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Roger F. Goodrich  

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  • Defining, Measuring And Diversifying Income Risk [View article]

    For example, I try to develop a metric that represents the amount of cash available for 'spending': investing, share buyback, debt reduction and the like. I think you are using Net OpCF as a similar metric. I use the sum (+/-) of Net Income, Depreciation & Amortization, Other Non-Cash Items from the Operations part of the Cash Flow Statement. I feel the other items not pertinent, i.e., spendable. Some are merely EOY values.

    Call this metric CAFS (Cash Available for Spending). Cash Payout is Dividends Paid (Financial Section) / CAFS. This metric is good for C-Corps (less banks and some financials), Utilities, MLPs, REITs, Telecoms. MLPs and REITs should be around 90% (by law). If not, why not? The answer might be useful.

    Another metric is the number of years it would take to payoff Long Term Debt if all of CAFS were used: Long Term Debt (Balance Sheet) / CAFS. C-Corp companies cluster around 2 years, the rest around 5 years.

    I am interested in your metric 'Return on Investments to Net OpCF'. I am tempted to use [CapX + Acquisitions] / Change in Revenue for a 3 year span. I thought about using Change in Net Income, but I think you may be right in using Revenue. I need to think about this some more. Good thrust on your part, I had been looking for something like that.

    You are also right, it is fun..

    May 27, 2015. 05:32 PM | Likes Like |Link to Comment
  • Defining, Measuring And Diversifying Income Risk [View article]

    Thank you for the article and research. You are on the right track, thinking about pertinent metrics for the income investor.

    I read your book and enjoyed it. Will read more of your articles as time permits.

    I have been researching the same general subject. My metrics are different, but similar; still working at it.

    Keep up the good work.

    May 27, 2015. 04:32 PM | Likes Like |Link to Comment
  • United Technologies: Not All Dividend Yields Are Created Equal [View article]
    Interesting article. Thanks for the research.

    In your example of future dividends, I noted that except for the 2nd year, the dividend difference was $0.17, which is what I call a linear dg. I had not related a linear growth to an exponential increase every 5 quarters. Will have to check that out.

    Learn something new every day..

    May 14, 2015. 07:56 PM | 1 Like Like |Link to Comment
  • Dividend Payout Vs. Free Cash Flow Payout [View article]
    The payout ratio is the reciprocal of the ratio defined above.
    May 6, 2015. 05:27 PM | Likes Like |Link to Comment
  • Dividend Payout Vs. Free Cash Flow Payout [View article]
    One problem with using Free Cash Flow is the Capital Expenditure parameter. The value that should be used is the Capital Expenditure that maintains the company business, not expenditures that grow the business.

    For a Cash Payout Ratio calculation, I use (Net Income + Depreciation & Amortization + Other Non-Cash Items) / Dividends Paid, all available on the Cash Flow Sheet. I find this works very well for C-Corps, REITs, MLPs. It does not work for banks, BDCs and mREITs.

    May 6, 2015. 04:53 PM | 4 Likes Like |Link to Comment
  • Comparing Prospect Capital Corp.'s NAV, Investment Portfolio, Dividend, And Valuation To Several BDC Peers - Part 2 [View article]
    Great Scott, you've done it again!

    Thanks for the great research and sharing your outlook.

    Apr 5, 2015. 07:15 PM | 4 Likes Like |Link to Comment
  • Using The 7-Step Income Stock Selection Process: 3 Examples [View article]

    I am well into RMD (at 82) and am starting to sell shares to make the toll.
    This year I am selling ADP because their dg was low this year. I try to pick the least useful to sell.

    I have over 100 holdings in my 2 accounts. One easy way to take 'extra' distributions is to sell one per year - pick the one not keeping up with your objectives. This scheme should last my lifetime.

    Apr 2, 2015. 04:50 PM | Likes Like |Link to Comment
  • A Diversified, High-Income, Lower-Risk CEF Portfolio For 2015 [View article]

    If one compares the price history of IBB and HQH, then indeed IBB wins. However HQH distributes about 5% in yield versus about 1% for IBB. Pulling income from a field of no to low paying stocks must be done with capital gains, as HQH does. Stocks sold cannot appreciate in the future. I don't know which is better, the return of HQH where shareholder income and management fees are extracted from portfolio total returns or returns from IBB where essentially only capital gains are left for shareholders to harvest. Its the same old game, one has to decide how to play.

    Being retired, I prefer income. And am willing to pay 'reasonable' management fees if they are earned.

    Jan 3, 2015. 11:39 AM | 2 Likes Like |Link to Comment
  • A Diversified, High-Income, Lower-Risk CEF Portfolio For 2015 [View article]

    Thanks for the research and analyses. Good work.

    I looked into HQH. They only paid distribution in part with ROC for 2 quarters in 2009. The web site states that distributions are paid in stock, unless otherwise specified by the shareholder. Does anyone know if they pay in cash? Thanks.

    Jan 1, 2015. 03:57 PM | 1 Like Like |Link to Comment
  • Higher Dividends With Less Risk (Part 3): Global X SuperDividend U.S. ETF [View article]
    Stanford Chemist:

    Wow, this is something to chew on. Thanks for the research and analyses. I am wondering why you are concerned with low volatility. Do you equate this with low risk? Risk of losing capital?

    I am retired and mainly interested in yield (when I buy or sell) and dividend growth (while I own the asset). Price variations are of secondary interest.


    P.S. I could argue that if there is no sound when a tree falls and no one is there to hear it that there is no volatility in price if there is no one looking at it.
    Dec 26, 2014. 08:08 PM | 4 Likes Like |Link to Comment
  • Buy And Switch Beats Buy And Hold [View article]

    I have been thinking more about your comment and don't think I gave you a proper answer.

    The exact numbers and relationship between the 2 dma(s) is not vital. The S&P500 will go up and down in the future pretty much as it has done in the past. If you have a trigger set, like 50/200, it will trigger whenever the market changes course in a reasonable significant way. Smaller numbers (40/160) will cause more triggers, but will also pay more because the triggers are closer to market tops and bottoms. So it becomes a trade-off between the number of triggers you want to deal with versus the payout.

    In the case I demonstrated there were 20 trigger set in 43 years, probably close to an optimum number. Six of these were positive in that #shares went up. Using the additional criteria discussed in Part 2, one of the false alarms would turn from a false alarm to a positive by using TLT and watching the relative prices between triggers would have flipped another false alarm and increased the gains of one of the positives. These 2 schemes were only used in the period from 2003 on. Possible better results could be gained by using these techniques in the earlier years. I didn't do it because I didn't have a proxy for TLT. Using a loss limit also reduced losses in false alarms.

    Hope this helps clarify the issue.

    Oct 9, 2014. 12:39 PM | Likes Like |Link to Comment
  • Buy And Switch Beats Buy And Hold, Part 2 [View article]

    Thanks for the comment. I don't deny that another metric would not work better. My main point was that if you could find one that tilted the odds in your favor, you could tap some of that capital gain and convert it to income.

    I looked at the S&P500 200 sma crossovers and there are several (many) instances that I would call 'false alarms' where the crossover only lasted a few days to a couple of weeks. This was particularly true in the 1970s decade where the market had its ups and downs, but was essentially sideways for the whole decade.

    Oct 8, 2014. 06:51 PM | 1 Like Like |Link to Comment
  • Buy And Switch Beats Buy And Hold [View article]

    Thanks for the comment (and the plug several days ago).

    I don't 'know' if it will work in the next 10 years. The market will be making major corrections in the future and if a scheme where you can put the sell high/buy low odds in your favor, then you can tap some of this as income, which is the thrust of the article.

    The reason for 50/200 was that in the past there have been several instances where there were the 'touch and go' instances I tried to illustrate. These, I believe, were cases where there was human intervention to prevent a crossover. The fact that the last one happened in 2002 may indicate now no one can afford to attempt it. It said to me that there were a lot of people looking at 50/200 and that in itself could cause it to work.

    Oct 8, 2014. 06:35 PM | Likes Like |Link to Comment
  • Are SCHD And NOBL Good Dividend Growth Investments? [View article]

    I address this to you, but it is not directed to you.

    In my article "ETFs for Dividend Growth Investors, Re-visited", I put together a 6 ETF portfolio consisting of VWO VEU EWC VDC ILF DLS. This group, weighted by the 'r' coefficient, has an 8 year non-l.r. dividend growth of 11.5%. Not a pure up and up curved line, but useable. 11.5% is not a bad number. Will this hold up? Time will tell. I believe it will ebb and flow with the underlying economies, which is OK with me.

    VWO's dividend growth from 2006-2013: 24.3, 47.1, 19.7, -53.7, 49.5, 11.2, 7.6, 15.4. This ETF covers Emerging Markets. You can see some good years in its DG and some very bad years. It goes, I believe with the local and world economies. You probably are aware that the world economy is not doing so well right now, so dividends are off. But it looks like VWO is coming back.

    If you are expecting to find ETF's that perform as well as 'most' DGI's portfolios, you will probably be disappointed.

    David's research is searching for such, and he (hopefully) has found one in SCHD. Time will tell. I am 81 years old and my ETF research is in another direction - what is out there today with a track record. As for me, again, time will tell.

    SCHD looks good and I will probably add it to my pile. But, that is only one ETF. For those who are seriously looking for ETFs, one is not enough, unless you are willing to plunk all your funds in one holding.

    This is a serious subject and I am glad to see the interest in it.

    Oct 4, 2014. 04:35 PM | Likes Like |Link to Comment
  • Are SCHD And NOBL Good Dividend Growth Investments? [View article]

    Try VEU, VWO, VT.

    You will find dg erratic, so you need to look multi-year.

    I have written a few articles on ETFs if you are interested.

    Oct 3, 2014. 09:30 PM | 1 Like Like |Link to Comment