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Paul Wagner

 
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  • Dividend Growth Investing, Total Return, And Indexing Revisited [View article]
    I'm not here to argue the merits of either index investing, growth investing or dividend growth investing. I just want to point out that when the author openly states that his research is non-academic, his caveat shouldn't be ignored.

    For example, the author doesn't give the starting date or the ending date of his analysis, He should have. He should also have provided a source for his total return numbers. If he had broken down the individual stocks' total return between dividend income and price change, he would have enhanced his argument.

    An analysis doesn't have to be "academic" to be valuable, but the analysis should at least involve accurate data. In this particular article, some of the data is inaccurate.

    Kinder Morgan Inc. (KMI) had its IPO on February 10, 2011, yet the author treats it as if it had been a publicly-traded entity 5 years prior to some undisclosed, apparently recent date.

    Okay, maybe the author made a single mistake that doesn't change the essence of his argument. Maybe I'm the ignorant one and there's a perfectly good explanation. Maybe the article is full of errors. Maybe meaningful ones. I would have to do due diligence to know. But, that's the author's job. I'll stick to underwriting the companies I contemplate investing in.
    Nov 23, 2014. 09:22 AM | 10 Likes Like |Link to Comment
  • Dividend Stocks Are Not In A Bubble, But Many Of Them Are Pricey [View article]
    TF17, advisror4 and anyone else interested in valuation: if you haven't already read it, I think you'll find this article http://seekingalpha.co... an example of sophisticated valuation analysis. We're lucky to get this kind of stuff free on SA.
    Nov 22, 2014. 04:53 PM | Likes Like |Link to Comment
  • Dividend Stocks Are Not In A Bubble, But Many Of Them Are Pricey [View article]
    chowder...durn straight, the dividend income is the hedge. Still, no one can be certain what will cause the next bear market. If it is a slowly developing one caused by inflation and rising interest rates we could see our share prices decline in today's dollars and and we could also see our dividends decline in purchasing power. Granted the divvies can be reinvested in cheaper shares with (hopefully higher yields), but overall, we'll all be poorer. The good news for investors like yourself in 2008 was that the bear market was caused by illiquidity and consumer price inflation and illiquidity are generally mutually exclusive. So while share prices were momentarily (it turns out) depressed, the DG investor didn't feel the pain.
    Nov 21, 2014. 08:02 PM | 2 Likes Like |Link to Comment
  • Dividend Stocks Are Not In A Bubble, But Many Of Them Are Pricey [View article]
    chowder..I agree with you and I don't mind buying stocks at the interim top if the company is growing. Often, the share price is only catching up with the earnings growth of the company. If I wait for a pullback of say 10% and buy my shares, I will make more money. If it never pulls back and I end up paying 10% more, I make less money. But, if it's the right company that's making a >15% return on book value and invests its growing earnings at that kind of return, too, it is unlikely that I can lose money, insuring that I don't violate rule #1.

    I could be thinking about things all wrong, but it's been working for me for quite awhile now.

    It's always better to be right about the company and wrong about the price than to be right about the price and wrong about the company.
    Nov 21, 2014. 07:44 PM | 9 Likes Like |Link to Comment
  • Building A Core Investment Portfolio For The Next 20 Years: Automatic Data Processing [View article]
    Dan. enjoyed the article. Question: do you have information regarding ADP's service charges relative to interest rates? By that I mean: has ADP raised fees to adjust for decreased interest income? That would be nice to know, as the company might be under pressure from major clients to lower fees if and when interest rates rise.
    Nov 20, 2014. 03:57 PM | Likes Like |Link to Comment
  • The Real Nifty 50 For Dividend Growth Investors [View article]
    Bob. re: Varan's blog. I investigated and the evidence indicates that a portfolio consisting of equal investments in each of the stocks listed would have produced price appreciation of 17.53% between the closing prices on 2/15/13 and today's closing prices, as reported by Fidelity. I did not investigate the total dividends paid, so I don't know the YOC or the total return.

    Your turn.
    Nov 19, 2014. 07:56 PM | Likes Like |Link to Comment
  • The Real Nifty 50 For Dividend Growth Investors [View article]
    David...I believe I recall the conversation about dividends reducing the value of a company. I don't recall if I chimed in or not. It's almost impossible to prove either side of that argument right or wrong with respect to publicly traded companies, because "worth" is fluid and affected by the time of day among a gazillion other ethereal elements that are not understandable by mortals.

    Where cause and effect are more apparent are in the private market where the terms of the buy-sell agreement typically deal with the cash balance as an ingredient of the price, as in "$20 million, plus cash on hand at the time of closing." In a private transaction, cash dividends between the date of the agreement and closing would reduce the purchase price by the amount of the dividends paid, confirming that the company is "worth less" for having paid the dividend.

    Another example might be in a sale of income producing property. Which is the better deal: buying the property right after the rents have been paid or right before the rents are due? A present value calculation will show that buying the property closer to when the first rent payment is due provides a greater yield to the buyer. The analogy in the public market is the phenomenon that the ex-dividend quote is lower than the with dividend quote

    Indeed, in the public marketplace, a company that suspends its dividend is more likely to see its "worth" decline than a company that pays its dividend in the ordinary course of business. Ironies abound.

    CAN a company with more cash grow earnings more easily than companies with less cash? That seems reasonable, all things equal --which they never are. A company may use its stock as currency in buying other companies and conserve or dividend its cash. How efficient that is depends on the valuation of the stock.
    Nov 19, 2014. 05:28 PM | 4 Likes Like |Link to Comment
  • The Real Nifty 50 For Dividend Growth Investors [View article]
    Larry..perhaps it's just me who sees intent behind Dale's leading off with the reference to Mike Nadel's articles. No poke, no nudge...you may be right.
    Nov 19, 2014. 01:28 PM | 1 Like Like |Link to Comment
  • The Real Nifty 50 For Dividend Growth Investors [View article]
    Larry Melman: Dale has a choice when he writes his articles: gear them to individuals who may be looking for superior mutual funds or ETFs or purposely direct them to an audience of committed DG investors. He seems to choose the latter audience. I don't know why he does: it may be that he sincerely (but mistakenly in my opinion) believes that is the target market for his firm's offerings. Perhaps he (and/or his employer) measures success in the number of page views or comments his articles elicit.

    I actually appreciate hearing about funds, but I don't find it particularly helpful to compare funds to any one particular individual's returns from stock picking. Funds should either judged on whether they are better than, equal to or worse than other funds, including managed funds and index funds.

    The most eloquent argument of Dale's in this article was the argument against over-diversification he made when he referenced his own 3-stock portfolio. It's an "argument" that could easily be challenged, but at least it would have been on a subject less ubiquitous than the merits of DGI.
    Nov 19, 2014. 11:42 AM | 12 Likes Like |Link to Comment
  • The Real Nifty 50 For Dividend Growth Investors [View article]
    John Liddil. The question: is Dale a straight man or a fisherman casting a lure? Whatever, he sure has a knack for getting his audience to bite and a talent for getting the page views. SA's gotta love him for that.
    Nov 19, 2014. 11:25 AM | 7 Likes Like |Link to Comment
  • The Real Nifty 50 For Dividend Growth Investors [View article]
    Bob...I did some investigating but I have yet to discover when and where Bono found what he was looking for. I have been hoping that he would, but my due diligence hasn't confirmed that he did. Help! ;=)>
    Nov 19, 2014. 11:03 AM | Likes Like |Link to Comment
  • Should Dividend Investors Own Non-Dividend Paying Stocks? [View article]
    Hardog...I haven't been at it 4 decades, but I agree DD is essentially the same. Of course, the blue chips don't represent the same challenges as small and midcaps do. I'm a firm believer that free cash flow is free cash flow and something good is going to flow to the person who invests in companies that are growing their free cash flow. Dividends are something you can touch and feel. Cap gains are a bit more ephemeral and that understandably gives many investors a queasy feeling. I like them both.
    Nov 18, 2014. 11:29 PM | 1 Like Like |Link to Comment
  • The Next Time You Evaluate A Stock Consider The Return At Constant Valuation [View article]
    Good article. Indeed, finding bargains means identifying turnarounds, meaning accepting more risk.

    I can't help but think that a healthy part of MO's valuation change was a result of its earnings consistency and the drop in interest rates.

    Right now I accept paying more than I would like to pay because there isn't a lot of good competition for my investment dollars.
    Nov 18, 2014. 06:23 PM | Likes Like |Link to Comment
  • Should Dividend Investors Own Non-Dividend Paying Stocks? [View article]
    RLLH...good thinking. It sounds like the accounts you want to protect from the tax man are regular brokerage accounts as tax-deferred accounts are going to be hit based on the total value, including unrealised gains. I'm not currently an owner but it would seem that Berkshire would fit your strategy. In some respects it's like a closed-end fund of dividend-payers that doesn't pass along the dividends it receives to its shareholders.
    Nov 18, 2014. 04:21 PM | Likes Like |Link to Comment
  • Should Dividend Investors Own Non-Dividend Paying Stocks? [View article]
    TF: Couldn't have said it better..as you'll see on my website, my first 3 principles are: 1. Know who you are; 2. Know what you know; 3. Know what you don't know.
    Nov 18, 2014. 02:40 PM | Likes Like |Link to Comment
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