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charliezap

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  • Realty Income Corp. Proves Monthly Dividends Amplify Returns [View article]
    Pen,

    I see it differently. They first have to accumulate the cash to pay the divi. So the dividend payment is an end of period thing. If they pay quarterly, they will hold the cash, on average, for longer than if they pay monthly -- or they can maintain lower balances on their line of credit, saving on interest costs. So paying monthly reduces FFO -- and thereby also reduces aggregate dividend payments.
    Apr 26, 2015. 02:24 PM | Likes Like |Link to Comment
  • Realty Income Corp. Proves Monthly Dividends Amplify Returns [View article]
    Southgent, I appreciate your contribution. I also don't understand the relevence of the Einstein "quote" in the article, since it is not compound interest that makes the difference in this author's analysis. What makes a slight difference is that in a rising market you will get new shares cheaper if you buy monthly rather than quarterly. Maybe this will work in a DRIP plan. I doubt if it works if you have to pay commissions.

    On the company side there is probably extra expense to paying dividends monthly, at least in mailing costs if sending out paper checks. Or maybe they just hit a button on a computer and the funds are transferred electronically to brokerage accounts. And what about opportunity costs from having lower average balances if the funds go out monthly?
    Apr 24, 2015. 02:13 PM | Likes Like |Link to Comment
  • Feed Your Family With These 4 Monthly Paying REITs [View article]
    Yup. Back in the 1970's, the Chase Manhattan Mortgage and Realty Trust (CMART) was the biggest mREIT of them all. The Chase bank sent the riskier loan applications over to the REIT. CMART made lots of land and development loans in places like Hilton Head, Puerto Rico, and all over Florida. Then real estate tanked in the mid 1970's. The developers' cash flow dried up and they walked on the loans. CMART filed for bankruptcy in 1979, much to the embarrassment of the bank.

    Higher leverage coupled with the unpredictability of interest rates generally makes mREITs riskier than eREITs. A number of mREITs failed in the 2008 recession.
    Apr 24, 2015. 12:25 AM | 2 Likes Like |Link to Comment
  • Feed Your Family With These 4 Monthly Paying REITs [View article]
    """I often urge the quarterly payers to move to a MONTHLY pay model. It really doesn't cost the REIT anything to pay monthly and I think the benefits for retail investors trump the minimal change-over expense."""

    Brad, I'm scratching my head, trying to figure the benefits of getting dividends monthly vs quarterly. I made a comment yesterday, to the effect that the extra $$$ from monthly compounding vs quarterly wouldn't even be enough to get you a ride on a New York City bus. What was true yesterday is still true today!

    http://seekingalpha.co...
    Apr 23, 2015. 11:48 PM | 1 Like Like |Link to Comment
  • Oil's Plunge: Cause For Concern Or Celebration? [View article]
    gggl, if you want some credibility, tell us about your credentials. ("gggl has yet to provide a bio")

    Meanwhile, I'll go along with the mainstream economists who forecast that the oil price cuts will add to GDP growth in 2015, adding perhaps 1 percentage point on to GDP growth. Oil jobs lost will impact about 10 states -- 40 states will gain due to the "tax cut" effect of lower gasoline prices. The oil jobs are being lost now, but the job gains from increased consumer spending will come later. We should see the impact during the second half of this year.
    Apr 23, 2015. 12:08 PM | Likes Like |Link to Comment
  • Oil's Plunge: Cause For Concern Or Celebration? [View article]
    Of course, the article is plain wrong. Oil is priced in $$$$, so whether the oil comes from Saudi, or from Timbuktu, it does not get cheaper when the $$$$ goes up. Frisbee is also plain wrong, its not "panic".

    Its just good old fashioned supply and demand. US production has risen by 80% (3 million barrels per day) in the past 7 years, and that oil had to go somewhere. Since it could not be exported (except by converting it to products) it went into US refineries, backing out imports from Venezuela, Mexico, Nigeria, and Saudi Arabia. Supply to world markets rose.

    http://1.usa.gov/zWEk2c

    Meanwhile, demand in developed markets flattened out (the US, Europe, and Japan). Only in the emerging markets, primarily China and India, did demand keep rising. But China and India could not absorb all of the new supply and crude stocks kept rising.

    http://1.usa.gov/1yUv896
    Apr 22, 2015. 10:51 PM | 1 Like Like |Link to Comment
  • Omega Healthcare Puts The Purr In Performance [View article]
    You could buy 100 shares of OHI today for $3,840. But to keep it simple, lets say you put $3,840 in the bank at a fixed 5.5% (current yield on OHI) for 5 years. (Assumes interest added at the end of the period.)

    With monthly compounding your balance at the end of 5 years will be $ 5,046.02.

    With quarterly compounding your balance at the end of 5 years will be $5,052.30.

    The difference is $6.28. Barely enough for 1 "meal" at McDonalds.
    Apr 22, 2015. 03:40 PM | 2 Likes Like |Link to Comment
  • Omega Healthcare Puts The Purr In Performance [View article]
    It is hard to imagine why some people get excited about monthly dividends. The annual difference that monthly compounding produces versus quarterly is peanuts.

    Say you invest $10,000 in a stock paying 5% ($500 annually). With monthly compounding, including reinvestment, but no commissions, the value of your stock at year end (assuming no price change) will be $10,511.62. With quarterly compounding you get to $10,509.45. The difference is $2.17, not even enough to get you a ride on a New York City bus ($2.75), unless you are a senior ($1.35).

    So don't spend it all at once!
    Apr 22, 2015. 02:30 PM | 4 Likes Like |Link to Comment
  • Senior Housing Properties Trust: Price Appreciation Needs To Improve For This 7% Yielder [View article]
    SNH went ex div today ($0.39), which explains today's drop in price. Technical indicators such as you quote are more appropriate for momentum stocks. SNH, being one of the few healthcare REITs that does not trade at a large premium to NAV is more of a value stock. FWIW, the technical indicators that I watch, RSI and MACD, are both indicative of a downtrend for both SNH and HCP. But I do not see myself selling SNH right now. For one thing, there appears to be support in the $20.70 - $21.00 range. Plus, the lower it goes, the greater the discount to NAV. For another thing, SNH pays a higher dividend than HCP and other healthcare REITs (7.4%). Have you factored that into account?
    Apr 22, 2015. 02:05 PM | Likes Like |Link to Comment
  • Bloomberg: BP seeking bids for $2B in U.S. pipeline operations [View news story]
    """I know few agree with me . . """

    Well, I certainly don't. Exxon already owns pipelines, some of which they probably wish they didn't own. (Google "Exxon pipeline oil spills".) But pipelines are low return assets, best financed though leveraged structures such as MLPs. (See my comment above.) Major oil companies are spinning off pipelines into MLPs -- they prefer to allocate their capital to traditionally more profitable upstream activities. Exxon will only invest in pipelines that serve its own operations, not pipelines for pipelines' sake!
    Apr 21, 2015. 11:29 PM | 1 Like Like |Link to Comment
  • Bloomberg: BP seeking bids for $2B in U.S. pipeline operations [View news story]
    I would not see the sale of pipelines and terminals as "pulling out of the USA". Pipelines and terminals are low return assets that can be financed more efficiently through a MLP than through BP's corporate structure. That is why some companies have spun off their pipeline assets into MLP's, e.g., Phillips 66 Partners, and Valero Partners. BP still has a big stake in the USA, especially in deepwater E&P.
    Apr 21, 2015. 10:17 PM | Likes Like |Link to Comment
  • BP's Dudley does not foresee wave of energy mergers, at least not yet [View news story]
    XOM buying BP just won't happen. Period. Would have to overcome both the UK and the US govts. Would create an unmanageable monster rife with culture clashes. I also thank that it is simplistic to think that XOM would have an easier time in Louisiana courts -- uncertain spill liabilities would remain an issue. Under previous CEO, Lee Raymond, XOM became an ultra-cautious company in its investment philosophy, setting a high rate of return hurdle, using cautious assumptions about future crude prices, and spending more to buy back than for new oil and gas exploration. Since buying XTO, XOM has been criticized for mistiming the acquisition, and is still smarting from that criticism. Fuggedaboutit!
    Apr 21, 2015. 08:29 PM | Likes Like |Link to Comment
  • My Tactical Approach To Healthcare REIT Investing [View article]
    A good review. And I can see that looking at longer term historic trends can reinforce our impressions of the "character" of each of these REITs. But what is the point of short term comparisons such as 2-year dividend growth and 1-year total return?
    Apr 21, 2015. 09:31 AM | 1 Like Like |Link to Comment
  • REITs: The 90% Rule Isn't That Big A Deal [View article]
    Bruce, I was not really discussing "AFFO or DCF or FCF or EBITDA or any other metric used as proxy for some important corporate financial status." (Your 2 links are about EBITDA.) My comment was about FFO (and not "normalized FFO, "core FFO", or "FFO, as adjusted"). Most companies that report FFO follow the NAREIT definition (I am not specifically aware of any that don't), and they provide a reconciliation between FFO and GAAP net income.

    On FFO vs Net OpCF, another problem with Net OpCF is that it is strictly a historic number (do I have to repeat the old saw about "driving by looking in the rear view mirror?) -- companies normally issue no guidance on Net OpCF, and analysts don't normally bother with forecasting it. On the other hand, REIT companies generally do provide guidance on FFO, and REIT analysts include it in their stock reports.

    Let's agree that we have different approaches (there's lots of ways to skin a cat). Mine is more based on FFO. You put weight on Net OpCF
    Apr 19, 2015. 04:02 PM | Likes Like |Link to Comment
  • REITs: FFO And AFFO And Other Fun Acronyms [View article]
    Southgent, I would say: Beware of overanalysis. And also: Beware of company issued guidance on AFFO adjustments. As they say, "adjustments" are in the eye of the beholder. (I.e., the adjustments depend on who is doing the adjusting.)

    Looking at Citi's tabulations on the 150 odd REITs that it tracks statistically, it is evident that almost all REITs get negative adjustments. (The Citi tabulation is for 2015 estimated FFO and AFFO.) The adjustments are lowest for triple net REITs and for the healthcare sector, which does a lot of triple net leases. Only a few REITs get positive adjustments, and very small ones at that. NNN gets a $0.06 adjustment. For O, the adjustment is ($0.01). (I.e., negative.) For LXP, the adjustment is ($0.24).

    If you would like a copy of Citi's latest weekly, send me message with your email address.
    Apr 18, 2015. 02:34 PM | Likes Like |Link to Comment
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