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  • A 4% Dividend Yield Portfolio With A 10% DGR Is Good Enough For Me [View article]
    True, but even for younger folks, higher yield reinvested (even if growth is low) compounds quite fast as long as the business continues to remain stable and throws cash flows enough to cover the yields. That's the conclusion from the other articles that I was referring to in my earlier comment. Higher yield should be looked at favorably also by younger folks as long as they reinvest all dividends.
    Nov 22, 2014. 02:07 AM | Likes Like |Link to Comment
  • A 4% Dividend Yield Portfolio With A 10% DGR Is Good Enough For Me [View article]
    Good points, Seeker. The only caveat I would add to your suggestion of 'income weighting' is that it leads to skewed portfolio construction with high weightage (and more risk) towards future growth than current yield. If you have wide-ranging dividend yield stocks (say from 1% to 8%) in your portfolio, you will end up with 8 x the weightage in the 1% yielder than in the 8% yielder. This increases the portfolio risk though the DGR should be very good indeed. I would recommend a mix of the two approaches. You can have a 'core' set of equities in the 2-4% current yield range (with moderate DGRs of 4-8%) with the 'core' having 50% weightage, and 25% of 'high growth, low yield' variety that may be below 2% yield today but DGRs above 10%, and another 25% of the 'high yield, low growth' variety of yields of 6-10% (DGRs of 0-2%). A portfolio like this can achieve overall 4% yield and still about 7-8% weighted average DGR at the portfolio level, which is very healthy growth in my view.

    I recall there were interesting articles from SA contributors Tim McAleenan and Eli Inkrot that showed high current yield (even with low DGR) works out better compared to low yield but high DGR, even over 30-year holding periods. In my view, this has more do with compounding effect with dividend reinvestment than anything adverse about the high growth (low yield) company. Bottom line is that the DGI strategy allows each investor to custom-build their portfolio as per their current income and future growth needs.
    Nov 21, 2014. 02:28 AM | Likes Like |Link to Comment
  • BDC Results For Q3 2014 [View article]
    Buzz, Without your wonderful articles and reasoning, I would have totally ignored the BDC category. Thank you so much for your timely advice on this sector, persuasively delivered. Long HTGC and MAIN. I hope they become 'core' to a 30+ year DG portfolio as the dividend aristocrats are today.
    Nov 17, 2014. 01:05 AM | 1 Like Like |Link to Comment
  • Comparing The Best Dividend ETFs [View article]
    Thanks guys. It appears that Nasdaq data is wrong, but the sizable decline over 2008-2010 is a concern indeed.
    Nov 5, 2014. 04:20 AM | Likes Like |Link to Comment
  • Comparing The Best Dividend ETFs [View article]
    See: http://bit.ly/1wZZ8he

    Looking at the dividend growth history of VYM in the link above, while the dividends have grown in the last 4 years from this ETF, during the Great Recession, no dividends were paid. In fact, after 6/24/2008 the next payment of dividend by VYM was in 3/25/2010 - that is 21 months of ZERO dividends! This is why this strategy has a risk for investors counting on dividend income during tough times - even from an otherwise good and low ER ETF like VYM. It's okay not to grow income during recessions, but 21 months of no div income? That's a bit much to endure in my view.
    Nov 4, 2014. 08:06 AM | Likes Like |Link to Comment
  • What Likely Happened To Dividend Growth Retirees In The Recession: Another Point Of View [View article]
    DVK, Good point. In my own portfolio, if I take the Beta of each stock and weight-average it, portfolio beta comes to 0.87 for basket of 30 stocks, i.e. 13% less volatile than S&P 500. But somehow I felt this was not a good way of measuring diversification among stocks and I was struggling with it till I found one website talking about Intra Portfolio Correlation (IPC). This methodology looks at the correlation and co-variance between the individual stocks without regard to the broader market and produces a Beta-like metric - this came in at 0.3 for my portfolio, meaning the stocks are far less correlated with each other than what portfolio beta suggests. I am still wrapping my head around this one, perhaps you and others have researched this already. If you have some studies that explain this better, please share the links. Thanks.
    Oct 31, 2014. 06:31 AM | 1 Like Like |Link to Comment
  • Accounting Armageddon: Should You Dump Your American Realty Stake And Run For The Hills? [View article]
    A few positives stand out for me in this episode, despite the whole affair being avoidable if they had been more diligent in the first place:
    * There is a strong whistle blower policy in ARCP and people believe it works (at least one person did)
    * The Board takes up all complaints of whistle blowers and acts on them promptly
    * They hire independent forensic audit team of global repute immediately to ascertain the truth (not some local audit firm to save costs)
    * Once findings are in, they immediately act to sack the erring people (no matter how high up they are)

    These are signs of decent corporate governance, at least for me. This, combined with just 3 cents of AFFO adjustment (and a penny adjusted as per GAAP EPS), tells me that the market reaction is a 'tempest' in a tea cup. Though I did not have new funds to add at these prices, I am willing to give ARCP one more chance and will continue to hold it in my portfolio (despite the paper loss). GLTA.
    Oct 30, 2014. 08:12 AM | 14 Likes Like |Link to Comment
  • Why Dividends Matter: An Interview With Lowell Miller [View article]
    Butterfly, it seems to me that a simple way to quantify what you are saying is to compound the dividends for each year since 1929 with the assumption of constant stock price as of 1929. All reinvestments of dividends can be assumed to be at stagnant stock price as of the original investment. In other words, remove the combination variable's (price appreciation's) impact in the entire time period. It would be interesting to see in that case how PURE dividend compounding would compare with Dividend + Price Appreciation compounding. If you or anyone else has done this, it would be good to see the data. I did this as a theoretical exercise in to see the impact (see link), but don't have actual data to compare it with. http://seekingalpha.co...
    Oct 30, 2014. 06:29 AM | Likes Like |Link to Comment
  • Discover feels the love from consumers [View news story]
    Impressive. Now, if only the market can give the same love as consumers by giving DFS the same P/E multiple as AmEx....
    Aug 31, 2014. 03:00 AM | 1 Like Like |Link to Comment
  • Deere & Co.: Plowing Its Way To Lower Prices [View article]
    Good points bigx. I analyzed the same conditions and came to the conclusion that $86 is not a bad price to enter into a long DE position with intent to hold for 2 years minimum. Funny how the same analysis leads to different conclusions for different people.
    Aug 19, 2014. 11:13 AM | Likes Like |Link to Comment
  • Here's The Alarming Table Kinder Morgan Doesn't Want You To See [View article]
    Aren't you comparing entirely different companies in different industries? Surely, Cisco's (and others listed in the table) have industry dynamics that are markedly different from KMI's. Also, none of them are in the 'toll operator' business of an essential commodity which is also growing in global demand. Infrastructure companies will always have a lot of debt, so they should be evaluated on the difference in ROA versus long-term cost of debt. As long as this spread is sustainably positive, KMI will do fine over the long run and can increase dividends while servicing the debt as well.
    Aug 12, 2014. 12:16 PM | 19 Likes Like |Link to Comment
  • Kinder Morgan scrapping MLP structure in $44B deal [View news story]
    If you own KMR in an IRA, you will get 16.5% unrealized gains that you can immediately cash in with no tax impact at all. In my view, selling now may not be the best for long-term investors because I see the 16.5% premium as a 'compensation' by management to KMR shareholders to 'endure' slightly lower dividends in KMI, which, by the way (at 10% growth annually as projected), will catch up within a year or two to what you were getting with KMR. Think of it as getting paid upfront for slightly lower dividend yield in KMI in the next 1-2 years. So, it is a win for KMR holders in my view.
    Aug 10, 2014. 11:55 PM | 3 Likes Like |Link to Comment
  • Why I Bought Walgreen On This 15% Alliance Boots Pullback [View article]
    On balance, looks like a good decision by Walgreens though investors didn't like it. I read somewhere that nearly 23% of their US revenues comes from Medicare/Medicaid reimbursements so they are a beneficiary of our subsidy program in healthcare for seniors. Also, being a very visible consumer brand, it is smart to be in the consumers' good books on 'responsible corporate citizenship'.
    Aug 7, 2014. 05:34 AM | 2 Likes Like |Link to Comment
  • McDonald's Vs. Chevron: All Dividend Yields Are Not Created Equal [View article]
    Have french fries with coke at MCD and fill up a tank of CVX gas just in case the electricity runs out?
    Aug 6, 2014. 12:42 AM | 3 Likes Like |Link to Comment
  • Retirement Strategy: The ETF Only Portfolio Vs. Buy The Dips Portfolio: Update For July [View article]
    VYM has 0.13% expense ratio and other dividend ETFs also have similar ratios. This doesn't seem to explain the difference in income between the ETF versus the portfolio of underlying stocks? Could the ER ratios be wrong or is there a cash drag in ETFs (possibly to provision for redemptions)? It would be helpful if you or others can share any analysis done for the income/yield variance.
    Aug 5, 2014. 05:46 AM | Likes Like |Link to Comment
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