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Jim Pyke

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  • The $27,000 Millionaire: Dividend Growth Unleashed [View article]
    I think they are part of your starting point, but I wanted to caution against blindly saying that they will all repeat or even implying that. At some point in the past autos and banks probably looked pretty good too but history is not a perfect or at times even good indicator of future performance.

    The other point is that when you look at the value breakdown of the current position - there is a large component of stock appreciation.

    The final point is a trend point - JNJ's dividend growth has been without question slowing down - could it reaccelerate again for a while? Perhaps. But consider this, JNJ's total dividend payments in 2010 were 5.8 B. So if this figure grows at 10% per year to hold close to historical average this would require 262.5 B in dividend payments in 40 years. With a 5% yield that implies a 5.3 Trillion market capitalization versus a 176.5 Billion market capitalization today. However, this ignores the fact that JNJ buys back shares which means the individual dividend growth can be much higher than the total dividend growth, but even using a 5% growth rate (perhaps 6-7% on individual dividends with 1-2% annual share repurchases) implies a market capitalization of $817 billion. This sounds more reasonable. - but now your growth is much lower than historical averages on JNJ.
    Feb 11 11:05 AM | Likes Like |Link to Comment
  • The $27,000 Millionaire: Dividend Growth Unleashed [View article]
    Thanks for the comment. I'm still quite early in investing and had not really appreciated this approach, unlike my dad, nor the benefits of compounding. When I was college-aged and first out in the work force, it was very difficult (perhaps impossible) to comprehend investing over a 40 year time frame and pretty much doing nothing. It was also in great contrast to the internet boom which was occurring at the same time when stocks when doubling in a matter of months and the NASDAQ 100 had an 80+% in a single year. The concept of getting a 4% dividend and reinvesting it to move from 100 shares to 104 shares seemed quite mundane and without question a surefire way to go no where fast. However, 10-15 years down the road, I have a better appreciation for investing time frames and more patience - the point is not necessarily to go fast, but to get to the end. Depending on when you bought, NASDAQ returns are not looking stellar over the long run while many dividend stocks have held up and outperformed the broader market. While I would caution that picking individual stocks carries some risk, there are other possibilities to apply these principles - ETFs, Dividend oriented mutual funds, high yield corporate bonds. Personally, I use high yield corporate bonds in my retirement accounts since they offer a compounding benefit, portfolio diversification, and that is an optimized tax location.

    Best of luck to you and your son.
    Jim
    Feb 11 10:46 AM | Likes Like |Link to Comment
  • Using DuPont Analysis: Is Amazon Really That Great? [View article]
    I think that is the catch. In looking at short opportunities, one has to consider what the catalyst might be to bring them back in line with your thoughts. AMZN had a disappointing quarter, but is still carrying a high valuation. I suspect that they've had ups and downs, but the market still gives them that valuation. Perhaps substantially slower growth or as you point out something related to sales tax.
    Feb 11 12:31 AM | 1 Like Like |Link to Comment
  • Using DuPont Analysis: Is Amazon Really That Great? [View article]
    I'm thinking about it. Need to do some more work, but I'm skeptical of their valuation and think they do not have enough growth to support it. Their stumble over the holiday results was not good. Some comments have raised the notion of margin expansion which would obviously help performance, but has the question of exactly when it that going to happen. It was one thing back in the 90s when they had bad cash flow due to capital expenditures which you can grow into and they did. But at what point are they going to raise prices to increase margin (or not lower than as much as COGS declines)?
    Feb 10 08:17 PM | 1 Like Like |Link to Comment
  • Using DuPont Analysis: Is Amazon Really That Great? [View article]
    You can only analyze data that is available. WMT and TGT close their year in January - their holiday results are simply not available. I would have thought that is obvious, but perhaps not.
    Feb 10 01:16 PM | Likes Like |Link to Comment
  • The $27,000 Millionaire: Dividend Growth Unleashed [View article]
    Bob,
    The last 10 years have been tough, until the last 2 years, across the board for equities of all types in terms of stock appreciation, but more generous when dividends are included. While the market has not fully recovered from the 2008 crisis, it has made a substantial comeback. JNJ has returned about 48.5% including dividends and the SPY has returned about 40.2% with dividends. Excluding dividends would drop both returns substantially - to around 15-16%, which over ten years is less than typical inflation. I personally don't look at individual securities and count up and down years but try to focus on performance to date and even more importantly how I think the security will do in the future.
    Best of luck,
    Jim
    Feb 5 11:43 AM | 1 Like Like |Link to Comment
  • The $27,000 Millionaire: Dividend Growth Unleashed [View article]
    My understanding is that JNJ grows alot through acquisition. It will be interesting to see how it continues to approach emerging markets.
    Feb 5 11:29 AM | Likes Like |Link to Comment
  • The $27,000 Millionaire: Dividend Growth Unleashed [View article]
    Thanks for the comment. I do note that I wouldn't expect JNJ to show the same performance over the next 40 years. The goal of the article was to illustrate the power of dividend reinvesting using real data. In order to accomplish that I need to find stocks with significant price and dividend histories, which often by definition means they have probably been quite successful. This is in essence survivorship bias.
    Feb 5 11:28 AM | 3 Likes Like |Link to Comment
  • The $35,000 Millionaire: The Power Of Recurring Reinvestment [View article]
    Thanks for the comment.
    Feb 3 01:05 AM | Likes Like |Link to Comment
  • Junk Bond Millionaire [View article]
    I think this comment references a point in bcmini's comment. Safety should be viewed on an overall portfolio basis and so the addition of certain asset classes can be beneficial if they provide benefits to the portfolio. Diversification etc...
    Feb 3 12:48 AM | 1 Like Like |Link to Comment
  • Junk Bond Millionaire [View article]
    The focus of the article is to look at the broader asset class of high yield corporate bonds. ETFs are a convenient way to evaluate; however, you corrently point out that there are other options. Furthermore, if one views the asset class as less efficient, active management might yield better returns than an indexing approach. Hence looking at a broader set of options for investing could be worthwhile. One potential analytic approach would be to look at Sharpe ratios.
    Feb 3 12:46 AM | 1 Like Like |Link to Comment
  • The $35,000 Millionaire: The Power Of Recurring Reinvestment [View article]
    If one is not willing to invest the dividends in the stock, there is always the question of why you hold that position. If you reach the point where you say I would definitely not reinvest my dividends then perhaps it is time to sell the full position.

    I agree with your last point; the challenge is trusting the downturn.
    Feb 3 12:40 AM | Likes Like |Link to Comment
  • The Challenges of Using Beta to Measure Risk [View article]
    Beta is typically listed under Key Statistics on the right hand side. Other sources also provide beta, but it should be noted that different sources compute beta differently (different methods on regression, different time frames, etc..) so there will not be a match. Last time I checked Yahoo and Zacks.com had different methods.
    Jan 21 11:21 PM | Likes Like |Link to Comment
  • Frontier Communications And Dividend Capture [View article]
    Thanks for the data at your website. Are those return figures pre or post tax ? Is that portfolio being run in taxable account or tax deferred account (the latter would eliminate the difference of pre and post tax returns)? Have the returns accounted for transaction costs as well?

    Is this a theoretical portfolio or one based actual invested capital - sounded like that latter, but I wanted to confirm that.
    Dec 30 12:23 AM | Likes Like |Link to Comment
  • Frontier Communications And Dividend Capture [View article]
    Absolutely correct - I tried to minimize that by taking the closing price one day and the opening price the next day.
    Dec 29 03:51 PM | Likes Like |Link to Comment
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371 Comments
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