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John D. Thomason  

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  • 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.

    John D. Thomason
    Mar 26, 2013. 05:48 PM | 1 Like Like |Link to Comment
  • Yield, Value, Safety With Utilities - Redux [View article]
    Hi, Bingo 2,

    I concur that PNW is improving. Still, with the recent dividend bump being the first since 2006, I would be cautious -- will dividends be increasing annually or nearly so going forward, or will shareholders have to wait another 6 years for the next increase? That is the question I would ask. Prior to the drought, PNW increased the dividend regularly, so that is a good sign.

    NVE looks pretty good, based on a quick scan of some numbers.
    I had not heard of NVE before your comment.

    Thanks for the update.

    John D. Thomason
    Mar 26, 2013. 03:14 PM | Likes Like |Link to Comment
  • 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.

    John D. Thomason
    Mar 26, 2013. 11:57 AM | 1 Like Like |Link to Comment
  • 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.

    John D. Thomason
    Mar 26, 2013. 09:35 AM | 1 Like Like |Link to Comment
  • 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.

    Thanks for commenting.

    John D. thomason
    Mar 13, 2013. 11:47 AM | 1 Like Like |Link to Comment
  • Digital Realty: This 'Big Dog' Barks The Loudest [View article]
    Hi, Brad,

    DLR is certainly not a stock for the faint-hearted. I wrote (favorably) about the stock last October, stating that the swoon in the shares was a buy opportunity. As noted in later comments, I bought in at $65 and $60, and was ready for more, when the stock reversed and rose steadily from early November through January. I felt vindicated in my recommendation, but now I'm not so sure, as the stock has dropped precipitiously since Jan 28, from nearly $73, back down to $65, a 10% drop in ten trading days. Any thoughts on why this "Big Dog" may actually be a "Big Kangaroo"?

    As for debt and other fundamentals, per Ckent323's concerns noted above, I'm not worried about that -- per the specifics of my article, DLR has excellent fundamentals. It is just that one has to be ready for an exciting ride up and down if owning the stock.

    Any thoughts on the volatility issue?

    John D. Thomason
    Feb 11, 2013. 03:11 PM | Likes Like |Link to Comment
  • Trading The Market Versus The Economy [View article]
    Agree wholeheartedly with the analysis. I also appreciate your writing style.

    One way to play it is to sell covered calls with even higher strikes than the current high prices, as an alternative to selling outright. If the stock is called away, at least you have the satisfaction of having sold for more than it was trading when you sold the call, and then when you add the option premium, the effective sale price is higher still. As a dividend-seeking investor, I hate to sell a good dividend payer, even for a ridiculously high price. Example: sold July call with strike of $77.50 on Procter & Gamble Wednesday, for $1.00. Just a few months ago, PG was struggling to stay above $60. Today, as I write this, it is trading just a little under $75.

    Just a thought on how to not waste this rally.

    John D. Thomason

    Jan 31, 2013. 11:49 AM | 3 Likes Like |Link to Comment
  • Diebold: Is This Value-Priced Dividend Payer A Buy? [View article]
    Good point. In fact, that is what I am doing with most of my cash in brokerage accounts. Diebold did not look all that bad before Thursday 1/24/2013. As per the article, it had some issues, but stocks selling at a value price usually do. I went in on PG, ETN, EMR, DLR, to name four examples that at the time were similarly regarded as DBD (see my articles on these four), and the price each had fallen to was a buy opportunity, it turned out. Unfortunately, DBD at this point looks to be headed down, not up. I can learn from this -- upon reflection, DBD had more issues than the other four, and is probably not going to work out well anytime soon. Sometimes a value price is a value trap. But the board is taking steps to change the direction, so there is hope for the long-term. I plan to monitor closely & continue to evaluate whether to hold or fold.

    John D. Thomason
    Jan 28, 2013. 09:20 AM | Likes Like |Link to Comment
  • Diebold: Is This Value-Priced Dividend Payer A Buy? [View article]
    Thanks. As you can see from the comments, mine and others, this has been a new experience for me -- writing about a stock and having the article come out simultaneously with bad news and a huge drop in the stock. I'm just glad it didn't say "jump in with both feet" or someting like that. But as I pointed out, this whole situation may be more informative as an object lesson of what can happen any time you buy a stock. All we can go on is the information publicly available. No one not privy to inside information could have known what was coming.

    Thanks for sharing your thoughts.

    John D. Thomason
    Jan 27, 2013. 07:35 PM | Likes Like |Link to Comment
  • Diebold: Is This Value-Priced Dividend Payer A Buy? [View article]
    Cetainly the dividend is a record to admire, and the commitment to the dividend through bad times is also admirable. This looks to me like a classic case of a pretty good franchise that is just in need of a shake-up and new management to get back on track. Hopefully that is the case and the needed new leadership will be found. The risk is, if things don't turn around, as far as earnings and revenue growth, then the admirable record could be in jeopardy. While caution is in order, it is not a case of total gloom, and may represent a value investing opportunity. I hope so. My position is modest, and a bit underwater at the moment. I don't like to lose money on a stock, even if it is only a small position in my portfolio.

    Thanks for your insights.

    John D. Thomason
    Jan 25, 2013. 02:44 PM | Likes Like |Link to Comment
  • 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.

    Thanks for commenting.

    John D. Thomason
    Jan 24, 2013. 03:33 PM | 1 Like Like |Link to Comment
  • Diebold: Is This Value-Priced Dividend Payer A Buy? [View article]
    Thanks. This is the first time I have written about a stock and then had negative developments come out almost immediately afterward. Actually, I caught the news before publication, but instead of pulling back the article, I prepared the update instead, which I posted as soon as SA published the article. I said to myself, let's let the chips fall, and see where we go from here. The whole scenario will probably prove to be more instructive to investors than if the bad news had not come out. This is the real world, where bad things sometimes happen, even if one has done due diligence. Speaking of same,as the article reads, I did not have much of a comfort level with DBD -- it was only attractive as a possible value stock in a frothy market. I probably should have listened more to my inner voice -- perhaps I was over-confident after some good (short-term, at least) calls on PG, ETN, and EMR (See articles on these for what I'm referring to). One thing is certain, any time you get over-confident, the market will resolve the problem for you.

    John D. Thomason
    Jan 24, 2013. 03:23 PM | 3 Likes Like |Link to Comment
  • Diebold: Is This Value-Priced Dividend Payer A Buy? [View article]
    See my update comment, below. The article was prepared over the week-end, and only submitted yesterday. As of early this morning, when the Diebold news came out, it still had not been published. Anticipating the article would come out soon, I prepared the update below, to be posted as a comment. The big picture has not really changed all that much -- DBD is an under-performing firm in need of a shake-up, and now, it looks like the needed shake-up is indeed happening. For holders, I would say be patient -- the Board is responding, let's see who comes in as CEO and what the plan is before bailing. For investors considering a position, I would recommend caution, as per the article -- either wait to see what happens before buying in, or if getting in to take advantage of the "value", start small and monitor closely. DBD may have further to fall before it stabilizes. The entire episode may provide a good object lesson, in that anything can happen, and often does.

    Even after buying more today, DBD represents barely half of 1% of my portfolio, so I am disappointed, sure, but not in panic mode, now or ever, regardless of what happens.

    John D. Thomason
    Jan 24, 2013. 12:52 PM | 2 Likes Like |Link to Comment
  • Diebold: Is This Value-Priced Dividend Payer A Buy? [View article]
    Diebold (DBD) Update 1/24/2013

    What a difference a day makes! Since the article was submitted on Wednesday, 1/23/2013, there has been a major shake-up at Diebold, announced Thursday morning.

    First, the preliminary results for the final quarter and full year 2012 were reduced again, with earnings now projected at $0.45 per share, on revenue of $840M. The consensus estimates from analysts surveyed by Thomson-Reuters had been $0.64 for EPS, and $846M for revenue. The full-year preliminary EPS is now projected to be $2.07, down from an earlier projected range of $2.25 to $2.35. These earnings are not inclusive of non-operating charges to be taken in the quarter, $22M for pension buyouts, and $18M for expenses related to an ongoing Foreign Corrupt Practices Act investigation. When these items are included, a loss of $0.12 per share is expected for the quarter. Further, the company lowered guidance for 2013, with earnings now expected to be flat to moderately lower.

    Further, significant management changes were announced. The CEO for the past seven years, Thomas W. Swidarski, is stepping down, and a search for a new CEO is under way. The recently named non-executive Board Chairman, Henry D.G. Wallace, will serve as active CEO in the meantime, now becoming an executive Chairman of the Board. A new position of Chief Operating Officer was created, to report to Mr. Wallace, and was filled by transferring in George S. Mayes, formerly executive vice-president of global operations.

    I stand by the article, with events proving why a cautious, incremental approach is recommended when starting a new position in a stock. DBD is definitely in value stock territory now, falling over $3.00 since last week. While I added a few more shares today, my position is still modest. I will await developments before taking further action. DBD will hopefully provide a positive example of the dynamic nature of capitalism and business in the months ahead -- that a sinking ship can be going turned around by new leadership. If it happens, DBD will prove to be a good investment. If not, it will illustrate why limitations on exposure to a single firm in a portfolio is required.

    John D. Thomason
    Jan 24, 2013. 12:33 PM | 6 Likes Like |Link to Comment
  • NuStar Energy: How An Investment Turned Into A Speculation [View article]
    Update 01/18/2013:

    As I noted in my comment above on Dec 7, that I might lighten up on my position and take some money "off the table" upon a rise by NS above $50, that opportunity came yesterday, and I reacted as planned, selling the shares bought in the low $40's. I did this even though I truly expect the stock to eventually recover and get back into the upper $50's and maybe beyond. Still, the jury is still out on the recovery plan, and an opportunity to grab a quick profit and reduce exposure had to be taken, per my conservative approach. This reduces my exposure to NS to less than 3% of my total portfilio value, well under my 5% maximum, and allows me to have a bit more of a comfort level with the holding. If it goes on up and this move ends up not being "smart", so be it -- I never complain when a stock I own goes up!

    John D. Thomason
    Jan 18, 2013. 08:38 AM | Likes Like |Link to Comment
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