Thanks for the compliments. It is definitely an interesting opportunity. You've been following it longer than I have. In the big picture, the upside potential seems huge, despite the near term valuation questions.
Is The Threat Of Rising Interest Rates A Reason To Avoid Dividend Growth Stocks? [View article]
Gardesign, I'm not sure this answers your question, which I think is along of the lines of "if I believe that the stock is going to decline in value, should I not also sell some/all of my position in addition to not just buying more through a DRIP or other mechanism"
In theory the answer is yes you probably should. In cross's example of the portfolio, a 1% decline is $3000 which is vastly larger than the cash raised from discontinuing the DRIP. The wrinkle to me is taxes - depends on how much unrealized gain you have on the portfolio. Selling would trigger taxes which impacts your after tax return. Then there is a possibility that you are not correct about the declines and miss out on gains and then have to decide when you re-enter the market. The only reason portfolio size matters is around transaction costs would also make the benefits worse. I also think time horizon for investing is another important consideration as well.
Thanks - they do have pretty impressive margins so perhaps it is a bit of concern. But even still if the margins slipped a little the capital productivity measures would still be really good.
Thanks dataman2, I think they try with some formulaic approaches. Having reviewed the holdings of the different ETFs, some appear to go straight down the fairway looking for good yields and others seem to focus on additional aspects and end up with more eclectic holdings. I believe SDY's largest holding is PBI and then T. VIG as noted leads with consumer products - KO, PEP, PG and then a pretty familiar list including CVX, MCD, and others. Is there a list somewhere of dividend growth stocks that anyone has assembled or created a ranking for?
The Best Utilities For Dividends, Part 2 [View article]
Good point, I glossed over that. Hurdle rate is basically saying there is a certain level of return you should get based on the risks you are taking. This is simply applying the capital asset pricing model. If you ascribe to efficient markets, it basically says that the only risks you get compensated for are market risks and that alpha doesn't really exist. Different people ascribe to this belief to varying degrees. Beta is a measure of the level of market risk assigned to a stock (or any other security). Here is another one of my articles with a more detailed description:
I like your idea of applying earnings growth - one can then think of dividend growth as having two components - one is the underlying earnings growth and the other is the payout ratio. One can then say well are they growing the dividend by raising the payout ratio (less sustainable) or by actually growing earnings (and perhaps even allowing the payout ratio to decline). This would be a better scenario.
Looking At The Limits Of Frontier's Growth Potential [View article]
Here is some state data over a much bigger time scale which supports the notion that NY might be overstated, but aligns WA. However, the general story is exactly the same. It should be noted though that this is a 30 year sample based on 2000 census data, released in 2005.
I looked at table 1. while the other data is a 27 month set - so one cannot expect all differences to align. The 27 month set is also based on 2010 census data. I would also note that the initial data set used noted the more recent data were estimated and hence probably subject to changes and revisions.
FTR States 2000 Population 2030 Projection Annual CAGR 0 United States 281,421,906 363,584,435 0.9% 1 West Virginia 1,808,344 1,719,959 -0.2% 2 New York 18,976,457 19,477,429 0.1% 3 Indiana 6,080,485 6,810,108 0.4% 4 Illinois 12,419,293 13,432,892 0.3% 5 Ohio 11,353,140 11,550,528 0.1% 6 Michigan 9,938,444 10,694,172 0.2% 7 Washington 5,894,121 8,624,801 1.3% 8 Wisconsin 5,363,675 6,150,764 0.5% 9 Pennsylvania 12,281,054 12,768,184 0.1% 10 Oregon 3,421,399 4,833,918 1.2% 11 Minnesota 4,919,479 6,306,130 0.8% 12 North Carolina 8,049,313 12,227,739 1.4% 13 California 33,871,648 46,444,861 1.1% 14 Arizona 5,130,632 10,712,397 2.5% 15 Idaho 1,293,953 1,969,624 1.4% 16 South Carolina 4,012,012 5,148,569 0.8% Average of Other States 0.9% 2 Florida 15,982,378 28,685,769 2.0% 2 Georgia 8,186,453 12,017,838 1.3% 2 Tennessee 5,689,283 7,380,634 0.9% 2 Alabama 4,447,100 4,874,243 0.3% 2 Iowa 2,926,324 2,955,172 0.0% 2 Mississippi 2,844,658 3,092,410 0.3% 2 Utah 2,233,169 3,485,367 1.5% 2 Nevada 1,998,257 4,282,102 2.6% 2 New Mexico 1,819,046 2,099,708 0.5% 2 Nebraska 1,711,263 1,820,247 0.2% 2 Montana 902,195 1,044,898 0.5%
Looking At The Limits Of Frontier's Growth Potential [View article]
Gotincome, Thanks for the extra look. Your link didn't seem to work though. The adjustments you describe would largely exacerbate the FTR situation too since NY was much larger than WA. I'll look into this more.
I believe that I reflected your comments as well in my final paragraph that noted the importance of improving customer loyalty and selling additional services. However, one can also look at the growth in the broadband numbers (which is often quite meager) as a reflection of the overall success of this strategy. I would agree that the revenue would also be higher, but is it enough to deliver more margin than defecting telephone customers.
The Best Utilities For Dividends, Part 2 [View article]
Potentially yes. Utility equity will often look similar to a bond. However, there are several key points to note in that utility equity - there is no obligation to pay a dividend (just very strong tradition). Utility equity should provide some inflation protection. Other aspects that contribute to the bond like nature are the regulated returns of utility equity (note that you should check how much of the business is regulated and how much is not regulated - some utilities have rather sizeable commercial (not regulated) divisions that might engage in wholesale power transactions, retail businesses, etc..).
In a broader point of view rising interest rates should lower the value of most to all instruments as it raises the discount rate that you should use to value the future cash flows. However, there numerous interconnected factors that drive the result. For example, rising interest rates are often associated with an expanding economy which helps on the growth part of the analysis. A growing economy helps equity much more so than bonds (depends on seniority position in the capital structure) since equity gets all the residual profits after obligations to bondholders in rank preference have been met.
I think this is a good comment - to invest in FTR requires the recognition of its challenges and "slow bleed." Upside is the difference between what you pay and the potential, assuming it is realized. A declining company that is appropriately priced could be a good investment. Its just a question of how well are they harvesting the remaining opportunity. However, there is a larger margin for error on growing companies in growing industries.
Cashing In With Dividend Stock ETFs [View article]
Interesting ETF - should note that it has limited assets under management <$200 million and not very much volume traded. It also does not have very much history - but based on the holdings, one should be able to construct the expected dividend growth rate, yields, and other metrics.
I calculated the yield at 3.75% based on 4 x of the last quarterly distribution.
The PC Industry's Powerful New Weapon Against Tablets Is About To Be Unleashed [View article]
This is an interesting article. But I'm not sure I see how fundamental technology improvements will help the PC surpass the tablet? pass the tablet back. It seems like technology has evolved enough so tablets offer sufficient performance and quality graphics to meet needs and desires. Hence the tablet with a smaller footprint is simply better. It seems like a disruptive technology concept. Fundamental technology improvements should also ultimately benefit tablets. Clearly the PC has its purposes and will continue to play a large (but declining) role. Will this technology really convert someone away from using a tablet to using a PC?
PriceSmart: Counting On Colombia [View article]
Is The Threat Of Rising Interest Rates A Reason To Avoid Dividend Growth Stocks? [View article]
I'm not sure this answers your question, which I think is along of the lines of "if I believe that the stock is going to decline in value, should I not also sell some/all of my position in addition to not just buying more through a DRIP or other mechanism"
In theory the answer is yes you probably should. In cross's example of the portfolio, a 1% decline is $3000 which is vastly larger than the cash raised from discontinuing the DRIP. The wrinkle to me is taxes - depends on how much unrealized gain you have on the portfolio. Selling would trigger taxes which impacts your after tax return. Then there is a possibility that you are not correct about the declines and miss out on gains and then have to decide when you re-enter the market. The only reason portfolio size matters is around transaction costs would also make the benefits worse. I also think time horizon for investing is another important consideration as well.
Buckle: A Long-Term Gem [View article]
Comparing Vanguard Dividend Stock ETFs [View article]
Buckle: A Long-Term Gem [View article]
Using DuPont Analysis to Compare Coke and Pepsi [View article]
The Best Utilities For Dividends, Part 2 [View article]
http://seekingalpha.co...
I like your idea of applying earnings growth - one can then think of dividend growth as having two components - one is the underlying earnings growth and the other is the payout ratio. One can then say well are they growing the dividend by raising the payout ratio (less sustainable) or by actually growing earnings (and perhaps even allowing the payout ratio to decline). This would be a better scenario.
Thanks for reading my articles.
Looking At The Limits Of Frontier's Growth Potential [View article]
http://1.usa.gov/150VPoY
I looked at table 1. while the other data is a 27 month set - so one cannot expect all differences to align. The 27 month set is also based on 2010 census data. I would also note that the initial data set used noted the more recent data were estimated and hence probably subject to changes and revisions.
FTR States 2000 Population 2030 Projection Annual CAGR
0 United States 281,421,906 363,584,435 0.9%
1 West Virginia 1,808,344 1,719,959 -0.2%
2 New York 18,976,457 19,477,429 0.1%
3 Indiana 6,080,485 6,810,108 0.4%
4 Illinois 12,419,293 13,432,892 0.3%
5 Ohio 11,353,140 11,550,528 0.1%
6 Michigan 9,938,444 10,694,172 0.2%
7 Washington 5,894,121 8,624,801 1.3%
8 Wisconsin 5,363,675 6,150,764 0.5%
9 Pennsylvania 12,281,054 12,768,184 0.1%
10 Oregon 3,421,399 4,833,918 1.2%
11 Minnesota 4,919,479 6,306,130 0.8%
12 North Carolina 8,049,313 12,227,739 1.4%
13 California 33,871,648 46,444,861 1.1%
14 Arizona 5,130,632 10,712,397 2.5%
15 Idaho 1,293,953 1,969,624 1.4%
16 South Carolina 4,012,012 5,148,569 0.8%
Average of Other States 0.9%
2 Florida 15,982,378 28,685,769 2.0%
2 Georgia 8,186,453 12,017,838 1.3%
2 Tennessee 5,689,283 7,380,634 0.9%
2 Alabama 4,447,100 4,874,243 0.3%
2 Iowa 2,926,324 2,955,172 0.0%
2 Mississippi 2,844,658 3,092,410 0.3%
2 Utah 2,233,169 3,485,367 1.5%
2 Nevada 1,998,257 4,282,102 2.6%
2 New Mexico 1,819,046 2,099,708 0.5%
2 Nebraska 1,711,263 1,820,247 0.2%
2 Montana 902,195 1,044,898 0.5%
Looking At The Limits Of Frontier's Growth Potential [View article]
Thanks for the extra look. Your link didn't seem to work though. The adjustments you describe would largely exacerbate the FTR situation too since NY was much larger than WA. I'll look into this more.
I believe that I reflected your comments as well in my final paragraph that noted the importance of improving customer loyalty and selling additional services. However, one can also look at the growth in the broadband numbers (which is often quite meager) as a reflection of the overall success of this strategy. I would agree that the revenue would also be higher, but is it enough to deliver more margin than defecting telephone customers.
The Best Utilities For Dividends, Part 2 [View article]
In a broader point of view rising interest rates should lower the value of most to all instruments as it raises the discount rate that you should use to value the future cash flows. However, there numerous interconnected factors that drive the result. For example, rising interest rates are often associated with an expanding economy which helps on the growth part of the analysis. A growing economy helps equity much more so than bonds (depends on seniority position in the capital structure) since equity gets all the residual profits after obligations to bondholders in rank preference have been met.
Frontier Communications: Customer Losses Continue [View article]
Frontier Communications: Customer Losses Continue [View article]
Cashing In With Dividend Stock ETFs [View article]
I calculated the yield at 3.75% based on 4 x of the last quarterly distribution.
The PC Industry's Powerful New Weapon Against Tablets Is About To Be Unleashed [View article]
Are Gold Stocks Oversold? [View article]