A Moderate-Risk, High-Reward Dividend Play [View article]
erpichtauf,
I don't disagree with what you have to say. I just take it as a given that when I present information as pre-tax in nominal dollars, investors will adjust the figures accordingly to reflect their own tax and inflation rate. Everyone's situation is different, so I can't do that thinking for them.
i.e. a small business owner from Colfax County, New Mexico doing all of his investing in retirement accounts is going to have a very different inflation and tax situation compared to a heart surgeon in Los Angeles looking to invest $400,000 annually in fully taxable accounts.
I leave it up to the reader to determine how the pre-tax, pre-inflation returns apply to his or her own particular situation, unless I specify otherwise.
A Moderate-Risk, High-Reward Dividend Play [View article]
"Is this how they teach you to lay out cases for juries?"
I'm assuming that is an insult, and I'll let it go.
"Have you dealt with the handling of taxes since you've made the jump and become a partial owner of some holdings?"
Yes.
"Aye, different people have different tax situations, and the tax scene has changed over the years. Though, be aware that taxation eating away at the dividends over thirty years can leave you far short of the near two million in the example you presented."
I agree with you. If you hold income producing assets in a taxable account and pay the highest rate, returns can be much lower. That's why I included the line "optimal tax strategy" to note that the results were contingent upon a full tax shelter, and if an investor does not have that, he will have to edit results to fit his circumstances. There is nothing stopping you, or anyone else, from backtesting Aflac's dividend payments at a tax rate you find reflects your situation so that you can proceed accordingly. I don't know what each reader pays in taxes, so I leave it up to them to take the information and extrapolate to their personal circumstances.
A Moderate-Risk, High-Reward Dividend Play [View article]
I think this is my first full length piece on Aflac I have ever written. I made a side reference the other day about it being undervalued, but I don't recall doing more than that.
A Moderate-Risk, High-Reward Dividend Play [View article]
I used a work database to access the Aflac figures. A lot of times, longrundata.com is a good easily accessible source for histories. When I typed in Aflac, it only lets you start on July 19, 1984.
For what it's worth, it tells you that Aflac compounded at 20.00% from then until today, turning $1,000 into $192,551.
Since I used $10,000 in my example, that gets you up to $1,925,510 which is in line with the $2 million figure I mentioned.
When I say optimal tax strategy, I am referring to pre-tax returns in nominal dollars. Accomplishing that in real life varies from person to person, so I leave it to the reader to adjust the figures themselves to reflect their personal tax situation and expectations.
New Market Highs Are Easy To Handle [View article]
Wow, Roady. This comment is crazy. I spent most of the first half of this year buying BP, and I think I'm going to spend the second half of the year buying Aflac, barring a price run up or the discovery of another opportunity.
I can't believe you said that. Out of the 15,000+ stocks in the world, it seems that we are focusing on the same two. That's wild.
Exxon Mobil: 4 Reasons To DRIP This Company [View article]
Michael, the purchase fees at computershare are much higher forChevron and they are in fact nonexistent for Exxon.
Also, Exxon is starting to show a desire to raise its dividend by a meaningful amount, and perhaps the days of 6-7% dividend growth have been replaced with 8-12% dividend growth. We shall see.
I like Chevron, a lot. I think both companies are excellent.
Exxon Mobil: 4 Reasons To DRIP This Company [View article]
Madness, I currently own Exxon, but I plan to own Chevron as well. They are both excellent companies. Chevron's had the better hand if you look at most performance periods less than 10 or so years, while Exxon has had the better performance if you open it up and look back 15+ years (those are my general historical reflections on them).
Going forward, I think the answer is to own both. It's especially interesting to see that Exxon is starting to raise the dividend by a nice amount. For some income investors, that could put Exxon on equal footing with Chevron, although Chevron currently has the higher starting yield.
This is one of those few cases where, if you have to choose, I don't think you can go wrong with either if you have a 15+ year time horizon.
The Worst 'Big 4' Tobacco Company Right Now [View article]
"Right now, I like LO for the mid term."
Agreed. Lorillard would be an interesting company to take the 5% dividend and funnel it into other stocks. Within five or six years, you could probably get about a third of your initial investment back in Lorillard dividends you could direct at other stock purchases.
And Lorillard doesn't stand to get hit by P/E compression like Reynolds, IMHO.
It looks like Chevron will be making an investment worth a total of $1.5 billion scaled in over several years.
For context: Chevron has somewhere around $21 billion in cash, a huge untapped credit line because debt is only 8% of its capitalization, and $172 billion in proven reserves. Heck, Chevron buys back more stock in a typical 120 day period than the sum of its investment in Argentina. Even if it lost everything with this investment you point out, it does not seem like it would be more than a small blip on the screen of a long-term investor.
Dripping Works: A Real-World Example [View article]
mtairy,
I cannot speak for Mike, but here is what I can guess. He has mentioned that he has held Procter & Gamble for five years. Most likely, daily fluctuations do not dictate his strategy (in fact, if you get hung up on short-term fluctuations, how could you ever own a particular security long-term? Berkshire has compounded at something like 20% under Buffett's stead, but it experienced four 50% drops in the course of his stewardship). The daily give and take of the marketplace is but a bee in the garden of a long-term strategy.
Procter & Gamble is doing powerhouse things. Earnings are growing again. The company has been paying a dividend to investors since Italy colonized the Horn of Africa in 1890. With a record like that, how can you get upset about daily market movements?
Buffett has scaled back his position, but his opportunity costs are different than ours. Maybe he needed the money to facilitate his Lubrizol and Heinz ketchup purchases. Maybe he wanted even more cash on hand to do something bold in the next year or two. We can only speculate. But this we do know: Buffett still owns tens of millions of shares of P&G through Berkshire.
Mike's dividend story shows what Procter & Gamble can do over the long-term. For being a long-term owner, Mike received 3 additional shares of Procter & Gamble. Now he has 3 shares working for him to generate an additional $7.20 in annual income. That'll get him an additional 1/10 of a share, which will start paying dividends of its own.
And here's the good part. This happens every three months. And the amount paid grows every year. Maybe that is why Mike can deal with it "being down a point today."
A Moderate-Risk, High-Reward Dividend Play [View article]
I don't disagree with what you have to say. I just take it as a given that when I present information as pre-tax in nominal dollars, investors will adjust the figures accordingly to reflect their own tax and inflation rate. Everyone's situation is different, so I can't do that thinking for them.
i.e. a small business owner from Colfax County, New Mexico doing all of his investing in retirement accounts is going to have a very different inflation and tax situation compared to a heart surgeon in Los Angeles looking to invest $400,000 annually in fully taxable accounts.
I leave it up to the reader to determine how the pre-tax, pre-inflation returns apply to his or her own particular situation, unless I specify otherwise.
A Moderate-Risk, High-Reward Dividend Play [View article]
Reread my post in a year or two.
A Moderate-Risk, High-Reward Dividend Play [View article]
I'm assuming that is an insult, and I'll let it go.
"Have you dealt with the handling of taxes since you've made the jump and become a partial owner of some holdings?"
Yes.
"Aye, different people have different tax situations, and the tax scene has changed over the years. Though, be aware that taxation eating away at the dividends over thirty years can leave you far short of the near two million in the example you presented."
I agree with you. If you hold income producing assets in a taxable account and pay the highest rate, returns can be much lower. That's why I included the line "optimal tax strategy" to note that the results were contingent upon a full tax shelter, and if an investor does not have that, he will have to edit results to fit his circumstances. There is nothing stopping you, or anyone else, from backtesting Aflac's dividend payments at a tax rate you find reflects your situation so that you can proceed accordingly. I don't know what each reader pays in taxes, so I leave it up to them to take the information and extrapolate to their personal circumstances.
A Moderate-Risk, High-Reward Dividend Play [View article]
Congrats on the engagement, good sir.
A Moderate-Risk, High-Reward Dividend Play [View article]
A Moderate-Risk, High-Reward Dividend Play [View article]
For what it's worth, it tells you that Aflac compounded at 20.00% from then until today, turning $1,000 into $192,551.
http://longrundata.com
Since I used $10,000 in my example, that gets you up to $1,925,510 which is in line with the $2 million figure I mentioned.
When I say optimal tax strategy, I am referring to pre-tax returns in nominal dollars. Accomplishing that in real life varies from person to person, so I leave it to the reader to adjust the figures themselves to reflect their personal tax situation and expectations.
A Moderate-Risk, High-Reward Dividend Play [View article]
New Market Highs Are Easy To Handle [View article]
I can't believe you said that. Out of the 15,000+ stocks in the world, it seems that we are focusing on the same two. That's wild.
Exxon Mobil: 4 Reasons To DRIP This Company [View article]
Also, Exxon is starting to show a desire to raise its dividend by a meaningful amount, and perhaps the days of 6-7% dividend growth have been replaced with 8-12% dividend growth. We shall see.
I like Chevron, a lot. I think both companies are excellent.
Exxon Mobil: 4 Reasons To DRIP This Company [View article]
Going forward, I think the answer is to own both. It's especially interesting to see that Exxon is starting to raise the dividend by a nice amount. For some income investors, that could put Exxon on equal footing with Chevron, although Chevron currently has the higher starting yield.
This is one of those few cases where, if you have to choose, I don't think you can go wrong with either if you have a 15+ year time horizon.
The Worst 'Big 4' Tobacco Company Right Now [View article]
Agreed. Lorillard would be an interesting company to take the 5% dividend and funnel it into other stocks. Within five or six years, you could probably get about a third of your initial investment back in Lorillard dividends you could direct at other stock purchases.
And Lorillard doesn't stand to get hit by P/E compression like Reynolds, IMHO.
Chevron's 5-Year Dividend Potential [View article]
It looks like Chevron will be making an investment worth a total of $1.5 billion scaled in over several years.
For context: Chevron has somewhere around $21 billion in cash, a huge untapped credit line because debt is only 8% of its capitalization, and $172 billion in proven reserves. Heck, Chevron buys back more stock in a typical 120 day period than the sum of its investment in Argentina. Even if it lost everything with this investment you point out, it does not seem like it would be more than a small blip on the screen of a long-term investor.
Dripping Works: A Real-World Example [View article]
I cannot speak for Mike, but here is what I can guess. He has mentioned that he has held Procter & Gamble for five years. Most likely, daily fluctuations do not dictate his strategy (in fact, if you get hung up on short-term fluctuations, how could you ever own a particular security long-term? Berkshire has compounded at something like 20% under Buffett's stead, but it experienced four 50% drops in the course of his stewardship). The daily give and take of the marketplace is but a bee in the garden of a long-term strategy.
Procter & Gamble is doing powerhouse things. Earnings are growing again. The company has been paying a dividend to investors since Italy colonized the Horn of Africa in 1890. With a record like that, how can you get upset about daily market movements?
Buffett has scaled back his position, but his opportunity costs are different than ours. Maybe he needed the money to facilitate his Lubrizol and Heinz ketchup purchases. Maybe he wanted even more cash on hand to do something bold in the next year or two. We can only speculate. But this we do know: Buffett still owns tens of millions of shares of P&G through Berkshire.
Mike's dividend story shows what Procter & Gamble can do over the long-term. For being a long-term owner, Mike received 3 additional shares of Procter & Gamble. Now he has 3 shares working for him to generate an additional $7.20 in annual income. That'll get him an additional 1/10 of a share, which will start paying dividends of its own.
And here's the good part. This happens every three months. And the amount paid grows every year. Maybe that is why Mike can deal with it "being down a point today."
In A Post Flash-Crash World, No One Should Use Trailing Stops [View article]
In A Post Flash-Crash World, No One Should Use Trailing Stops [View article]