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uncle nunzie

uncle nunzie
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  • Dividend Growth Investing 'Is' Total Return Investing [View article]
    Agreed, though I think we are hitting the same point. More cash than they can deploy at high rates of return - too much cash coming in versus places to put it profitably is the reason. Size definitely plays a role. How do you invest, say, $20 billion with a realistic chance of obtaining a 15% return on that capital? Very hard to do, it is the law of large numbers at work, and if you do find and invest in such an opportunity, where do you invest such sums in the next year? That is a good problem to have, to be sure, though it does demand discipline on the part of managers not to burn all that money on questionable "opportunities".

    There are any number of corporate managers in the world (XOM managers not among them), who would use some of the "too much" cash flow to increase the size of their organizations. Just because they can, it is fun, or profitable for them personally, not because they can do so profitably for shareholders. As it happens, I own XOM, and am confident they properly fund profitable growth areas (after meeting maintenance needs of course) and return "excess" cash to shareholders in dividends and buybacks.

    I'm generally of the opinion that the "default" position shareholders should take is that all (non-maintenance) cash produced by the business should be returned to shareholders, but should be retained for reinvestment internally when significant profitable uses are available. I like to think of a small neighborhood store run by mom and pop. At the end of the day, week, or month, cash for living is pulled out of the register -- but enough is left in the drawer to support the business day to day. If they have to leave all the cash in the drawer to keep the store up and running, then the store has zero economic value to it's owners, except perhaps in any hard assets like land and such, and the cash in the drawer once operations shut down. But if even after leaving enough cash behind and taking their living needs, there is still more cash, they could probably open another store as a better use for the excess cash than say buying a savings bond.

    Anyway, good article and interesting commentary flow here.
    Dec 30 12:15 PM | Likes Like |Link to Comment
  • Dividend Growth Investing 'Is' Total Return Investing [View article]
    OT - RE the American intellectual scene.

    Personally, I think the rise of nearly zero cost, nearly zero attribution venues for opinion publishing produces the appearance of decline. I think the American intellectual scene is alive and well, it's just buried in a mountain of unsubstantiated opinion held out as well thought out research. This effect (in my unsubstantiated opinion) is most acute in the political arena, but may be found anywhere where strong motivations and emotions abound.

    As to article content - I think Mr Smith isolates the effect of reinvestment of dividends as an important component in building growth, but doesn't discuss this as adding new capital, which would affect the investor's return on investment results. This might not matter to everyone or anyone :)

    Additionally, the management team of a company has in theory decided to return cash to shareholders because they cannot invest it internally at a rate of return high enough to warrant retaining shareholder's cash for this purpose. That alone, or combined with a desire to provide a percentage of profits to shareholders, is why dividends are paid (other reasons too of course, but these seem to be the main practical ones).

    Myself, I consider dividend growth investing as a strategy or tactic that fits what I want to achieve. I like the security of a diverse portfolio of growing, income producing vehicles whose cash output I can use in real life, now, if I choose, or to reinvest such cash as opportunities arise. That is a flexibility which helps me keep on track and navigate through life in a position of financial strength. That alone is worth it for me, and why I prefer cash output as part of my portfolio strategy.
    Dec 30 09:50 AM | 2 Likes Like |Link to Comment
  • CenturyLink's Management Has Lost Its Mind [View article]
    That kind of share price manipulation might run afoul of some laws, no? Not a lawyer or financial professional myself, but I'd think such a thing would be considered fraudulent. Assuming these policy changes are legitimate though, it strikes me that income investors want steady and dependable payers. This action is therefore way out of an income investor's comfort zone, I'd think.

    Maybe I should read the details surrounding these changes to know more, but as it is, I see this as not particularly positive.
    Feb 15 10:34 AM | Likes Like |Link to Comment
  • USA Graphite Inc: Set Up For Insider Enrichment? [View article]
    I also received USGT stock promotion email. It's so obviously a scam, and I thought for a moment about replying to the email asking when the peak price is planned so I could short along with them LOL. But only for a moment, because then I thought of the class of people who do this, and what they may be capable of....

    But yeah, email, snail mail, glossy prints. Touting riches, to quote my good friend Dr McCoy, "Beyond the dreams of avarice". Criminal pigs.
    Dec 27 10:06 AM | Likes Like |Link to Comment
  • Why Investors Are Nervous About Altria's Future [View article]
    I'll agree that the author should stick to relevant subject matter, and that the assertion that Florida's gun law caused a death, is false. But you have no basis at all, sir, to assert that Mr Martin's attitude got him killed. You have no idea what his attitude was, nor does anyone's attitude warrant an armed response. The facts of that case are yet to be determined, and everyone has strong feelings one way or another, but to make such a statement strains the bounds of decency.
    Jun 15 06:50 AM | 3 Likes Like |Link to Comment
  • Strong Signs Dividend Stocks Are Approaching Bubble Territory [View article]
    The author's self-description has been taken out of context.

    When read with the prefatory statement in the same description it makes perfect sense. The author's pride is in being a successful trader and investor despite the fact of his not working in fields which might have given him an advantage in that activity.
    Jun 6 08:51 AM | Likes Like |Link to Comment
  • Frontier Communications: Is Another Dividend Cut In Its Future? [View article]
    new management might improve credibility, along with actual revenue growth translated into cash flow and earnings growth.

    I ask myself this question: If FTR paid no dividend, would you buy or own it on the basis of future prospects? The answer for me is no.
    May 17 02:15 PM | 1 Like Like |Link to Comment
  • Dividend Investors Prefer Hatched Chickens [View article]
    I agree, and note that while I had interest in INTC for a long time, I would not buy/own until the price was right. I picked up some early last year, and I have been well pleased with the results.
    May 14 10:56 AM | 1 Like Like |Link to Comment
  • Dividends To Capital Gains: I Want A Divorce [View article]
    Very interesting and thought-provoking. How this could possibly be done is beyond my pay grade, and frankly makes my head hurt. But if done for low cost to the investor there should be interest in such financial "products". Perhaps a problem to be reckoned with is the inherent risk factors common to all stock ownership. Because even if you could separate the dividend payouts from the equity ownership, there's still the underlying business risks. And if a company decides to cut the dividend, for whatever reason seems good at the time, would that not benefit the B shares and damage the A shares? And even if things are "normal" with no cuts during period of ownership, does not the B share grow in value at a lower rate than it would if the dividend were still attached? All sorts of effects are possible, "interesting" to be sure.

    Thanks for the article!
    May 8 03:57 PM | 2 Likes Like |Link to Comment
  • Don't Buy DVYA: A Look Under The Hood At iShares Asia/Pacific Dividend 30 ETF [View article]
    indeed, anything to scrape some gold off the coins passing through their fingers......
    Apr 26 12:00 PM | 1 Like Like |Link to Comment
  • Occupy Defined-Benefit Pension Funds! [View article]
    Capitalizing a pension at less than 1% generates excessively inflated investment requirements and is disingenuous applied in this context. Although I could reasonably argue for a higher capitalization rate, 4% is conservative and still requires less than 1/4 of your figure. And in any case, defined benefit pensions are earned by those who have them and are part of negotiated agreements. Taxpayer's backs are hardly broken by those few pensions that remain in the public space, earned by decades of public service by those who still have them.
    Apr 26 10:42 AM | Likes Like |Link to Comment
  • Are Dividend-Focused Strategies Viable For Investors? [View article]
    What may be in the back of most minds but often unstated is the need to spend cash on living expenses. Couple this unyeilding fact with market volatiity, and an investor faces selling shares when prices may not be favorable. A dividend focus for producing income helps with this risk, but so may other tactics or strategies. Personally, I take great comfort in owning quality companies and reinvesting dividends or spending them as my needs require. Tax treatment is certainly an issue, though for folks below the expected income theshold, will not see any change. At least this is how I undertand it, though I am not a financial professional of any sort and cannot be sure of what the future may hold.
    Apr 25 08:49 AM | 1 Like Like |Link to Comment
  • The Misplaced Mania Over Dividend-Paying Stocks [View article]
    Investors are a diverse group, and have diverse needs from their investments. They make investment policy decisions which map to their real needs, which may shift from accumulation to preservation and income distribution. I myself have decided that income produced by a diverse portfolio of companies will fund my personal expenses. I expect retained earnings to benefit me through internal investments in maintenance of competetive position and in future growth possibilities. I insist on dividends now, both because I want the money to spend it, but also to instill a sense of responsibility on the part of my corporate managers. I also gain real security in the receipt of cash into my account without the need to sell part of my ownership interest.

    Apple is an interesting non-dividend case, as was Microsoft some years ago. Apple has perhaps 60-70 billion dollars in cash and investments (or so), and tremendous positive cash flow generation. Must they sit on so much money and generate a sickly interest return in the current environment? How much money can they possibly spend on actual growth opportunities as opposed to tempting but ultimately futile efforts? With regard to growth, at roughly 100 Billion in revenue over the last 4 quarters, what % increase over the next several years is acheivable?

    If Apple can produce growth rates far enough into the future to generate acceptible returns on capital, then perhaps their 100% earnings retention policy is wise. But if not, it would be reasonable to return some portion of the cash flow and the cash hoard to shareholders.
    Jan 10 11:06 AM | Likes Like |Link to Comment
  • Bushes And Birds: A Different Perspective On Stocks And Dividends [View article]
    Nice work. I view my portfolio of large-cap dividend payers as growth + cash-generating sub-lines of business. I make the capital allocation decisions to the extent dividend cash is passed up to me in the "home office". I'm content for the remaining cash to be reinvested in the sub-lines as they see fit, maintaining competitive position and generating profitable growth. The only time I concern myself with price, is if they are low enough for me to want more ownership, or high enough for me to divest. I envision myself as a small business owner who receives his share of the profits the business generates. I expect the profits and payout to grow faster than inflation.
    Oct 25 07:02 PM | 5 Likes Like |Link to Comment
  • 'Buying Dividend Stocks For Income' Arguments Don't Make Sense [View article]
    My portfolio is a collection of businesses I own, and which routinely pay me a portion of their free cash flow. The remainder stays invested to maintain earnings power and support future growth. I'm happy with this arrangement and feel the managers who work for me produce good results with that remaining cash flow.

    In an ideal world, in which market prices always reflect actual value (or nearly so), a person could depend on selling shares for income, as needed. I don't think that's realistic, and so prefer to collect dividends for my cash needs instead.
    Aug 31 04:10 PM | 7 Likes Like |Link to Comment