I Am Not A 'Gold Bug' But I Do Like Newmont Mining For The Dividends [View article]
I believe any buyers of NEM focused on the dividend should become familiar with the firm's gold price-based dividend policy, as stated in an April 7, 2011 press release, available from the Investor Section of the firm's website. The relevant section is as follows: "Gold Price-linked Dividend -- Newmont's gold price-linked dividend policy contemplates a quarterly payable dividend based on Newmont's average realized gold price for the preceding quarter. The annual payout will increase at a rate of $0.20 per share for each $100 per ounce rise in the average realized gold price. At the current gold price of approximately $1,450 per ounce (i.e. between $1,400 - $1,499 per ounce), Newmont's annual dividend would be $1.00 per share. Subject to Board approval, the first quarterly dividend under this policy is expected to be payable on June 29, 2011 to shareholders of record on June 16, 2011. The declaration and payment of dividends remains at the discretion of the Board of Directors and will depend on the Company's financial results, cash requirements, future prospects and other factors deemed relevant by the Board." The next dividend up, in September (after the 6/10/2013 ex-dividend date) will likely be somewhat less than the $0.35 current dividend, considering gold prices during the 2nd quarter. I still agree with going long NEM, as I stated in my recent article, but I am not counting on a 4% yield always being there.
Yield, Value, Safety With Utilities - Redux [View article]
Hi, airlarr & chowder,
My approach is based upon dividends as a foundation. I would not invest in a growth stock for many reasons, let me count the ways -- it is hard to pick winners, growth may or may not occur, I need income now, dividend stocks are back in favor and demographics ensures that the trend will continue, it may be a long wait for "normal" interest rates, and so on. The safety of a given dividend is certainly not assured, but it can be predicted much more confidently that a given growth rate and corresponding share price increase for a company.
Yield, Value, Safety With Utilities - Redux [View article]
Hi, Yowwwwie,
As I confessed to Travel4yields, above, my review was at a high level, and a screen based purely on numbers can miss a good stock. I subjected PPL to my more intense "5 minute" review (more intense than my 30 second review, I suppose), and I see no reason to bail on PPL at this point. The stock, like many in recent days, is bouncing around its 52 week highs, but even at that, it yields an attractive 4.6%, with Payout Ratio a manageable 55%. As I noted, debt is a bit on the high side, with Leverage Ratio 4.2, D/E 1.9, Interest Coverage 3.3, and Total Liabilities at 76% of Total Capitalization. S&P Bond Rating is BBB, just one notch above the lowest investment grade rating, but comparable to other high quality utilities. The stock is rated Neutral by Credit Suisse, 4 Star (Buy) by S&P, with Medium Risk, Earnings Quality B+, and 3 Star (Hold) by Morningstar. It is a recommended holding in Weiss' Income Superstars portfolio. Digesting all of that, PPL is a reasonable utility holding, with debt a little on the high side, even for a utility, but manageable. The keys going forward are regulator relationships and management's business strategy. The numbers are no cause to sell out. If you are comfortable with the management strategy and the intangibles, I would say to hold it & collect the very attractive dividend. I would hold off to add to the position, however, for a more attractive entry level.
Thanks for commenting. I learn something every time I receive a comment such as yours, suggesting I take another look at a given stock.
Yield, Value, Safety With Utilities - Redux [View article]
Thanks, Bob,
I took a break from writing while I was relocating from Oklahoma to Austin, TX. My fellow Okies have accused me of going over to the "dark side" (of the Red River, I suppose).
Another factor slowing down my writing is the overbought market and the dearth of attractive buy opportunities on quality stocks. My last article in January, where I cautiously recommended Diebold just as a management shake-up and earnings warning hit was a great lesson in what can happen when you go down the quality scale in an effort to get a reasonable price.
Yield, Value, Safety With Utilities - Redux [View article]
Hi, Scooter,
The list I have from March 2011 shows CenterPoint as a Challenger, 5 to 9 years of dividend increases. The next level is Contenders, 10 to 24 years, then Champions, 25 or more years. So, CNP is at best only a Contender by now.
Yield, Value, Safety With Utilities - Redux [View article]
Hi, VTND50,
No, I only looked at some basic numbers available from a financial website to trim down a list of 36 firms. I did find an article on this move, which said CNP would own 59% of the new MLP. It looks like it might be a positive for CNP shareholders - maybe they will be awarded units in the partnership. CNP has a leverage ratio of 5.3, one of the highest of any of the utilities I looked at, a payout ratio of 83%, and a total liabilities of 81% of total capital, according to the MSN Money website. These are not good numbers, which is why I passed on CNP.
Yield, Value, Safety With Utilities - Redux [View article]
Hi, 11worth,
I believe WEC did not make my initial screen a year ago, which had a yield cutoff of 4%. WEC had a closing price of $34.53 on 3/16/2012, and a quarterly dividend of $.30, which would have resulted in a yield of 3.5%. The few I did look at that yielded less were utilities I knew about that I added to the utilities my screen found. The Redux article, in turn, only looked at the utilities I had looked at a year ago. WEC certainly has gained in price in the past year, and the dividend had a sizable bump to $.34 in February, so WEC would have been a good choice. That is the risk of any screen, you may set the parameters too tight and miss good candidates.
Yield, Value, Safety With Utilities - Redux [View article]
Hi, Smurf,
NextEra (NEE) was one of the 13 recommended utilities, although it is very pricey just now. It is in the group of 5 I still recommend, even though the yield is a bit under the 4% level. NEE is a top performing utility, I agree.
Stocks, Options, Taxes: Part II - Dividends [View article]
Thanks. In preparing the series, I have been surprised at how little interest the topic generated. Taxes are surely the "elephant in the room" that everyone wants to ignore, which can affect investment returns in a big way. The website reference noted in my comment above simply state that "the qualified distinction goes away". I'm not too sure about that. The rules for qualified dividends have been that any US exchange-traded C-corp with earnings are "usually" qualified. REITs and BDCs have not usually been qualified. MLP distributions are not dividends, and the "qualified" distinction is not applicable. The brokerage reporting has been reliable as to qualification, not considering the holding period requirement, which I think goes away. One way to determine up front before buying would be to inquire from the Investor Relations dept for the company being considered.
I plan to pursue taxes further, and obtain certification as a RTRP (Registered Tax Return Preparer) later on this year. If I learn more that might be of value to SA readers, I will write another article.
Diebold: Is This Value-Priced Dividend Payer A Buy? [View article]
The issue of restatements for the years 2003 through 2006 and the ongoing shareholder lawsuit , as noted in the article, was definitely a concern, which needed to be pointed out when looking at open issues. A management shake-up and reaction from the Board over declining performance is a positive for shareholders, as far as I'm concerned. It's going to take time, but a Board that recognizes problems and is taking action to change direction is better than one that is not doing anything about it.
Stocks, Options, Taxes: Part V - Options [View article]
Thanks much. My final article in the series will be coming out in the next few days, hopefully. In it I will go into detail about how to avoid tax problems when writing covered calls, which I believe will be of interest to a lot of income investors, who, like myself, are trying to juice returns from dividends by selling covered calls, at least occasionally.
Stocks, Options, Taxes: Part IV - Wash Sales, Short Sales, Constructive Sale Rules [View article]
Hi, Baboon,
The IRS has devoted much effort over the years to force investors to realize gains sooner rather than later, and to treat losses just the opposite. Investors and their tax accountants try to do the opposite, as much as they can, while (usually) operating within the sometimes fuzzy IRS rules. I don't believe all this energy would have been expended if both sides did not see a benefit for their efforts, if successful. Granted, the losses disallowed can be used eventually in most cases, if handled properly, but eventually can be a long time from now. With apologies to the late George Allen, when it comes to realizing tax revenue, the IRS takes the position that "the future is now".
Thanks for posting. As much as we are all affected by the IRS and some of the rather strange rules on reporting gains and losses, I am hoping this series will bring out some more insights and observations from the SA readership. I'll consider any suggestions I can get, taxes are definitely going up.
NuStar Energy: How An Investment Turned Into A Speculation [View article]
With dividends factored in, it sounds like you came out OK. As per the article, NS is not a stock I could recommend today for conservative income investors.
Thanks for commenting, always great to compare notes with fellow investors.
NuStar Energy: How An Investment Turned Into A Speculation [View article]
Hi, All,
Appreciate the comments and points of view expressed. There's not much more to say at this point, it is now a waiting game for the next few months. I concur with Tom in Texas that whether a reduced dividend, if it occurs, gives one a reasonable yield depends on what one paid. I bought back into NS a second time about a year ago, with an average cost of $55.71, my position being acquired over a six month time frame, 11/2011 through 4/2012. I added more at $48.65 (9/2012), $43.65 (11/2012), and $40.40 (also 11/2012). I'm maxed out, will not add more. If it pushes back into the $50's anytime soon, I will likely take a quick profit & lighten up some on my position. I'm nervous with this stock, but as the article stated, I believe it is a reasonable speculation, and I plan to give the new strategy a chance to work, holding on to the units acquired above $50, at least, well into late 2013 and probably longer.
Digital Realty Trust: A REIT Worthy Of Consideration For Income Investors [View article]
Hi, All,
Like everyone else, I am perplexed by the stock price drop in light of an earnings report that was a standout, compared to the norm this earnings season. The stock dropped precipitiously yesterday (Oct 25) before earnings, going below $60 briefly. I surmised then that it might be fear of what the next day's report would look like. I slammed in a quick order as soon as I saw it going back up, even using a market order instead of a limit, it was moving so fast, and bought more at $60.44. The stock then went on to recover, closing above $64. As the good report came out, I felt like a trading genius briefly. We all know what happened -- another drop just like yesterday, only this time it isn't going back up like yesterday.
I don't have the answer. Based on all my research, I believe in DLR as an investment. I surmised that the original decline from $80 to the mid-sixties was because of concerns about a general world economic slowdown, affecting especially the technology sector. But DLR isn't selling PCs, it owns Data Centers, which will be kept going no matter how much PC sales slump and chip demand declines. So I thought (and still think) the sell off was not warranted, at least not as rapidly as it occurred. I will buy more if it drops into the $58 range or below, barring some news that destroys my investment thesis. I picked $58 because I require at least a $2 price improvement from my last buy to buy down on a stock over $50.
So I have bought in at $65 and $60, and will add more under $58 - and I'm just glad I didn't buy in at $80 and $75 - that would really be discouraging.
I'm just going to stay with the idea that this is an opportunity. I'll buy down at least once more, if it reaches below $58. And I will continue to evaluate, to see if there is any explanation.
I Am Not A 'Gold Bug' But I Do Like Newmont Mining For The Dividends [View article]
John D. Thomason
Yield, Value, Safety With Utilities - Redux [View article]
My approach is based upon dividends as a foundation. I would not invest in a growth stock for many reasons, let me count the ways -- it is hard to pick winners, growth may or may not occur, I need income now, dividend stocks are back in favor and demographics ensures that the trend will continue, it may be a long wait for "normal" interest rates, and so on. The safety of a given dividend is certainly not assured, but it can be predicted much more confidently that a given growth rate and corresponding share price increase for a company.
John D. Thomason
Yield, Value, Safety With Utilities - Redux [View article]
As I confessed to Travel4yields, above, my review was at a high level, and a screen based purely on numbers can miss a good stock. I subjected PPL to my more intense "5 minute" review (more intense than my 30 second review, I suppose), and I see no reason to bail on PPL at this point. The stock, like many in recent days, is bouncing around its 52 week highs, but even at that, it yields an attractive 4.6%, with Payout Ratio a manageable 55%. As I noted, debt is a bit on the high side, with Leverage Ratio 4.2, D/E 1.9, Interest Coverage 3.3, and Total Liabilities at 76% of Total Capitalization. S&P Bond Rating is BBB, just one notch above the lowest investment grade rating, but comparable to other high quality utilities. The stock is rated Neutral by Credit Suisse, 4 Star (Buy) by S&P, with Medium Risk, Earnings Quality B+, and 3 Star (Hold) by Morningstar. It is a recommended holding in Weiss' Income Superstars portfolio. Digesting all of that, PPL is a reasonable utility holding, with debt a little on the high side, even for a utility, but manageable. The keys going forward are regulator relationships and management's business strategy. The numbers are no cause to sell out. If you are comfortable with the management strategy and the intangibles, I would say to hold it & collect the very attractive dividend. I would hold off to add to the position, however, for a more attractive entry level.
Thanks for commenting. I learn something every time I receive a comment such as yours, suggesting I take another look at a given stock.
John D. Thomason
Yield, Value, Safety With Utilities - Redux [View article]
I took a break from writing while I was relocating from Oklahoma to Austin, TX. My fellow Okies have accused me of going over to the "dark side" (of the Red River, I suppose).
Another factor slowing down my writing is the overbought market and the dearth of attractive buy opportunities on quality stocks. My last article in January, where I cautiously recommended Diebold just as a management shake-up and earnings warning hit was a great lesson in what can happen when you go down the quality scale in an effort to get a reasonable price.
Thanks again for commenting.
John D. Thomason
Yield, Value, Safety With Utilities - Redux [View article]
The list I have from March 2011 shows CenterPoint as a Challenger, 5 to 9 years of dividend increases. The next level is Contenders, 10 to 24 years, then Champions, 25 or more years. So, CNP is at best only a Contender by now.
John D. Thomason
Yield, Value, Safety With Utilities - Redux [View article]
No, I only looked at some basic numbers available from a financial website to trim down a list of 36 firms. I did find an article on this move, which said CNP would own 59% of the new MLP. It looks like it might be a positive for CNP shareholders - maybe they will be awarded units in the partnership. CNP has a leverage ratio of 5.3, one of the highest of any of the utilities I looked at, a payout ratio of 83%, and a total liabilities of 81% of total capital, according to the MSN Money website. These are not good numbers, which is why I passed on CNP.
John D. Thomason
Yield, Value, Safety With Utilities - Redux [View article]
I believe WEC did not make my initial screen a year ago, which had a yield cutoff of 4%. WEC had a closing price of $34.53 on 3/16/2012, and a quarterly dividend of $.30, which would have resulted in a yield of 3.5%. The few I did look at that yielded less were utilities I knew about that I added to the utilities my screen found. The Redux article, in turn, only looked at the utilities I had looked at a year ago. WEC certainly has gained in price in the past year, and the dividend had a sizable bump to $.34 in February, so WEC would have been a good choice. That is the risk of any screen, you may set the parameters too tight and miss good candidates.
John D. Thomason
Yield, Value, Safety With Utilities - Redux [View article]
NextEra (NEE) was one of the 13 recommended utilities, although it is very pricey just now. It is in the group of 5 I still recommend, even though the yield is a bit under the 4% level. NEE is a top performing utility, I agree.
John D. Thomason
Stocks, Options, Taxes: Part II - Dividends [View article]
I plan to pursue taxes further, and obtain certification as a RTRP (Registered Tax Return Preparer) later on this year. If I learn more that might be of value to SA readers, I will write another article.
Thanks for commenting.
John D. thomason
Diebold: Is This Value-Priced Dividend Payer A Buy? [View article]
Thanks for commenting.
John D. Thomason
Stocks, Options, Taxes: Part V - Options [View article]
John D. Thomason
Stocks, Options, Taxes: Part IV - Wash Sales, Short Sales, Constructive Sale Rules [View article]
The IRS has devoted much effort over the years to force investors to realize gains sooner rather than later, and to treat losses just the opposite. Investors and their tax accountants try to do the opposite, as much as they can, while (usually) operating within the sometimes fuzzy IRS rules. I don't believe all this energy would have been expended if both sides did not see a benefit for their efforts, if successful. Granted, the losses disallowed can be used eventually in most cases, if handled properly, but eventually can be a long time from now. With apologies to the late George Allen, when it comes to realizing tax revenue, the IRS takes the position that "the future is now".
Thanks for posting. As much as we are all affected by the IRS and some of the rather strange rules on reporting gains and losses, I am hoping this series will bring out some more insights and observations from the SA readership. I'll consider any suggestions I can get, taxes are definitely going up.
John D. Thomason
NuStar Energy: How An Investment Turned Into A Speculation [View article]
Thanks for commenting, always great to compare notes with fellow investors.
John D. Thomason
NuStar Energy: How An Investment Turned Into A Speculation [View article]
Appreciate the comments and points of view expressed. There's not much more to say at this point, it is now a waiting game for the next few months. I concur with Tom in Texas that whether a reduced dividend, if it occurs, gives one a reasonable yield depends on what one paid. I bought back into NS a second time about a year ago, with an average cost of $55.71, my position being acquired over a six month time frame, 11/2011 through 4/2012. I added more at $48.65 (9/2012), $43.65 (11/2012), and $40.40 (also 11/2012). I'm maxed out, will not add more. If it pushes back into the $50's anytime soon, I will likely take a quick profit & lighten up some on my position. I'm nervous with this stock, but as the article stated, I believe it is a reasonable speculation, and I plan to give the new strategy a chance to work, holding on to the units acquired above $50, at least, well into late 2013 and probably longer.
John D. Thomason
Digital Realty Trust: A REIT Worthy Of Consideration For Income Investors [View article]
Like everyone else, I am perplexed by the stock price drop in light of an earnings report that was a standout, compared to the norm this earnings season. The stock dropped precipitiously yesterday (Oct 25) before earnings, going below $60 briefly. I surmised then that it might be fear of what the next day's report would look like. I slammed in a quick order as soon as I saw it going back up, even using a market order instead of a limit, it was moving so fast, and bought more at $60.44. The stock then went on to recover, closing above $64. As the good report came out, I felt like a trading genius briefly. We all know what happened -- another drop just like yesterday, only this time it isn't going back up like yesterday.
I don't have the answer. Based on all my research, I believe in DLR as an investment. I surmised that the original decline from $80 to the mid-sixties was because of concerns about a general world economic slowdown, affecting especially the technology sector. But DLR isn't selling PCs, it owns Data Centers, which will be kept going no matter how much PC sales slump and chip demand declines. So I thought (and still think) the sell off was not warranted, at least not as rapidly as it occurred. I will buy more if it drops into the $58 range or below, barring some news that destroys my investment thesis. I picked $58 because I require at least a $2 price improvement from my last buy to buy down on a stock over $50.
So I have bought in at $65 and $60, and will add more under $58 - and I'm just glad I didn't buy in at $80 and $75 - that would really be discouraging.
I'm just going to stay with the idea that this is an opportunity. I'll buy down at least once more, if it reaches below $58. And I will continue to evaluate, to see if there is any explanation.
Good Luck to all.
John D. Thomason