Avoiding Tunnel Vision In Your Dividend Growth Investing [View article]
Be Here:
Mr Herring's article is all about assessing sustainability of the dividend and its growth. I personally would love to be convinced that juicy dividends of the mREITs, AGNC included, are sustainable over a 5 to 10 year period. I have not done much DD on mREITs and I was hoping you could help address the question . If this is a short-term thing, the day of reckoning is coming, which would make AGNC and the like hazardous to you wealth, unless of course you are really good at timing!
Avoiding Tunnel Vision In Your Dividend Growth Investing [View article]
Be Here
Tempting indeed. High leverage (9x per Mstar) magnifies results. But answer me this what if the duration of the asset side (MBS) and the liability side doesn't turn out to be as well matched as believed. We will only know when interest rates rise. This thing is all of 4 years old and never been through a rising rate environment. Why does the market permit 15%+ yield if there aren't some hefty risks lurking. Is this more that a bet on ZIRP and QE Infinity? Don't take it the wrong way - I'd love to be convinced!!!
Avoiding Tunnel Vision In Your Dividend Growth Investing [View article]
Pen, Robert, et al.
So how many times in your collective investment career can your remember a stock paying 15% current yield that DIDN"T eventually lead to tears and gnashing of teeth? Has it ever happened?
Avoiding Tunnel Vision In Your Dividend Growth Investing [View article]
Eddie
Terrific article. As I was reading the Kodak part, I thought, holy cow, MSFT and INTC immediately jumped to mind wonder if he will go there - I am long both and when I undercover a seemingly "under priced" security I try real hard to figure out why, especially if it is counter to the market trend. So yeah the parallels between Kodak and MSFT and INTC are there. Was I pleased to see that is exactly where you took the article. This is a gem and its going on my hard drive (I just recently discovered google chrome print function allows saving documents as pdf files. wow is that handy for keeping press releases, conference call transcripts, article and pretty much anything.)
I also enjoyed the comment thread that your article inspired 69 at the moment - great comments from some of the DGI masters!! A excellent article inspires excellent thoughtful helpful comments.
Coca-Cola Vs. PepsiCo: The Same Taste For The Stock Market Too? [View article]
Good article and it helped me focus my thoughts. Interestingly I came to the opposite conclusion. But then that's what makes a market! Here is why I favor KO in the photo finish with PEP:
KO has higher earnings and dividend growth rates. My starting dividend with KO grows to 4% yield on cost in 4 years vs 5 for PEP because of the higher DGR KO has stronger balance sheet with lower debt to equity and higher cash and marketable security balances. Dividend yield was about the same before the PEP 4% dividend increase. But that increase was mildly disappointing after annual increases between 5% and 7% for the last four years. KO usually declares its first quarter dividend and the annual dividend increase on the third Friday in February. That was last Friday, but since the Feb 1 was a Friday, I am looking for the announcement this Friday 2/22. Meanwhile we can hope that the recent trend in the 8% range continues, which would put 2013 dividend at around $1.10. At $1.10 KO would need 8% earnings growth to keep the payout ratio roughly constant, which I believe is below management's earnings objective.
Anyway its a close call to be sure and both fit DGI portfolios.
Thanks To A Pullback, ConocoPhillips Is Now In The 'Buy Zone' [View article]
I'm with divneer - somewhat impatiently waiting for management to declare its hand. jnpfl is correct as far as Yahoo dividend data goes. But Morningstar does exactly what jnpfl says in their data array i.e they reduce dividends prior to the PSX spin-out. So the .66 is restated at .5031. For unknown reasons the restated dividend is closer to 75% of the original.
12 Things To Dislike About Dividend Investing [View article]
Christine- have looked at several, VIG, VYM mostly and they don't approximate the results the DVK gets with his portfolio in terms of dividend reliability and growth. DVK did an article a while back where he examined a larger sample of dividend etf's without finding a really good surrogate for an individual portfolio. I don't really mind the work per se - I have a professional background in finance and accounting - its just that I like to see for myself (there are plenty of already constructed portfolios to be had on SA) and I find too many questions to dig into, getting me sidetracked and consuming too many of my "golden hours" as it were!! Guess its more of a discipline and management issue that a ruthless boss would cure in short order!!!
Thanks To A Pullback, ConocoPhillips Is Now In The 'Buy Zone' [View article]
Contraria
Historical pattern is irregular. I went back to 2009:
declaration 10/7/09, .47 was increase to .50 , which was pd 12/1/09 declaration 3/24/10, 0.50 was increased to 0.55, pd 6/1/10 declaration 2/11/11 0.55 was increased to 0.66, pd 3/1/11 2012 increase came in form of PSX spin out which was 5/1/12 divneer is correct 1Q13 declaration was 0.66
With the huge capx program being undertaken I have this puppy on watch and have been watching in vain for some indication of mgt intention post PSX spin out. Disappointed increase didn't come with Feb declaration.
12 Things To Dislike About Dividend Investing [View article]
Wow do I agree with Craig. I have never felt comfortable with just a handful of stocks and doing diligence on 50+ names to select 20 to 30 to actually own is a full time job. I keep thinking that regular maintenance won't be as bad as initial start-up but that remains unproven.
Also I would add a different number 14 and that would be that screening for high dividends exposes you to value traps and you only know for sure in hindsight. The upside to both is the work is great brain exercise and perhaps will delay age related dementia!!
How To Mislead Investors With New Non-GAAP Measures [View article]
Thanks RAS for the article and that link. I recently looked at LMT and found the yield, DGR, ROE and historic sales and EGR attractive. But then a caution flag went up when I noticed the outsized debt to equity ratio and dug into it a bit and found this charge in the equity section of the balance sheet under the caption "Other Comprehensive Income" for unfunded pension liability that pretty much wiped out book value was the reason for the high debt to equity and the decent ROE's as well. That threw a gallon of ice water on my enthusiasm and I have been having this internal debate about the significance of it. Then LMT reported below expected 4Q earnings because of the pension. That together with these articles and it looks like I'm going to take a pass on LMT. I didn't dig into the pension much more and I was amazed to see in the linked article that the unfunded pension was 125% of market cap. Wow. But then I see RTN on the list with pension liab just over 100% of market cap. SOB- got more work to do cuz I'm long RTN. You don't what you don't know till you don't know it!!!
Buckeye Partners Has Few Growth Opportunities And Poorly Placed Assets [View article]
Absolutely correct TCG. However BPL, unlike many MLP's never generated significant passive loss carryforwards and what was generated has long since been utilized to offset distributed income. Years 1 - 6 were roughly zero taxable income. And since then taxable income has ranged from about 35% to 100% of the distribution with an 19 year average of about 60%. But your tax point is absolutely correct - suspended losses are not released until there is a "substantial disposition" which most folks regard at complete exit.
Buckeye Partners Has Few Growth Opportunities And Poorly Placed Assets [View article]
Really?? I was no fan of either the GP buy out or the Lodi deal, but it was the Borco deal that sent me over the edge, especially coming right on the heals of the huge Lodi write-off (admission of mistake). Here is why. Borco annual revenue, Operating Income and what BPL calls Adjusted EBITDA for the 7 quarters beginning 1/1/11 have annualized averages, in millions, of $197.9, $75.3 and $119.3 (I am taking the International Operations segment as proxy for BORCO - it actually includes Puerto Rico terminal as well, but that only makes the numbers look worse). They paid $1.424 billion for Borco and they have added another $300 million of Cap Ex since (i.e. fix-up costs cuz the property needed work!). So the multiples on the capital invested so far are 9x revenue, 23x operating income and 14x EBITDA. Assume EBITDA is a reasonable proxy for cash flow, so that is a cash flow return on capital invested of 7%. Last time I looked they were paying about 5% on debt and you have the 8% distribution on the L.P units so at a 60% debt / 40% LP units the cash flow return is just about equal to the weighted cash cost of capital with very little margin for safety. Pretty far from what I would call a bargain purchase. I sold about 60% of my units which I had owned from the IPO in 1986 and this April I will be paying the tax man - I estimate the tax cost, because of the cumulative basis adjustment and depreciation recapture is going to be about 16% of the sales proceeds - ouch, ouch and ouch. So yeah, even though I still have a meaningful holding, I am sympathetic to the author's point of view.
Is Total Return A Useful Metric For Income Investors? [View article]
I am not at all sure there is a silver bullet answer!!! As you point out earnings are an indicator but you still have to wrestle with separating the temporary from the long term factors. Its hard work aided by not much more than lots of study, healthy skepticism and most of all experience and sound business judgment!! If you got'em smoke'em!!
Is Total Return A Useful Metric For Income Investors? [View article]
Thanks Chowder, that is helpful. I agree there are no bad decisions - each one, whether results turned out as expected or not, was based on all the information you had at the time. Still I do like to compare real time decisions with subsequent results to try to sharpen the tools of the trade. Your re-counting of specific situations is illustrative. I see three common themes - listen to management and pay attention, temper it with a large dose of skepticism and most importantly take the indicated action!!
Avoiding Tunnel Vision In Your Dividend Growth Investing [View article]
Mr Herring's article is all about assessing sustainability of the dividend and its growth. I personally would love to be convinced that juicy dividends of the mREITs, AGNC included, are sustainable over a 5 to 10 year period. I have not done much DD on mREITs and I was hoping you could help address the question . If this is a short-term thing, the day of reckoning is coming, which would make AGNC and the like hazardous to you wealth, unless of course you are really good at timing!
NC45.
Avoiding Tunnel Vision In Your Dividend Growth Investing [View article]
Tempting indeed. High leverage (9x per Mstar) magnifies results. But answer me this what if the duration of the asset side (MBS) and the liability side doesn't turn out to be as well matched as believed. We will only know when interest rates rise. This thing is all of 4 years old and never been through a rising rate environment. Why does the market permit 15%+ yield if there aren't some hefty risks lurking. Is this more that a bet on ZIRP and QE Infinity? Don't take it the wrong way - I'd love to be convinced!!!
NC45
Avoiding Tunnel Vision In Your Dividend Growth Investing [View article]
So how many times in your collective investment career can your remember a stock paying 15% current yield that DIDN"T eventually lead to tears and gnashing of teeth? Has it ever happened?
NC45
Avoiding Tunnel Vision In Your Dividend Growth Investing [View article]
Terrific article. As I was reading the Kodak part, I thought, holy cow, MSFT and INTC immediately jumped to mind wonder if he will go there - I am long both and when I undercover a seemingly "under priced" security I try real hard to figure out why, especially if it is counter to the market trend. So yeah the parallels between Kodak and MSFT and INTC are there. Was I pleased to see that is exactly where you took the article. This is a gem and its going on my hard drive (I just recently discovered google chrome print function allows saving documents as pdf files. wow is that handy for keeping press releases, conference call transcripts, article and pretty much anything.)
I also enjoyed the comment thread that your article inspired 69 at the moment - great comments from some of the DGI masters!! A excellent article inspires excellent thoughtful helpful comments.
Looking forward to your future articles.
NC45
Coca-Cola Vs. PepsiCo: The Same Taste For The Stock Market Too? [View article]
KO has higher earnings and dividend growth rates.
My starting dividend with KO grows to 4% yield on cost in 4 years vs 5 for PEP because of the higher DGR
KO has stronger balance sheet with lower debt to equity and higher cash and marketable security balances.
Dividend yield was about the same before the PEP 4% dividend increase. But that increase was mildly disappointing after annual increases between 5% and 7% for the last four years. KO usually declares its first quarter dividend and the annual dividend increase on the third Friday in February. That was last Friday, but since the Feb 1 was a Friday, I am looking for the announcement this Friday 2/22. Meanwhile we can hope that the recent trend in the 8% range continues, which would put 2013 dividend at around $1.10. At $1.10 KO would need 8% earnings growth to keep the payout ratio roughly constant, which I believe is below management's earnings objective.
Anyway its a close call to be sure and both fit DGI portfolios.
Thanks for writing the article.
NC45
Thanks To A Pullback, ConocoPhillips Is Now In The 'Buy Zone' [View article]
NC45
12 Things To Dislike About Dividend Investing [View article]
NC45
Thanks To A Pullback, ConocoPhillips Is Now In The 'Buy Zone' [View article]
Historical pattern is irregular. I went back to 2009:
declaration 10/7/09, .47 was increase to .50 , which was pd 12/1/09
declaration 3/24/10, 0.50 was increased to 0.55, pd 6/1/10
declaration 2/11/11 0.55 was increased to 0.66, pd 3/1/11
2012 increase came in form of PSX spin out which was 5/1/12
divneer is correct 1Q13 declaration was 0.66
With the huge capx program being undertaken I have this puppy on watch and have been watching in vain for some indication of mgt intention post PSX spin out. Disappointed increase didn't come with Feb declaration.
NC 45
12 Things To Dislike About Dividend Investing [View article]
Also I would add a different number 14 and that would be that screening for high dividends exposes you to value traps and you only know for sure in hindsight. The upside to both is the work is great brain exercise and perhaps will delay age related dementia!!
NC 45
How To Mislead Investors With New Non-GAAP Measures [View article]
Thanks again
NC45
Buckeye Partners Has Few Growth Opportunities And Poorly Placed Assets [View article]
NC45
Buckeye Partners Has Few Growth Opportunities And Poorly Placed Assets [View article]
NC45
Is Total Return A Useful Metric For Income Investors? [View article]
Thanks for the dialogue.
NC45
Is Total Return A Useful Metric For Income Investors? [View article]
NC45
Is Total Return A Useful Metric For Income Investors? [View article]
Thanks
NC 45