Seeking Alpha
View as an RSS Feed

John D. Thomason  

View John D. Thomason's Comments BY TICKER:
Latest comments  |  Highest rated
  • 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.

    John D. Thomason
    May 29, 2013. 11:17 AM | 3 Likes Like |Link to Comment
  • Yield, Value, Safety With Utilities - Redux [View article]
    I had not considered it prior to your comment, but in response, I looked it up. This article http://bit.ly/112xwmd has some info. As I stated in my original article, regulators usually extract concessions before giving approval, and it appears to be the case here. The question is, do the benefits (to shareholders) outweigh the concessions. Note that the benefits are usually projected, while the concessions are real. A press release from the company stated "this merger puts us in a unique position to provide better service levels, support our communities and employees, and take the lead on green programs and smart technologies that protect the environment, and blah, blah, and so on.” I did not see anything in the release saying dividends to shareholders would be increased! Wouldn't that be a welcome surprise. Another article
    http://bit.ly/174SSb4 did say the NU dividend would be increased. The same article stated there would be two headquarters going forward, in different states. Say what? That doesn't sound like effective consolidation. I guess to summarize, I don't look favorably on mega mergers generally -- how well it works out depends upon compatibility, synergy opportunities, and above all, execution. A lot can go wrong. Still, if you are a prior owner, no reason to sell, just wait and see how it goes. There are not a lot of screaming buys out there right now.

    John D. Thomason
    May 29, 2013. 10:46 AM | Likes Like |Link to Comment
  • Newmont Mining - A Value Stock Speculation Opportunity [View article]
    I concur I was not clear on my approach. I follow an incremental, averaging down approach up until such time as I have acquired a set maximum number of shares. After that, if the stock becomes range-bound, I would be prepared to hold, and hopefully collect dividends, until such time as it rebounds, or if, after a year or two, I tire of waiting, I can get out close to break-even. A worst-case scenario is the stock (and likely the gold price) continues on down after I have finished accumulating shares. At that point, I must make a decision that somewhere along the downside continuum, there is a point at which I will cut my losses to conserve capital. and admit a mistake. I'm hoping that decision won't be required, that NEM will not go down much more -- but I need to consider up front what I will do if that happens. After selling to cut my losses, if it goes way, way down, say to single digits, and I'm still a believer, I can always get back in.

    John D. Thomason
    May 28, 2013. 02:48 PM | Likes Like |Link to Comment
  • Newmont Mining - A Value Stock Speculation Opportunity [View article]
    Hi, All,

    Thanks one and all for commenting. NEM has just bounced up a bit after being down earlier this AM. It has been a very volatle stock recently. As per the article, I believe the management will do whatever is necessary to survive and be prepared for the next upsurge in gold prices. The central question at this point is, where is the bottom, both for NEM and gold? Of course, I don't know, but we are definitely closer to it than anytime during the past several months. Good luck to all.

    John D. Thomason
    May 28, 2013. 11:18 AM | Likes Like |Link to Comment
  • Stocks, Options, Taxes: Part VI - Options And Tax Straddles, Covered Calls [View article]
    Hi, firetiger77,

    See the reference: Tax Consequences Associated With Option Strategies, a series of articles provided by BBD, LLP, a Certified Public Accounting firm located in Philadelphia, PA, Part IV, Example 1). Even though the long-term status would not be affected, the holding period suspension could cause the holding period requirement for a dividend to qualify for the 15% tax rate to be failed. This may be moot for tax year 2013 and beyond, since the holding period requirement for qualified dividends (which was that the stock must have been held, unhedged, for at least 61 days (for quarterly dividends) during the 121 day period beginning 60 days prior to the ex-dividend date and ending 121 days later) has apparently been eliminated. I will await the new rules for 2013 to be sure this is a fact.

    John D. Thomason
    May 15, 2013. 10:05 PM | Likes Like |Link to Comment
  • Yield, Value, Safety With Consumer Staples - Redux [View article]
    Hi, All ,

    I believe in taking profits, i.e. capital gains, when the price has advanced substantially, especially if the fundamentals are deteriorating, and if there has been a parabolic advance that is likely to retrace. One rule of thumb I have is, if I can get a capital gain equal to 3 or 4 year's worth of dividends, consider taking it. The point I was making in the article is I have taken some gains a little too early in a couple of cases, so don't be too quick on the trigger. Another factor to consider is, what is available as a replacement? There is a lot to consider, but I'm not married to any stock -- there is a price I would be a seller of any stock I own.

    John D. Thomason
    May 2, 2013. 08:30 PM | Likes Like |Link to Comment
  • Yield, Value, Safety With Consumer Staples - Redux [View article]
    I agree, Josh's Dividend Investor newsletter is the best one out there that I have found for dividend investors. I also recommend his book in my recommended reading list on my website (Optimum Stock Investing), and I referenced Josh's approach to evaluating REITs, outlined in the book, in my two-part article "Yield, Value, Safety with REITs". Josh focuses on the dividend income, and does not recommend trading in and out, although he is open to letting go of a fully-valued stock that he feels may have stalled out, as far as dividend inceases are concerned, if he can find an attractive alternative that will not result in a reduction in dividend income.

    John D. Thomason
    May 2, 2013. 11:46 AM | Likes Like |Link to Comment
  • Yield, Value, Safety With Consumer Staples - Redux [View article]
    Hi, hat_trick3 and mostserene1,

    I'm kind of in the middle with the sentiments expressed. I usually consider selling some or all of an over-valued name, or at least selling a call option, to take advantage of a run up in price. With luck, by paying attention to the ex-dividend dates, I have been able to exit and get back in at a lower price without even missing a dividend many times over the past few years. But lately, with such a long stretch without a pull-back, and the extreme price advances continuing unabated in these highly sought after names, I have had a couple of disappointments with this strategy, which has been successful in the past. That is why, in the article, I have cautioned against selling just because the price has advanced. The question is, has it advanced so much that you just have to take some money off the table, or does it have more room to run? Recently, I felt like PG had run up too far, and sold a call. GIS I just sold outright, and so far, it looks like I maybe should have given it more room. JNJ (not in the article, but similar to the stocks covered), is an example where I decided to hold off on selling. The ratings firms' target prices factor into my thinking whether to cash out or hold, which is why I presented some of that data in the article. I'm just looking for some help to decide whether the price is high enough that I should just take the money and run. One way I appoach it is to ask, what is the worst outcome if I go a certain way vs another, and how will I feel about it. I will admit to more of a trading mentality than is probably advisable, but that is how I like to operate.

    Thanks both of you for commenting.

    John D. Thomason
    May 1, 2013. 08:28 PM | Likes Like |Link to Comment
  • 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.

    John D. Thomason
    Apr 22, 2013. 08:46 AM | 1 Like Like |Link to Comment
  • 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.

    John D. Thomason
    Apr 17, 2013. 10:29 AM | 1 Like Like |Link to Comment
  • Yield, Value, Safety With Utilities - Redux [View article]
    Hi, Travel4,

    Point well taken. My review was at a pretty high level. Instead of recommending my finalists, I should probably say "worthy of further study". There is always much more to the story than a quick review of numbers can reveal. Thanks for your insights and informative comment.

    John D. Thomason
    Mar 30, 2013. 11:21 AM | 2 Likes Like |Link to Comment
  • 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.

    Thanks again for commenting.

    John D. Thomason


    Mar 27, 2013. 09:49 AM | 1 Like Like |Link to Comment
  • 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.

    John D. Thomason
    Mar 26, 2013. 09:19 PM | 1 Like Like |Link to Comment
  • 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
COMMENTS STATS
336 Comments
223 Likes