point (2) of TF's response. Holding up KORS or HLF as examples for your thesis is probably not a wise choice.

    Also, if you follow your logic of --

    "While Wal-Mart, Coca-Cola and General Mills traded at markedly low P/E ratios, between 10 and 12, during the Great Recession, it is unlikely that they will become so cheap again during the next recession."

    -- then now would not be so bad an opportunity to buy these companies. They are not currently selling at grossly inflated prices and, if they are not going to sell off during the next recession, you can sit back and enjoy the 6-10% long term returns without worrying.

    Thanks for writing. I think the ensuing discussion will be interesting.
    Jun 16, 2015. 11:10 AM | 2 Likes Like |Link to Comment
  • Portfolio Introduction: Starting From Scratch And Learning Along The Way [View article]
    Scott, I think this is going to be an interesting process as it evolves. I'm also betting that as you age and the portfolio progresses, you'll revise your outlook and begin to wonder again.

    I look at myself and begin to wonder at times also. As we came out of the Great Recession, I thought I had all the time in the world. It wouldn't really make a difference owning some great 1ish% yielders as I/we had lots of time left before we'd need the dividend income. Our only sources of income in retirement will be Social Security & what we've built in our IRAs and I really hate the thought of spending my "seed corn". Then one day I realized that, in my late 50s, I need to be more cognizant of the income being produced in the portfolio and the possibilities of it growing. So instead of GILD being 5%+ of the portfolio, I had to settle for about 2.5% and plow some of the remainder into utes and REITs to balance it out despite the exciting research & products coming out GILD (and others). Ten or more years ago, it probably would've been a different story. But enough about me.

    One question I had was how did you settle on $600 opening positions? I'm guessing you're using a brokerage with free trades to minimize expenses rather than pay commission on each one. My other questions have already been hashed out with maybenot.

    Looking forward to articles as you progress along this path. Thanks for writing an intriguing first article on this.
    Jun 4, 2015. 11:23 PM | Likes Like |Link to Comment
  • Learning From The Masters: Q&A Session With Richjoy403 [View article]
    Mr. Ward, a great addition for this interesting series.

    Richjoy, thanks for sharing your thoughts. You especially got a chuckle & a nod out of me because of this:

    "Time and compounding are the BBFs of SDIs of ALL strategies."

    However, I do have one complaint. Mentioning poblanos had me dreaming of a plate of chiles relleno while I was reading the article. Unfortunately, fresh poblanos are hard to find around here.

    Thanks to both of you.
    Jun 3, 2015. 02:53 AM | 3 Likes Like |Link to Comment
  • Honeywell: Why It's My One Dividend Stock To Own [View article]
    Mr. Aloisi, excellent article covering HON. I've looked at it several times but decided against it only because the yield is perennially low. If I had more time before needing those dividends or the ability to give it an outsized position in the portfolio, I may have thought otherwise. I've consigned it to the "look at it during the next downturn" group that I hope to add when the starting yield is higher. In the meantime, I'll have to be satisfied with watching the company grow.

    Thanks for sharing your thought process.
    May 30, 2015. 02:54 AM | 3 Likes Like |Link to Comment
  • Dividend Growth Investing: The Perfect Portfolio Moving Forward (Part 1) [View article]
    Mr. Crosetti, I remember when you wrote about the processes you were using when setting up your mom's portfolio. It was the inspiration for my Grandma's Money series when I was first asked to help with her finances although different circumstances.

    The results are amazing so far and without you reaching for yield or using any "financial engineering" to enhance your returns. Just buying good companies and letting them do what they do best.

    Thanks for keeping us updated.

    Oh, but you should've bought GILD in 1999 instead. You would have had a better return ... just saying. ;-)
    May 27, 2015. 09:57 PM | 5 Likes Like |Link to Comment
  • The Great Beta Hoax: Not An Accurate Measure Of Risk, After All [View article]
    Mr. Carnevale, thanks for the interesting article.

    When building my portfolio tracking spreadsheet, I had included a column for beta despite never using it for an investment decision because the common wisdom was professing lower beta stocks were "safer". Now that I think about it, I've spent more time keeping the beta column updated than I ever did using it for a screening or investment decision.

    I think it's time to delete that column and spend the time I wasted on keeping it updated somewhere else. I suppose now I can use it to get one more thing done on the "honeydo" list.
    May 23, 2015. 12:58 AM | 4 Likes Like |Link to Comment
  • Learning From The Masters: Q&A Session With Chris DeMuth Jr. [View article]
    Mr. Ward, I've been following your excellent series so far. Thank you for stepping outside "the box" and bringing us Mr. DeMuth's thoughts and investing philosophy. I don't always agree with what he writes but, now that I read how he approaches investing, have a better understanding of his mindset. I certainly don't have the skills, time and resources to follow his approach but it was refreshing to hear a different perspective.

    To Mr. DeMuth, thank you for sharing with the SA community. It was an interesting read. I now have to go read "Investing in the Unknown and Unknowable".
    May 18, 2015. 10:17 PM | 1 Like Like |Link to Comment
  • REITs: Look Out Below? [View article]
    Mr. Aloisi, good article cautioning us on the effects of rising interest rates whether engineered by the Fed or anxious bond traders.

    However, I suggest it may be time to start or add partial positions in the larger and higher yielding REITs with reasonable P/FFO ratios; especially so for those of us nearer the time when we'll be relying on those dividend streams. The recent pullback in prices have brought yields closer to a reasonable return in that sector. Although further price drops may eventually end with some REIT's yields several hundred basis points higher, those yielding in the 4-5ish% range now offer good compounding opportunities in the meantime.

    I'm guessing, with slow growth throughout the world and Japan and Europe trying to stimulate their own economies, "normalization" of rates to the 3-4% range for mid-term bonds is still a ways off. In the meantime, sitting in cash is a losing proposition. Focusing on the dividend stream and its growth can help mitigate some of the concerns of large changes in share price.

    Thanks for writing.
    May 2, 2015. 02:57 AM | 5 Likes Like |Link to Comment
  • How To Handle The Currency Factor [View article]
    "Fast forward a few years and the situation has now completely shifted; [b]the US dollar is stronger than ever.[/b]" (emphasis yours)

    Dividend Guy, don't take it the wrong way but, around 2000-2002, the US dollar was trading around US$1.55 to the Canadian dollar. The current US$1.20/C$1.00 is a far cry from that. It made for some wonderful (and economical) family vacations in the Niagara Falls/St. Catherine's/Niagara bench wine region, Toronto, Ottawa and Montreal.

    As to the article, you're right, there are some interesting companies amongst our neighbors to the north.

    The telecoms interest me because they don't have quite the penetration as south of the border. I don't remember the exact number of phones per household but there was a significant difference. (long TU & RCI)

    The banks are interesting because of their capital ratios and the mortgage structures are for the most part markedly different than U.S. banks. I have a friend in Toronto that used to joke that if you bent over to pick up a penny on the sidewalk in front of one of the large banks they'd charge you a fee for that. If one does a little window shopping on their web sites for accounts you may want to open, indeed there's a hint of truth to that joke. (long BNS, RY, BMO)

    We're about midway between the currency extremes over my lifetime so I wouldn't feel uncomfortable investing in either direction at this point if you're truly willing to be patient.

    Thanks for writing.
    Apr 28, 2015. 01:44 AM | Likes Like |Link to Comment
  • Several Dividend ETFs Slash Their Dividends By Up To 22% [View article]
    "He was a nice guy. Who get's the bike?"

    Bada Boom!

    Don't worry folks, Hilo will be here all week. Sit back and enjoy the show. 8-D
    Apr 16, 2015. 01:13 AM | 2 Likes Like |Link to Comment
  • Rating Opportunities In REITs [View article]
    DH, we seem to be on a similar wavelength lately. First it was utilities and now REITs. After ignoring both for so long thinking they were for stodgy old folks, I woke up one morning and realized I had somehow joined that esteemed group. Maybe it was the distortion from the warped mirror in the bathroom. I'm beginning to appreciate the slow but steadily increasing and above-average income stream as it's dawning on me that the day when I will need to dip into that stream is fast approaching.

    It was quite the surprise to see that, except for VTR and DLR, we own the same REITs. When the cash becomes available, and with a little dip in VTR bringing the yield closer to 4%, we will have added those too as they were already on my shopping list.

    I still think Federal Realty (FRT) and Tanger Factory Outlets (SKT) are both well-run REITs. Unfortunately, Mr. Market must feel the same with their perennial lower yields.

    I have little concern for HCP. They handled the surprise CEO switch a few years ago well, have continued to prosper and so far the Manor Care renegotiation takes some financial pressure off Manor Care and less concern for HCP about their primary tenant. I also like their diversification across the 5 major categories of healthcare facilities.

    Thanks for another excellent article and your style of winnowing the list down.
    Apr 16, 2015. 12:49 AM | Likes Like |Link to Comment