Livingstone

Seven Dividend Stocks to Take the Emotion Out of Investing

Here are two quotes for you from The Dow Jones-Irwin Guide To Put & Call Options (1975 , Henry K. Clasing, Jr.)

"The common sense of the marketplace is that it is made up of people and there is a wide disparity between the abilities of these people to make money in the stock market. There are also wide discrepancies in the ability of market participants to perceive and understand the events that offer clues to future business conditions."

"There are a few successful stock market investors and they have one trait in common. They understand how the market crowd behaves and do the opposite. When the crowd has gotten excited about the future direction of stock prices and has moved them up, the professional sells. When the crowd is gripped with fear that the world is coming to an end even though it isn't, the professional buys."

Why I Sold Coke and Bought Church & Dwight

Mr. Freedland

Since you executed this trade KO has returned 9% (in less than 1 month) not including dividends and CHD has returned 5.7% in the same time period. KO has a 2.9% dividend rate and CHD is 1%. On a relative basis KO has provided a 58% higher return than CHD. Things seem to be going better for Coke

Will U.S. Allow China to Buy More Gulf of Mexico Oil Assets?

Jet1C:

You can have your NAT with its 10% loss over 1 year.

Dow Industrials + 25% over 1 year

Nasdaq + 45% over 1 year

S&P 500 + 30% over 1 year.

Did you pick this loser on your own?

United Technologies: Attractive Dividend and Peer Outperformance

JET1C:

Hmm, let's see

3 month performance:

UTX +20%

MMP +2%
NS +4%
RYN -3%
NAT -7%

You can have your 7% yield for NAT because combined with the -7% loss in the share price in the past three months you have a net zero return. I would take the 2% yield plus the 20% gain in the share price for a positve 22% return any day

Why I Sold Johnson Controls

Ok I understand your strategy better now.

In my case I also attempt to maintain all of my holdings for the long term.

For the most part I am a dividend investor but I also augment my income stream by writing options, so most of my holdings must pay an increasing dividend over time and must have listed options. I make it a priority to hold even board lots because of my options strategy. I have never had a stock exercised away from me and at any given point in time I might have five to ten open option positions on my portfolio of 15+ stocks. For example, in 2008 I wrote out-of-the-money calls on JCI several times on my postion and each time I purchased the options back at a profit or left the position open until expiry. Each time it reduces the original cost of purchase of my holdings.

Patience is the key with this type of strategy because you have to wait for the opportune time to write and cover. If you ensure that the option strike price is higher than your average cost it lessens the risk that you would be called away at a loss. If you are a longer term investor you hold the stock through the fluctuations anyway so options can provide some trading profits along the way and satisfy the urge to "trade" within the portfolio.

The fundamental premise here is that you must pick the absolute best stocks in the class because you aren't likely to ever sell them. JCI is one such company. A dividend aristocrat, with a 21% compounded rate of dividend increase over the past 5 years and a potential beneficiary of the impending infrastrucure initiative.

I am not as concerned about an exact percentage ownership in my portfolio to the extent that it would mean I would end up owning odd lots of shares. For example BA represents 5.4% of my holdings and JCI 4.8% but in both cases the number of shares represents an even number of board lots.

Why I Sold Johnson Controls

Mr. Freedland,

I have a few suggestions for your "trading" portfolio.

Your purchase of JCI was well timed in November at $14.83/share on Nov 20/08, however, you should have purchased a board lot of 100 shares to give you the ability to write a call option on your position.

During December JCI advanced to $20.50 per share and you had the opportunity to write an April 17.5 call for about $4.00 which would have reduced your cost to $10.83 per share. At the current trading price of $16.21 you would have an imputed 49% gain. If JCI advances past $17.50 by April 17 your shares would be called away but your gain at that point would be 62% in five months. If JCI's price does not change from here you would still make 49% (not including a $0.13/share dividend) in a five month period. JCI would have to drop to $11.23 per share and it would still equal your 5% return.

Ignoring the option strategy I question why you would be selling your stock on the day when JCI announced negative earnings close to the low point of trading for the day. If your portfolio is in fact a trading portfolio, you should sell prior to the earnings announcement because everyone knows that earnings season this year will be ugly.

Or, if you are a long term investor and using a conservative options strategy you would now have the opportunity to cover the April 17.5 calls at $1.50. Your average cost would now be $12.33 per share. At the current market price your postion would still have a 31% gain. If you still want to sell your shares at this point you have a much better return than what you have described.

It seems in your article that you still like JCI from a longer term perspective so you appear to be somewhat torn between a long and short term strategy. You have to choose one and then play the market on that basis.

The Price of Oil: Weak Demand Trumps Distractions

There are millions in China and India who are moving to the middle class. Every one of them wants to own and drive a car. Gasoline is still the fuel of choice. Demand for oil will significantly outstrip supply in the next few years because supply is declining and will continue to decline even more rapidly with current low prices because of the deferral of numerous mega projects. The low oil price will sow the seeds of future oil price increases to levels that will make last year's $140/Bbl look like a bargain. Take a look at the presentation by the CEO of Conoco Phillips in September '08 (on their website). Do your homework, look for the right companies (like CVX, BP and COP) and then load up because this ride isn't over.

S&P Gives Teck Cominco Lowest Investment-Grade Rating

Firstly, the name of the company is Teck. Not Teck Camino or even Teck Cominco...just Teck. They officially changed their name on October 1, 2008.

Teck will come out of this and in a few years will be trading at a premium to NAV which at present is about $30 per share. S&P will be back on the band wagon with a positive rating. I would like to see a rating agency that can actually tell you where a company is going rather than where it has been.