Harry Domash

Newsletter provider, dividend investing, long only, preferred stocks
Harry Domash
Newsletter provider, dividend investing, long only, preferred stocks
Contributor since: 2011
Company: Dividend Detective
In this financial environment, I don't think that high leverage necessarily equates to high risk. This is not 2008. Of course KYE is down a lot. This article is about making money when and if oil and nat gas prices recover. However I defined KYE as conservative compared to SRF because KYE holds mostly pipelines, so it can score gains without a rebound in oil and nat gas if the market decides that pipelines can make good $ while oil and gas prices stay low. If that happens, KYE holders will do well, but I'm sure that other MLP CEFs will also do just as good.
No, but I just looked at GNT, which holds gold miners. It's trading at a 12.7% discount to NAV and pays a monthly dividend (12.8% yield). The miners don't always track gold prices, but if you want to play a gold mining recovery, GNT would be a good way.
That's the point. E&Ps have the most to gain if oil and nat gas prices rebound.
Yes, all numbers were based on the closing prices, including sells.
I used the closing prices in all cases. So the two return percentages quoted for each variation reflected buying at the close of announce day +1, or buying at the close at announce day +2.
I'd be interested in hearing about your findings. This is very much a work in progress.
Having my special dividend database going back to 11/2009 finally made it feasible to test various strategies.
No, my numbers exclude commissions, trading slippage, income taxes, etc.
Actually, the average hold period was measured in days, probably around 12 days.
It appears that much of NRZ's income comes from Excess MSRs. How can someone predict the future income from Excess MSRs?
The GPs that I've mentioned here are all corporations, so you'd get 1099s. However, some GPs are MLPs themselves. In those cases, you'd get K-!s.
Much research has found that stocks that have recently outperformed are your best bets for future gains.
Targa Resources (NYSE:TRGP) and Williams (NYSE:WMB) were the only GPs, organized as corporations, that have been GPs for two years. Here are their two-year returns.
TRGP 223%, NGLS 74%
WMB 95%, WPZ 17%
Spectra and Oneok only converted to pure GPs around the beginning of 2014. Here are their YTD numbers.
OKE 31%, OKS 16%
SE 20%, SEP 29%
PAGP was an October 2013 IPO. Here are its numbers since its IPO.
PAGP 37%, PAA 23%
All of the GPs that I mentioned are corporations, not partnerships.
AGNC announced BV at $25.51. A toast to you Scott Kennedy for your "right-on" analysis.
Joey,
A 23-year old finance major! Wow! Wonderful analysis. You have a bright future ahead.
Hi Meltdown,
Thanks for the plug for Dividend Detective.
Harry
RNF is more volatile than the other picks. Its share price moves with expectations for nitrogen fertilizer demand, which in turn, depends on the size of next year's corn crop, next year's weather, and who knows what else. Those expectations seem to change almost daily. I view RNF as a good mid- to long-term play and don't watch it every day.
Hi richjoy403,
Thanks for the complement. It is much appreciated.
Harry
BGS just made a big acquisition, in terms of product brands. So, I think it is still a buy.
Hi Munger Maniac,
Thanks much for the complement.
I picked my "Buy & Forget" list from stocks that I follow in my day job (Dividend Detective). Currently, we're not following any big pharma stocks because we view that sector as too risky. Consequently, you are probably more up on the topic than me.
BND's last monthly dividend was $0.214. Given its recent $82.90 trading price, that equates to 0.258142%/mo, which annualized, is 3.1%.
yes
Hi FloridaScene,
In my view, the traditional yield formula for bond funds (last 12-mo ave dividend divided by share price) is more meaningful for investors like us than the SEC yield, which, in essence, is a form of yield to maturity.
The traditional formula reflects what you actually earn, in terms of dividends.
Hi Scott,
Thanks for the complement. There are many other stocks that would qualify, so my picks are somewhat arbitrary. MO is paying around 6% vs. 4.7% for PM. While PM may have better growth prospects, in this instance, I'm in the "bird in hand" camp.
Oil stocks, including XOM, are generally too volatile for such a list. Finally, KO's 2.9% yield is nothing to shout about.
Harry
What's amazing about PDT is how much it has outperformed PFF, an ETF that more or less addresses the same sector (preferreds).
Hi Whidbey,
The assumption is that bonds will continue to produce produce positive returns in an economic downturn and weak stock market. That doesn't necessarily imply a "depression."
You are right that bonds would underperform stocks in a strong market. In such a scenario, whether bonds produce positive or negative returns depends on prevailing interest rates and inflation. Bonds would lose money if interest rise significantly, or if inflation takes off.
That is correct. If half of the ETFs are trading below their 200 day MAs, you would start the month with 50% of your assets in SHY or cash.
The results that I related are for the strategy as described. But that is not necessarily the optimum strategy. If you have a better idea, I'm all ears.
You are right. Why would you buy preferreds paying 6.5% if you could get 5% from your government insured savings account.
Yes, you are right. Preferreds are listed in the Shareholders Equity section of the balance sheet.
What I should have said is that, despite that, for all intents and purposes, preferreds act like debt, not equity. For instance, if a company prospers, triples in size and its common stock goes to the moon, preferred shareholders wouldn't participate. That is, the preferreds would still be trading near their call price. Thus, in a practical sense, preferreds act like bonds, not stocks.
Using BBT-B data from 5/31/11, I get yield to call of 7.35% assuming four payments per year and 7.33% assuming two payments per year.
Thanks for the plug.