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  • Costco Earnings Preview: Fabulous Operator, But Thin Margins And Valuation Has Limited Position [View article]
    you mentioned on your blog that retail may be bottoming here and there may be some good values in the retail sector starting to appear. which ones and in any particular sub-sector? perhaps ROST/TGT/TJX?
    May 26, 2014. 10:30 AM | Likes Like |Link to Comment
  • Dividend Growth Investing: Creating Your Own Dividend By Selling Shares (Part 1) [View article]
    baltimore--I saw a study awhile back that concluded that the stocks most likely to cut dividends were in the highest quintile of dividend yielders.

    additionally, SA contributor Jeff Paul conducted a sample study which I have linked to below. Of 56 firms which cut dividends from 1999-2011, 22 were Financials (39%), 13 were Cons Discretionary (23%), and 6 were Industrials (11%). I also found it interesting to see several well-known utes on the list (SCG, WEC, XEL). He suggested that if a company eliminates its dividend, it's probably wise to sell. But if a company merely reduces the dividend, there is an argument for holding onto the stock from a total return perspective. Obviously, that's a highly individual decision for each investor.

    In addition, Morningstar DividendInvestor keeps an ongoing chart of payouts in peril, which broadly include: rural telecoms, MLPs, BDCs, mREITs, mineral mining, and ocean transport stocks. I'd also add that more cyclical stocks are more prone to freezes/cuts since cash flow goes up and down with the cycle--like F, GE, DE. In those cases, you could probably identify a smoothed dividend payout which works throughout the average of an entire cycle.
    May 26, 2014. 12:43 AM | 2 Likes Like |Link to Comment
  • Are Any High Quality Companies Decently Valued At The Moment? [View article]

    also speaking just for myself, I don't personally have hard and fast rules about dividend growth. due to utilities' relatively low earnings growth, my expectations for dividend growth are much lower.

    instead, I place a much higher emphasis on buying utilities under fair value, since that's the only way of creating an adequate margin of safety with such slow growers. I don't mind paying a "quality premium" for stocks in other industries/sectors that have higher div growth, capital appreciation potential, better earnings growth, or economic moats (like KO or MCD for example) but utility stocks don't merit that in my humble opinion.

    you prob read Chuck's article on utilities, but it's always worth rereading:
    May 25, 2014. 09:12 PM | 2 Likes Like |Link to Comment
  • Is It A Healthy Move To Hold On To UnitedHealth Group? [View article]
    I don't think the question you should be asking is "if the dividend will increase," but by how much UNH will increase the dividend---unless you are aware any evidence to the contrary.

    thus, when UNH increases its dividend, you should ask yourself what rate of dividend growth would satisfy your needs? do you expect a higher rate of growth from stocks with a lower yield, a la the chowder rule? will you sell UNH if it raises its dividend less than 5%? or will you buy more if it raises its dividend by 20%? these are all important questions and guidelines you should think through.

    the uncertainties surrounding MCOs and the healthcare industry in general could just as easily apply to any industry--defense stocks, tobacco stocks, utility stocks, etc. and in fact, I think a more compelling argument could be made for the positive effect of the ACA on MCOs with new potential growth opps as the result of an expanding membership base. UNH in particular has a large, well-diversified, membership base which helps mitigate risk in the face of future headwinds.
    May 25, 2014. 08:22 PM | Likes Like |Link to Comment
  • Are Any High Quality Companies Decently Valued At The Moment? [View article]
    misscbd--I believe that right after the rate freeze ends at the end of 2015/16, ED has immediately built in a $97 million rate increase to help pay for their post Hurricane Sandy and climate change related upgrades (fortifying seawalls, using smart switches to isolate flooding, etc). even though it will ultimately have an effect on NYers pocketbooks, that kind of investment in the future signals to me that ED is a well-run company with no danger of freezing their divvy.

    all that being said, I only have about 2% of my portfolio in utes due to low growth and find companies like MSFT and AAPL to be a more appealing combo of growth, value, and a dividend. however I'm already full up on both!
    May 22, 2014. 01:19 AM | Likes Like |Link to Comment
  • If I Were Starting All Over Again [View article]
    DM--Thanks so much for taking us along on your journey, for being so open with your personal life story, for being so generous in sharing your lessons learned, as well as your honesty and humility. many could learn from the example you have set.

    I don't always have the time to read/comment on your articles, but know that I appreciate every one of them and am amazed that you constantly find new and interesting topics to discuss. I think I'm around your age, and I also quit job in the pursuit of a career that I'm ultimately more passionate about and may ultimately result in greater financial rewards down the line. I don't regret that choice for a minute, even if it requires me to be a bit more frugal now. bottom line is that you're doing what works for you and what makes you, your family, and your friends happy. that's all that matters.

    p.s. I would add BAX, BP, and AMGN to your above list!
    May 20, 2014. 08:43 PM | 2 Likes Like |Link to Comment
  • Are Any High Quality Companies Decently Valued At The Moment? [View article]
    miss--both S&P IQ and Morningstar give ED around a $54 fair value, so it looks to be one of the few utilities that aren't overvalued.

    I don't follow ED closely, but I believe its one of the slower growing utilities out there. its electricity rates are frozen through 2015 and steam/gas rates are frozen thru 2016, so its growth has to come primarily from cutting costs. (this is true of many utes). as Mike mentioned above, NY is a tough regulatory environment w/ high taxes and a high cost of living, so ED prob won't have much leeway in negotiating future rate increases.

    i think most utes have run up a bit (one of the few sectors positively affected by the winter weather conditions), so I'm not in any rush to buy any. SCG, (which Chuck has often mentioned in his articles) AEP, ED, and XEL seem to be closest to fair value.
    May 20, 2014. 08:13 PM | 4 Likes Like |Link to Comment
  • Wal-Mart And Target Both Win Right Now [View article]
    I imagine that being a TGT shareholder of today is somewhat reminiscent of being a JNJ shareholder during the decades of recalls. a short term shareholder might've thrown in the towel over the bad press, the stagnant share price, government investigations, and the lawsuits. but the long term shareholder would've come out on top. I know, I sold my JNJ during that time, d'oh!

    hell, now that I think about it, TGT's issues seem like nothing compared to the issues that the JNJ of yesteryear faced!
    May 20, 2014. 11:52 AM | 1 Like Like |Link to Comment
  • Transforming A Portfolio Without A Real Plan Into A Dividend Growth Portfolio: My First Step [View article]
    whether or not you made the right decision depends on what your portfolio's goals and strategy are going forward. is your plan to own only income generating stocks? do you have minimum yield or dividend growth requirements for each stock?

    if you haven't already, check out Bob Wells' newest Business plan to help further refine your overarching strategy:

    of the above stocks you listed, I personally own GILD, MMM, MCD, COP, and a very small position in BMY (which trades more like a richly valued biotech than a reliable dividend grower). the bulk of my portfolio consists of dividend growth stocks, but I own a few non-dividend payers with compelling growth stories. However, I am many years from retirement and income isn't my only consideration. This may or may not be the case with you.

    In the future, you may also want to consider trimming a portion of your stock rather than selling 100%. I follow this strategy esp if I still like a stock's long term story, but currently believe it to be overvalued.
    May 19, 2014. 04:54 PM | 3 Likes Like |Link to Comment
  • Retirement Strategy: Dividend Income Investing And The Distribution Phase [View article]
    Slowly--you do not need earned income to perform a Trad IRA to Roth conversion. I have done so in the past, under the guidance of my accountant. you do however need earned income to contribute new money to a Roth.
    May 19, 2014. 03:19 PM | 4 Likes Like |Link to Comment
  • Retirement Strategy: Dividend Income Investing And The Distribution Phase [View article]
    David--I'm still a good 35 years from retirement, but currently not drawing a large salary so I took the opportunity to convert a big chunk of my IRA to my Roth in 2012 and 2013. In retrospect, I wish I had converted a small chunk, since I was rather taken aback at how large the tax hit was.

    going forward, I intend to convert a much smaller chunk every year--I don't believe there are any minimums on how much you can convert at a time.

    I realize our situations may be different, but to anyone who is putting off converting their Trad IRA to Roth IRA to the last minute--it may be best to spread the tax pain over as many years as possible.
    May 19, 2014. 01:53 PM | Likes Like |Link to Comment
  • 10 Stocks To Buy Now: Be Cautious - But Don't Panic: Part 2 [View article]
    maybe--I might add BAX to that list as well. and AMGN as Chuck mentioned above. but to be totally honest, I have not added to my BP, AMGN, or BAX yet even though they're undervalued--I do so hate averaging up on positions!
    May 19, 2014. 11:58 AM | 1 Like Like |Link to Comment
  • Are Any High Quality Companies Decently Valued At The Moment? [View article]
    miss--I tend to stick a bit more to my value guns with utilities since they're slow growers, so have not purchased WEC yet. Morningstar has a fair value of 38 assigned to WEC, so it would take a substantial drop to hit that. I suspect your target of $42 is about right on the money. It seems to me that a lot of utilities are pulling back due to overvaluation and simple sector rotation. If you look back at the past couple of years, utilities seem to correct about 10-15% every summer after a big run-up. So I have limit orders on AEP around 47.5 and SCG/XEL, which would be fairly to slightly undervalued if they correct another 7-8%.

    the only reason I own NEE is because of a bizarre stroke of luck which occurred about a year ago. NEE and AEP flash crashed and then immediately recovered, but I had an old limit order from Nov 2012 which triggered and Fidelity subsequently honored. So a good (albeit rare) lesson learned--no harm in keeping old limit buy orders sitting around if you don't mind owning the stock!
    May 19, 2014. 11:49 AM | 3 Likes Like |Link to Comment
  • How I 'Played' My Microsoft Shares And What I'm Doing With Them [View article]
    Canadian--thanks for another great article!

    what do you think you will do with your MSFT stock if it becomes overvalued again? hold, trim, sell?

    It seems that throughout this recent bull market, investors have been rewarded by continuing to hold onto overvalued stocks. I know that I almost never sell a stock these days, even if I know it's overvalued. but i'm pretty sure at some point however, that kind of thinking won't be rewarded.
    May 4, 2014. 10:51 PM | Likes Like |Link to Comment
  • Dividend Growth Investing And The Benefits Of Being Patient [View article]
    Part Time--While I agree with much of your article, I think your conclusion that DGI investors are much less likely to be swayed by individual stock volatility is a rather broad generalization. while it would be nice if that were the case, it's equally as possible that DGIers get much more emotional over a 10% drop than the total return investor because the DGIer intentionally buys low beta stocks in safe sectors. having observed many DGIers squirm over TGT's drop this year, I believe that sensitivity to price volatility has everything to do with an investor's personality.

    I also think it would have been interesting if you had explored the flip side of the coin. does being a DG investor ever cause one to hold onto a stock too long when its price declines? it's easy to say in retrospect that APD or JNJ were solid stocks, but what about DLR, LNCO, or SDRL? are investors who own those stocks in the face of declining stock prices but high yields being too patient?
    May 4, 2014. 10:29 PM | 1 Like Like |Link to Comment