Jarrod W. Jacinth

Long only, value, long-term horizon, dividend growth investing
Jarrod W. Jacinth
Long only, value, long-term horizon, dividend growth investing
Contributor since: 2013
May 5, 2010 0.34 Dividend
Feb 3, 2010 0.34 Dividend
Nov 4, 2009 0.34 Dividend
Aug 5, 2009 0.34 Dividend
Apr 29, 2009 0.34 Dividend
Feb 4, 2009 0.34 Dividend
From Yahoo Finance
AgAuMoney,
I see it the other way. If a company is unwilling to buy it's own shares then why should I or any other investor.
To expand I like the approach Disney is taking. They buy LucasFilms with a stock purchase. They plan on buying back the stock in a couple of years. Once they have bought the stock back they are now in a position to use the stock again to expand the company.
Smucker is using stock to expand, then 5 years later they have bought little back. But there is a huge dividend based on the payout of 42%. just over a 2.1% yield. If we are in the low 2% yield I would expect a payout ratio in the mid to high 30's.
It's a dog chasing its tail scenario. Smuckers uses shares to buy a company. The payout is too high to buyback shares. The price is too high so the shares that are bought do not go as far. Smucker sees another company to acquire so they use more shares to buy it. I just do not see the balance. I see a possible snow ball effect.
Kenneth12,
Thank you for the kind words. I did a write up of MPC and PSX which came in a close second, both of which you can find below.
MPC:http://seekingalpha.co...
PSX: http://seekingalpha.co...
LOL, she didn't send you to bed without supper did she?
Old Folks,
Lets say you invest the $4000.00 with the 5% yield. you get your $200.00 a year yes. Lets say you keep that investment and do not add or sell to it.
Translating it into solid payments you have your $200.00 dividend. The company you invested in increases dividends annually at 7.5% a year. So in year two you will get $215.00, $231.13 (third year), $248.46 (fourth year).
The dividend payment will double every 10 years at this rate. So after 10 years your yield on cost will be 10% or $400.00. However, to a person looking at that stock in ten years, they will only see a 5% yield as the stock price is greatly tethered to it's price and the price increased in correlation to the dividend.
The dividend increases and stock price increases so it looks like the yield stays the same.
Hope this helps,
Jarrod
Fred,
I'm not sure you are understanding the premise behind how my portfolio, yes real portfolio, in real USD is set up. First off it is based on dividend growth. Companies that have and will likely continue to increase dividends over time. At an annualized dividend increase of 7.5%, dividends should double every ten years. I'm in my mid-thirties, so I have 30 years to get the dividends to grow to where I need them by time I retire.
I feel that this is safer as many retirees that have commented on retirement are chasing yield and putting their principal at risk. With this strategy I expect the yield to come to me.
This is where the Buffet part comes into action. He uses the growing dividends from his top holdings to pay for further acquisitions. So to answer your questions.
1) It does not matter. Many portfolio series' articles are based on a amount of principle only someone who has saved for many years can obtain. I want to demonstrate how with even a small amount of principal any investor, even someone with $500.00 to their name can start. What type of account they decides to open is their decision and should be based on their tax situation.
2) Yes this is my portfolio with my real reinvested dividends. Again, I plan to exhibit how reinvesting growing dividends produces wealth.
3) No benchmark comparison. Why? I do not want to see the price of stocks to go up as I am reinvesting dividends I want as many shares as possible. Dividends payments are based on shares not yield. This is why I am showcasing the growth of shares.
4) As I said in the intro I will reassess what I will be able to contribute on a yearly basis, not monthly. Again the idea is to show a young investor or someone with little capital how even a small amount over a long time can build wealth. The idea of contributing a set amount is silly. Contribute what you can when you can so you can still put food on the table and a roof over your head.
5) I do not plan of keeping track like Mr. Buffett. The only connection to Mr. Buffet is the philosophy of multi-decade investing and using the growing dividends to fund more investments. I have altered it to reinvesting the dividends as a person who may have little capital cannot make investing a full time job.
Bottom Line - This exercise if you will, is to demonstrate that time is your number one asset when investing. The amount of capital that you allocate to the account is second. People see a short term (year or two) shift in the market and think that is how the market will act for the long term. The market will go up and down, the long term investor needs to balance the portfolio to accommodate for both of these phenomenon.
All the Best,
Jarrod
Fred,
The introduction should be able to answer most of your questions.
http://seekingalpha.co...
We are only five months into the year. The S&P 500 is already up 14.34% ytd. The annualized average is only 9.75%. We should reasonably expect a correction for a couple of months.
Mwaster,
As I have mentioned in many of my posts.One valuation that is used by Benjamin Graham is that an investor should not pay more than 25 times the average earnings of the past 7 years.
25 may seem excessive, however I have written about companies that are currently priced over this valuation.
Thank you for pointing this out. It was an error on my part. I have submitted a correction.
Dave,
Yes if you already own it there is no reason to sell. At this point there are other opprotunities out there to buy into.
Jarrod
MPC fails 3,4, and 5 as it is a spin off and does not have the stand alone record. If we account for Marathon Oil prior to the spin off it passes.
David,
Thank You for your comment. This was brought to my attention and will be the last with this template. My apologies.
My goal in this series of articles is to take a set framework and assess a stock based on a common denominator to objectively investigate a stock.
I find that many articles found on the internet are looked at with varying frameworks. In many cases the same company is looked at various ways from the same analyst. This leads me to believe that the author is trying to, in a way convince themselves and others a stock is a good pick by making an argument for a conclusion they have already made.
In a world where trading is more popular than investing; it is difficult to relay a message that analyzing a stock, even based on a time-proven framework is something that works in today's world.
All the Best,
Jarrod
I am trying to explain a phenomenon that occurs. This past week we saw Sony increase by up to 10% after Daniel Loeb announces a stake in the company.
We know that Sony has issue with product lines (XBox and iPod). Mr. Loeb makes an announcement and the stock jumps. Nothing fundamentally has changed yet, simply some one coming and saying I'm going to fix Sony (by splitting it up).
Investors can certainly sell their shares after a price jump. But what happens if the prices go up after some one comes in and announces they will fix the company, but nothing happens then what?
I was trying to connect the dots for some investors as to why some stocks behave in such a manner by comparing it to an empirically proven social phenomenon.
Jarrod
A P/E of 25 averaged for EPS of the past 7 years.
Graham expected earnings to grow over time. So eps six or seven years ago should be lower than the last twelve months. He expected earnings to double every 10 years at least. At the same time he knew that there are also good years and bad years.
"Founded in 1917"
The drink was created in 1886 and the company was incorporated in 1892.
http://bit.ly/17rPSW4
KO has been publicly traded since 1919, being reincorporated as a Delaware company. Not sure where 1917 comes into play.
"with a long standing dividend which has been paid since 1987"
KO has increased its dividend since 1963 and paid a consecutive quarterly dividend since 1920.
Jarrod
Karfifty4,
XOM has been fairly stagnant as of late. Some of the critiques I've seen is that the dividend is far too low for the amount of money the company generates. It seems that people may be taking their money out of XOM and moving to CVX.
It depends on how you view dividend stocks. Do you want a steady dividend increase along with an increase in equity price?
or
Do you want an increase in dividends and not so much equity price?
Both scenarios have their advantages and disadvantages.
WM,
Thank you for your comment. I'm 34 and tend to write with a target viewership of people who are still in the stages of building their portfolios and wealth.
I'm sorry to read about the money you lost with Lehman Brothers but it should not sour you all together on lower paying dividend stocks.
During the crash of 2008 I know of many people who lost just as much as you, except in REITS. The sell was a high dividend yield, but because of the business they were in simply could not fend off the crash. Personally, I like HCP and NLY. I would not suggest reinvesting dividends when in REITS they can be a great way to produce immediate income once some one is in retirement.
All the Best,
Jarrod
Yes, sorry it's $4 @ 3.2%
Smurf,
Of all three I mention NWN is the least desirable. The 81% payout throws up a red flag.
Because of their high yield and and dividend growth history, people have initiated a position driving the price up. However the earnings does not reflect the run up in price.
I'm not sure where you received the numbers for the 3 yr income growth. I have a 3.75% 5 year growth vs. 8.30% for industry. However, this is still a concern either way, as they have such a history of increasing dividends will they be able to continue to do so at a 81% payout and if not; what will the sell off be like?
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
This is, in part why I have the Weekly 50 sma rule in place. There is usually one or two pullback / corrections in a year. I plan to wait and take advantage of the phenomenon.
I do not believe the market is anyway over valued at the moment. Yes, we are due for a correction, but not over valued. We are only slightly over the highs posted in 2007 before the crash.
Where would the indices be if we did not have the 2008 crash? Or for that matter if it was just a correction and not almost a complete economic meltdown?
Mickelsson,
I appreciate your rebut and yes, many comments are off topic. As I said in a previous post I believe many people are simply frustrated at the non-action by Congress.
Yes the basic numbers are from Wikipedia, double check by other sources. That is why Wikipedia has references, so the reader has the opportunity to double check claims made.
As far as your numbers from the World Bank, I find the World Bank to be considerably less trust worthy than Wikipedia.
I ended fertility rate with 1979 for two reasons, none of which you accurately mention. Those born in 1979 will meet a retirement age of 65 in 2044, 11 after the projected 2033 date. I did not want to get too far ahead of myself. Also I did not want to have to explain population growth as most of it comes from immigration, turning the focus into an immigration debate.
The CDC released a report that in 2011 Americans had fewer children than in any other year prior.
http://bit.ly/QUfjpN
Yes, I not include population numbers, estimate none the less as I did not wish to turn this article into a debate about immigration, as stated above. You are providing the information of population increases, however forget to include any correlation to people paying into SS. Why? Because you can't, no one can.
We are seeing an increase of the shadow economy, people are simply not working as businesses are learning to do more with less. People are in a hole and require government benefits to survive but yet there is no plan to get these people off of government benefits. Or a plan in general.
Estimates for job creation was so low, "we" beat the estimates for April, however if a bar is low enough anyone can step over it.
In my article I linked a press release by the SSA stating what they have found the condition of SS to be in. Yet you are also linking the SSA and expect a different response?
The point of the article, which I am not sure you got, is that people should calculate their retirement needs without SS. As it is better to retire with enough money and SS than it is with not enough money and not have SS.
Have a great weekend!
The link I provided states that the disability portion of SS is going under in 2016.
I would make the same argument as I have for SS retirement.
Save Your Money!
It is unfortunate some of the circumstances that people are required to be on disability. However, there seems to be a factor in our culture that we continue to trick ourselves that bad things won't happen.
Prepare for the worst and hope for the best. I truly believe it also has to do with how some parents raise their kids.
I remember when I had my first job. I had money sitting around simply because I was still in high school and drove a 1981 VW Quantum....remember those?
Any way, I started talking with my mother as I was interested in investing at age 17. "That Woman" informed me that the stock market is a horrible place and I would lose all my money.
My son is 5 and I am instilling, or at least trying to, how investing money as opposed to buying crap is a solid life long decision. However, it is difficult as all he talks about are transformers right now. So I have to be creative and change my language so he understands, to a point.
Some of the "right-wingers" is most likely a lot of people who are simply frustrated with the predicament we are in and no one is listening.
One of the links I provided is a press release by the SSA to Congress. The SSA reports on the state of the trust, informs congress and nothing is done.
This is an issue that can be fixed, over time, it is just another issue that keeps being ignored.
Are you able to share these changes with us? I'd be interested in reading it.
Currently, the SSA needs $8.2 Trillion (2012 dollars) to float SS for 75 years. That is over one-half our GDP.
No the government is not a magician. But even our elected officials can see the flaw of a program that makes no attempt to grow the money.
Simply counting on continued population growth is the second mistake when structuring SS.
The third mistake is that enough people and or small businesses are going to report earnings along with the increase in population.
cnbc reported a UW - Madison report that the shadow economy last year estimated to move about $2 Trillion. That is over 13% of our GDP that is not taxed.
The cap to pay into SS is about $114,000.
I would agree one of the main issues is that the money that is paid into the trust is not grown and instead is paid out relatively immediately.
A pension due to working in the public sector? as well as SS?
The original 10 sectors I used are derived from the Global Industry Classification Standard (GICS), also used by the S&P 500. The 10 sectors are:
Energy
Materials
Industrials
Consumer Discretionary
Consumer Staples
Health Care
Financials
Technology
Telecom
Utilities
Under the sector Industrials we have 3 Sub-sectors:
Capital Goods
Commercial and Professional Services
Transportation
Norfolk Southern is Transportation
That is one of the best things about a solid company with a growing dividend. When the stock is down you can either add to your position or if you get a dividend payout reinvested, you are able to purchase more shares than if the equity price is up.
Then more dividends are then compounded on top of that.
The problem with an index fund is that they are made simply to mirror whatever index they are comprised of. With The three stocks I currently have positions in the dividends are expected to increase.
Wal-Mart has a 25% annualized dividend growth rate since it's inception, that is equivalent to receiving a 25% raise a year.
A $10,000 position with a 2.5% yield starts off with $250 payout. At say 20% growth we see:
300
360
432
518
and so on, after 20 years we get the $10,000 back annually in dividends, if the dividends for the past 20 years are not reinvested and the position is not added to.
If the dividends are reinvested and position is added to, say the annual May/ June dip; then the returns are exponentially larger.