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Cash Cows Investor

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  • Project $3 Million Dividend Results - Objectives [View article]
    Hi Chowder,
    Don't forget to let me know when you're coming to London. I've been traveling quite often lately but I do come back as much as I leave...
    Hopefully I can meet you in person and if you can let me know the arrival and departure dates a bit in advance I might be able to get you some tickets for an Arsenal game.... oh and needless to say... beers are on me! :-)
    Jan 26, 2015. 05:59 PM | 2 Likes Like |Link to Comment
  • How You Can Invest Like Warren Buffett [View article]
    Wonderful article David, 10 out of 10!

    Also, thanks so much for the WB letter link. The best part for me is "Some Thoughts About Investing" with the whole story and rationale behind the two real investments he made: the farm in 1986 and the retail property in NY in 1993.

    And these are the key sentences in that part of the letter, that highlight the "common denominator" between Warren Buffett and DG investors.

    "INCOME from both the farm and the NYU real estate will probably increase in the decades to come. Though the gains won’t be dramatic, the two investments will be solid and satisfactory holdings for my lifetime and,
    subsequently, for my children and grandchildren."

    "With my two small investments, I thought ONLY of what the properties would PRODUCE and cared not at all about their daily valuations"
    Mar 11, 2014. 02:24 PM | 3 Likes Like |Link to Comment
  • The Role Of Slow Growing Cash Cows In Your Portfolio [View article]
    Dear Tim,
    Saying that I agree 100% with you, would be an understatement.

    Cash Cows
    Jun 18, 2013. 05:47 AM | 2 Likes Like |Link to Comment
  • Own These World's Leading Brands And Never Fear A Recession Again [View article]
    "The primary thesis behind this article is that volatility does not necessarily equate to risk."

    Thanks Chuck, really good stuff.

    Jun 6, 2013. 03:49 PM | 4 Likes Like |Link to Comment
  • Why It Pays To Invest In Emerging Market Dividend-Payers [View article]
    Terrific article’s topic. Though I’m disappointed after reading the article…

    I don’t see that 60 basis points differential between the S&P 2.05% yield and the MSCI Emerging Markets Index’ 2.65% yield as a comprehensive and exhaustive enough reason of “why” “it may be a good time to look at emerging markets dividend-paying stocks” and why "it pays to invest in emerging markets dividend payers".

    I was actually hoping to find a list of relatively safe individual names of companies with thick moats, free cashflows and competitive advantage among the emerging markets dividend payers offering excellent long term prospects…

    I’d encourage a follow up article discussing a few real examples, rather than the far too simple and abstract notion of comparing two indexes (domestic vs emerging) by their div yields.
    Jun 6, 2013. 09:36 AM | 2 Likes Like |Link to Comment
  • The Psychological Benefits Of Dollar Cost Averaging Into Dividend Stocks [View article]
    “I'm not saying you can't relate the quote to whatever you like, but I'm not seeing the clear connection with DCA/dripping...”

    Hi Diver,
    Indeed, Munger never made that connection himself and I can understand why you struggle to reconcile his investing style (buying in bulk when “deep value” presents itself) with it. I was just thinking aloud… and simply offering a counter-non just-psychological reason to DCA/dripping…

    The way that I see it is and therefore link Tim’s article with Munger’s wise words is that, irrespective of (and in addition to) the psychological benefits, there are also factual benefits in DCA/dripping: “Over the long term, it's hard for a stock to earn a much better return that the business which underlies it earns”, therefore, even those odd “expensive looking” purchases done while DCA/dripping over several decades, will deliver average-adjusted returns that are not too different from the “underlying” business returns. Get the food for thought/drift now?

    Tim’s article talks about the “psychological benefits” of DCA. Granted, I think we can all agree on those. But there are also other counter-benefits either psychological, emotional or factual: I think Obiee does a good job in his comment at depicting and hinting at some of them: “ from some of the comments the all-too-human penchant for believing they can 'time' purchases seems set im emotive-concrete……some... people just won't believe it really can be that easy…”.

    There’s another cool quote from Charlie Munger that goes hand in hand with Obiee’s comment (can’t remember it exactly, but it goes roughly like that): “People don’t invest like we do because what we do is too simple”.

    From the thousands of comments I’ve read from DG investors, and the several sub-investing “styles” and individual “rules” (the “Constitution” in David Van Knapp’ jargon) within their DGI approach I think it’s safe to say that DG investors can be split into those that: drip, those that don’t and those that do it partially.

    There are merits, pros and cons for each approach. I fall, mostly, in the camp of those that selectively choose where to allocate new capital and reinvest dividends. Why do I do that? For three reasons: the first is that, being UK based, I can not enrol into US stocks drips (I would if I could); the second is that I can do “dividend capture” and by doing so I can slightly accelerate the magic of compounding (this is particularly true for UK semi-annual payers with an interim and a final dividend being paid). Finally, because a part of me (I confess) believes that can do better by deciding where to allocate capital each month rather than leave it on auto-pilot.

    But it is precisely because of this self-confidence (that I think I can do better by myself than leave it on auto-pilot) that I self-question my approach. I’m not at all 100% confident that I will “always” spot “value” and make the right “allocation choice”, thus I like, for a small portion of my portfolio, to embrace an almost automatic DCA approach while allocating capital/compounding, reassured by the fact that, even if I have occasionally slightly “overpaid”, as long as the underlying business is earning robust return on capital, I’ll do just fine in the very long term…

    In fact, I am somehow executing a form of “indirect” manual DCA/dripping when I buy UK stocks prior to their final ex-div date via the regular investment feature offered by my stockbroker. So I tend to buy certain stocks at regular yearly intervals in certain months of the year. For example, almost every year I buy Diageo in August (their final ex-date is in Sep), almost every year I buy National Grid in May (their final div ex-date is in June), etc…

    Ultimately I entirely agree with Tim’s view: “Blending the gradual accumulation of high-quality stocks with old-school value investing seems like a balanced strategy to me”.

    Good investing!
    Jun 6, 2013. 07:43 AM | 3 Likes Like |Link to Comment
  • The Psychological Benefits Of Dollar Cost Averaging Into Dividend Stocks [View article]
    Some food for thought from Charlie Munger (re long term DCA/dripping):

    "Over the long term, it's hard for a stock to earn a much better return that the business which underlies it earns. If the business earns six percent on capital over forty years and you hold it for that forty years, you're not going to make much different than a six percent return - even if you originally buy it at a huge discount. Conversely, if a business earns eighteen percent on capital over twenty or thirty years, even if you pay an expensive looking price, you'll end up with one hell of a result."
    Jun 5, 2013. 02:57 PM | 3 Likes Like |Link to Comment
  • Is Blue-Chip Dividend Investing Only For Rich People? [View article]
    The other questions are: Who's "rich"? When am I rich? How rich am I?

    Have fun perusing this website to find out... :-)
    May 26, 2013. 05:36 PM | Likes Like |Link to Comment
  • 5 Funds With Rock Bottom Expense Ratios For Busy Investors [View article]
    Apparently Buffett spent just 31K for his first house, and as we all know… he never moved… so his own home is approx 0.0005% of his net worth! Gosh… I’d rather be Larry Ellison… (

    Miz, when I moved from Italy to London my first ever culture shock was “What the hell! How unbelievably expensive are these houses round here! Are you kidding me! I’m never gonna be able to afford my own place!”. Twenty years later, the rest is history… these days I’m in a position to continue “milking” my small, but cashflow and equity rich, residential property portfolio and channel funds into DGI… but I think I still got PTSD… haha.

    Totally agree re children, Big Thunder. I’m happy for you that, like Miz, you can enjoy your space with your pets… it’s a priceless feeling. Eventually, our own place defines us, contains us and makes us grow. It takes a certain mental strength to “resist” (as I am) the temptation to splash out on that “dream house”.

    As a hands-on landlord I can confirm that tenants can be real hassle, although I have excellent relationships with all my good tenants. (My fav? The Americans... currently I have four American girls sharing a 4 bed townhouse and they are the coolest I ever had!). Maintenance is another big headache, as in the long term it reduces your rental Yield by a good 20-30% (especially in old late 1800 Victorian houses) and it reduces dramatically your ROIT (return on invested time).

    The truth is that when you buy yourself an investment property, you buy yourself a job! (isn’t it Pey?)

    When I was laid off in 2009 from my last job in the City I held my Employer and the whole financial industry in contempt! (See my comments re ETFs AUM expenses ratio, RIAs, financial industry “experts”). I just hated it and I refused the idea to ever send another CV in my whole life to one of these dodgy Investment Banks. After a one year+ break in China, teaching English to kids, I returned to London in late 2010 and with my cashflow and “immaculate” credit record I could continue to borrow and bought two more (cash cows) properties.

    I AM already financially independent but I am NOT mentally free.

    And I’m not yet in a position to “pass on the bucket” and have the properties managed… it’ll take me another good decade… but I will get there!

    All right.. gotta go.. the barbecue idea is brilliant, either at Miz’ place or Pey is fine for me… and as Pey is skint we can bring the beer….Just imagine how much laugh we would have taking the mickey of all those morons that keep trolling the DGI articles…

    “Hey, but if you just bought Exxon at $93 and is now trading at $92.50, you have lost!!”
    May 21, 2013. 04:42 PM | 2 Likes Like |Link to Comment
  • 5 Funds With Rock Bottom Expense Ratios For Busy Investors [View article]
    Hi Pey,
    I don’t touch ETFs, in fact I never come to this section of SA. I’m here because I’ve just seen an article by Tim McAleenan and so I saw yours too …

    Like Big Thunder, Miz and Stephen I congratulate you on your new home and for the efforts you put into it to make it the way you like it…

    As a young newly-wed man in his early 30s you took a step that is considered by most “a must” (like getting a college education... and so on). And if you’re planning to have kids it makes perfect sense to provide them with stability and a sense of “belonging somewhere”.

    Having said that, I want to share a thought: your “dream home”, my friend… is the biggest “wealth stealer” of all…

    Yep, that’s right. Just think about... you wrote your penultimate article in Aug 2012 and here you are in May 2013 talking about the fact that you had no time and are now thousands of $$$ lighter after refurb and furnishing costs… Over the next decades maintenance costs are all on you… not to mention property taxes…

    Just think how productively you could have employed all that time and money you wasted in Home Depot. I know exactly how you feel because I just spent the last year refurbishing a completely run down 4 bedroom Victorian house in central London. The difference is that I will rent it within a couple of weeks, than “milk” the equity from it and move on to the next “investment adventure”…

    I have no idea how much you and your wife earn p/m and how much your mortgage payment and all other costs are as a percentage of your household income. I also have no idea what type of job you do. If there’s an entrepreneur in you… I’d suggest you read this blog and the comments in it…

    There’s also some truth in what Schiff says here..

    I do not mean to discourage you, nor to hurt your feelings and your pride. We all have, at different times, different priorities and needs and I fully respect that.

    But if you take a snapshot of you asset ad liabilities (your balance sheet) and your house is, by far, your greatest asset (80-90%+) of your net worth, I’m afraid you just made the same mistake committed by the vast majority of the middle class on this planet… you made yourself possibly significantly poorer, on a long term forward basis…

    There’s absolutely nothing wrong about that! If this what you and you wife want *now*, just enjoy the pleasure, the peace of mind and the quality of life that comes from owning your own tastefully decorated place…

    But, as I understand from what you wrote in your first paragraphs, if you’re having second thoughts… just rent it and go to live somewhere else. Of course the numbers need to stack up. The rent must cover your mortgage payments and the rent you’ll be paying…

    Finally, whatever you do, it’s your life and your right to live it to the full and enjoy it now… but if you feel like you can make this “sacrifice” and postpone living in your nice and cool house… you can make yourself significantly wealthier and possibly retire much earlier..

    Home ownership makes perfect sense for someone like our friend Miz as she is nearly 30 years older than you. It will make sense for me one day too, when the cost of my own home will be <5% of my entire net worth…

    I bought my 1st property at 28, I now have a few investment properties in London, and to this day I’m still renting! I’m no Buffett genius and I never really earned a lot… but it was precisely not digging myself in the hole of expensive home ownership that allowed me to retire from the rat race four years ago at 37…

    Just my 2cents food for thought. Think about it and good luck!

    Now, wouldn’t it be cool if you, me, Big Thunder, Miz and Stephen could have had this discussion while having a barbecue in the back garden of your wonderful new home? :-)
    May 21, 2013. 09:34 AM | 2 Likes Like |Link to Comment
  • Are Streaks And Current Yields The Best Metrics For Dividend Growth Investors? [View article]
    Craig, solid first article and smart take away message:

    "Think outside the box" (the CCC list)

    Having said that, I agree with Nathan that such message is NOT for everyone, such as retirees needing steady income now with no unnecessary "bumpiness".

    I think it must also be added that non-CCC dividend payers would require more due diligence and strict monitoring.

    To each his/her own....
    May 19, 2013. 06:00 PM | 2 Likes Like |Link to Comment
  • What If Long-Term Dividend Investors Buy Before A Crash? [View article]
    Typical Tim McAleenan’s writing…

    Plain common sense… yet astonishingly brilliant !!
    May 19, 2013. 05:27 PM | 2 Likes Like |Link to Comment
  • How To Take Some Of The Risk Out Of Tobacco Investing [View article]
    Morning Pete, hey don’t take it personally mate (I’ve just read PM is your largest holding by a large margin).

    Ok (it’s Sat morning, just woke up, it’s 7:15am and I’m free!), I’ll explain why, within my portfolio, my Tobacco sector (PM, BATS, IMT) is currently underperforming (in total return) relative to my other portfolio sectors.

    It has nothing to do with the absolute long term return of PM, but with the timing of my purchases and its return relative to my other portfolio sectors.

    But first let me say: I’m well aware (and fond) of the resilient nature of the Tobacco industry revenues and have been a happy shareholder for nearly a decade, in fact I ain’t selling either...

    I’ve been accumulating dividend growth stocks since 2004. Every year different amounts depending on cash flow. Though, the bulk of my stocks is in cons staples, food producers, brewers, confectioners (approx. 50%) energy and utilities (20%) large pharma (20%), the rest, in descending order, in Property, Agriculture, Tobacco, Financials, Mining.

    Within the Tobacco sector, I initially bought some Imperial Tobacco and British American Tobacco shares between 2004 and 2007. I bought no tobacco stock during the 2008-9 price lows. Yes, I considered buying MO <$20 for several months in that period, but had other priorities and cashflow constraints (to this day I do not own any MO, but hold a nice stake in SABMiller, being my 18th largest portfolio holding).

    Then, I happily added Philip Morris in 2010, 2011 and 2012 to my portfolio.

    But before, and during the financial crisis, I bought mainly large stakes in Unilever, GlaxoSmithKline, HNZ, PG, ABT, MCD, YUM, XOM, KO, JNJ, KO, HSY, WMT, etc…

    Overall, I have invested more money between the years 2004-2009 than in the last 3 and a half years.

    Now, my base currency and cashflow is GBP. When I buy USD assets I have to sell GBP. Look at cable (gbpusd FX rate) between 2004 and the first half of 2008… let’s just say the average gbpusd fx rate in those four and a half years was 1.85. Today gpbgusd is approx 1.55ish.

    Most of the early purchases were made at a time when sterling was much stronger against the dollar.

    Being Philip Morris a relatively newer portfolio holding (bought it in 2010 for the 1st time ever), it has not benefited as much as other older holdings by the current dollar strength.

    Imperial Tobacco, on their hand, had disappointing half year results (adj operating profit down 6.7%). The last 3 times time I bought IMT was in Dec 11, Jun 12 and Dec 12 (“dividend capture”). Imperial Tobacco’s price has been lower than my last 3 purchase prices since then. Not one other stock in my portfolio is lower than it was last year! As well as "fx", it’s these last three IMT purchases that are averaging down my tobacco sector current total return.

    Hope the above explains why my tobacco sector is underperforming other sectors within my portfolio (it’s got nothing to do with PM’s historical returns).

    Personally, I intend to keep between 1.5 to 2% capital allocation in my three Tobacco sector stocks for the foreseeable future. But will re-assess on a rolling-decade basis their performance, rationale and merits in the portfolio.

    Good w/e
    May 18, 2013. 02:25 AM | Likes Like |Link to Comment
  • The Business Model Of The Dividend Growth Investor [View article]
    This article is a reminder of why I have such high regard for David VK…

    While reading through the whole article, I’ve been nodding all the way down, top to bottom… and I‘m struggling to cherry-pick my fav sentence as in each paragraph there’s a sentence I really like… so I’ll settle for this one:

    “It's fun to run your own business rather than work for others.”
    May 15, 2013. 09:02 AM | 16 Likes Like |Link to Comment
  • The Case For A 100% Dividend Stock Portfolio [View article]
    Q - “Who wouldn't want to reinvest dividends at a lower price:)”

    A - The DGI naysayers, the MPT aficionados.... and probably Cranky, when he'll sell at the next bear market bottom... as he keeps saying things about the average guy not being able to "tolerate" price declines... sort of self-fulfilling prophecy... :-)
    May 13, 2013. 04:50 PM | 4 Likes Like |Link to Comment