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Smarty_Pants

Smarty_Pants
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  • Dividend Growth Investing, Total Return, And Indexing: Let's Take Another Look [View article]
    "As one buys more and more companies or adds index funds one is allowing more and more mediocrity into their portfolio. Not all companies can be or will be successful so I really don't see the point in owning the 3rd and 4th stringers." - conkjc

    One of the underlying assumptions of MPT and the Total Return types appears to be the idea that it isn't possible to distinguish between very well run companies and the 3rd and 4th stringers, so they buy them all thinking they will get the good ones into the pile that way. (At least that's what I glean from reading numerous interactions with them.)

    According to their way of thinking, DGI can't be possible because "stock picking" can't be done reliably, therefore it's not possible to discern which stocks will be 'successful' and which will be 3rd stringers. DGI violates what appears to be a key tenet of MPT / Total Return, ergo it can't be "better" than just throwing your money into an index of hundreds, or thousands, of stocks.

    Of course that's just my opinion, for what it's worth. My "stock picking" seems to be going pretty well thus far, for a DGI newbie. My portfolio has a 10.1+% CAGR in price and a current yield over 5.5% since starting DGI in early 2011. SPY has a CAGR over that same span of 15.1%, so I'm nosing out the index by 0.5% CAGR with a 30 stock portfolio beta under 0.70 (and a significant portion of my dividends have not been reinvested).

    I can live with that.
    Nov 28, 2014. 01:23 PM | 4 Likes Like |Link to Comment
  • Textainer: A 5.4% Yield Plus A Play On Chinese Growth [View article]
    TGH is a good, though volatile, holding for the long term. I picked my shares up in 2012 at $31. Current YOC is ~6%. They carry a lot of debt, but nearly all of their containers are leased very profitably on long term contracts.

    Wait for a good dip in the share price and get some. The high volatility results in the occasional "offer you can't refuse" kind of prices. The share prices dip significantly on any news of economic slow-downs, but their long term leases keep the money rolling in anyway. The company is well run, IMHO.
    Nov 28, 2014. 12:37 PM | 4 Likes Like |Link to Comment
  • Altria: The Best Is Yet To Come [View article]
    MO was the first dividend growth stock I bought when I started converting to DGI back in early 2011. My shares cost me $24.10 and are up about 104% today, with a YOC of 8.6%.

    Not bad after holding nearly 4 years. MO will always have a place in my portfolio, barring a complete market meltdown. Under those circumstances, MO would probably be the last stock I sell. :-)
    Nov 26, 2014. 08:19 AM | 1 Like Like |Link to Comment
  • Dividend Growth Investing, Total Return, And Indexing: Let's Take Another Look [View article]
    Dave, you completely forgot to mention the one thing that makes DGI work: magic pants. <sarcasm off>

    Seriously, I'm beginning to think it's a waste of time pointing out the lameness of most anti-DGI articles any more. Those who 'get it' can see how DGI principles lead to consistent long term results. Those who don't 'get it' probably never will.
    Nov 25, 2014. 07:03 AM | 17 Likes Like |Link to Comment
  • Kinder Morgan begins test drilling on Burnaby Mountain [View news story]
    I guess you might say this is a case of people being excited about Boring (as in drilling a hole into something - in case you didn't get the intended pun).
    Nov 22, 2014. 04:41 PM | 5 Likes Like |Link to Comment
  • The CCC DiviDogs 2011 - Year 1 [View article]
    Thanks for the update Miz. Your doggies are running pretty well.

    FYI, your pooling approach has returned 12.41% CAGR since inception through 11/19/14 (slightly higher actually, since I counted 2014 as a full year when calculating it).

    ($15,967 / $10,000) ^ (1/4) = 1.1241 ==> 12.41% CAGR

    In comparison, $10,000 of January 2011 SPY is currently worth $17,561.39 for a return of 15.60% CAGR. (per longrundata)

    Still, your pooling approach generated ~6.25% income vs. SPY's ~2.25% in 2011, so for retired folk who are spending the income it appears the dogs may have been the better choice with around 6% income and 6% price growth each year, even if the SPY had slightly better CAGR.

    The 2011 - 2014 time frame was a good one for capital gains. Things might turn out somewhat differently for a period where the markets don't go straight up all the time and under those circumstances the doggies might really shine.
    Nov 22, 2014. 11:19 AM | 1 Like Like |Link to Comment
  • Kinder Morgan: Stock Nosedives, Time To Sell Out Or Buy With Both Hands? [View article]
    "most, if not all, dividends from KMI are expected to be a return of capital and thus tax deferred" - Lookingforincome

    My brokerage statements show all of KMI's distributions as qualified dividends.
    Nov 22, 2014. 10:26 AM | Likes Like |Link to Comment
  • Kinder Morgan: Stock Nosedives, Time To Sell Out Or Buy With Both Hands? [View article]
    Given that KMI was trading around $30 back in April and only took that "nosedive" down to just under $40, I'd call today's drop a non-event.

    I didn't sell at $30 and have no plans to sell now. Long KMI, expecting higher income and higher prices in the long term.
    Nov 20, 2014. 06:42 PM | 14 Likes Like |Link to Comment
  • REITs Are Prime-Time Players, Baby! [View article]
    I suppose the classification changes being considered would make REITs the

    Diaper Dandies

    of the Dow Jones classification world.
    Nov 14, 2014. 11:01 AM | 2 Likes Like |Link to Comment
  • Dividend Growth Investing IS Total Return Investing [View article]
    "I think the transition will be quite interesting and quite telling. If BRK can not continue achieving results similar to what it has done the past ... years ..." - PTI

    Additionally, what if BRK performance goes into reverse soon after the transition? How many long term investors will hold on until they have lost 60% of the value of the holdings they built over a life time of trusting WB? (not saying this will happen, just doing a thought experiment)

    How do the faithful know when to exit BRK once WB is no longer at the helm and performance starts lagging? Granted, they might already have enough to live comfortably by selling BRK now and buying an income fund of some type, but old habits die hard and I imagine many will continue to hold BRK (since that always worked in the past) far longer than might be prudent.

    I wouldn't expect that will be the case, but you can't always be certain of what the future holds.
    Nov 13, 2014. 08:06 AM | 2 Likes Like |Link to Comment
  • Dividend Growth Strategy: Take The Beaten Path Or Road Less Traveled? [View article]
    "So purely in the context of income generation (I'm just thinking out loud here) does it really make sense to buy a DIS, V, or other 1% yielder?" - Grasshopper529

    I guess you could say "It depends." DGI can take many, and varied, forms. You can find old articles and comment streams on SA which discuss various ways to structure positions in a DGI portfolio: Equal dollar amounts, equal income, etc.

    If someone decides to use an equal income approach, then a low yielding high DGR stock can serve to boost the total DGR of the portfolio by putting more money into those stocks, for instance you would have roughly 5x the money in DIS stock as you would in T. Naturally this would reduce overall income, but you would be focussing your money on the faster growers.

    That's not an approach for everyone since it requires a large portfolio to generate sufficient income in the present, but if you have that amount of money at hand, it can help boost performance in the longer term.

    Personally, I use a mix-n-match approach of nearly equally weighted positions to generate income now. When opportunity arises I might trim/sell overvalued stocks to add undervalued ones while boosting my income.

    http://seekingalpha.co...

    It all depends on your individual goals. Fortunately there are quite a few sharp people in SA's DGI cadre to use as sounding boards before investing your first penny.

    Asking questions is one of the best ways to shorten the learning curve we all climb when we decide to use a DGI approach. Keep thinking, it pays off in the end. :-)
    Nov 8, 2014. 12:50 PM | 3 Likes Like |Link to Comment
  • The New Nifty Fifty, Part 2: Dividend Growth Investing's Greatest Hits [View article]
    "From an outsiders view, this strategy is just stock-picking, like most people do, albeit from a pool of stocks with limited short term up and down side.. Which is also fine, but not necessarily superior to other methods." - dnorm1234

    Personally I find the DGI sort of stock-picking produces better performance over time than any ETF-picking strategy I have ever considered. But that's just me.

    If you're going to invest, ya gotta 'pick' something to put your money in. I've yet to see anyone explain how picking an ETF or fund of many hundreds or thousands of stocks produces consistently superior performance to picking 30 to 50 quality DGI stocks with historic records of outperforming over long time frames and that are bought at a price which represents a value for the enterprise.

    Once you get past about 50 holdings the ETF's added benefit of "diversification" becomes borderline meaningless and the next several hundred stocks have a difficult time overcoming the added expenses and fees inherent with the ETF or fund, not to mention the fact that very few ETFs or funds make any serious attempt to restrict their purchases to "undervalued" issues. Most seem to pour their money into the stocks they hold without considering the current price at all.

    Based on what I keep hearing, folks could do REALLY well if they could only buy an ETF that held everything BUT the normal DGI-type stock, because somehow every ETF worth considering seems to own them as a significant portion of their holdings. But I suppose that's just a coincidence...
    Nov 5, 2014. 07:00 PM | 6 Likes Like |Link to Comment
  • Generational Market Shift [View instapost]
    Norman I am with you on the gradual move to hard(er) assets. The banks are printing so much money that the price of actual things will have to move upward to match the money supply.

    I am in the process of moving money from my mREITS to LNCO. The recent drop in oil & gas related issues combining with the anticipated rising interest rate environment makes that kind of move beneficial in the medium to long term, I feel.

    I've been holding my mREITS so far just to deploy the high income into other assets. Now that LNCO offers a yield nearly equal, but backed by the production of tangible products like oil and gas, I feel concentrating in LNCO is a gamble that will pay off one day given the current 12+% yield.

    I still get my income and have traded the possible "interest rate downside" for a "higher energy prices" upside. Win-win-win!
    Nov 2, 2014. 05:19 PM | 2 Likes Like |Link to Comment
  • 11.4% Distribution Linn Energy Completed Its Needed 1031 Exchange Trades To Match The Devon Buy [View article]
    "My trade is to dump some of my income from mREIT's and Utilities, and move it into LNCO where the rate is even higher and the capital appreciation a very strong likelihood, whereas there's none in the mREIT's and Utilities, at these prices." - 1sinedo

    I like the idea of swapping mREITs for LNCO, but the utilities I own are proven winners over the long run so I'll continue to hold those. Thanks for suggesting the idea. Trading a "rising interest environment rate is bad" holding for one that is beaten down and has a good plan for continuing growth in the future seems like a plus, especially if the yields are comparable.
    Nov 2, 2014. 02:33 PM | 1 Like Like |Link to Comment
  • 11.4% Distribution Linn Energy Completed Its Needed 1031 Exchange Trades To Match The Devon Buy [View article]
    "$40MM can be the difference between a DCR above or below 1.0x." - rlp2451

    The charts linked above by Matt-Man show a savings of $300 to $400 million in capital run rate after the swap (Chart 6).

    Even if they spend 80% of that savings on other operating / development costs the remainder of savings will more than offset the ~$40 million in lower revenues. It appears they have a lot of wiggle room to either maintain, or increase, the distribution depending on what other operational use they make of the cap-ex savings.

    Also based on current prices and hedging (Chart 14) it appears that the change in revenue will be based on oil prices of:

    2015 $93.02 (93% hedged @ $94, 7% @ $80) ==> -$19.9 million
    2016 $92.32 (88% hedged @ $94, 12% @ $80) ==> -$24.6 million
    2017 $89.38 (67% hedged @ $94, 33% @ $80) ==> -$44.2 million

    That assumes no changes in hedging or the current price of oil. And for what it's worth, the price of oil has been as high as $105 in the past 3 years, so the revenue might not drop that much should the price revert back to the mean over that time frame.

    It seems to me the loss in revenue is dwarfed by the savings in cap-ex.
    Nov 2, 2014. 01:30 PM | 1 Like Like |Link to Comment
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