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Jeff Paul

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  • To Sell Or Not To Sell, This Is The Question [View article]
    Using your example...at the point where ADI went up to $150 (YOC=5%, current yield=3.3%). I tell you about Even Better Dividends (EBD) stock, which yields 4% and has a comparable dividend growth rate. Being interested in income, you politely pass because your YOC (5%) is higher than 4%. However, doing the math...assume $50/share EBD paying $2/yr div (4%).

    If you sell your stock for $150 (excl fees) and buy 3 shares of EBD, you would receive $6 in dividends. $6 is 20% more than the $5 you were receiving under ADI. Compared to the original $100 that you invested, you could argue your YOC is now 6%. Either way, it's an upgrade, but if you compare YOC to current yield, you would have kept your original stock. (assuming all else equal and income focus). The other issue with YOC is it doesn't factor in the time component. For example, a 15% YOC sounds great, but if it took 30 years to get there, it isn't so great.

    I don't think there's much more I can say on this topic, so I'll just hope some of this makes sense and wish you well.
    Dec 17 02:09 AM | 1 Like Like |Link to Comment
  • To Sell Or Not To Sell, This Is The Question [View article]
    If your goal is dividends and dividend growth, I would urge you to think more about what you are calling "personal yield" (or YOC). You are not getting a higher yield than the current yield. Yes, you invested X and now it is worth 52% more (unrealized gain), but those shares have a value, and it is $66/share. Any comparison made to alternative options should be made with that value. For example, if you switched to NU, yielding 3.5%, you would increase your dividend stream by ~50% over what you are receiving now from AFL (2.2%). This doesn't mean you have to keep switching to get the higher yielder; there's obviously more that goes into any investment decision, plus transactional costs. But comparing a YOC to the current yield of a new investment is not an apples-to-apples comparison. YOC may be a measure of success, but current yield is the better metric for decision making for income investors. I covered some of the issues in an article a year ago.

    http://seekingalpha.co...
    Dec 16 01:39 AM | 3 Likes Like |Link to Comment
  • To Sell Or Not To Sell, This Is The Question [View article]
    I think you are comparing your yield-on-cost for AFL to the current yield of WAG, which is not an accurate comparison. Regardless of what you paid for AFL, it is currently at $66/share and the current yield is 2.2%. WAG's yield is the same, therefore you will earn exactly the same amount of dividends if you sell AFL and switch to WAG (excluding commissions). If you think WAG will grow its dividend faster going forward, then this may be a good trade. Yield on cost is not a good metric to use for sell decisions, as it reflects your original investment, not the current market value. For example, AFL could keep its dividend flat for the next 3 years, and its YOC would still be higher than the current yield of WAG (assuming WAG's price keeps going up with the div).
    Dec 15 07:59 PM | 5 Likes Like |Link to Comment
  • Mid-Year Dividend Income-Growth Portfolio Rebalance: 4.6% Yield And Lower Beta [View article]
    I meant Feb 2013, as this article was written in 2012. The update was delayed to April 2013. See this link:

    http://seekingalpha.co...
    Sep 12 08:03 PM | Likes Like |Link to Comment
  • The Dividend Cut And Run - Or Should You Stay? [View article]
    What percentage of that 37% were financial stocks and what % were actual cuts? Historically (last 15 years or so), only about 2% of non-financials ($500MM+ cap, 7+ yrs DG) cut divs annually on average. More in recessions, sometimes none is good years. I'm guessing a large chunk were financials, and many were freezes, which in the scheme of things could be considered "good" given the economics of the time. In other research I've done, on average DG stocks that cut their div tended to outperform over the next 2 years, so holding for total return may not be a bad plan. Of course, selling before the cut would be better!
    Jun 11 09:20 PM | 2 Likes Like |Link to Comment
  • Dividend Growth Models Update: Smaller-Cap Gainers And Decliners [View article]
    Yes, I going to be working for a wealth management firm, and will need to curtail my online writing for compliance reasons. Thanks for the positive comments though!
    Jun 5 09:21 PM | Likes Like |Link to Comment
  • NV Energy Bought By Buffett - Replaced With SCANA In HYLP Model Portfolio [View instapost]
    Well, compared to NEE and SRE, it's PE is lower, yield is higher and they all have similar projected earnings growth rates. So based on those numbers, it seems like a better value at the moment.
    May 31 08:21 PM | Likes Like |Link to Comment
  • Are Dividend Investors Concentrating Too Much On Consumer Staples? [View article]
    Hi Bruce7b,
    Your question seems to make the assumption that accepting a dividend implies getting a lower return than a non-dividend stock. There is a lot of research, which I have written about, that shows dividend stocks outperforming the market and non-dividend stocks over the long-term. Based on that, DGI investors can have their dividend and still get a great total return over the long run. The challenge for individuals is picking good companies, as the research bought all stocks within the parameters, something most of us probably can't afford. But that is no different than choosing good non-dividend stocks. Returns always vary due to market timing and selection choices.

    I think the main difference for many DGI investors is their objective. They seek the income stream, so are less concerned about the total return (though they would like it to go up!). From that standpoint, yes, they might buy a stock for the current yield and div growth versus the total return potential.
    May 31 10:07 AM | 1 Like Like |Link to Comment
  • NV Energy Bought By Buffett - Replaced With SCANA In HYLP Model Portfolio [View instapost]
    Under the scoring system that I used for the HYLP portfolio, SCG was the next highest utility. Others with close scores were NEE and PPL. NEE has run up and has a lower yield (disclosure: I own shares of it). I've been debating selling it and swapping for another utility. AVA looks interesting and is in a couple of the models.
    May 31 01:07 AM | Likes Like |Link to Comment
  • Are Dividend Investors Concentrating Too Much On Consumer Staples? [View article]
    Hi Bruce7b,

    I have several DG-based model portfolios that you can read about. While they generally yield over 3.5% (so good for income investors), I am more interested in the total return, as the research I used to create them showed DG stocks outperform over the long run. I published monthly updates that include comparisons to the SPY, beta, max drawdown, and relative performance (volatility adjusted).

    Jeff
    May 30 12:27 AM | 1 Like Like |Link to Comment
  • After The Dividend Cut: To Buy Or To Sell [View article]
    Thanks, Elle. The trick, of course, is to sell BEFORE the dividend cut and pre-cut price drop. Then perhaps buy it back after, at least if one is trying to maximize total return. Since that is easier said than done, assuming one already owns the stock at the time of the cut, holding on or even adding to the position may be appropriate based on the examined data, if one is pursuing total return. For income investors, it will depend on what the new current yield is (versus alternatives), and how confident they feel about that dividend level and the business (could another cut occur?). In either case, I would classify the stock as more speculative until its DG trend is restored.
    May 25 12:56 PM | Likes Like |Link to Comment
  • Dividend Growth Models Update: Dividend Aristocrat+ Gainers And Decliners [View article]
    Thanks, SDS. I'll look up that research.
    May 5 10:56 PM | Likes Like |Link to Comment
  • Dividend Growth Models Update: Dividend Aristocrat+ Gainers And Decliners [View article]
    I have not. Do you have some links with more info on the Ulcer Index? I like the name!
    May 5 10:56 PM | Likes Like |Link to Comment
  • Dividend Growth Models Update: Dividend Aristocrat+ Gainers And Decliners [View article]
    Thanks, everyone! I appreciate your comments and wishes! I'm planning to work with Phillips & Co, a wealth mgmt firm in Portland. I believe the firm has clients nationwide. Should anyone ever contact the firm, please mention SA. I would be interested in knowing to what extent we are meeting an unserved need for income investors, and if there would be significant value in having an SA presence.
    May 5 10:55 PM | 1 Like Like |Link to Comment
  • Dividend Growth Models Update: Dividend Aristocrat+ Gainers And Decliners [View article]
    Thanks, Chris. I'm not totally sure what will happen yet, but based on previous conversations, if I do indeed start working for this firm, then sadly, I will probably have to discontinue writing. I appreciate your comments! On the plus side, I will get to further develop the DG models and have access to more research, so that will be good.
    May 3 07:24 PM | 1 Like Like |Link to Comment
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