4 February 'Feel Good' Factors For Apple Fanatics [View article]
Frankly, I'm shocked. Even if Apple just held to this earnings yield and failed to acheive any earnings growth going forward I would consider this a decent low-risk stock to add to something like the Utilities portfolio (due to low valuation, dividends and easy ability to pay future dividends). But we are not talking about electricity or water delivery...this is a stock trading a deep deep value that still has game. I was not a fan of Apple when it was trading around $700 and got slammed for saying so. Now at $450 I think its a great bargain and this is suddenly the unpopular opinion. Apple is a great stock to play provided you are a contrarian investor.
Are Dividend Stocks A Substitute For Bonds? [View article]
I find this short on actionable advice. You talk about averages but you only invest in the current price and yields. What are you telling investors today? Buy bonds at todays low yields and it will likely spike up to 17% at some future point giving them an average yield of 7.5%? Why not go with dividend stocks with higher yields now and rotate - if and when - the bond yields go up later? Bonds are not like stocks as you like to point out and you will not be missing out on some great captial appreciation price move.
In fact, tell the zealots and maniacs what happens if you buy a 10 year bond now at a low rate, get really jealous when you see your dividend growth friends raking in 14% total average gains using some simple utility or MLP strategy (this has been the 10 year average - if you can use your 7.5% yield than fair is fair) and sell your bonds when current yields spike up to 7.5%? How much money will your client make in that scenario? If he locks in at a low yield and sells unhappily when everyone is making money when interest rates are high, what happens when he sells early?
Your article is true if bonds are at 7.5% and dividend yields are at 5%. Is that the case now? Was it necessarily true in the past or were there higher dividend yields when interest rates and bond rates were higher such as in the 80s?
Hard facts please and actionable advice will turn believers into your camp - otherwise just more anti-dividend rhetoric.
Why Dividend Investors Can Ignore Stock Prices [View article]
Dividend growth trading based on valuation is one of my top strategies right now. However, big disclaimer about dividends/price/earnings being linked together. Price going down may indicate future risk of earnings drop thus making the dividend growth unsustainable. Dividend growth is a good starting point for an investable universe but many factors need to be considered in addition to management policy of raising dividends annually.
Here's How To Get Sustainable 7% Dividend Yields When Markets Crash [View article]
You'd be surprised to see how many people pump dividend stocks in any market.
As the markets are cap-sizing, I felt it timely to put a few solid companies with increasing earnings and dividends on the radar to buy when dividends hit the right threshold. Yes, the title was meant to grab your attention - but you'd also be amazed at how many people pick up blue chips in any market and are only getting yields of 2 - 4 percent instead of picking them up when yields hit 6 - 8%.
People are having tunnel vision on capital losses right now when they should be focusing on earnings and dividend yields that they can lock into at the right annual income payout.
Eating Some Humble (Apple) Pie And Hedging Our Position [View article]
Well, I am happy to see these type of articles for one reason... it means that investors are hitting the maximum pain point and this is usually where things spin around. Huge cash pile, incredible value, it is being treated like a garbage stock that is going bankrupt - yet they are still a great company with big, albiet slowing, profit. When something makes as little sense as this... you keep buying and buying and buying. Now is not the time to hedge... that was when prices were trading up at mega-valuations. You should buy when something as insane as this happens.
You really think Apple is going to trade at cash value? There is nothing wrong with coming out and saying, "whoops, we thought this would bounce back sooner,"... we all thought so. But to sell out or hedge or anything else when its trading like beet soup... no sireee.
I've worked at 2 prop trading jobs and I've experimented with dozens of indicators and patterns. Oddly enough, what worked best was a simple trendline and a couple moving averages as possible pullback zones for a bounce. The rest was fighting my emotions, over-trading, and making stupid moves trying to win back losses. Use what works for you though.
Here's How To Get Sustainable 7% Dividend Yields When Markets Crash [View article]
During the last market crash stocks went on more than a 1/2 price fire sale - and we are talking the S&P 500. If they had 3.5% dividends before the crash - they had 7% dividends during provided they followed the policy of raising dividends every year - as quality companies do. I am on vacation but when I get to my own computer I can give you a list of good companies that had 7% implied dividends - there were quite a few.
The point is - buy and lock-in when dividends get that high and ignore capital gains and losses while you sit with big dividends until the market returns...even if that is 2 or three years down the road.
When This Indicator Hits 19, Stocks Always Rally [View article]
I get the use of sentiment surveys to determine timing when you think the market is greatly oversold...when sentiment is too low and people have sold out, a new wave of investors with opportunistic institutions drive prices up since supply of stock at those levels dries up.
But I think we should be focusing more heavily now on the underlying risk factors. If the economy tanks and stays down there for years on end, picking an arbitrary number that has worked well in past short-lived bear markets may harm investors for the road of slow growth / slow recovery.
I appreciate your comment but I don't agree with your viewpoint. The last few weeks has been a sideways trading range that was testing the uptrend. I'm not sure on your definition of a drop but I consider the last month as a set-up rather than a new down-trend.
My point is that the recent uptrend is broken (as opposed to a small pull back to the trend followed by a bounce), and you should get positioned for it if you have not already done so.
The New Stock Market: Obscenely Volatile, Perfectly Inefficient And It Only Gets Worse [View article]
You may find in the future that HFTs care very little about dividends and if enough fundamental investors cannot keep prices down (how could they possibly do so?), a P/E of 50 on a stock with a 50% payout ratio may not mean much in the way of income between now and retirement. Dividend stocks can be gamed like any other stock - the participants and the amount of money they bring to the investing table is what makes the difference.
The Hard Truth Of Dividend-Growth Investing [View article]
Well I guess you walking out of the room and turning out the light ends the discussion then so I'll just say this out-loud to myself.
I want to understand your point of view - it is why I interact every time you show up and heckle my dividend growth articles. What I struggle to understand is that I have never met an investor until now that doesn't care about building wealth, or comparing it to what everyone else is making, or even trying to pick a better than average stock. You simply want to turn capital into income?
Turing capital into income is the easy part...a shell company with an IPO keeps half your capital and slowly gives back the other half in dividends and you get to pay income tax on it yet again. Or, you can also chase ex-div dates turning your capital into income at a very quick pace. But unless you consider total return you might just be giving yourself back a small portion of your original investment in some self-inflicted Ponzi scheme.
Sustainable income, on the other hand, requires knowledge of fundamentals and valuation.
The Hard Truth Of Dividend-Growth Investing [View article]
I appreciate any and all feedback Robert. I am merely trying to show where the returns lie so a new investor does not get burned by thinking dividend growth stocks deliver superior returns on average or that a management policy has anything to do with the firm's fundamentals. The goal is to 'seek alpha' with strategy - which is what the meat of this article is about.
But as you are an advanced dividend growth investor, I can see how this article may not be of use to you personally.
Three weeks ago we warned our Portfolio-cafe subs that the market was setting up a bearish pattern and advised against small caps and into our utility and dividend growth models which have fared the best during down markets while holding at least 25% cash.
But to answer your question, today was essentially confirmed our fears. Our quant models have not suggested increasing the cash position and selling more positions than we already have... but the models are updated weekly so there could be some changes as early as next week. I'll keep SA posted.
4 February 'Feel Good' Factors For Apple Fanatics [View article]
Are Dividend Stocks A Substitute For Bonds? [View article]
In fact, tell the zealots and maniacs what happens if you buy a 10 year bond now at a low rate, get really jealous when you see your dividend growth friends raking in 14% total average gains using some simple utility or MLP strategy (this has been the 10 year average - if you can use your 7.5% yield than fair is fair) and sell your bonds when current yields spike up to 7.5%? How much money will your client make in that scenario? If he locks in at a low yield and sells unhappily when everyone is making money when interest rates are high, what happens when he sells early?
Your article is true if bonds are at 7.5% and dividend yields are at 5%. Is that the case now? Was it necessarily true in the past or were there higher dividend yields when interest rates and bond rates were higher such as in the 80s?
Hard facts please and actionable advice will turn believers into your camp - otherwise just more anti-dividend rhetoric.
Why Dividend Investors Can Ignore Stock Prices [View article]
Here's How To Get Sustainable 7% Dividend Yields When Markets Crash [View article]
As the markets are cap-sizing, I felt it timely to put a few solid companies with increasing earnings and dividends on the radar to buy when dividends hit the right threshold. Yes, the title was meant to grab your attention - but you'd also be amazed at how many people pick up blue chips in any market and are only getting yields of 2 - 4 percent instead of picking them up when yields hit 6 - 8%.
People are having tunnel vision on capital losses right now when they should be focusing on earnings and dividend yields that they can lock into at the right annual income payout.
Eating Some Humble (Apple) Pie And Hedging Our Position [View article]
You really think Apple is going to trade at cash value? There is nothing wrong with coming out and saying, "whoops, we thought this would bounce back sooner,"... we all thought so. But to sell out or hedge or anything else when its trading like beet soup... no sireee.
Is A Stock Market Drop Imminent? [View article]
Here's How To Get Sustainable 7% Dividend Yields When Markets Crash [View article]
The point is - buy and lock-in when dividends get that high and ignore capital gains and losses while you sit with big dividends until the market returns...even if that is 2 or three years down the road.
When This Indicator Hits 19, Stocks Always Rally [View article]
But I think we should be focusing more heavily now on the underlying risk factors. If the economy tanks and stays down there for years on end, picking an arbitrary number that has worked well in past short-lived bear markets may harm investors for the road of slow growth / slow recovery.
Is A Stock Market Drop Imminent? [View article]
My point is that the recent uptrend is broken (as opposed to a small pull back to the trend followed by a bounce), and you should get positioned for it if you have not already done so.
The New Stock Market: Obscenely Volatile, Perfectly Inefficient And It Only Gets Worse [View article]
The Hard Truth Of Dividend-Growth Investing [View article]
I want to understand your point of view - it is why I interact every time you show up and heckle my dividend growth articles. What I struggle to understand is that I have never met an investor until now that doesn't care about building wealth, or comparing it to what everyone else is making, or even trying to pick a better than average stock. You simply want to turn capital into income?
Turing capital into income is the easy part...a shell company with an IPO keeps half your capital and slowly gives back the other half in dividends and you get to pay income tax on it yet again. Or, you can also chase ex-div dates turning your capital into income at a very quick pace. But unless you consider total return you might just be giving yourself back a small portion of your original investment in some self-inflicted Ponzi scheme.
Sustainable income, on the other hand, requires knowledge of fundamentals and valuation.
The Hard Truth Of Dividend-Growth Investing [View article]
But as you are an advanced dividend growth investor, I can see how this article may not be of use to you personally.
Analyzing P/E When Both Price And Earnings Are Moving Targets [View article]
Is A Stock Market Drop Imminent? [View article]
But to answer your question, today was essentially confirmed our fears. Our quant models have not suggested increasing the cash position and selling more positions than we already have... but the models are updated weekly so there could be some changes as early as next week. I'll keep SA posted.
Is Dividend Growth Investing Enthusiasm Inflating A Bubble? [View article]