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Richard G. Pearce

 
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  • Is It A Mistake To Only Hold U.S. Dividend Growth Stocks? [View article]
    Christopher Mahoney,

    Thank you for commenting. I think it makes a difference what a company does with its cash flow, whether it is stock repurchases, dividend payments and/or reinvesting in the company. There are many studies suggesting that companies tend to overpay for their own stock, yet doing so is a useful tool to increase the value of the remaining shares and at least indicate to the public that the company considers the shares a good value. On the other hand, dividend distributions expand the number of potential investors and (hopefully) instill an additional layer of discipline in terms of the use of the company's cash flow.

    What a company does with its cash flow can be the difference between an undervalued stock that I decide to purchase and one that I choose to pass over. Personally, I prefer to see a decreasing number of shares over time, but I do not have a preference for share repurchases beyond that. The rest of the cash flow would preferably be distributed and reinvested based on the company's options for growth and the cost/benefit of that growth. In other words, mature companies that do not have cost-efficient growth options should pay out more of their cash flows in dividends, whereas other companies, including many tech companies, have ample opportunities for significant growth, and so they should use more of their cash flow to create that growth.

    -Richard
    Jul 6, 2013. 09:36 PM | Likes Like |Link to Comment
  • Is It A Mistake To Only Hold U.S. Dividend Growth Stocks? [View article]
    SDS,

    Thank you for commenting. As you noted, there are quite a few good dividend paying companies in the emerging markets that may not technically raise their dividend every year, but have kept it pretty consistent and with a very appealing yield. DEM is also a consideration for those who want the exposure to dividend paying emerging market stocks without attempting individual selections.

    -Richard
    Jul 5, 2013. 11:26 PM | Likes Like |Link to Comment
  • Is It A Mistake To Only Hold U.S. Dividend Growth Stocks? [View article]
    RAS

    Great points and thank you for commenting.
    Jul 5, 2013. 11:50 AM | 1 Like Like |Link to Comment
  • Is It A Mistake To Only Hold U.S. Dividend Growth Stocks? [View article]
    nicholas davout

    Thanks for commenting. I am concerned that you may have gone too far in the other direction! There are dozens of very strong U.S. companies that should be able to weather almost any storm domestically. The key is to look at how they performed in the last couple of bear markets. Did they continue to grow revenues and increase their dividends? If so, then even someone who is very concerned about the U.S. economy should feel some comfort with holding them.
    Jul 5, 2013. 10:02 AM | Likes Like |Link to Comment
  • Is It A Mistake To Only Hold U.S. Dividend Growth Stocks? [View article]
    zubub

    Thanks for commenting. I do not presume to be a consistently successful market timer, nor do I attempt to be one. My education and research over the years leads me to believe that if the Ivy league MBAs running all these mutual funds, with all of the money and manpower at their disposal, still tend to lag their respective target indices in the long-run, then I likely would as well. Besides, although the U.S. has outperformed recently, who is to say that it will not be Japan, emerging markets, or the EU next? If I maintain exposure to other economies, and rebalance periodically, then I have instilled another form of discipline that encourages me to buy low. If I attempt to guess which economy is going to perform best in the future, then I am going to incur unnecessary taxes, transaction fees and risk without having a guaranteed benefit.

    The premises of the article is that market cycles, war, monetary risk, government risk, etc. have different effects on different economies at different times. Sometimes the effects are relatively short, but many times it can take 10-20 years for the stock market to recover. For the buy and hold mentality of dividend growth investors, who seek to exercise discipline in reinvesting dividends in downcycles and not trading in and out of stocks frequently, it is important that they spread their dividend growth stocks around, lest they have too many eggs in the U.S. market basket, for example, when it is in the middle of a long slump. This is part of reducing unsystematic risk, as described above.

    Thanks,
    Richard
    Jul 5, 2013. 09:56 AM | Likes Like |Link to Comment
  • Oil And Gas Review Part II--Evaluating 3 Of The Largest Emerging Market Options [View article]
    jamessongmz

    Thank you for commenting. I should have used more detail in my comment. No one knows where there is truly a "floor" or "ceiling" on these stocks. Those are figures of speech and are incapable of evaluation to a degree of certainty. In this case, it is my opinion that China (moreso than Brazil) has a sufficient interest in the success of SNP and PTR that its government leaders will take actions to prevent those companies from failing, which I believe limits the downside of these companies relative to many others.

    I am not familiar with Metrogas and I am not sure how the second comment follows. I certainly did not take the position that all emerging stocks have a floor.

    Regards,
    Richard
    Jul 4, 2013. 11:38 PM | Likes Like |Link to Comment
  • Is It A Mistake To Only Hold U.S. Dividend Growth Stocks? [View article]
    Thinking Big

    Thanks for commenting. I intend to delve into more specific examples in my next article.

    -Richard
    Jul 4, 2013. 08:38 PM | Likes Like |Link to Comment
  • Is It A Mistake To Only Hold U.S. Dividend Growth Stocks? [View article]
    rnsmth

    My information was from Morningstar.
    Jul 4, 2013. 08:31 PM | Likes Like |Link to Comment
  • Is It A Mistake To Only Hold U.S. Dividend Growth Stocks? [View article]
    richjoy403

    I always appreciate your insight. I researched the article without knowing the outcome, and so I was surprised that, at least recently, a basket of U.S. dividend growth stocks with large foreign revenues has a similar correlation to the S&P 500 as a basket of foreign (not emerging) dividend growth stocks. As you have highlighted, the trend is towards greater correlation between the U.S. and the other developed markets, but there are still some situations/events/risks, such as what is going on in the EU, that will disproportionately effect some developed economies for prolonged periods.

    The article concludes that emerging markets play a more important role in diversification within the dividend growth stock universe. The problem is that individual selections in emerging markets that meet the strict criteria of many DG investors are harder to come by. So instead, I often use a fund like DEM, which pays a yield of 4.2%, an expense ratio of 0.62%, and is weighted by cash dividends paid, which is preferable to weighting by yield or market cap in this inherently risky area.

    Thanks again,
    Richard
    Jul 4, 2013. 10:44 AM | 1 Like Like |Link to Comment
  • Is It A Mistake To Only Hold U.S. Dividend Growth Stocks? [View article]
    joecharnc

    Using value investing concepts within the dividend growth stock universe is a great path to success. That is exactly what I am to do, and I am a big fan of BP.

    -Richard
    Jul 4, 2013. 10:29 AM | Likes Like |Link to Comment
  • Is It A Mistake To Only Hold U.S. Dividend Growth Stocks? [View article]
    Guardian3981

    One of the points of the article is that some of the largest U.S. dividend growth stocks with significant international revenues have a very similar correlation to the U.S. stock market as does a basket of international dividend paying stocks, at least looking back the past three years. So to that extent, I agree that investors pick up some international exposure in that situation.

    A more important point, however, is that over the long-term, different economies have prolonged slumps often at different times. By maintaining exposure in different economies, you can reduce that risk.

    -Richard
    Jul 3, 2013. 07:12 PM | Likes Like |Link to Comment
  • Oil And Gas Review Part II--Evaluating 3 Of The Largest Emerging Market Options [View article]
    Guest1234--Thank you for commenting. Your concerns are appropriate. I think that being government owned and controlled puts both a floor and a ceiling on these stocks. 
    Jul 2, 2013. 05:25 PM | Likes Like |Link to Comment
  • Oil And Gas Stock Review, Part I: Correlation And Review Of Large Foreign Developed Stocks [View article]
    mdpath

    Thanks for commenting. I believe that on the UK exchange, you remove the period (.), so it is RDSA and RDSB.

    Per Shell's website: http://bit.ly/13bKsLf, the RDSA shares are subject to a Dutch withholding tax, whereas the RDSB shares are not.
    Jul 1, 2013. 10:13 AM | Likes Like |Link to Comment
  • Retirement Portfolio For Maximum Income Growth [View article]
    LD

    Hopefully Doug will respond to your questions and congratulations on your first post! Under the assumption that the above stocks are trading at the target buy price, then you should consider investing all of your available funds in one shot at one time. Again, this is if the stocks are trading at your target buy price.

    Outside of that assumption, it depends on your risk tolerance and the amount of money involved. For example, if you have $30,000 to invest right now, and you anticipate being able to invest approximately $30,000 each year, but none of the stocks are trading at your target buy price, then consider identifying the stocks that are trading closest to your buy price and go ahead and purchase them. In other words, don't spread out the $30,000 among numerous stocks, but rather just hit the 5 or so best values. There is no guarantee that prices will go down between now and the next time you have money available to invest, so you have basically done the best you could under the circumstances. Otherwise, if you sit on the cash in your brokerage account, it is earning interest at a rate lower than inflation and you are missing out on an opportunity to reinvest the dividends of your purchased stock, not to mention that prices could rise further while you wait.

    If, on the other hand, you inherited $2,000,000 and did not anticipate being able to save much year to year to add to it, then you would treat the same scenario quite differently. Rather than immediately put all $2,000,000 in the market to purchase stocks trading above your buy price, you might be more willing to spread out your purchases over time, putting more of the cash to work when stocks are trading at your buy range and less when they are trading over your buy range.

    Hope this helps.
    -Richard
    Jun 30, 2013. 10:18 PM | 2 Likes Like |Link to Comment
  • When To Sell A Dividend Stock [View article]
    By analogy, if someone approaches you at your $500,000 home and offers you $650,000 for it, and you can find a home that costs $400,000 that you expect will give you more or less the same satisfaction as your current home, do you sell? Let's assume that real estate agents are not involved...
    Jun 24, 2013. 04:48 PM | Likes Like |Link to Comment
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