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Jeff Paul

 
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  • A High-Yield, Low-Payout Dividend Growth Model Portfolio For 2013 [View article]
    Martin, if you look at the other stocks, most have lower betas, so if there is a relationship, it probably has more to do with the industry, though there is variation there too. I would chalk it up to firm-specific traits. If I ever have time to throw the CCC data into an analysis tool, it would be fun to make charts plotting beta vs DGR or EPS Growth, etc. to look for relationships. Really need some total return numbers though to see if any metrics led to better performance.
    Mar 11 09:37 PM | Likes Like |Link to Comment
  • A High-Yield, Low-Payout Dividend Growth Model Portfolio For 2013 [View article]
    That's what I see too, so Pistachio, can you cite an article/news source for your dividend number? Yahoo lists it as $2.53 paid this month. However, I do see where on the summary page, Yahoo lists it at $1.64. That's rather inconsistent. Pistachio, do you actually own NVS? I don't, so I can't confirm what was actually paid (vs what Yahoo says). Is it displaying the amount AFTER foreign tax withholdings? Switzerland has a 35% withholding, and $1.64/$2.53 happens to be 65%. Looks suspicious to me...
    Mar 11 09:34 PM | Likes Like |Link to Comment
  • A High-Yield, Low-Payout Dividend Growth Model Portfolio For 2013 [View article]
    Thanks. According to Yahoo, the dividend was raised.
    Mar 11 09:37 AM | Likes Like |Link to Comment
  • A Portfolio For A Young, Aggressive Investor [View article]
    Well said, Chowder. While cleaning out an old file, I found a handwritten list of my stock transactions from 1991 (I was 21). If I have time to reflect more on it and write an article, I will, but suffice it to say, "Oh my, what junk I owned…" Out of the maybe 15 stocks listed, only 4-5 are still around today, and a few (like Citigroup) have really suffered. The only saving grace was the last one listed was MCD…of course, I didn't hold on to it for the last 19 years.
    Mar 10 08:16 PM | 3 Likes Like |Link to Comment
  • A High-Yield, Low-Payout Dividend Growth Model Portfolio For 2013 [View article]
    You're welcome, lancejay!
    Mar 10 05:39 PM | Likes Like |Link to Comment
  • A High-Yield, Low-Payout Dividend Growth Model Portfolio For 2013 [View article]
    There are some dividend ETFs, like SDY, and SPLV (low volatility) seems to hold mostly div stocks in its Top 10, though I don't know if it is exclusively dividend stocks. I may have some more info on a new venture next month…ask me this again in April!
    Mar 10 11:53 AM | Likes Like |Link to Comment
  • A High-Yield, Low-Payout Dividend Growth Model Portfolio For 2013 [View article]
    Thanks, Martin. The combination of HY and LP by formula definition results in low PE stocks, so it doesn't surprise me that FAST Graphs would identify them as undervalued. Next month, I'll update the Income-Growth model, which relaxes the low payout requirement a little more, allowing for MLPs, REITs, and Medium-Medium stocks to enter the mix. You might get some ideas from that rebalance too, given your objectives.
    Mar 10 11:50 AM | 1 Like Like |Link to Comment
  • A High-Yield, Low-Payout Dividend Growth Model Portfolio For 2013 [View article]
    Thanks, Sameer. Defense against div cuts is definitely one thing this screen helps with.
    Mar 10 11:48 AM | Likes Like |Link to Comment
  • A High-Yield, Low-Payout Dividend Growth Model Portfolio For 2013 [View article]
    Thanks, Bob. Regarding no/low debt, from a corporate finance standpoint, there is the same question: what is the optimal level of debt? Firms can raise their ROE by leveraging, but go too high, and there are risks. No debt is definitely "safer", but they could potentially improve returns by changing their capital structure. Intel used to have practically no debt, but changed; of course, with rates so low, I can't blame them! But, in 2 years, it's gone from $2B (~2=4% of shareholder equity) to $13B (26%). That's probably enough, so hopefully it isn't going up more this year.
    Mar 10 11:47 AM | 1 Like Like |Link to Comment
  • A High-Yield, Low-Payout Dividend Growth Model Portfolio For 2013 [View article]
    Thanks! I just use Excel to sort and filter the stock list down. What I'd really like to do is get my hands on historical data (adjusted price, PE, DGR, other metrics) and play with the data in a visual tool like Tableau to see what patterns can be found.
    Mar 9 11:36 PM | Likes Like |Link to Comment
  • A High-Yield, Low-Payout Dividend Growth Model Portfolio For 2013 [View article]
    Thanks, Romilar. The payout ratio does vary by industry and the firm's model. Utilities, Telecom, Tobacco…often have high payouts. These are regulated industries, with kind of slow growth, but they generate cash. I guess the "raise an eyebrow" approach is still valid…then check the firm's model, cash flows, etc. and make a decision.
    Mar 9 08:39 PM | 1 Like Like |Link to Comment
  • A High-Yield, Low-Payout Dividend Growth Model Portfolio For 2013 [View article]
    Thanks for your thoughts, Bob. I can see where for a high-payout ratio stock, we would want to check other factors (that you list) to determine if it may still be worth holding on to. I'm curious…are there scenarios when low-payout stock would be considered unacceptable from a screen standpoint? The obvious would be if the yield was very low, though I'm already screening on that one too. I agree that investors should then look at other factors to decide which low-payout stocks to buy, though the research bought the whole group and it performed well! I like the screen for identifying 30-50 stocks that I can then think about in more depth.
    Mar 9 07:36 PM | 1 Like Like |Link to Comment
  • A High-Yield, Low-Payout Dividend Growth Model Portfolio For 2013 [View article]
    Hi Dave,
    The payout ratio is (divs / net income), and net income already factors in interest payments, so assuming the firm can at least roll over any maturing debt, the remaining funds are technically available to be declared for distribution. (Note: I'm simplifying a bit, as divs really get paid from the cash flows, whereas retained earnings/net income is an accrued value. They could reinvest the cash into facilities, inventory, etc.) However, I do agree with you that there is a difference between the ability to raise a dividend (low payout ratio) and deciding to actually raise it (management decision). This is why I like seeing high DGRs for these stocks, as I see that as a proxy for management working to return $$ to investors.
    Mar 9 06:30 PM | 2 Likes Like |Link to Comment
  • A High-Yield, Low-Payout Dividend Growth Model Portfolio For 2013 [View article]
    Hi jp99,

    I'm assuming you mean their liabilities (debt+other liabilities) to assets (capital) ratio. My read is that much of this is not debt (i.e. bonds/loans) but related to the underfunded pension. LMT is using a pretty low discount rate (4%), which means the present value of future liabilities is higher. I've worked with other companies that had a discount rate closer to 8% (a bit high in today's environment), but reduces the present value of the future pension payouts (makes things look "good"). LMT has made some extra payments to close the gap ($3B+, based on what I saw in the last annual report), and as of 2012, it looks like the pension is closed to new employees, though I skimmed that rather quickly. If LMT can earn more than 4% on its investments (it is assuming 8%), it will start to close the underfunded gap. Going forward, these changes in assumptions should be beneficial, but in the short-term, it adds to the present liability. I would expect to see some reduction in the next year, otherwise, would take another look in more detail to see if this is a concern. Cash flow wise, LMT appears to cover its payments without difficulty.
    Mar 9 06:22 PM | 1 Like Like |Link to Comment
  • A High-Yield, Low-Payout Dividend Growth Model Portfolio For 2013 [View article]
    Hi emac99,
    I don't have a resource with payout guidelines per industry, though maybe someone else on SA has something. It will vary, and I've considered using higher payout levels for utilities, for example. Also, the metric doesn't make as much sense for REITs and MLPs.

    For the income-growth model, which I will update next month, I don't have a hard cap on payout, but I like to see it below 65% ideally. However, the ratio is also impacted by short-term, one-time expenses, so for higher payout ratio stocks, check the operating cash flow and/or free cash flow. This is where the HYLP model goes strictly by the reported numbers, but I would consider stocks not passing this screen, if the cash flows and business are sound.
    Mar 9 01:18 PM | 2 Likes Like |Link to Comment
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