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richjoy403

richjoy403
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  • Has Realty Income Really Bottomed? [View article]
    P.S. Should anyone be wondering...if you did not sell yesterday or at the open this morning, I believe it unwise to join in what feels like panic selling. This morning I reset lower my open limit-buy orders--nonetheless, my order for POT was executed while I was writing the above comment.
    Jun 20, 2013. 11:36 AM | Likes Like |Link to Comment
  • Has Realty Income Really Bottomed? [View article]
    Pen & Berloe -- As I write this, the S&P is off about 25 pts., or 1.5%.

    Please keep in mind "bargain" is a far more complex term for a stock than just a share price decline...not all price declines are mis-pricing's.

    For example, buying a REIT, MLP, or BDC when its price declines by 10 or 15% is entirely different than buying a box of TIDE when "on sale" Monday thru Thursday at Kroger.

    My earlier comments made the point the market re-prices downward the market value of income stocks when interest rates rise--that's well grounded in risk/reward--higher rates create greater completion for higher risk income stocks compared to lower risk Treasuries, Agencies, and other bonds. It is interesting we are seeing this violent move when the 10-+yr Treasury note is at only 2.4%...what happens when it heads toward 3%, and 4%? I don't expect this relationship will ever change.

    Typically, rising rates favor stocks with higher earnings growth rates, and punish those with the lower growth rates (and I am seeing that again today in my portfolio!). When the S&P, of which 80+% pay dividends declines 1.5%, very few stocks can have price advances, and it is a victory of sorts to decline only 1% or less because so many investors are selling everything, throwing out the bath water and the baby too. The test will be those stocks that advance in the first week and second week of the market's up move.

    That doesn't mean you can't (or shouldn't) buy REITs and/or other income stocks...but it does suggest the last 4 or so years of outstanding total returns may be over, or relatively limited, for the remainder this business cycle.

    I also wrote I believe this 2nd round of re-pricing may be over-cooking the relative value of those income stocks (just as I said about the 1st). I've made the point the market almost always goes too far on both the downside and upside when reacting to news.

    It would not surprise me if share prices for income stocks start to improve soon (maybe even after the close of European markets today), or next week at the latest...but such an improvement would likely to be only a temporary reprieve, as rates are quite likely to make serious advances in the future. Thus we will likely see similar re-pricing in the future, though perhaps much less violently.
    __________________

    Than again Pen, maybe you are correct--Rich is a contrary indicator!

    If anyone sees the relationship of income stocks and rates differently, I'd enjoy reading their analysis.
    Jun 20, 2013. 11:06 AM | 1 Like Like |Link to Comment
  • Temptations That Dividend Investors Need To Resist [View article]
    IMO, having the will to take action to limit losses is more important to long-term portfolio total returns (including dividend income) than is the occasional 4-bagger...thus I find the following to be the key sentence of the article:

    >>> The natural tendency may well have been to keep riding a winner that had produced such stellar dividend growth in the past, but being able to see the writing on the wall and take corrective action is one of the hallmarks of successful dividend investment. <<<
    Jun 19, 2013. 10:27 PM | 5 Likes Like |Link to Comment
  • Has Realty Income Really Bottomed? [View article]
    P.S. IMO, today's market action was yet another glimpse at the impact of rising interest rates upon REITs and other income stocks...when I rank my portfolio by % decline today, it is obvious the income stocks suffered the greatest price declines.

    The S&P500 (of which 400+ pay dividends), declined by 1.4%. Yet my income stocks declined from 2% to 3.6% (O, the topic of Adam's article, lost 2.75%).

    In fairness, I do expect some price recovery soon, as the market typically over-reacts to both bad and good news.
    Jun 19, 2013. 09:52 PM | Likes Like |Link to Comment
  • The Safety Valve Of Dividend Growth Investing [View article]
    Dave -- The value of your DiD series is relative to the business cycle.

    I devote the time required to closely monitoring of my portfolio and the economy.

    However, for those unable or unwilling to do likewise, it would seem DiD is most useful in a contracting economy, and of less value in an expanding economy...thus IMO, probably not worth your effort to restart it at present.
    Jun 19, 2013. 09:42 PM | 1 Like Like |Link to Comment
  • Has Realty Income Really Bottomed? [View article]
    Adam -- Either and both...just call em as ya sees em!
    Jun 19, 2013. 04:11 PM | 1 Like Like |Link to Comment
  • Has Realty Income Really Bottomed? [View article]
    Adam -- I would appreciate your posting more REIT articles.

    IMO, a 2nd voice discussing those stocks would well-serve all investors.
    Jun 19, 2013. 01:05 PM | 5 Likes Like |Link to Comment
  • Add A Faucet To Your DRIP [View article]
    depraved -- Agreed, the likelihood of munis becoming federally taxed is low.

    OTOH, if they were taxed, the implication to existing munis is such that it is almost certain those would be grandfathered (if not until maturity, for at least 8-10 years), and in that event, the grandfathered munis would likely become more valuable IMO.
    Jun 19, 2013. 12:45 PM | 2 Likes Like |Link to Comment
  • The Role Of Slow Growing Cash Cows In Your Portfolio [View article]
    If you research investment returns in the financial literature, I believe what you will find can be summarized very much like this:

    All investments are compared by their total returns--TR

    TR is the sum of distributions + price change.

    The next step is to convert TR to average annual return, or to compound annual growth rate. A refinement sometimes includes adjusting return for risk.
    Jun 19, 2013. 10:30 AM | 1 Like Like |Link to Comment
  • Amgen In Focus [View article]
    XY--Thank you for this article.

    I hold only dividend-paying stocks. AMGN is among my core positions because I regard it is the best of the biotechs based upon its past successes, and because it offers excellent price appreciation potential due to all the factors you outlined above.

    In addition, and not mentioned--AMGN initiated a dividend at 28 cents in Sept. '11, increased it 28% to 36 cents in March '12, and increased again by 30% in March '13 to 47 cents...I expect above average dividend-growth to continue.

    AMGN fills-out my healthcare allocation to pharmas; medical devices; and REITs devoted to hospitals, LT care, and medical office buildings. Demographics in the U.S. and other developed countries will drive demand for the offerings from AMGN and other healthcare-related providers for many years--a rising middle-class in the developing world provides an additional layer of demand for all things healthcare.

    I look for AMGN, which remains undervalued, to provide excellent total returns for many years.
    Jun 19, 2013. 10:18 AM | 1 Like Like |Link to Comment
  • Add A Faucet To Your DRIP [View article]
    Adam -- Since you mentioned it...I too have had a lukewarm view of DRIPs (actually tepid). Thus I view favorably your pro-active and selective use of DRIPs as very likely to produce greater returns than the traditional passive/autopilot usage.
    Jun 19, 2013. 09:11 AM | 2 Likes Like |Link to Comment
  • Dividend Income Is More Stable Than Capital Gains [View article]
    DGI -- You have made your case quite well--brief and to the point.
    Jun 19, 2013. 07:48 AM | 2 Likes Like |Link to Comment
  • Add A Faucet To Your DRIP [View article]
    Adam -- With respect to DRIPs, your 'tweak' serves to push the ball closer to the goal line. I would expect your article to be well-received.
    Jun 19, 2013. 07:40 AM | 4 Likes Like |Link to Comment
  • The Safety Valve Of Dividend Growth Investing [View article]
    PTI -- OK, I re-read your article, and my response.

    You sought to demonstrate that a PASSIVE investor (not unlike in Tim's article) would some 4 or 5 years later have recovered all his losses associated with 2008-09 dividend cuts. To do so, you used the X-dates of actual dividend cuts to 12 CCC stocks from 2008-09.

    As to Tim's article, my comment reviewed my PRO-ACTIVE alternative which I believe offers a superior tactic (both financially and emotionally). Whereas you based your calculations on X-dividend dates, I believe those stocks could have been sold at significantly higher prices based on monitoring to identify likely dividend cuts, and thus would have been reinvested at far better prices to produce greater income far sooner than the 4 or 5 years in your study (or above).

    As with Tim's 5 "burnout companies", we have a difference of opinion as applied to portfolio management and risk moderation...I strongly believe the 35% income decline suffered by your portfolio in 2009 could have moderated by acting BEFORE those dividends were actually cut. Having done so, the income from the new dividend stream would very likely have exceeded the 2008 stream by 2010--three years earlier than your 2013.

    Your article lays out your passive rule--you will not sell a stock until it actually cuts its dividend. You can live with that. I can do likewise with my more pro-active rule.

    May you live long and prosper.

    Rich
    ______________________...
    My full response to your article, including its post-script was as follows:

    I'm one of those who advocate selling a stock BEFORE it cuts the dividend...principally, so as to preserve maximum value for reinvestment into a comparable opportunity. For example: $25k invested in a stock with a 3% yield sold for $23k (8% loss), will produce 8% less dividend income when invested in another stock yielding 3%; whereas waiting for the investment to drop to $20k (now a 20% loss) only exacerbates the problem. My secondary reason relates to the emotional mental benefits to avoiding a falling Sword of Damocles.

    Thus, I prefer to sell a problem stock, and move on...but I acknowledge we are all free to follow our own processes.

    I also acknowledge a troubled stock will sometimes be deemed in danger of cutting its dividend, but may not do so. However, unfortunately, the appearance of a potential dividend cut can become almost as damaging to the stock's value as the cut itself.

    PBI is not on your up-to-date list (it only announced its dividend cut on April 1st). So here are relevant results on PBI, a 30+ year d-g stock, if purchased at the start of the Great Recession, and held it to today: Your total returns would absolutely awful (-1.25% per year, including its generous and rising dividend; versus +44% had you bought the market index).

    This also illustrates your process of reinvesting dividends back into the paying stock can be a detriment to your performance when those additional shares magnifies your losses (as with PBI), and again points out the need to recognize alternative investments -- opportunities foregone by staying with a troubled investment.

    As for your study (and I also acknowledge it was a lot of work), it does not address selling before dividends are actually cut. It only demonstrates when looking at a large portfolio, the damage incurred by dividend cuts is ameliorated by the other holdings when those stocks are held for 4 or 5 years. (I believe this is important)

    For myself, it also fails to recognize (even verbally), the likely superior performance of the investments that might have replaced the stocks in danger of cutting their dividends, and the satisfaction of avoiding a falling knife.

    My points sum to this: IMO, for most investors, portfolio management consists of more than collecting generous dividends.

    It is good that you are comfortable in your rules. However, it also strikes me that you may have started with a conclusion, and worked to construct supporting evidence...I can't avoid wondering what might have been the results if you had considered only those stocks cutting their dividends, and compared their prices 90 days before the effective date of the cut, and the price 6 months or 1 year after.
    _____________
    p.s. I also acknowledge as a full-time investor, I am likely more active, and likely to view the topic differently than might a part-time investor.
    Jun 18, 2013. 07:21 PM | 1 Like Like |Link to Comment
  • The Safety Valve Of Dividend Growth Investing [View article]
    PTI -- Thanks for the shout...and sorry, I'll have to follow the link to refresh my memory...more later.
    Jun 18, 2013. 06:20 PM | 1 Like Like |Link to Comment
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