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emac99

emac99
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  • Are Dividend Contenders The Real Champions? [View article]
    Hi, Bob,

    Great article. I like your premise and also view the CCC Contenders as fertile ground for future Champions. They seem to occupy a sweet spot for DGI-ers between "already proven" and "still plenty of potential." And, unlike the Challengers, the Contenders' track record of dividend increases still includes the great recession of 2008-2009. So somewhat battle-tested, though not to the degree of the Champions.

    I did a quick Contenders scan within our own DG portfolio and was a bit surprised to realize they account for more than 40% of our holdings, including quite a few core - for me - stocks (like D, GIS, EPD, SO, VZ, and O) and high conviction satellites (like NEE, WEC, MSFT, HCN, ACN, RTN, LMT and LNT).

    Looking forward to the next article, and your list.

    Happy investing.
    emac
    Mar 24, 2015. 12:42 PM | Likes Like |Link to Comment
  • The Case Of Investing In Master Limited Partnerships [View article]
    Fifteen percent of our retirement portfolio is in quality midstream MLP's and they provide a tremendous boost in annual income. Any decent CPA can handle the K-1 partnership tax complexities. I calculated the difference between my mother in law's (very simple, vanilla) tax return and ours with 7 MLP's. The fee difference from our CPA was a tiny fraction of our MLP income. I consider K-1 tax accounting a cost of managing a (profitable) business, particularly in a year like 2014: I was a long time KMP holder, plus I fully liquidated another MLP due to its risk profile and performance.

    Regarding TurboTax, my time is better spent researching and managing which investments I want in our portfolio than calculating the taxes owed. I adopt the same approach with MLP's as with foreign taxes on international holdings, AMT, self-employment taxes, qualifying deductions, stock option exercises, estimated taxes, etc.: I'd rather leave it to an expert to stay on top of all the complex and changing tax laws. I ping our CPA occasionally during the year for tax advice before making investment moves, too. Worth every penny.

    emac
    Mar 22, 2015. 07:12 PM | Likes Like |Link to Comment
  • Mr. Valuation's Best Ideas For Retirement And Dividend Growth Portfolios: Emerson Electric [View article]
    Great article, Chuck, as well as another demonstration of the power of FAST Graphs. Bravo.

    The (mostly) thoughtful commentary, both pro and con, has been useful, too.

    I've been slowly building a "satellite" (non core) position in EMR recently as a complement to the other industrials in our DG portfolio, GE, LMT and RTN. Emerson's diverse product line, rock solid balance sheet, and 58 year history of uninterrupted dividend increases make this "boring" slow growing shareholder-friendly company exciting to me.

    I like EMR at current valuation; if it goes lower, I'll add more.

    emac
    Mar 22, 2015. 06:46 PM | 1 Like Like |Link to Comment
  • You Can Absolutely, Positively, Retire Early... Maybe [View article]
    TF17,

    Inflation, compounding rate assumptions, yes. Points well taken. However, it's unlikely someone would STOP investing after just 10 years. And that's the point the chart is making. It's getting an early start that matters - hugely!

    Thanks for your comment though.

    emac
    Feb 27, 2015. 06:01 PM | Likes Like |Link to Comment
  • You Can Absolutely, Positively, Retire Early... Maybe [View article]
    Investing $2000 per year starting at age 18 (or 20 or 21 or whatever) is only $170 after taxes per month. How is that not do-able for just about anyone who is working? And if you happen to work at a company offering a tax-advantaged vehicle like a 401(k) it's even less. With a company match, even less. With endless web resources and low trading fees, no excuses today except a woeful lack of financial education and not understanding the benefits of time and compounding.

    I dearly regret not starting to save for retirement until age 34. I had to set aside a much more sizable amount of my salary to make up for that lost decade. Fortunately, by age 34 I did have a 401(k) pre-tax option with company match. "Free money" was a good incentive, even though I was limited to the fund selections in my plan.

    After 30 years with my firm, and 20 years of 401(k) contributions, I was laid off. Thankfully, with a long bull market I had accumulated enough to retire early. But it sure took a lot more scrimping, saving and sacrifice starting in my mid 30's than my early 20's. Even with student loans, car loan, and a mortgage, I could have economized and set aside $43 a week if I thought to do so.

    Thanks RS for the article. Hope it resonates with the younger generation. With few pensions and much strain on Social Security, it's more important than ever to take control of your own financial future!

    emac
    Feb 27, 2015. 01:39 PM | 4 Likes Like |Link to Comment
  • Another Stock To Build A Retirement Portfolio Upon At Any Age [View article]
    Right on, RS. I was wondering when PG would show up on your list of "must own" stocks for a retirement portfolio. (And I like your previous choices, too.)

    PG is the single largest position in our DG retirement portfolio, so obviously I believe wholeheartedly in your selection. Yes, they face competition from generics, yes the currency headwinds are fierce, but let's face it, a company that's been around as long as PG, serving so many basic needs, with a huge, diverse stable of billion dollar brands, must be doing something right.

    I like that they are shedding their less profitable, non core brands to refocus on their strongest ones. (Same thing I'm doing with our retirement portfolio - shedding the outliers and concentrating more on the best ideas.)

    PG was around long before me, and I'm betting it will still be here long after I'm gone.

    Very long PG.

    emac
    Feb 14, 2015. 06:20 PM | 4 Likes Like |Link to Comment
  • Goal-Setting For Income Investors [View article]
    <<<I had what I thought was a plan, but it was a plan without a goal. >>>

    ScottU,

    Congrats on a great first article. Love your distinction between a plan and a goal and why you need both. Also like the parallels between real estate cash flow and investment income / cash flow.

    When that particular light bulb went off for me - that my goal was not a portfolio "number" but a specific amount of reliable (growing) income sufficient to cover 2/3 of our expenses, it was an epiphany. The plan cascaded easily from the goal. As did the measurements. I stopped comparing my results to others, or an index, and started comparing my results to that goal. As a result, I was able to dial down the risk profile of our investments considerably, too.

    Good job. Hope to see another article from you on SA soon!

    emac
    Feb 14, 2015. 06:09 PM | 1 Like Like |Link to Comment
  • Dividend Growth: Is It Really The Right Strategy For You? [View article]
    Nice overview article, Adam.

    Just 6 weeks into 2015, our balanced DG portfolio has delivered 11 dividend increases already, most of them larger in % than any raises I received while employed.

    This stuff works.

    emac
    Feb 14, 2015. 05:52 PM | 4 Likes Like |Link to Comment
  • Did A Market Alarm Go Off On Friday? [View article]
    Eric,

    The meteoric rise of the past 1 1/2 years and the today's sky high valuations of REITs and Utilities reflected cheap debt, yield chasing and price speculation, IMO. Current prices are not supported by earnings or growth so how can they be sustainable? No surprise to see them begin to revert to more normal valuations and P/E's.

    emac
    Feb 8, 2015. 10:22 AM | 5 Likes Like |Link to Comment
  • McDonald's Versus Starbucks: Income Or Growth? [View article]
    DVK,

    Time magazine had a cover story last week on Howard Schultz and Starbucks's business model, approach to employment, and plans for growth (as well as challenges). Worth the read.

    emac
    Feb 8, 2015. 10:09 AM | 2 Likes Like |Link to Comment
  • McDonald's Versus Starbucks: Income Or Growth? [View article]
    Hi, AaronFunding,

    See my response to 2Reb above. In the case of MCD the current yield is only slightly lower than overall portfolio yield (3.85% at today's prices). But I base additions and reductions on size of holding.

    In total I expect my 25 or so Core holdings to account for at least 55% of income and high conviction Satellites at least 35%. So MCD for me is down but not out. At least not yet.

    emac
    Feb 8, 2015. 10:01 AM | 1 Like Like |Link to Comment
  • McDonald's Versus Starbucks: Income Or Growth? [View article]
    Hi, 2Reb,

    I'm a recent retiree. My goals are income to cover 2/3 of expenses (rising faster than inflation) first, cap preservation second. A full position of a Core holding for me is 3% of the portfolio value. In the case of MCD that equates to approximately 3% of the income as well.

    I have not added to MCD in quite some time so I sold at a profit. The 20% shave bring it closer in line to a Satellite position for me (1.5% - 2% per position).

    I bought a little SBUX with proceeds but most of the MCD cash is being held pending better valuation on one of my (now) 24 remaining Core holdings. It's "on the bench", so to speak. If it outperforms my reduced expectations, I may add back in future. Or I may continue to trim. As a Satellite it gets monitored more closely, vs. my Core.

    emac
    Feb 8, 2015. 09:52 AM | Likes Like |Link to Comment
  • McDonald's Versus Starbucks: Income Or Growth? [View article]
    I appreciate this article and agree with the premise and the math behind it. Some stocks truly are more suited for income and others for growth. Like other commenters, our balanced DG portfolio contains a mix of both, including MCD and SBUX.

    I must say, though, despite the illustrious history, I've lost a lot of confidence in MCD lately. Their last dividend increase was sub 5% and I suspect this year's will be in that range, too. The headwinds of taste and currency are formidable and some of their recent moves seem like desperation vs. strategy. So I recently "demoted" MCD from Core category and reduced our full position to 80%.

    Still building our SBUX position, currently quite small. Check out this week's Time magazine cover story for added perspective on SBUX's forward strategy and plans for growth. Plenty of runway left. Not sure same can be said for MCD, without some significant changes, hard to do with its entrenched culture and changing demographics.

    Only time will tell. I'm the meantime, why not benefit by holding both.

    Happy investing to all.
    emac
    Feb 7, 2015. 05:48 PM | 2 Likes Like |Link to Comment
  • Portfolio Business Plan - 2015 [View article]
    Bob,

    Nicely done, as always. Thank you for constantly beating the drum about having an investment business plan, and sharing the evolution of yours.

    Personally, I found the process of creating our investment plan as useful as the end product. It brought the goals into crystal clarity, made investing decisions a lot more black-and-white, and focused metrics onto the "critical few."

    That being said, ours is not a static plan either. There's a lot to be said for less work and less monitoring - even in early retirement - and as you say, it begins with Buying Quality. I didn't start out that way, but I've made a deliberate shift in that direction to make my job now - as well as any future Legacy plan - simpler and less burdensome. Portfolio will never be auto-pilot but definitely taking steps by selling the low-conviction stocks and holding as cash until high-conviction stocks enter my buy zone. It required an overhaul of our business plan, but again that process was so valuable to focus my thinking on what I needed to do differently.

    Quite a journey for you, Bob - thanks for bringing us along, and wishing you continued investing success!

    emac
    Feb 4, 2015. 09:13 PM | 2 Likes Like |Link to Comment
  • The Dividend Growth Weighting Game [View article]
    Mike,

    Another excellent article!

    My approach is very similar in that the total (portfolio value) of my core stocks (like your superstars) is 50-55% and my high conviction satellites (like your role players) is 30-35%. That leaves room for about 10-15% in medium conviction (like your prospects). I no longer speculate. Decided I don't have the stomach for it after BWP and SDRL.

    Like you, I will "promote" or "demote" depending on company results, industry outlook, or macro events. MCD, for example, was demoted recently from core to high conviction satellite as I just don't have the confidence they can grow given competition in fast-casual and changing tastes. I'll hold MCD until there's a reason not to, but I stopped adding some time ago.

    I really like how you are weighting % of income by bucket and not just the size of each bucket. Makes perfect sense since protecting the income stream is a stated goal. That's not something I've started measuring yet, although I do invest by "tier." So my core stocks, for example, are roughly 3% positions, high conviction 1.5%, and medium conviction 1% or less. But I think I will take a closer look at the income % by holding and see where that leads.

    Great portfolio, by the way. Very high Quality. And I say that NOT just because I own 29 of the 35 stocks you list above. :)

    emac
    Jan 20, 2015. 09:54 PM | 4 Likes Like |Link to Comment
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