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  • My 4% Dividend Yield Portfolio: A Postmortem After One Year [View article]
    "Since ... producers are hurt by lower prices, its possible that the producers will reduce volume." - PendragonY

    The producers have bills to pay and must also pay the cost of building out their infrastructure, including payments on any remaining debt used for construction. If they reduce production they have less revenue (and possibly larger losses).

    Look at Chevron's Dec 2014 startup of their Jack/St. Malo deepwater platform in the Gulf. It cost CVX $8 Billion to build the rig and start pumping.

    "This week of extreme oil price volatility might not seem like an auspicious time for Chevron to open the spigots on its $8 billion Jack/St. Malo production platform in the deepwater Gulf of Mexico. But when something this big and expensive is ready to start paying back its construction costs, there’s no reason to wait." - Forbes article - Dec 2014

    More recently ...

    [Moody's] "forecasts that giants including ... Chevron Corp. ... will record reductions in cash flow of as much as 20 percent this year with only a modest recovery in 2016. The shrinking base of cash flow has led companies to cut back on expenses and pare drilling by an average of about 10 percent thus far ... Longer-term projects that are already underway are likely to be completed, though integrated companies are unlikely to commit to new ones until prices rebound, the firm said." - Sept 2015

    My reading on this is that current production will continue and savings will primarily come from exploration (drilling) cuts, delaying new construction projects, and workforce reductions. The KNOP Q3 lease rates reflect that at 99.6% despite the low prices for oil.

    I understand others may interpret things differently so we might have to agree to disagree, but those differences of opinion are what make a market.

    Thanks for offering your read on things.
    Nov 28, 2015. 11:04 AM | Likes Like |Link to Comment
  • Investing For Retirement: A Different Strategy For The $7 Million Portfolio [View article]
    "The future value multiplier Bruce is using is a fairly quick 1.05^19 unless I miss my guess." - ColoradoWealthManageme...

    1.05^20 = 2.653

    I'll point out that dgsman indicated only that his stocks yielded 5%. The formula above would be (approximately) correct if all the dividends were reinvested and there were NO dividend growth at all.

    Now if you make some simple dividend growth assumptions too, like 3% per year, then the total value will compound faster, at approximately the sum of the yield + DG rate (5% yield + 3% DG rate ~= 8% compounding).

    1.08^20 = 4.66

    So under those conditions (5% yield and 3% Dividend Growth), the end total value would be approximately:

    $600,000 * 4.66 = $2.79 million.

    That's a tad bit better than $1.6 million, and not an unreasonable projection. You would get the same end value estimate for a 4% yield and a 4% DG rate.

    Of course reality may differ somewhat from the assumed projections, but as a back of the envelope calculation that's not much of a stretch.
    Nov 28, 2015. 04:29 AM | 1 Like Like |Link to Comment
  • Alimentation Couche-Tard In A Bubble? Not A Chance [View article]
    Go Couche-Tard!!

    They must've figured something out to have such good margins in the convenience store space.
    Nov 27, 2015. 11:06 PM | Likes Like |Link to Comment
  • Is There Anything For MLP Investors To Be Thankful For This Year? [View article]
    9) Some great MLP investments can be picked up at bargain basement prices.
    Nov 27, 2015. 10:46 AM | 2 Likes Like |Link to Comment
  • My 4% Dividend Yield Portfolio: A Postmortem After One Year [View article]
    "GLOP is in LNG transport and should be okay as well. ... KNOP however runs shuttle tankers between off-shore production facilities and on-shore refineries. This strikes me as being more exposed than the other two as if the producers cut production in response to price drops, KNOP will take it in the shorts, although the might do okay if they have long term contracts in place." - PendragonY


    Both KNOP and GLOP are in the business of leasing the tankers, not shipping the product (average lease duration ~5.8 years for KNOP, ~8.3+ years for GLOP). Both lease to large multi-national customers who don't get revenue unless their product ships. While anything is possible, I believe it is unlikely that their customers would shut down operations after investing billions to stand it up. Their CapEx is already a sunk cost, the operating gross profit going forward from those wells / terminals is positive and necessary to continue.

    Besides, lower prices generally leads to higher demand, right? More demand = more tanker use.

    GLOP utilization - Time charters generate revenue under daily rates regardless of volume or production levels, distribution coverage 1.37x

    KNOP utilization - 99.6% of fleet, distribution coverage 1.07x
    Nov 27, 2015. 10:35 AM | Likes Like |Link to Comment
  • My 4% Dividend Yield Portfolio: A Postmortem After One Year [View article]
    "Regarding energy stocks, I feel less confident at this point to add to it. I can't really see the oil price recover in a significant fashion and therefore I don't want to get to a situation of companies that are stressed with cash.
    It might be the great time to buy energy but at this point I would look for the "sleep good at night" candidates." - Ron Honig

    You might find some interesting candidates in the companies which provide support services to the energy industry. In general, they have stable, consistent revenue that is not dependent on the price of oil or natural gas. Some of these businesses have severely been beaten down along with the energy stocks and have high current yields as a result. Naturally you should put in sufficient due diligence to convince yourself that the business is economically sound before buying any shares.

    I have recently picked up shares in KNOP, GLOP, and USAC (all MLPs) which fit this model. They each provide a necessary service to their energy industry (shipping tankers and/or compression equipment) on long term contracts, with good distribution coverage. They also have good prospects for continued growth over the next few years.

    Their share prices are rather volatile, but the underlying businesses appear very stable. You might be able to get shares during one of their dips and give yourself an extra margin for error on the value front.

    I hope that gives you another option to consider. As others have commented, it seems one of the better DGI strategies is to buy stable and growing stocks when they are out of favor, then hold on.

    Just be sure you are sufficiently convinced of the "stable and growing" aspect of the equation before jumping in.
    Nov 27, 2015. 08:51 AM | Likes Like |Link to Comment
  • Can You Define Your Investing Philosophy? [View article]
    One has to wonder if the AAII Journal is aware of "Magic Pants" as an Investing Philosophy. ;-)
    Nov 25, 2015. 07:47 AM | 2 Likes Like |Link to Comment
  • Early Black Friday For MLPs [View article]
    Indeed. Pieces of essential, stable, and profitable businesses are available at bargain basement prices. Eventually the prices will return to more rational levels and those who buy now will be rewarded. Meanwhile, many of these MLPs are throwing off significant distributions.

    Long ARLP, GLOP, KNOP, and USAC. Holding on tight for now and reinvesting the outsized cash flow right back into more units.
    Nov 23, 2015. 08:11 AM | 1 Like Like |Link to Comment
  • Gold Heads To The Bottom [View article]
    "how much downside do you think GDX and GDXJ would have if gold has another 10-20% downside?" - chewy790

    That's a good question. It's very likely that even profitable PM miners will decline if gold goes lower. How much is anyone's guess.

    However, the author suggests that any future low is likely to be a near term event followed by higher prices (might be right, or not, I don't know) and that thinking about building a position in GLD now might be reasonable.

    "However, it's most likely that the bottom is already close. So investors need to focus on gradual formation of long-term long GLD positions." - Dmitry Demidenko

    My comment only meant to point out that IF one felt the author was correct regarding the timing of gold prices, then building a position in profitable miners, or PM mining ETFs, might be a better option than GLD.

    I apologize if my prior post was insufficiently clear.
    Nov 22, 2015. 09:49 AM | Likes Like |Link to Comment
  • Gold Heads To The Bottom [View article]
    If you're going to position yourself for an eventual rebound in gold prices you should be looking for shares in beaten down, profitable mining stocks, not the GLD ETF.

    Look into the GDX or GDXJ ETFs instead, or perhaps evaluate the individual stocks that those ETFs hold to find a few that are still profitable in the era of low gold prices. If you feel that gold prices will turn back up those will be the mining stocks that will benefit the most as a result, and their prices should move up faster than gold's price does.

    GDX Holdings:

    GDXJ Holdings:
    Nov 21, 2015. 09:39 AM | 1 Like Like |Link to Comment
  • GasLog Partners - Good Time To Build A Position [View article]
    "GLOP is an absolutely no brainer from a leverage point of view. They borrow at <3.4% and pay out >10%. Repeat, please. This is the best MLP company, bar none." - Biological

    Another MLP with similar circumstances is KNOP. A shipping lease MLP in the oil transport space.
    Nov 2, 2015. 10:15 AM | Likes Like |Link to Comment
  • GasLog Partners - Good Time To Build A Position [View article]
    I built my position in GLOP when it was trading at $17 a few weeks ago. With a yield of 10.2%+ and the likelihood of a growing distribution, I'm pretty happy to DRIP into more shares while I watch the company grow.
    Oct 21, 2015. 05:06 AM | 5 Likes Like |Link to Comment
  • Dividend Growth Portfolio - Fall Checkup And Semi-Annual Review [View article]
    Great job DVK.

    You forgot to mention that your Sharpe Ratio was more than 10% higher than SPY's Sharpe Ratio back in May of 2015. I haven't updated the calculations since, but I'd guess your Sharpe Ratio is still higher. Your risk adjusted return was/is beating "the market" handily.

    DGI nay-say'ers must be looking around for various seasonings to put on the crow they'll need to eat. (MKC comes to mind.)

    Nothing quite makes a point like a good example. Bravo!
    Oct 13, 2015. 10:59 PM | 10 Likes Like |Link to Comment
  • The Coal Industry Is Set To Continue Its Downward Spiral [View article]
    "But most switch by using a GT generator with the exhaust used to run the old coal steam generators as run 60% eff now." - jerrydd

    Sure, combined cycle plants can be an efficient way to replace aging and inefficient coal plants. That has already happened where it makes sense. Saying it's going to happen a lot more because of the EPA regulation changes is debatable.

    It takes roughly 3 years to make that change happen, once you've figured out that it makes sense economically. It's a miniscule fraction of the current coal load that will benefit under current conditions.

    The US Energy Information Agency estimates that 35% of electricity generation will be coal based in 2040. Not much of a change from today's levels. See the chart in the above-linked article.

    Somebody will have to mine that coal.
    Oct 8, 2015. 03:25 PM | Likes Like |Link to Comment
  • Shipping and tankers make broad move higher [View news story]
    "I thought GLOP was a LNG carrier, not a crude tanker play." - jzwmnb01

    GLOP owns and leases the ships to the carriers. They are not in the business of transporting LNG. They buy or build specialized ships and lease them out on long term contracts. The revenue stream is much more steady than it would be for a carrier.
    Oct 6, 2015. 07:27 PM | 1 Like Like |Link to Comment