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  • Chowing On Unsafe Dividends For Monday's Breakfast [View article]
    I agree, Robert. You've got to put your long-term financial health ahead of that of the companies you own - no doubt about it.
    Aug 30, 2015. 12:43 PM | 3 Likes Like |Link to Comment
  • Chowing On Unsafe Dividends For Monday's Breakfast [View article]
    Great article! Many of us value/ dividend growth types get out knickers into a knot with the prospects of dividend cuts. All businesses run into tough times at some point - that is the nature of things. When they do, it is BAD for the company to fritter cash away. If you're a long-term investor, what you should care most about is the long-term health of the business - MORE than the dividend. We get that wrong often, though. And where investor group A gets it wrong, investor group B has an opportunity. This article does a great job highlighting that fact.

    I've held companies that have cut or even suspended their dividend as long as I think it is in the best interests of the business to do so. When Wells Fargo cut the dividend, I loaded up on shares, actually increasing my position by several 100%. You really need to understand each particular situation, and avoid drawing any sort of bright line doctrine when it comes to investing.

    My only hard and fast rule where dividends are concerned is that where I see mismanagement or dishonesty coupled with a dividend cut, I sell immediately, and don't look back. Even without a dividend cut, though, managerial incompetence or dishonesty is sufficient grounds to instantaneously sell 100% of my position.
    Aug 29, 2015. 05:21 PM | 3 Likes Like |Link to Comment
  • Retirement Strategy: Did You Freak This Week? [View article]
    Hey, Regarded. I bought more shipping companies with a strong profile moving goods and raw materials into and out of India, and added more MLP positions.

    One thing that may or may not interest you. I do not keep "dry powder." Instead, I own a portfolio of steady dividend payers, I accumulate the cash over periods of one month, pay my bills and then deploy the savings into more dividend payers. I deploy ALL of my savings at month end, leaving not more than $50 or so of "dry powder." Why? Because keeping dry powder, in my mind, amounts to trying to guess where the market will go next. For all I know, the market will never touch the levels it is at today EVER AGAIN. I understand that I have literally no idea, and so I invest once a month regardless of market conditions.

    One thing I do know, however, is that I will have more savings next month, and the month after that. I can control that, and predict it. My "dry powder" is basically a comitment I have made to invest my savings at month end every month until I die.
    Aug 29, 2015. 05:02 PM | 7 Likes Like |Link to Comment
  • The Sky Was Falling Into The Hands Of Astute Dividend Growth Investors: Did You Catch Any? [View article]
    Be Here Now - it means plenty to me.
    Aug 29, 2015. 03:13 PM | Likes Like |Link to Comment
  • The Sky Was Falling Into The Hands Of Astute Dividend Growth Investors: Did You Catch Any? [View article]
    Actually, George, I've been spending some time reading some of the classic tomes on portfolio risk management, and virtually every single one equates "risk" with "volatility". The aim seems to be maximizing portfolio returns while minimizing volatility - Nobel Prizes have been awarded for work on that very topic.

    Falling stock prices are bad for sellers, but what about investors who think of themselves as business owners? When I was practicing law, the biggest threat to my welfare was not what someone would pay me for my partnership interest, but that the firm's earnings might drop. What makes my investment in IBM or PFE any different? The answer, in my view: nothing.

    If our greatest risk is dropping corporate earnings, what about dropping stock prices? If a company's earnings permanently drop by 10%, but the stock price only drops 1%, it's a disaster! It means you' overpay by 9% every time the company retains earnings or buys back stock, or you reinvest dividends into more shares. If the stock price drops by 20%, you've just clocked in a 10% bargain on every last penny of earnings the company retains or uses to buy back shares, and every time you reinvest dividends into more shares. In sum: volatility is the single most beneficial piece of financial news a "business owner" investor can have. Business owner investors should actively seek out volatile stocks - preferably for companies with rising or steady earnings. The only risk they take in doing so is the risk of earnings screaming bargains on their businesses.

    Simply stated, the widely accepted view of what "risk" is quite precisely 180 degrees wrong for long-term investors. Thank goodness for that! When 99% of the world's investors are investing based on a profound misconception, the opportunity for the 1% of investors who understand that misconception is, well, it is enormous. I suppose I'm one of those investors that modern portfolio theory types would dismiss as a statistical outlier. I don't think I am, though. I'm not uniquely gifted as an investor, and have literally no clue about what will happen in the future. I just buy companies with solid earnings, good products and business practices and collapsing stock prices, and then I never sell the shares. I collect the dividends, and I reinvest my savings into more shares of companies with reasonably good earnings and collapsing stock prices. The portfolio cash flow grows like a virus, and every month I buy more and more and more shares of beaten down stock of companies with reasonably solid earnings. Sometimes people call me an idiot for failing to understand modern portfolio theory. I LOVE IT when that happens!
    Aug 29, 2015. 05:49 AM | 5 Likes Like |Link to Comment
  • The Sky Was Falling Into The Hands Of Astute Dividend Growth Investors: Did You Catch Any? [View article]
    Great article! I've been adding MLP positions for the past few months, reinvesting dividends and buying some of the least fashionable stocks I can find. This activity alone has boosted my portfolio income by nearly 1% just over the past couple of months - and that does not include some dividend increases that were announced during that time period. The last time I saw that sort of month over month growth was during the taper tantrum, when I tightened my belt and pigged out on REITs. I just don't see volatility as some sort of a tradeoff - I mean, dude, volatility is what gives us massive and lasting raises!
    Aug 28, 2015. 05:44 PM | 3 Likes Like |Link to Comment
  • Navios: Not For Novices, But The Dividends Are Safe [View article]
    Generally speaking, there is no question that a stock price swoon accompanies dividend cuts like bees on honey. It's especially true of "surprise" cuts. Navios has been touting the safety of it's dividend for some time now, and if a cut does ultimately materialize, I have to assume it would fall into the "surprise" category.
    So, I just look at the distributable net income oper share over the past five years, average it out, and see whethet it covers the dividend. Based on that approach, the dividend looks stable. I also just listen to the CEO and try to make a judgment about whether I trust what she says, and whether I think she's running my business as well as it can be run. All businesses have ups and downs - the posibility of dividend cuts is just part of owning a company. I typically don't bail out when times get tough. Actually, I've done best when I buy businesses at times when most others are fervantly selling. I've taken 70% losses on some positions some years, only to see them rally explosively fifteen years later. Not all investors are willing to surf tidal waves, though. I see Navios as one of those tidal wave stocks, and if you don't have the stomach for unreal volatility, it's not something to dabble in.
    Aug 28, 2015. 04:36 PM | 2 Likes Like |Link to Comment
  • It Takes A Village [View instapost]
    My wife is a nurse. The medical benefits of the family support are more or less accepted now as a scientific fact. I would have to assume that the same dynamic could apply in a financial, as well as a medical setting. I am not aware of any research into the topic - but haven't looked either. It seems like a potentially fertile topic to explore.

    Like you, I benefit from the reality check I get sometimes on SeekingAlpha.
    Aug 28, 2015. 04:28 PM | 1 Like Like |Link to Comment
  • The Mirage Of Dividends And Yield In Commodity Stocks [View article]
    Great point, Earlyriser. I'd only ask, why not play both sides of the fence: own both some bonds and stock for the same producer? Seems like one way to help preserve capital and cash flow in the face of possible dividend cuts.

    Another point to consider: you have to look at corporate structure to see whether management has an incentive to cut dividends. Some commodities firms (particularly in the MLP space) have large majority shareholders that absolutely rely on the dividends to support parent company level operations. I tend to think your safer owning shares of a company which has a separate publically traded GP that is heavily compensated by distributions from the lower tier entity. The chances of dividend cuts are greatly diminished when management's compensation takes the form of dividends because the corporate structure aligns shareholder and management incentives.
    Aug 27, 2015. 05:25 PM | Likes Like |Link to Comment
  • Navios: Not For Novices, But The Dividends Are Safe [View article]

    A 24% yield simply means the stock market is pricing in a drastic dividend cut (or worse). Either the stock market is dead wrong, or the CEO's repeated statement that the dividend is secure through 2016 is wrong. Take your pick.
    Aug 27, 2015. 04:08 PM | 1 Like Like |Link to Comment
  • Navios: Not For Novices, But The Dividends Are Safe [View article]
    I bought another 1k worth myself. They're making enough now with India to offset the China slowdown, and I think the market is selling NMM simply because it's dropping and there is rampant investor terror. Sort of my favorite time to buy.
    Aug 27, 2015. 07:26 AM | 1 Like Like |Link to Comment
  • Navios: Not For Novices, But The Dividends Are Safe [View article]
    The market may know something the rating agencies don't. Wouldn't be the first time, right?
    Actually, Navios has a huge slog of bonds falling due in 2018. That concentration of maturities coming up in the not too distant future would have me worried if Navios was shut out of the capital markets at the time and couldn't roll the debt. The issue I see is that it is sort of vicious cycle. The stock goes down, and the door to raising equity shuts, and that makes the bonds riskier from a rollover perspective since there's one less avenue open to the company to raise capital, the bonds sell off, and that drives down the stock price. That sort of dynamic is tough to trade with a larger company, but NMM volumes are low enough that a trader with a large enough book could run something like that. For a while at least. At some point, the assets are too cheap and you can get a short rally that will put a swift and expensive end to the bond short/ stock short trade. I wouldn't care to bet on when or if that will happen.
    I own the stock, and will continue to do so. I don't see it as a safe investment or a safe trade. I'm willing to ride it down to zero, but if you're looking for safety, maybe look elsewhere.
    Aug 26, 2015. 07:09 AM | 2 Likes Like |Link to Comment
  • Weighing The Week Ahead: The Start Of Something Big? [View article]
    My plan remains unchanged: spend less than I earn, invest the savings into dividend paying companies with stable earnings, collect more income next month so I have more savings to invest. Repeat cycle for 50 years or until I die. The condition of the stock market has NOTHING to do with my plan. The only reason I even bother looking at the stock market ever is to find the best priced deal I can find at the time. I virtually NEVER check the net worth of my portfolio - I just tabulate the expected dividend income, subtract my expected living expenses and consider the difference between the two to be what I'm worth. That number pretty much only goes up, slowly, to be sure, but consistently up. That number actually goes up FASTER when markets are crashing.
    I haven't lost sleep over stock market crashes and corrections since 2007, when I finally honed my investment plan down to what I have described above. I'm quite vague on whether I've outperformed or underperformed the S&P500 in terms of my portfolio price (doesn't help that I have no idea what it is), but my income has grown far quicker than the rate of dividend appreciation for the S&P500. That 's largely a function of buying stalwart companies that other investors are desperate to sell at rock bottom prices.
    I enjoy reading Jeff's articles, but in truth, the information is fairly useless in terms of my approach. I generally place just one trade per month - once my bills are paid and dividends have all come through. In between those trade days, I read quarterly reports, articles, Fed publications, and more or less whatever other information I have time to digest. 90% of everything I read has no direct bearing on what I will invest in at the end of the month. Why do I read it? I love it. I don't care if it's directly applicable, but if it helps me think clearer, it's well worth my time.
    So, on that note, thanks again Jeff for a great article.
    Aug 24, 2015. 03:57 AM | 4 Likes Like |Link to Comment
  • This Dividend Stock Yields Over 12%, Has 70% Cash Flow Growth, And Will Raise Its Next Dividend [View article]
    I've discovered liquid deserts here. Ginja is a cherry liquor. They pour it into small cups made of chocolate. Very nice after a sardine and pata negra feast.
    Aug 23, 2015. 02:02 PM | 1 Like Like |Link to Comment
  • This Dividend Stock Yields Over 12%, Has 70% Cash Flow Growth, And Will Raise Its Next Dividend [View article]
    I live on the Iberian peninsula, where it's all about sardines, octopus, olives and various forms of dried cured piggy. Haven't quite graduated up to deserts yet - unless the desert happens to be made of any one or more of the foregoing ingredients. I think the chocolate around here is supposed to be good, so once I break free of my mollusk and porcine shell and branch out into what the locals refer to as "sobremessas", rest assured, the similes will concommitantly broaden out. Particularly where energy firms are concerned (midstreem MLPs, here I come), as those little morsels are turning out to comprise my entire investment diet these days.

    Curious, is it Milbank as in the law firm of Milbank Tweed?
    Aug 23, 2015. 04:38 AM | 1 Like Like |Link to Comment