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  • Dividend Champions For April 2014 [View article]
    I have to wonder how many people are on the Standard & Poor's staff keeping track of the Aristocrats vs. David Fish updating the larger and faster growing CCC list.

    From the looks of it David Fish is a Champion in his own right.

    Again, many repeated thanks for your efforts to enlighten the investing world David.
    Apr 1, 2014. 08:34 AM | 33 Likes Like |Link to Comment
  • We're Living Through the Best of Times [View article]
    "My argument will be, when I am with them in Dallas in December at their conference, "Where are we going to get business-investment spending when banks aren't lending and capacity utilization is at an all-time low?""

    It's called SAVINGS. We won't be seeing sizeable amounts of it for quite some time as the public needs to pay down their personal debt first, as the article notes.

    Which leads to:
    "Lending to small business, the real engine of job creation, is sadly decreasing each month."

    At what point in recent history did growth of small business become dependent on borrowing?

    There are other options for growing your business, like using profits or selling a piece of the business to someone with savings. These are the businesses forming the backbone of the economy. Profitable and debt free. Any business which REQUIRES borrowing to operate is probably going to have a tough row to hoe for quite some time.

    "The psyche of the American consumer has been permanently seared. Consumption and savings habits are being changed as I write."

    Or stated another way, 'sanity returns'.

    "I can't imagine these people will recklessly monetize US debt."

    And thus, the author undermines his own basis of authority. Did you ever imagine that they would run a $1.42 Trillion annual Federal deficit at any time before 2007 with an estimated additional $7.6 Trillion in deficits to follow over the next decade? Probably not.

    "even so, the world will be better, far better, in 20 years, with far more opportunities than today."

    I'll bet Roman Emperor Arcadius thought along similar lines in 390 AD., a mere 20 years before the Visigoths sacked Rome in 410 AD. After that things were so 'good' that the next 1100 years (ie. the Middle Ages) are widely known for their improved standard of living compared to the Romans (NOT).

    Read history. Whenever the ruling class abandons equality before the law and respect for individual rights in order to sustain their rule, you can bet that it won't be long before society's standard of living starts slumping.

    The last decade has seen America's rule of law dismantled piece by piece. Until that fact is reversed, the decline will continue.
    Oct 25, 2009. 02:52 PM | 26 Likes Like |Link to Comment
  • Frothy Market, Impending Correction - What's A Dividend Growth Investor To Do? [View article]
    "I do give credit (to) ... SA for at least beginning to create a mechanism by which authors and articles can be rated along the lines of "how did it turn out?". The current method does not work well, IMO, for dividend growth investing, and it may not work for any kind of long-term investing. But it's a start." - DVK

    I would not trade the DG supportive forum that SA provides here for all the short term bragging rights in the world. Let them compete to find "the One" trade that beat everyone else over the past year. Give an award, give a cash prize, hold a parade, whatever.

    When the next 30% market correction comes along the DG folks will be buying future growing income streams at a discount, while all the award winners are giving back those one-time wonder gains and speculating which will be the next 'Big Thing' to buy for the following year.

    The Dividend Growth participants here on SA have literally changed the way I look at the stock market (and for the better - much better). The value to me of having access to the many years of freely shared experience and knowledge regarding DG is far more important than being fortunate enough to pick the Moon-Shot lottery ticket stock for last year.

    I've already received my Prize, and it pays me cash money every quarter, year after year, in ever-increasing amounts.

    I haven't posted any sort of general Thank You in quite a while, but this sub-thread has reminded me of the various positive aspects I have enjoyed as a result of the many DG articles and discussions here on SA. Our Prize has been having a dedicated place to go where we can exchange and/or discuss ideas relating to DG.

    Once again, I wish to express my most sincere gratitude to everyone who participates in the SA Dividend Growth forum. It has been an immeasurable benefit to me. Thank you one and all.

    And a big Thank You to the SA staff for supporting our Zealotry. We wouldn't have been able to do it without your assistance either.
    Aug 10, 2014. 12:51 PM | 23 Likes Like |Link to Comment
  • The Great Growth Debate (Part 2): The Benefits of Dividend Growth Stock Investing [View article]
    Excellent articles Chuck (including Part I).

    I nearly posted a comment to the first article but decided to hold off until I had read the second, and I was glad to see you discussed the matter I was going to post in the second article.

    Specifically I am glad to see that you included the part that risk takes in making investment decisions. It is an often overlooked factor which can make or break any grand plan one might devise.

    I have only recently come to 'see the light' regarding DG investing. For a great many years I have been doing my best at making growth stocks work and the majority of my investment funds are still in what I consider to be growth stocks while I mix in dividend growers.

    That said, I believe it cannot be repeated often enough the major role that risk plays in long term success in the market.

    Your articles show that a great growth or high-growth stock will easily outperform a dividend grower, but making that case is a lot easier in hindsight. For every success there are bound to be a few failures where growth stocks with good prospects implode and put a big dent in your account balance or just sit there and go nowhere for years on end. Relying on a 'buy low - sell high" approach requires that you make a second decision regarding when to sell.

    The only way to dilute that risk is to limit the proportion of your account dedicated to one growth stock so that its risk of failure won't send you back to square one.

    That risk is much lower for a good dividend growth stock as most have decades of stable operations behind them. An investor will probably be comfortable enough to put a large piece of their portfolio in a single DG stock knowing that the odds of complete failure are slim while the odds of continued success are good.

    One could argue that the lower risk (or higher certainty of success) of dividend growth stocks may be one of the most significant reasons why the average investor is likely to attain their retirement goals using that approach instead of via a pure growth stock approach.

    It would be interesting to see how relative performance of growth and dividend growth portfolios fare when one accounts for the necessary diversification in a growth portfolio and the fact that only a few growth stocks will actually prove to be of the moonshot variety while others will crash and burn.

    Suppose we postulate two portfolios of 20 stocks for each approach and (for this exercise) prohibit active management.

    The growth portfolio will likely wind up with one 25%/year moonshot, three 10%/year 'also-rans', six 5%/year growers, seven no-growers, and three "lost it all" clunkers.

    In contrast the DG portfolio will be far more likely to contain 19 or 20 10%/year growers if dividends are reinvested.

    Of course in the real world one would be monitoring and replacing laggard growth stocks, so such a comparison is only an approximation.

    The DG portfolio will also require a lot less work to be successful over a 30 year span as the constant rotation between growth stocks is less necessary.
    Mar 27, 2011. 12:08 PM | 23 Likes Like |Link to Comment
  • 2 Key Tests For The True Dividend Growth Investor [View article]
    A $2,000,000 portfolio will throw off roughly $80,000 annually (pre-tax). After a 20% dividend tax you are left with $64,000, or $5,300+ per month of after tax income, assuming no dividend cuts. I can live on less than that, so I can probably save about $2,000 per month out of that income and put it to work via the purchase of more DG stocks.

    When my DG portfolio gets schwacked down to $800,000 it will be yielding ~10%. How can I fail to get excited about putting my new savings to work at a 10% yield?

    After two years of this dividend reinvestment at 10% yield my income would increase by ~$200 per month simply from those reinvested dividends (ignoring any dividend increases). 10% of $24,000 savings = $2,400 of divvies annually = $200 per month. Add on the dividend increases of ~5% annually and you're adding another ~$700 per month increase after two years.

    Two years into the market meltdown, my pre-tax income should have increased by roughly 13.5% to around $72,600 annually, after taxes.

    I don't know about most folks, but my last pay raise at work was around a 3% increase. I don't have a significant expectation of panicking when my dividend income is increasing by more than 6% a year.

    So long as I can pay all the bills without selling shares, I'm thinking it's all good.
    Aug 14, 2014. 11:06 PM | 20 Likes Like |Link to Comment
  • Beware Phantom Dividend Cuts [View article]
    "to some extent I agree with your point on targets, but those targets have been the beneficiaries of a minimum wage that has to be seen as a national embarrassment" - Left Banker

    As someone with over a decade of experience in running a small restaurant I make this suggestion:

    If you are REALLY so concerned about the incomes of workers in this kind of business, then why don't you pony up your own money and open a restaurant (where you will be free to ignore the minimum wage and pay your staff as much as you want)?

    I'm sure that when word gets out you are paying $20 - $30/hr for a line cook you will have a nearly limitless supply of applicants.

    I would also be willing to bet your restaurant will be closed within two years due to the mounting losses it generates.

    I am constantly amazed at how people with little or no experience running a small business, where many low- or unskilled workers are employed, can so flippantly claim that the base wage rates 'need' to be increased, as though the small business need not be concerned whether it makes a profit or not as a result.

    Failed businesses employ no one. Be careful when you insist that the businesses' cost must increase, as the job(s) you eliminate may be the person's who can't afford to lose it.

    Thus far I have yet to find one such adherent who is actually willing to risk their own money to rectify the problem locally. They usually ARE gung-ho to commit the money of others to the same end on a national scale however. In my experience Altruists seem to operate freely on the wallets of others, but seldom out of their own pocket.

    I often wonder also, whether these same people tip as freely with their own money as they advocate spending that of others. I'm not a wealthy tycoon, but I routinely tip 25% to 30% at restaurants if the service is passable. For really good service it's not uncommon for a 50% tip. Often the difference between that and the nominal 15% tip is $4, $5, or $10, which I don't miss in the least.

    FWIW, a good waitress can earn $15 to $20 an hour (wages + tips) in a busy restaurant, or more. Further, what I believe you would see should the minimum wage increase is that tip income would go down even more than the minimum wage goes up (since people would know that the minimum wage is 'higher' now), but there's no way to know that for certain.
    Dec 10, 2013. 03:12 PM | 20 Likes Like |Link to Comment
  • President Obama says House Speaker Boehner has decided to walk away from debt limit negotiations. Earlier today, Boehner had suggested talks would continue.  [View news story]
    "Would it not therefore be appropriate for a moderate raising of the debt ceiling to be agreed to by both sides, not as a solution to the fiscal and political issues in contention but rather to set the stage for the US electorate to decide those very fiscal and political issues? Would this not be both the honorable and practical way to proceed without prejudice to either side (and without painting the US and global economy into a corner of hell without a clear way out)?" - bob adamson


    That's what we've been doing for the past 30 years, and that's how we got into this mess in the first place. Eventually somebody's ox will be gored one way or the other.

    a) Raise debt ceiling - gov't keeps borrowing us into the hole ad nauseum. You can't fix the problem of too much debt by borrowing ever larger amounts to keep up appearances. Eventually doing so will ruin the dollar in toto.

    b) Make small cuts in spending, small tax increases, and raise the debt ceiling (aka - the middle road): This results in the same end state as a) but it might take longer and there will be fewer people with any savings left to try starting over.

    c) Leave the debt ceiling and cut spending to the level of 90% of revenues, using the remaining 10% to pay down the debt. This is the only workable long term solution. Problem is, we have to cut nearly $2 Trillion in current spending to get to that point. Who gets the axe? A lot of folks, that's who. And many of them are unionized government workers.

    We have already painted ourselves into a corner. We are now haggling over who gets cheated out of their future income and by how much.

    It's not pretty, but it's true.
    Jul 23, 2011. 12:33 AM | 19 Likes Like |Link to Comment
  • The Cheapest Way to Long-Term Income and Capital Gains [View article]
    "Veryan Allen identifies the world's best absolute return strategies and helps fiduciary investors achieve reliable portfolio performance. He has successfully managed most alpha capture styles and now researches new strategies, robust portfolio optimization and predictive analytics."

    He could, however, use a short course on effective writing.

    It may very well be that the author is the leading expert in his field, but I personally can't make heads or tails of what this article is trying to tell me. My take is that he says you should find a way to make 10% a year on your money, somehow, by shuffling it around to various hedge funds which are going to do well in the next year, but perhaps I misunderstood the semi-coherent ramblings presented.

    How this article made it into the "Income" section of SeekingAlpha is beyond me. Was there a point the author was trying to make?

    If so, I missed it completely.
    Jan 9, 2011. 12:00 PM | 19 Likes Like |Link to Comment
  • Did Bernanke Pull a Fast One Last Night? [View article]
    "Do you think that the country can actually participate in the world economy without a Central Bank?" - DavidGCarpentier

    Yes. Our country didn't have a central bank from 1837 to 1913. During that time period our country grew from a rural backwater to the wealthiest industrial power on the planet. Our money was freely convertible to gold on demand and inflations were limited as a result. The dollar's purchasing power fluctuated between $0.93 and $2.00 (reference $1 = 1800) during that entire period.

    Since the central bank was formed in 1913, the purchasing power of the dollar has decreased from $1.70 to under $0.08. The last time our dollar's purchasing power was in the range established in 1800 - 1913 was in the 1940s. The dollar's purchasing power has dropped by over 90% since then.

    During that time, the US went from being the world's largest creditor nation to the world's largest debtor nation. Our industrial base has been torn down and exported, and TBTF banks are gambling with 40:1 leverage knowing that the taxpayer will make good any losses they may have.

    So in answer to your question. Yes. We can "participate in the world economy without a Central Bank". The last time we did, our economy created real wealth like no other time in history. Since the central bank was established that wealth has been squandered to the point where our country's total net worth is now negative (counting net present value of Federal obligations).

    What took our ancestors 113 years of hard work to build has been destroyed in 70 years of debt fueled partying enabled by the central bank. We would all be better off in the long run if we got rid of it.
    Dec 6, 2010. 08:07 PM | 19 Likes 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
  • The Great Growth Debate (Part 2): The Benefits of Dividend Growth Stock Investing [View article]
    I don't mind the negatives. Two and a half years ago I was a Top 10 commentator and discovered that there are people out there who are willing to go on a Thumbs-down spree just because you are able to point out deficiencies in their arguments.

    Somebody spent several days giving me a thumb down on each and every one of the prior couple hundred comments I had written, knocking me out of the Top 10 for good. I don't view SA as a popularity contest. Those who are willing to read and consider will learn, others won't and that's their loss, which is sort of sad.

    Thanks for the supportive comment also. I find that a great many people overlook the role risk plays in getting ahead in the market. I have many years of buying growth stocks and it's not an easy task to find one that makes you as rich as examples in an article would suggest. You have to be right twice, buying and selling, or you don't get anywhere. Finding the next Microsoft, Berkshire, or Wal-Mart when they first go public is nearly impossible for the average investor with limited time to spend looking.

    That's the one are where DG stocks have a significant edge IMHO. There are only so many stocks that fit the mold and almost any of them will get you closer to a comfortable retirement if you buy them at a good price. The 'chancy' aspects of the exercise are greatly reduced.
    Mar 27, 2011. 11:27 PM | 17 Likes Like |Link to Comment
  • Silver Backwardation: Will There Be a Silver Short Squeeze? [View article]
    "The problem is, there are no silver shortages – only rumors of silver shortages. .... Additionally, over 340mm ounces of allocated silver is sitting at SLV." - dak riggins

    That may be, but one of the implications of a backwardation in the futures market is that there is a lack of confidence that delivery on the futures contract will be met. Holders of the futures contract demanding delivery may be more likely to experience counter party risk and not actually get their product, at which point they are left holding the bag.

    If the backwardation were completely meaningless then holders of silver could sell it on the spot market, buy it back via the nearest futures contract, take delivery in March, and keep the difference. After the silver is delivered in March, they would be ahead by whatever the backwardation amount is. Easy money, right?

    The current difference between spot ($33.38) and March Silver ($32.90) is $0.48 / oz. SLV could theoretically generate a locked-in profit of 340mm * $0.48 = $163.2 Million in about a month. But they don't, not even with a small portion of their holdings.

    The fact that backwardation exists tells you that people who have physical silver would rather forgo that locked-in profit than give up their silver. One of the reasons why is they have doubts about getting all their silver back in March.
    Feb 27, 2011. 12:56 PM | 17 Likes Like |Link to Comment
  • Misguided Interest In Dividend Paying Stocks [View article]
    "there's no evidence that anyone can pick the few hundred of the 10,0000 we buy that fit the definitions of the asset classes we invest want exposure to" - Larry

    And so the dissembling begins ...

    First, I don't see any mention of asset class exposure requirements in the original article. Could you point them out please? Was there some secret, unmentioned additional requirement implied in the article that I missed?

    Every paragraph you wrote simply used the dividing line of dividend vs no dividend with a total return scoring metric, which the papers I linked to showed the total return performance edge went to dividend payers over the long run. Why the sudden imposition of extra "sector requirements"?

    Second, the 2013 Dividend Aristocrats cover 10 sectors with 43 stocks.

    Consumer Discretionary
    Consumer Staples
    Information Technology
    Telecommunication Services

    Interestingly, the S&P 500 covers the exact same Ten Sectors with about 11x the number of stocks. DFA's DFEOX fund ALSO covers those exact same sectors while DFQTX adds in 0.1% of REITS to those standard ten sectors. Wow. That's sector diversification there. Add 0.1% REITS. I wish I'd thought of that.

    As a matter of fact, after spot checking several DFA funds, I can't find a single one covering more than 11 sectors (the 10 from S&P 500 and a small dash of REITS). Can you please point out one DFA equity fund with more than those 11 sectors?

    So it would seem that the 'lack of sector exposure' argument is a bit on the flimsy side. Nearly ALL the DFA equity funds and the Dividend Aristocrats cover the exact same 10 S&P 500 sectors and may or may not have an extra 0.1% of REIT exposure too.

    This is what passes for a reason why the Dividend Aristocrats don't provide sufficient sector coverage? 0.1% additional REITS in some of the DFA funds?

    Riiiiiight. NEXT!

    The Aristocrats appear to be a viable means for providing exposure to the same sectors as the S&P 500 and all the DFA equity funds (unless Larry can point out the ones I missed in my small sampling) while selecting the top performing "cream of the crop" stocks from that expansive list of 500. I wouldn't think it too difficult to find another 57 CCC stocks (which aren't members of the Dividend Aristocrats) to round out a final list of 100 while still outperforming the S&P 500 and provide at least 0.1% REIT exposure and/or some exposure to nearly any other sector you might desire (or small cap, or mid-cap, or value, etc.).

    Sorry Larry, the facts don't seem to back your claim regarding sector coverage. The Aristocrats cover the same sectors as the DFA funds and have outperformed the S&P 500 by 30% annually over a 23 year span. (8.2% / 6.3% = 1.30 or 30% more annually)

    "Second while some dividends strategies have outperformed market, the higher returns are well explained not by the dividends but by exposure to factors that explain returns. Factors such as beta, size, value, momentum and now profitability." - Larry

    Seriously!? You're now going to fall back on the "It's a coincidence" disclaimer? Ha, ha, ha. That's a good one!

    The data in the paper I linked showed the Dividend Aristocrats outperformed the S&P 500 by 8.2% CAGR to 6.3% CAGR over 23 YEARS. That's nearly a quarter of a century. That's some coincidence!! Or maybe it's not. Maybe every company that can manage to increase their dividend payment annually for 25 or more years will always 'coincidently' have those qualities. Could be, right?

    If selecting stocks using 'dividend coincidences' gets me all those qualities which superior stocks "just happen" to have then doesn't that validate using Dividend Growth as a methology for picking stocks which outperform, even if it IS a coincidence (which I doubt)?

    Apparently we DGI types HAVE found the magically simple way to discover those great "beta, size, value, momentum and ... profitability" laden stocks which are the best of the best like we keep claiming.

    It would seem to me that implies that the DGI methodology generates market beating performance over the long run. It sure doesn't disprove it, eh?

    "Third, as to returns on value strategies, a low p/d strategy has lower returns than p/cf or p/e strategies" - Larry

    Well there's a strawman for you. For the umpteenth time, DG investors don't use p/d as a sole determinant for selecting stocks. If anything it's only one of several qualities used to cull out lesser quality stocks. You should rethink continuing to make these claims in the future when it doesn't represent what you hope to claim it does.

    How many times to DG adherents have to point out that we aren't simply picking high yielding stocks and throwing money at them?

    What study data did DFA evaluate regarding the profitability, sustainability, and repeatability of stocks to provide dividend growth in the future, and THEN consider yield for the stocks clearing those hurdles? I'm betting exactly none. Instead they 'studied' a strawman position and you are using that information to claim that DG investing is inferior, when DFA didn't even study the true aspects of DG investing.

    Instead you lump everything into a single metric of p/d (ie. high yield only) and call it "Dividend Investing" when it's nowhere near what passes for Dividend GROWTH investing as practiced here on SA.


    Sector excuse: FAIL (DFA equity funds have the same 10 sectors as Dividend Aristocrats plus 0.1% REITS)

    'Coincidence' excuse: FAIL (if anything you have shown that using dividend growth - ala the Aristocrats - is likely to produce a list of superior stocks with those qualities you claim are a coincidence)

    High p/d excuse: FAIL (non-representative strawman which is so simplistic it is a non-starter)

    So far, the more I dig into DFA's argument, and Larry's defense of same, the more I discover that DFA's results are nowhere near representative of the capabilities of Dividend GROWTH investing.

    But that's just me. What's 30 years of experience in applying the scientific method compared to setting up and knocking down non-representative strawmen?

    Once again, facts are stubborn things:

    And as Forrest Gump used to say,

    "That's all I've got to say about that."
    Dec 16, 2013. 11:07 PM | 16 Likes Like |Link to Comment
  • President Obama says House Speaker Boehner has decided to walk away from debt limit negotiations. Earlier today, Boehner had suggested talks would continue.  [View news story]
    "I personally believe that if existing tax laws were rigidly enforced, and fraud, waste and abuse removed from government, that the budget could be balanced and the government would be able to perform whatever functions a majority of citizens feel it should be doing." - Tom Armistead

    You've never worked with anyone in the government before, have you Tom?

    I have, and you will never be able to remove the fraud, waste, and abuse in the system. That IS the system. The only way a bureaucrat can be certain to avoid trouble is to do as little as possible most of the time.

    Did you know that government program managers receive poor ratings if they finish a contract under budget? It's true. They are punished for finishing the work and having money left over. Conversely, they are rewarded with promotions and raises if they can justify adding people to their staff for whatever reason. Even if they don't really need any more people to get the job done.

    The rules currently in place encourage waste as a matter of routine.
    Jul 23, 2011. 12:45 AM | 16 Likes Like |Link to Comment
  • Silver Backwardation: Will There Be a Silver Short Squeeze? [View article]
    The presumptive contradictions in the author's final paragraph suggest that he "thinks too much" IMHO.

    Throughout decades of trading a backwardation in the futures markets has been a sign of bullishness. Silver is currently in backwardation, ergo silver is bullish for now.

    Initiating short positions before the backwardation turns contango is probably jumping the gun and asking for trouble.

    The author may be correct in that silver could fall in the future (anything is possible), but if that's what I was thinking I'd probably want to wait until the backwardation ceased before taking a position. Until then I'd either stay on the sidelines or trade from the bullish side.
    Feb 27, 2011. 12:32 PM | 16 Likes Like |Link to Comment