Doctor Dividend

Dividend investing, value, dividend growth investing
Doctor Dividend
Dividend investing, value, dividend growth investing
Contributor since: 2012
It does take a strong constitution. I got stopped out of MLPL, got hurt with KMI. Fortunately, have MMP and EPD with solid gains. But I look at MPLX and it is a completely different beast versus 3-6 months ago. It's difficult to compare now going forward with past metrics, but for what it paid, its now debt metrics, and the current environment, I'll sit on the sidelines because of the irrationality of anything energy. I hope it does work out for you. At some point it does become a serious value - I just don't think it's there yet.
They didn't cut the distribution. Just the growth of the distribution. From the mid 20s per year to what should be a more manageable 12-15% distribution increase.
I'm still holding this, but boy, is it ugly.
One big difference is that GLOG is the GP while the others you mentioned are the MLPs. So if there is a sense of "safety," GLOG makes the contracts with the oil companies to control the supply side, AND someone else commented in another article they can force GLOP to pay for the ships no matter the market condition to keep up their end of financing. KNOP and DLNG (and I own all three as disclosure) are not required to buy the ships if the market conditions are not appropriate to do so.
I am certainly scratching my head on this one. After getting killed by LNCO, MEMP, EMES, KMI, and probably BBL, the masochist in me says this one really has the macro trends in its favor and ride this one out.
My bad about the chart as it was just cut from the CCC list. It's the last 2 columns that matter - the price as of Jan 1 and the starting yield.
great question. If it's known ahead of time when the podcast will be recorded, people can call in just like a radio show and ask their question. If there is a way like Demuth is doing now linking to a video and link to a podcast, I see no reason why comments couldn't be given.
There is stuff to work out, but I wanted to know if there is an audience before beginning. Basic research to the community who would be the first to start listening to it.
What about a scrip dividend? Saves the cash, issue shares as if you were reinvesting anyway? It won't make those that use it for income happy, but does satisfy both sides of the talking head.
The more articles there are about SS, the more confusing it becomes. I helped my parents last year figure out the smartest way to think about SS. Now that the government changed the rules, particularly apply and suspend, it all went out the window. Others bring up great points about spousal benefits, tax considerations, Medicare premium situations, but in my parents case, what was going to be apply at 66 with spousal benefits and suspend until 70 for taking the delayed credit on both earners will now be take the money at 66 on the primary with spousal benefit and have the secondary wage earner delay on their account until 70. The crossover point doesn't occur until 90 or 91 now, and that's if both live that long.
It's just too complicated outside of your specific situation to glean anything useful because the variables of everyone is just enormous.
I am hoping someone can give more clarification. DLNG on 12/18 said they were buying another ice class ship from their sponsor and recommending an increase in the distribution. They are fully contracted next year, almost entirely contracted for 2017 and a healthy coverage ratio.
1) What am I missing or is this all macro economic and now tax loss selling that is occurring?
2) If macro economic, are all these shipping companies (GMLP, GLOP, GLOG, KNOP, DLNG) all duped on the supply demand of LNG transport and the actual worldwide demand that will be coming?
3) Knowing recent dividend increases don't mean anything anymore, but this sure seems like the investment of the century even if it can hold the dividend for the next 18-24 months.
Looking for answers.
The answer is no. Why would there be a step up in basis within an IRA? Think about it as it is currently in your possession. You bought KMI at 40 within your IRA. It's now @ 27/share. If you sell, do you get to use that tax loss against the income taxes you need to pay? Nope. So why would your heirs?
As it currently stands, taxable, then IRA, then Roth for withdrawal pattern is correct, but it wouldn't surprise me if they stop the stretch that the pattern will get much, much murkier.
I'm not sure what a TIRA is either, but bionic, you are missing one VERY important point. You never have to take a distribution from the Roth. Ever. You already paid the tax on the seed. Whatever the harvest is never has to be touched by you as long as you are alive. (Hopefully) the government won't get a second tax on distributions from it.
With a regular IRA, you do have to take distributions starting at 70.5 years because the government hasn't gotten its money yet.
A Roth to your granddaughter is very smart thinking from your sister. Your granddaughter can stretch the RMD over her lifetime tax-free. That is a fantastic gift for her to receive. There are no tax implications, except if she did not take a distribution as required.
That's what I alluded to. There is no official "stretch" designation, but all the IRA gurus call it that. Since they already received the IRA, they will most likely be grandfathered. Not if, but when, the law will change, the talk is stretching the IRA distribution AT MOST 5 years. The government wants the money now and never intended YOUR retirement funds to be slowly dripped out by your child, grandchildren, or great-grandchildren over many, many years and minimizing the tax that the government desperately needs.
Reading between the lines, I do lean more towards the latter. I don't like the government changing the rules on retirement accounts when they want to and I would not get a major benefit by setting up a 401k within my business. I like having the ability of control even if it means, using the article as the example, having less spending power in the future within my taxable account.
My .02, reinvested.
I will be happy to correct you. But first, I commend you on trying to attempt this article. I myself tried about a year ago and found the variables just too confusing as I would not know how to convey the information. To that end, congratulations. But I will add another wrinkle at the end of your bullet points:
-First, most brokerages will not allow you to start an account without having a designated beneficiary form done at the start of application, especially IRAs. So, no estate issue unless your beneficiaries have died before you.
-Second, unless your spouse is the beneficiary (and depending on your age), ALL other beneficiaries must take RMDs and ideally it would be stretched over that person's lifetime to get the maximum value and minimize the tax hit (and this is where I will expand as the rules - they are a changin')
-Third, the Roth. If you are the beneficiary and NOT the spouse, you must take RMDs. Yes, the withdrawals are not taxed, but you still must make a withdrawal.
-Fourth, investment accounts should have beneficiary forms filled out that supercedes a will and bypasses estate issues. The best idea, is to use the Jim Lange Cascading Beneficiary Plan so each person has the chance to disclaim and continue down the path for maximum options.
Back to the point I wanted to make Mark, which you did not mention - the death of the stretch IRA. I don't know when, but it will be very soon, that the IRA inherited by a non-spouse will have to be completely withdrawn in either 5, maybe 10 years vs the current lifetime stretch. So, if a 2 year old inherited an IRA, they would be able to take RMDs for nearly 80 years, allowing for some massive compounding and multi-generational wealth. Instead, it will become 5 years (maybe 10 but let's just stick with 5) and gone. No taxes with the Roth, but there could be huge tax consequences with a traditional IRA.
So here's the wrinkle: thinking past your spouse and her tax bills, what account is best for your kids? Is it an IRA that could have $500,000 in it and they get hit with a nice $215,000+ tax bill OR is it the taxable account that now has a step-up basis in cost when both you and your wife die?
I don't think you can create a spreadsheet to design that question.
That's why I put in the rolling last twelve months. It will smooth out the annual or semi-annual dividends to include all dividends. You will see a gradual increase over time. Especially with adding money you will easily eclipse that 3%/yr. As someone mentioned above, if you subtracted taxes out from your dividend stockpile, then I would have a much harder time keeping that 4% increase in check, but I just wanted to expand on the concept that you brought to light.
Thanks for the comment. I am aware of RAS website and over 8% DGR for the long haul, but that is also showing the company increasing the dividend each and every year and not an average over X years.
What you also forget is the income can grow 17 % a year if you reinvest the dividends and the third component of adding more money to dividend paying stocks. I am not saying to find companies that only increase the dividend 17% each and every year. That's not feasible.
You got it. There are times you may have to stretch and other times you may have some breathing room. This gives you some idea of, "If I want to hit my goal, do I have to look at a 5% yielder like Realty Income or can I purchase ROST and hope for the continued significant double digit dividend growth?"
Thanks for the comment. I tried to set the parameters ahead of time, but I understand your point. I am self-employed, but many are corporate and have the fantastic ability to put money into their 401K and are allowed to choose any stock, not just a few garbage mutual funds. The same concept can work and they don't have to worry about taxes, maybe trading costs. And with costs, if you have enough assets, Merrill Edge will give you 30 or 100 free trades a month. Or others that do it cheap enough to not be a huge drag.
I guess my purpose of the article was how to benchmark dividend growth in a systematic way. People benchmark the asset growth by comparing to whatever standard index is out there. I now have a clear path on how to get where I want to get.
Thank you again.
Thanks for catching that. I think the article is so old I can't edit, but you are correct. In this example, one is allowed up to $2.5 million in death benefit. As this is structured, $60,000 in premium will get you $2.1 million in death benefit. So each dollar in PUAs gives approx. $4 in DB.
Thanks for catching that, but remember the reason for this structure is not the death benefit, but to use the cash value within the policy while one is alive.
If you really want to see alpha for something like this, try the price 24 months after they declared to double their dividend.
Blue Sky's comments are confusing as he is mixing up too many rules.
rhiannion: There is no age limit on doing the transfer from IRA to Roth. However, as you stated, you pay the taxes for that year on the amount transferred. The other caveat is with you being close to 70.5 years of age, your RMD cannot be used as the transfer. Any value past the RMD can and you will pay taxes on that for that calendar year by April 15 of the following year.
cereeves: You are SOOOO far ahead it is fantastic to hear. Being so young, you can probably go down to 4 months of expenses if needed and invest the other 8. I would wait for the big drop, if it ever comes again, to do that. But that is a psychological thing on how comfortable you feel to SWAN knowing you have that much cash on hand.
Back to your Roth question, let's keep it simple and say it is 5 years after your initial deposit. ANY money you take out is tax-free. It doesn't matter if it's principal, gains, losses, dividends. It's all tax free. End of story. And you have no age requirement to ever take the money out during your lifetime. Once it gets inherited, there are different rules and I wrote an article about that a while back. But those rules will probably be different by the end of the decade.
Congrats on starting so young. You will get to your end point just because of starting so early in life.
You are confusing a regular 401K/IRA with a Roth. Since you are dealing with after tax money, you can take out the principal at anytime and any gains after 5 years from the first deposit into your Roth without penalty. You can also leave your Roth there forever and never have to withdraw, or just let it compound for decades and decades. This account does not have the 70.5 year age rule.
Best of luck.
Is there any withholding or dividend penalty with BLX?
I'm glad people are commenting about this ETN. I like it, still own it for the income perspective, but thoughts on two things:
1) Is anyone perturbed by the fact that the 80-90% individual components are raising distributions quarterly yet the dividend on this thing is creeping down as compared to the year prior? If you go to etracs, you can track it and see the decline. That's one part that bothers me.
2) Will Alerian expand the scope of the definition and give a broader sense of what "infrastructure" means, so it can include something like KMI since there is no public MLP within the Kinder family anymore? In other words, can it use the C-corp as the proxy when an MLP doesn't exist? Having something like Kinder not in this when it is only the largest pipeline company in the country does hurt its cache.
I am not a SS expert, but going to back to my parents case. If my Dad passed, my mom would get the higher of the two benefits, which would end up being my dad's SS benefit, for the rest of her life.
Is there a "penalty" for DH taking SS at age 62 and not her FRA of 67 where she would not be able to get the higher benefit of her spouse? According to her spreadsheets printed in the article, there is no penalty. But again, she may want to delay just for that scenario alone. potentially, a very good catch and one that she can find from kotlikoff's book, "Take what's yours." It's at Costco. And boy, is that material dry but they go through nearly every scenario you can think of.
I had to help my parents run numerous scenarios about when they should take SS. It's not an easy decision and my parents are only 4 months apart in age. The 8.5 year spread makes things much more confusing on when to take what, but what I found after running spreadsheet after spreadsheet is two points.
One, from a line in your article: "But, what if we don't live that long? Won't we be remorseful that we didn't take Social Security earlier?"
As Jim Lange from and Larry Kotlikoff as his guest if you look under the radio show tab, this is longevity insurance. When you are dead, there is no budget to worry about. The larger worry is having more life than money.
The second point, and I see this as the more important point and you alluded to it DH without explicitly stating it: What do you want for the surviving spouse? If you think in terms of a long term cash flow perspective, then delaying the higher earner's until 70 will maximize that longevity insurance. Since that was important TO YOUR situation, then there is only one variable left: When do you take your SS? With my parents, it was important to my father that his delaying until 70 will be the best for my mother in case he passes first.
But yes, this gets tricky. And don't expect the SS office to know anything. They may know 5 of the over 400 strategies about taking SS payments.
it's a twist on Geraldine Weiss idea who has been doing this for over 40 years.
not saying your way, just a new version.
Thank you for your perspective. I do hold this ETN in several accounts, and track each company to see what happens with the dividend. Yet I still haven't gotten a good response to one question:
Why did the dividend drop last quarter?
I know KMP was kicked out and it was 9 or 10% of the index, but even with the reshuffling, it should have been close to identical as the prior quarter. That's my $64,000 question.
Yours is a very detailed answer, and one I can't argue with but I do know that at the time WPZ and ACMP merged into a lesser dividend overall and changed the percentages as well. But I have a more prominent question:
Will this ETN still exist if the parent C-corp keep buying the MLPs? You just had the largest pipeline gone with KMI. Now the 3rd or 4th largest with WMB is being taken out. Will the index expand the definition to include C-corps if no MLP within the same coporation exists? that's what ticker AMZA has done to give themselves greater flexibility of choices. Thoughts?
Your time to plan for retirement was ten years ago when you were 27. Forget about your strategy. You lost part of the greatest asset you had: time. About two years ago, I traded some emails with someone who writes financial planning articles in my specific trade magazine and he said the average 40 year old in my specific part of healthcare has the following:
Loans from college
Loans from becoming a doctor
Loans from their spouse, if married
Loans for starting/buying a practice
Two loans for cars
Mortgage for a house that's too big for their income
A lifestyle too big for their income
High probability maxing out credit cards
Total savings: Close to zero
Total debt: over one million
Hopefully you chose a part of medicine where you can actually make an income. If you went into family practice or pediatrics, you might as well try and declare bankruptcy now. You are so limited in your income potential you don't have a chance.
I don't mean to sound attacking, but just telling you the truth. I would be happy to chat PM as I hope I am wrong for your situation.
Since you do have an insider view of the industry and the state of where things are, I am not asking for price points to buy, but rather how would you rank the companies in terms of strength in the market and the best managed to handle this current environment? I guess let's use the five companies of EMES, HCLP, SLCA, CRR, and FMSA.