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Jeff Paul

 
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  • How Did The Lost Decade Affect Dividend Champions? [View article]
    " Any company on the list today that cuts or eliminates their dividend is going to be off the list. So, once off the list they cease being a member of the "club.' That makes them irrelevant."

    Yes, if you are using RAS's stated assumptions, but if you want to really see how the Champs/Aristocrats performed over the decade, you need to start with a list of current Champs from 2000 and track their performance to avoid survivorship bias. That makes them totally relevant. Since there would likely be a few banks on there that have since fallen, the final result probably is still that dividends contributed more than cap gains for this decade, but we don't know from the data presented. It also occurred to me that there is skew in the sense that you can have capital losses, but dividends don't go negative. So in any decade with large declines/recessions, it's not surprising if dividends contribute more than capital changes. It just may not be as much more as RAS's data shows. If we went back to the 1990's, the situation is probably reversed, but that came to an abrupt end in 2000-2001.
    Nov 2, 2011. 11:00 AM | 3 Likes Like |Link to Comment
  • How Did The Lost Decade Affect Dividend Champions? [View article]
    Here is a document I found online that lists Div Aristocrats. I don't know if it is completely accurate, but it is the only history I've been able to find.

    http://tinyurl.com/3mu...
    Nov 2, 2011. 03:07 AM | 2 Likes Like |Link to Comment
  • How Did The Lost Decade Affect Dividend Champions? [View article]
    Yes, and you did list all of your assumptions, however, in the middle of the article, the bold type emphasizes how dividends returned TRIPLE the amount of cap gains. However, because of the omissions (spin-off, splits), the difference is definitely less. Regardless of whether this is a conclusion, the type emphasis is very suggestive to readers. Dividends may still have returned more during the decade for this group, but it was not triple. Depending on how many splits there were and the performance, it's possible for this group that cap gains could have been very good too, since there are few banks in it (survivorship bias).

    David Fish pointed out that Yahoo tracks the spin-offs as dividends. Seems like it wouldn't be too difficult to add those up and just include it with the cap gain amount. This ignores any gains/divs since the spin-off; it assumes you just sold it immediately. That would provide a more accurate comparison.
    Nov 1, 2011. 11:13 AM | 1 Like Like |Link to Comment
  • How Did The Lost Decade Affect Dividend Champions? [View article]
    Yep, that was my point earlier in the thread, but you summed it up more succinctly. There is a list of Dividend Aristocrats from 1989-2004, so it would be possible to do this study using those stocks (2000-2001 time frame as a starting point). Would need to decide if there would be drop/adds each year or just track them through 2009 (would be more interesting). Some firms merged, so it might be hard to find numbers for them since their symbols are retired or another firm picked it up. At least half of the stocks are still around today, so could make a sample from that.
    Oct 31, 2011. 11:32 PM | 1 Like Like |Link to Comment
  • How Did The Lost Decade Affect Dividend Champions? [View article]
    Out of curiosity, where did you get the dividend data? Is there a better source than Yahoo (perhaps one that adds it all up automatically)?
    Oct 31, 2011. 01:32 PM | 1 Like Like |Link to Comment
  • How Did The Lost Decade Affect Dividend Champions? [View article]
    Thanks, David. As long as the spin-off is accounted for, that would at least present a more accurate result. We can assume the investor keeps the parent and sells the spin-off, instead of holding it. This simplifies the calculations a bit.

    I guess my question for Robert is how he counted those spin-offs? As David noted, Yahoo classifies them as ersatz dividends, so did that get included in the dividend count? This would also skew the results.
    Oct 31, 2011. 01:02 PM | 1 Like Like |Link to Comment
  • How Did The Lost Decade Affect Dividend Champions? [View article]
    Yes, but you would need to add the spin-offs to your list to be "fair". That is, consider them part of the original investment for the whole time period and count divs and gains. Given the two spin-offs of MO, someone mentioned one from PG, and I don't know what others there are, plus the splits, it seems like there would be quite a difference. Divs may still exceed gains, but probably not 3x. Also, since you started with the 2011 list, I would expect gains to be pretty good as this list excludes many banks. I wonder if using the 2007 list as the starting point would be better? It would certainly show more of the loss in the Lost Decade.
    Oct 31, 2011. 12:18 PM | 1 Like Like |Link to Comment
  • Lorillard and Chubb: When Stock Buybacks Work [View article]
    Yes, and they do continue to raise it, but I agree that it would be nice to boost it a little more. Their payout is around 25%, so definitely have some room to grow there.
    Oct 31, 2011. 12:12 PM | Likes Like |Link to Comment
  • How Did The Lost Decade Affect Dividend Champions? [View article]
    It would be helpful if you did account for splits/spin-offs, as it greatly impacts the capital returns number. Seems unfair to tout that dividend returns trounce cap gains without an accurate count. For calculating total return, you could use the Adjusted Price number in Yahoo, which factors in dividends and splits (not spinoffs). You could then back out the dividends, since you seem to already have that calculated. Based on Adjusted Price, SJW went up ~50% over the decade, not down 90%. It had two splits (3:1 and 2:1).
    Oct 31, 2011. 11:31 AM | 2 Likes Like |Link to Comment
  • Lorillard and Chubb: When Stock Buybacks Work [View article]
    I think you misinterpreted what I wrote, Robert. The "safety" is for the investor, so you should like Chubb. Their dividend payout ratio is relatively low, so the div is safe and they have lots of room to raise it annually. They then supplement the dividend with additional stock buybacks that depend in part on the company's performance (which has been pretty good the last few years). If Chubb raised their dividend payout closer to 90-100% (instead of using the supplemental buybacks) , they would be at greater risk of having to cut in the event of income/CF fluctuations. The buybacks are more flexible and don't cause investors to dump the stock when they decrease the way div cuts do. Dividends are considered more permanent commitments by investors, such as yourself. Disclosure: Long CB.
    Oct 30, 2011. 11:09 AM | Likes Like |Link to Comment
  • Retirement Income For Life: Annuities Or Dividends? [View article]
    Thanks for providing actual numbers. That helps to quantify the value of the annuity, though obviously it depends on one's lifespan too. At the end of the day, I think does come down to how well a person can manage their investments and how much risk s/he is willing to take. Yes there is a cost to the annuity, but you are buying the security of a guaranteed inflation-adjusted income stream without any worries of market fluctuations that could erode your principal and possibly impact the stream (i.e. div cuts, dipping into principal during down markets). There is probably some value in having some funds in an annuity, though in my parents' case, they have a corporate pension and Soc Security, so that is their annuity component.
    Oct 30, 2011. 12:56 AM | Likes Like |Link to Comment
  • Improved Quantitative Strategy For Selecting The Best Dividend Growth Stocks [View article]
    Thanks. One correction…the 25+ stocks are the Champions, and the 0-9's are the Challengers.

    Comparing your last list (Contenders/Champions) to my Income Growth screen, most of those stocks made my list as well. The exceptions were MXIM and MCHP due to low 1-yr DGR (I screened for more consistent payers in the 6-12% range), and CWCO for low 5-yr DGR. All the rest made the cut, though the final portfolio of 30 opted for those with higher yields and weighted sectors based on market cap and representation in the screened universe. I focused on stocks with 10+ yrs of DG, so can't speak to the Challengers, though I do own INTC. Nice to know that two different systems can produce the same list. :-) Hopefully that bodes well for us!
    Oct 29, 2011. 06:39 PM | Likes Like |Link to Comment
  • Retirement Income For Life: Annuities Or Dividends? [View article]
    A 10% annual return would probably be considered on the high side, and certainly involve more risk-taking. The more typical expectation I've seen is between 7-8%, which is what many pension funds assume. With the current low interest/bond rates though, even this is falling. I would go with 7.5%, and if you get 10%, bonus. Plan conservatively to ensure you get where you want to be by retirement. If you do better, then you could retire earlier! :-)

    I think FivePlus Investor follows Canadian REITS/MLPs, not sure about stocks.
    Oct 29, 2011. 01:43 PM | Likes Like |Link to Comment
  • Lorillard and Chubb: When Stock Buybacks Work [View article]
    I don't know if you can blame the buyback for the company's issues. Had they paid it as a dividend, any investors who re-invested the money would have suffered the same loss from the price decline. Those who just take the cash at least would have had the cash plus whatever the stock was worth. It is accurate to say that many companies do not time their buybacks well, hence the value from such actions is questionable. EPS will still increase due to fewer shares, but if they are overpaying for the shares, it's likely still a net negative.

    In terms of the flexibility issue, buybacks provide more flexibility for the firms. If they paid much higher dividends instead, there would be an expectation for them to maintain that level. Investors punish stocks that cut divs. Therefore it is safer to have a lower dividend and use some of the excess cash for buybacks. The buyback amount will fluctuate each quarter, but the dividend is constant and hopefully is raised each year.
    Oct 29, 2011. 02:39 AM | Likes Like |Link to Comment
  • Retirement Income For Life: Annuities Or Dividends? [View article]
    There may be some truth to that, Robert, but I think it also has to do with the lack of financial education in this country, a large percentage of the population being in low-paying (under $50K) jobs (hard to cover a family's bills on that and save), and perhaps mostly, due to our society's short-term thinking. By this I mean the "need" to buy every latest gizmo and other stuff we don't really need, and doing so on credit to boot. I've known many people living month-to-month…seriously need to get priorities in the right order. Now, the fact that there is Social Security may be part of the reason some people feel they can ignore saving for the future. I'd like to think that education could help overcome this, but advertisers and credit card firms seem to be winning…maybe should buy Visa and MC?
    Oct 28, 2011. 09:14 PM | 1 Like Like |Link to Comment
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