Pat Racaniello

Pat Racaniello
Contributor since: 2011
Always interesting reading.
Dave is good at clearing the air. He has a wonderful memory.
King: I appreciate your candor and we obviously do have different approaches to our investment strategies. If you find that yours works for you then stick to it and I will do the same with my approach.
Also, you are so right about sharing information and thoughts as that is the means
Pat
Mr. King:
I am not trying to burst your bubble... but none of those you cited offer a DRIP. Also, ARR has lowered its dividend from 12¢/month to 11¢, and again to 10¢ just since 2010-11. As for Gabelli's Gold Fund he is returning you some of your principal with each dividend. The only difference between Mario Gabelli and Bernie Madoff is that Bernie neglected to tell his clients that a portion of the dividend payments included their own principal. (It is legal to do this as long as investors are INFORMED that that is what is happening.)
If your system works for you and you are happy with it then go with it. Just be aware that a portion of those dividends are a return of principal.
Hey King, name a couple that pay close to 4% like FNFG and also have a DRIP.
First let me say that I am a patient investor. Just about 1 year ago on (8-2-11), I wrote up FNFG for SA and at that time I pointed out that a dividend cut was possible with the addition of more shares. Cash from the issuance of additional shares was used to acquire additional branches and strengthen FNFG's market penetration. After all, more shares would require more money to be allocated towards paying dividends. Over the past year I have been gradually adding to my position at lower prices thus lowering my average cost per share. I am still a buyer! I have found that patience usually rewards long-term investors. And yes, I DRIP.
I liked the article. Good work!
A suggestion.
Perhaps you could run the same test for the next 40 stocks on Dave Fish's list, or maybe divide into 3 groups so that your software can more easily handle it. Just a thought!
All in all,one of the better articles I have read lately.
Thanks Dave:
I see HNZ just increased their div. to $2.06/yr. How many years does this make.?
Hey Dave:
As you have probably already noticed, stocks with low payout ratios and low yields find it much easier to raise their payouts every year. Ergo; there is a small list of cos. that have long histories of increased payouts among stocks with high yields and high payout ratios. i wish that were reversed.
Pat
Why not split your allocated cash equally between the 2 and get added diversification?
Hey Rocky!
Read those DRIP statements more carefully!
Why in the world would you put yourself further in the hole every month by making a $50/mo. investment. NOK charges fees of $2.50 plus 4¢/share on every check you send. You are not investing $50 but slightly less than $47.50 every month. Get smarter, and be a cheapo like me, Send them $150 every 3 months and save $5 and get yourself an extra share each and every quarter; that is 4 extra shares/year. That is as long as NOK stays below $5. I mentioned this strategy to you in another one of your articles.
"You can lead a horse to water..."
Gotta go Rock, be back Monday in PM
Pattyrac
Bi-weekly?
I could never understand if that meant twice each week or every other week.
Either way you are probably making too much work for yourself. Share prices long-term usually do not move up or down that much in 3 months.
Hey Rocky:
One thing you could do to improve dollar-cost-averaging is to invest quarterly AFTER THE DIVIDEND HAS BEEN PAID, that way each subsequent investment will earn a dividend in 60 days or less. I have been using this system since the 1970's. It improves the total return.
I also have another suggestion, but first let me know how you feel about my timing mode.
Pattyrac
Yes, Rocky I am Italian. In fact I just came back from Europe where the food is SUPERIOR to what we get in the US.
And a word regarding that typo. Don't sweat it, everybody makes errors. As hard as it may be to believe, I even err.
Do you use dollar cost averaging?
Because if you do, I have a suggestion or two to enhance returns.
Hey Rocky:
A quote from your article:
"I firmly believe that most of us who have a thing for the stock market end up much better off as investors rather than traders." Truer words have hardly ever been spoken.
Excellent article!
And if I may, I will quote something said to me many years ago by a good friend and a very bright educated businessman who at one time was an advisor to then President Eisenhower.
"If I had my choice to go through life being smart or lucky, I'll take lucky every time."
Dear Bill:
Most stocks paying a dividend yield much more than Money Markets, treasury bills, notes, and bonds. Also, when a company has a DRIP the reinvested dividends buy fractional shares and those fractional shares also earn a proportional dividend. Over the years the reinvested dividends can really add up. As an example I have a client who I put into INTEL in late 1999, reinvesting all dividends and adding additional cash along the way. To date he has put in a total of $29,000 and now owns just over 1,500 shares of which 164 came from reinvested dividends and I could cite many, many more such examples.
I always enjoy getting feedback on my articles.
As to Apple splitting. I personally will only buy a stock that offers a DRIP and pays a dividend.
The new CEO (Tim Cook) has begun to change Apple and will probably start a DRIP AND split the stock. A split and DRIP is in the interests of both existing and potential new investors. I can see a 5-for-1 or 10-for-1 split on the horizon. A split opens the door to new smaller investors who could only afford to buy small a handful of Apple @ $600/share. A split and a DRIP do no harm to the Apple business model, all it will do is attract new investors.
Case in point: How many people could buy even 1 share of Berkshire Hathaway? A few years ago they issued a special class of stock that sells for one-tenth of the regular shares opening the door to a new class of investors..
I am sure there are other readers out there who could list more reasons for a DRIP and/or split. I would be interested to see more thoughts along these lines.
A word on buying products of companies that you own. Personally my 1st allegiance is to my own wallet. I will buy the same item at a cheaper price even if it is from another manufacturer. A generic brand is usually just as good as a brand name. To me anyway!
A lot of work and you deserve to be paid for it!
Under the Table deal? How could you even think that such things exist in this great nation of ours?
Then again there are more criminals per-capita in the ranks of politicians than any other single occupation.
Sorry about that 1995 typo, Dave is right it should have been 1975.
To DGI. A good thought provoking article.
Dividend Bubble? Bah-Humbug!
All knowledgeable investors know enough to watch for high P/E's and high payout ratios and out of whack yields. These are the real Red Flags, or indicators of over valued stocks.
I am happy that so many "individual investors" agree with me on this one. It seems to me that the so called "experts," or money managers are too short sighted with their investing decisions.
Smurf, you are right, it did hit over $62 back in Jan. or Feb. but back then at those prices it just got ahead of itself. It is now ready to test those highs AGAIN! Only now it has proven itself worthy to move up.
I.E. the higher dividend, the much improved earnings, the higher cash assets, etc.
And as Sally points out, the time to buy is when the Market over-reacts to the down side.
Div sheet.
Nice list!
I also have some MDU.
Thanks Dave for the update,.
Happy to NOT see any of my stocks on list.
Since the stock market tends to run in 5 year cycles, I would be patient and divide the amount of my funds for investment by 5. That way I should be almost fully invested in 5 years. This almost ensures that an investor will be taking more fully advantage of fluctuating market prices. As to diversification, an investor in my opinion must diversify not only in different stocks but also in different industries. The most basic industries are: oils, utilities, drugs/healthcare, foods, telcos, consumer products, and an established high-tech. After acquiring these 7 industries, more industries can be added as time goes on. So for example, if I had $100,000 to invest I would commit only $20,000/year, and that $20K would then be divided by the 7 stocks for and annual investment of approx. $2,850 each per year per stock. Then I would further divide that into 4 quarterly investments of about $710/Q/stock. And I would keep track of each stocks dividend date and make my purchases the month after a dividend is paid. That way each quarterly investment will earn a dividend in just 30-60 days instead of 90 days. This system works best using DRIPS and Dave's Dividend Champions list.
Dear Frank:
On Nov. 10 the dividend @ Merck was increased.
Dear Bob:
The Merck dividend increase I predicted came earlier than I thought it would.
Great job! However, I feel that those cos. that increase their dividends by a mere fraction of a cent/Q should some how be penalized for being so stingy. Perhaps by listing them on a separate "Stingy List" Whereas those who are more generous with their increases should conversely be rewarded with a higher list ranking.
I know how much work you already devote to your lists, so please do not take offense.
As usual, I find your work helpful and informative.