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Norman Tweed's  Instablog

Norman Tweed
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Retiree interested in stocks and financial instruments, especially dividend producing stocks. In the 20th century, I was an electrical engineer with Dominion Resources. I use a dividend growth investment style. Quick rules of thumb for complex questions, like fair value p/e using the Gordon... More
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  • Comcast: Are They Succeeding Under Media Consolidation?

    My mother received Comcast (NASDAQ:CMCSA) shares as a spin off from AT&T on November 15, 2002. These shares grew gradually as the broad band business grew. When she died in 2009, I inherited a small holding in CMCSA at a basis price of $17/share. Since that time, CMCSA has grown to a current price of $58.82, while I have dripped the stock. CMCSA is more a media conglomerate growth stock than a dividend growth stock, but I treat my ½ position as a dividend growth stock (dividend growth is a significant portion of total return).

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    Price appreciation has provided a 3.46 multiple on my initial investment and dripping dividends + dollar cost averaging purchases have provided an overall total return of 11.48 x the original inherited lot. Price appreciation alone averages 23.15% per year.

    The metrics on this stock are quite good (data from Finviz + David Fish CCC charts) Market Cap = $147.34B; Current P/E = 17.4; PEG = 1.29; Forward P/E = 12.31; dividend yield 1.7%; 5yr dividend growth rate =26.8%; Forward TweedFactor = +16.19; My fair value calculation is $66.67.

    During the last month, the market has been quite volatile. High yield investments have taken it on the chin. Only a few growth stocks have maintained value and CMCSA was one of them until this past week. The rumor is that media stocks like Disney (NYSE:DIS) and CMCSA will fall victim to the new media trend started by Netflix (NASDAQ:NFLX).

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    NFLX is a true growth stock with a forward P/E of 413.11 and a market cap of $52.42B. NFLX pays no dividend. I tend to be more conservative, believing that true earnings history is preferable to future visions. Two good Seeking Alpha articles on CMCSA are here by Alexander J. Poulos and here by Brian Nichols.

    I consider the current pull back in CMCSA to be a buying opportunity and will dollar cost average into it, just as I have been doing when dividends come into my regular account. Safety of principal is paramount when you are in the RMD stage of life.

    Aug 08 10:45 AM | Link | 2 Comments
  • With The Direct TV Acquisition, Is The AT&T Dividend Safe?

    My extended family has owned AT&T (NYSE:T) stock since my grandmother bought it in the 1930s. Over the years it has supplied a good dividend through strong market coverage. In the early 1980s the government busted it up into the Baby Bells which all performed well. Over the next 30 years these entities were consolidated back into two primary players, AT&T and Verizon (NYSE:VZ).

    There has been much fundamental change in the telecommunications business recently with land lines going away and cell phones maturing into a fully saturated market. Content and digital entertainment have become the current market drivers and AT&T has led the trend toward internationalization and consolidation of delivery of content. Not only did they have exclusive right to carry the I phone when it first came out, but they have now purchased Direct TV to provide entertainment and communications to a large international footprint including Mexico and South America. WG Investment Research has a good article on recent progress in the merger with Direct TV and current earnings.

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    As can be seen from the chart, AT&T has been range bound between 15 and 35 since 2007. There was the Great Recession dip in 2008-2011 which showed the resilience of the stock in the face of global financial rout. For the last 31 years AT&T has been a Dividend Champion continuing to raise its dividend each year. In recent years the dividend increase (which usually occurs in the fall) has been on the order of 2% per year. However with the high yield 5.41% it has carried its investors through many rough times such as the present oil rout. As other high yield investments have cut their dividends, AT&T has raised theirs consistently. The market cap is $180.4 Billion. The forward P/E is 13.36 with a price to sales ratio of 1.36 and a Debt/Equity ratio of 1.31. The strong cash flow has allowed AT&T to continue to provide investors with solid dividend performance as detailed in this article by Casey Hoerth.

    Finally, Stone Fox Capital compares AT&T with Verizon from a P/E ratio standpoint considering the slowdown in wireless subscriber growth. Although AT&T was removed from the Dow Jones Industrial average, I still believe it is a stronger stock than Verizon as shown by the higher P/E. In volatile times like these, security of the dividend is paramount. AT&T has served me and my family well for over 75 years.

    Aug 01 5:20 AM | Link | 4 Comments
  • Cummins Just Raised Their Dividend 25% Is It A Buy Now?

    I have watched Cummins (NYSE:CMI) for the past several years, waiting for a pull back. It appears that this is the year.

    (click to enlarge)

    Having just raised their dividend by 25% to $.975/quarter it now sports a yield of 3%. It can be seen from the FAST graph in Eric Landis's linked article that there is a considerable undervaluation at the present price. In my own valuation using the Tweedfactor there is current value of +22.57 which shows a strong buy. The high dividend growth rate (30.3% 5yr) is what sets it apart from its competitors such as Caterpillar (NYSE:CAT). CMI is a very low leveraged company with a debt/equity ratio of .22. The forward P/E ratio is 11.8. The earnings per share growth rate for the next 5 years is 11.23%. The return on equity is 21.9%.

    For a highly positive take on CMI prospects, this article by Arie Goren shows an upside to $158 (21.7%). He also points out that they produce natural gas engines and clean fuel efficient diesels. This latter point is crucial to meeting EPA and National Highway Traffic Safety Administration standards for on-highway tractors, vocational vehicles, trailers and heavy-duty pickup trucks and vans.

    If one needs industrial exposure in their portfolio, now is the time to buy CMI.

    Tags: CMI, industrials
    Jul 18 9:40 AM | Link | 10 Comments
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  • Dividends posted from T & VZ. Bought $CMCSA @ $58.41. It may go down from here and I'll buy more.
    May 5, 2015
  • I had a limit order in for $CMCSA at $52. It is on a tear and I raised it to $59.47. Dollar cost averaging into the position.
    Feb 15, 2015
  • Agnc dividend received. Placed limit order for $PSEC @ $8.33 for 12% yield. Dollar cost averaging into position.
    Feb 7, 2015
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