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Nathan Kemalyan  

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  • 18 Seeking Alpha Contributors And Commentators And Their Picks For Future Dividend Growth [View article]
    Well, you pulled it off! I'd enjoy hearing more about the Why of your contributor's choices. I'm guessing the relative scatter-gram of companies chosen has something to do with the fact that most of us are far poorer as analysts than we are about parsing the past.

    I have to admit I'm much happier with the portfolio bet than I am with individual company bets.
    Sep 3, 2015. 12:10 AM | 2 Likes Like |Link to Comment
  • How Dividend Reinvestments Will Increase My Cash Flow Over The Coming Year [View article]
    hooray for the DRIPers! I have to admit I'm a bit envious of those who have dry powder for the current bargains, but my next retirement plan contribution will come along before too long. It's not possible to have it both ways; all your money at work and cash reserves too. Even selling puts ties up cash.
    I always like hearing a quote from some luminary that confirms my biases; just today I read that Benjamin Graham piece that advised investing your money when you get it, rather than waiting around for bargains; for me the DRIP is exactly that; buying fractional shares with NO transaction expense friction, when the dividend comes in.
    Aug 31, 2015. 08:48 PM | 6 Likes Like |Link to Comment
  • Is Procter & Gamble A Value Play? [View article]
    I bought my shares in 2010, 2012 (average around $60/share) and have been DRIPing along; the performance in my portfolio with reinvested dividends is 7% annually over those 5 years. I can believe the published numbers or believe the balance in my brokerage account; guess which number I trust more??? I won't be buying more at this point with a full position in my account, but can't see a reason to sell, either.
    I guess I could hold treasuries, TIPS or the like to anchor my portfolio, but I like P&G's prospects better than bond values and distributions at this point. Are the wheels coming off? I doubt it. Let's see what happens as the company focuses on it's best brands.
    Aug 30, 2015. 03:22 PM | 1 Like Like |Link to Comment
  • Retirement Strategy: Did You Freak This Week? [View article]
    For the dedicated DRIPer, it was a non-event. I'll be reinvesting dividends at a more attractive rate for the next however-long it takes to climb up that wall of worry again, or maybe at even more attractive rates if things sag further. I heard about the crash on my way to work, had nothing to regret, as my funds are put to work when they come into the account.
    Aug 29, 2015. 08:15 PM | 3 Likes Like |Link to Comment
  • PepsiCo: A Textbook Example Of An Expanding Payout Ratio [View article]
    Over 10 years time the company has a smaller and smaller profit margin;
    could be any number of things; bolting on less profitable acquisitions, organic growth with less profitable product lines, acquiring more debt and more debt service...Perhaps the annual reports would clarify this; nonetheless, a company of this size with steadily shrinking profit margin is one I'm not all that interested in owning.
    Aug 29, 2015. 07:17 PM | Likes Like |Link to Comment
  • What Stocks Stand Out If You Combine Smart Beta With Dividend Growth Investing? Here Are 15 Choices [View article]
    I guess my personal summation of your analysis (and thank you for that work, by the way) is that the "Smart Beta" analysis yields substantially the same list of contenders for my retirement portfolio as the approach I had taken with my somewhat loosey-goosey dividend growth strategy.
    I think I'm going to follow the KISS strategy and stay the course...
    Aug 29, 2015. 02:50 PM | 2 Likes Like |Link to Comment
  • Why I Sold These 4 Slow-Growing REITs [View article]
    Stanford Chemist;

    I look at swapping out stocks in the manner you described like changing lanes on a packed freeway; 3 miles later, you're a couple of car lengths ahead or behind, due to factors outside of your control.

    I have found it more fruitful to follow the actual money; watching O compound in my portfolio over nearly 10 years has been one of the more profound lessons in my investment education. Investors miss this on a regular basis; they get seduced by high dividend growth rates and bet their investment capital on the promise of future dividends, while failing to appreciate the differential effect of reinvesting higher dividends NOW on portfolio performance. Your lower dividend/higher dividend-growth REITs will experience price appreciation and that will blunt the impact of dividend reinvestment, as subsequent shares are purchased at higher cost.
    If you're investing for total return, find the fastest growing companies you can. If you're investing to build a cash-producing engine, keep your eyes on the cash flow.
    Aug 20, 2015. 12:29 PM | 6 Likes Like |Link to Comment
  • Taking Another Look At Realty Income Corp. [View article]
    DRIPing O is one of the sweeter dreams in my SWAN portfolio. Every month another 2+ shares are added to the count and they barely make a ripple in the average cost basis. That's the sweet thing about the DRIP; no watching the ticker tape for buy points. Every year the position grows by 5%, the average cost per added share by DRIP is substantially lower than the current price and no brokerage fee to boot. I'll take that any time over trying to capture the bottom of a dip; I think some of you enjoy the sport, though; like trying to catch the perfect wave...
    Aug 20, 2015. 11:58 AM | 7 Likes Like |Link to Comment
  • Retirement Strategy: Evaluating Your Risk Tolerance Can Be Gut-Wrenching But Vital [View article]
    So, you're the CEO of a large conglomerate, focused on running the company, and the whole market takes a 40% dive. How much time do you spend worrying about the stock price? If you spend more time worrying about the stock price than you do about running the company, you deserve to be fired. You should spend your time building value, since the market determines the price, not you.

    Are you the CEO of your retirement conglomerate? Are you spending your time worrying about the stock price of your conglomerate, or running your company and building value?
    I don't regret buying any of the part-ownerships I have or the price I paid for them. When I have some cash I'll buy more, when I spot a company I'd like to own a piece of at a favorable price. Somewhere along the line, I realized that I am in the business of slowly changing careers. I am building an asset management business that will be my primary business after I'm done with my current career.

    I've climbed a wall of worry about rising stock prices. I have sweat over declining prices. In fact, I'm sick and tired of worrying about price movements. I don't spend time worrying about the replacement cost of my car, my clothes, my furniture or my house. It's crazy that I should behave differently with regards to the asset management business that I am building. Since I don't intend to sell the business, why should I care what someone else would pay for it at any particular moment. I should care alot about how much profit it generates, and I do. I'm not planning on selling bits and pieces of it, so the only thing that matters is how profitable it is, and what it takes to make it grow.
    That's how I intend to behave during the next big swoon. Instead of bass-ackwards, I'm steering the boat this time.
    Aug 19, 2015. 10:31 PM | 8 Likes Like |Link to Comment
  • DDT - Material To Your Future, But Not So Toxic After All... [View article]
    Thanks DivNut;

    that's a hopeful sign for a guy like me;
    It's sobering to realize that the biggest component to the growth in my retirement assets is still the yearly contribution. Keeping a firm grasp on the where, how and when of retirement funds is a good grounding experience. It tells me to keep my nose to the grindstone, convinced me to give up the "mad money" piece of my portfolio (can't afford to gamble anymore) and brings expense control into focus. I spent far too much on toys early in my career, not enough on securing a plan for emancipation from the paycheck.
    Aug 19, 2015. 03:07 PM | Likes Like |Link to Comment
  • DDT - Material To Your Future, But Not So Toxic After All... [View article]
    Thanks DBG; there are a lot of spreadsheet jockeys out there. For those with the skills, they can follow dividend growth with the precision of a CPA. I don't need that degree of precision. What motivated me to take a big picture look was the apparent discrepancy between the published yields and dividend growth rates and what I was seeing in my portfolio brokerage statements. It fundamentally comes down to how much cash flows through the account as a result of owning dividend-paying/raising companies. I rolled a couple of 401k accounts (roth and traditional) into IRAs when my company merged with a larger corporation. I don't add any new contributions to those accounts, so the effects of DRIPs and organic dividend growth are more apparent now that new contributions aren't littering up the brokerage statements. I watch the dividend cash flow grow by 9-10% per year. It can only be explained by the combination of compounding and dividend raises. My new 401k is growing by leaps and bounds; maximizing contributions off a zero basis had the dividend growth rate at 100% in year 2, 50% in year 3, 33% starting year 4, purely on the power of new contributions. The 3-4% dividend reinvestment gets buried in the flood of new money, but the relative impact of the two will change dramatically a few years down the line. It's real dollars that matter to your freedom from wage-earning rather than percentages, so I'm trying to focus precisely on the metrics that inform me about my projected date of emancipation rather than get lulled into a sense of false security by percentages. You can't spend a growth rate; you can only spend dollar equivalents.
    Aug 18, 2015. 08:17 PM | 1 Like Like |Link to Comment
  • AbbVie: The Riskiest Dividend Aristocrat [View article]
    The crowd speaks...
    for the time being, I'm hanging on to ABBV. I never really understood the compelling reason for the split.
    Aug 18, 2015. 07:55 PM | 1 Like Like |Link to Comment
  • Income Growth After Retirement [View instapost]
    no comments? can't have that...!
    The problem with Elliot's analysis and all similar analyses I have seen is that they don't mimic how investors actually behave.
    If you buy T and collect it's dividends as cash and spend them, the most you can expect to earn next year is what the company board decides to distribute; 3% more than this year if you're lucky. However, if you reinvest the 5% dividend you receive, you'll own nearly 5% more stock, so your dividend will be that much higher in addition to whatever increase the board decides to grant.
    Since T is not growing all that rapidly as a company, the shares you purchase with your dividends may be only 3% more expensive. So, instead of 5% more shares, you'll purchase 4.85% more shares. Your next year's dividend will be 1.0485 x 5.15%, or 5.4% yield on cost.
    With KMI, you'll receive that 4% dividend. KMI is still a growing company and it's stock price continues to appreciate like a growing company, so your 4% dividend will be purchasing shares that are 8% more expensive than last year, blunting the effect of compounding. So, rather than 4% more shares, you'll have 3.65% more shares. Next year, your dividend will rise by 3.65% plus whatever the company board decides to grant; perhaps they'll keep their promise and the dividend will rise by 10%. That would be lovely, so you'll get 1.0365 x 4.4% in dividends next year or 4.56% yield-on-cost.
    No doubt, the capital value of your KMI may rise much more quickly than that of T, but increasing share price will continue to blunt the effect of compounding and it will take longer than Mr. Elliot predicts for the cash income from the KMI position to outstrip that of the T position if you reinvest dividends from each holding back into the position. The point of dividend parity will also be longer than predicted in the simpler model.
    Finally, remember what Robert Allen Schwartz has demonstrated in his data; very few companies continue to raise dividends at a rapid rate over many years, particularly off of a substantial basis. It's not hard to put up impressive DG rates over time when you start really low, but those numbers hide the fact that the dividends won't add much to investment performance when they start really low.
    Aug 18, 2015. 01:16 PM | Likes Like |Link to Comment
    two additional things to consider when viewing the issue of dividend yield and dividend growth;
    In the accumulation phase, compounding of a low dividend/high dividend-growth stock takes a longer time to have a significant effect on both share count AND the absolute flow of dividends within the position and/or portfolio. Also, with the low dividend/ high dividend-growth stock, you are counting on capital gains as the dominant driver of return. If your wish comes true, the stock price climbs, and this in turn blunts the effect of dividend reinvestment on compounding, as each dollar of dividend pays for an increasingly expensive stock certificate.
    The larger effect of compounding early in the investment history from companies that pay a higher dividend drives the point of dividend parity further out on the horizon, where predictions become less and less reliable. T is a great example of this; dividends follow capital gains rate, but with reinvestment, one is growing the share count 5% every year, driving the dividend payment up by 5% with or without a boardroom decision.

    In the distribution phase, every investor has a finite horizon over which those dividends will be needed. If you're lucky, you'll get 30 years of use out of your retirement portfolio.
    Since you are less likely to be reinvesting at that point in time, you'd like your current dividends to be generous and the rate at which they increase to beat inflation, but perhaps you're less interested in a 30 year projection on which stock will outperform. For every 95 year old retiree, there are several who are already pushing up daisies...
    Aug 18, 2015. 12:12 PM | Likes Like |Link to Comment
  • Notable Quotes From Seeking Alpha Authors And Commenters [View instapost]
    One of my favorites from SA
    AgAuMoney- "Capital Gains don't compound"

    total return investors would dispute this, but they never explain why dividend paying stocks generally outperform non-dividend paying stocks over the long haul.
    Aug 18, 2015. 11:46 AM | Likes Like |Link to Comment