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  • What's Your (Dividend Growth) Number?: Part 2  [View article]
    Car manufacturers have/had better access to money than me. I can not get a car loan that low, even with an excellent score. Remember it is about yield spread. Sure I could get a loan for maybe 5%? Never have, don't know. Spread or profit is just as much from low cost Interest as high yield Income. They want the sale, they leverage their financial ability for my benefit. Did that in 08 when they were begging. Know the full amortization payment will be higher than the yield spread Income. Meaning you will not get enough Income to fully cover the payment since it is a short term loan. We use it as a way to push our selves to actually save more, by making the payment from normal funds and keeping the Investments working. A household political solution, since it is the car payment not a savings bump as far as the wife is concerned.
    Jan 11, 2014. 02:48 AM | Likes Like |Link to Comment
  • What's Your (Dividend Growth) Number?: Part 2  [View article]
    The key with any yield intensive, mandatory payout like CEF's, BDC's REIT's MLP's is always THEIR cash flow. You want to know in general how THEY get paid, How they are doing on collecting the payments and what the future looks/guess's like.

    For CEF's, I usually start at Cefconnect.com. I then set the screener with my 8 important metrics-Dist %, Dist $Per Share, EarningsPS (looking to make sure Earnings is higher than payout), UNII (the accumulated difference of Dist and Earn), 3 yr return on Nav ( stay away from funds that are losers of NAV normally), 1 yr NAV return, and Prem/Disc to NAV. I do not track leverage or fees because I do care about the results, not how they did it. The choices can be tough with so many funds. I balance out Yield (of course, it's high), make sure decent UNII and earnings are more than payout, look at discounts vs normal, then go dig into the top 5 for-basic holdings and what that mangers strategy is, with turn over rates, length of Bonds, not that I am any whiz but sniffing for crap like Puerto Rico or Detroit.

    So for CEF's I look at Undistributed Net Investment Income and make sure it is positive first. Occasionally it could go negative due to a payment timing problem, if say the CEF is in Bonds that get paid every 6 months. Some Bond funds trade a lot and some just collect yield spread. UNII tracks how well they are doing and I want at least one months payment sitting there. Return Of Capitol is usually a bad thing, as it means not enough Income to cover your payment. It can be ok if the fund uses a lot of Options or is say like MLP's that payout ROC. No options allowed on CEF's unfortunately. I do like stock buys, and study charts and use a neat thing called discounts. the C in CEF stands for Closed, it does not add shares like a normal fund. Their strength IMHO, as their managers are not forced to buy or sell from money flows of the fund. If you buy at a discount you are actually getting the underlying stocks or Bonds at a fair market value or NAV discount. Why the Disc/Premium screen metric is there. Who does not like discounts, assuming it is good stuff inside. Why I take a peek inside and sold EVN ,my muni fund for a tax loss, it had Puerto Rico bonds- that are scary to me. PML sounded better after reading the SA article on it and checking it out. PML was still beat up also with all my Muni funds. Really liking the idea of tax loss selling on these. Almost interchangeable as far as what they do, generate tax free money every month, and now I also get a writeoff for my Ordinary Income. All with almost no change to actual cash flow. In my taxable I have NAC, NKX, NUC, MHI, PCK, PML, PMX, PZC most are California Funds. In my IRA's I have AWF, FPF, HPI, JMF, KMF, PHT, TEI. TEI is my biggest weighting and been a very solid performer. Like many others, they pay a big year end bonus that normally does not show up on things like Yahoo screens. I think normally Yahoo just shows the .25c per quarter, but the usually give at least .50c extra every year.
    With all these the monthly's are my favorite way to get the Income and juice the compounding.

    On BDC's SA author BDC Buzz is great. Read his stuff and you will learn a lot. Their main metric is also Net Investment Income, and again it should not be higher than the Distribution per share and look at how many behind payers they have.
    Much like MLP's or Reits it is all about tracking the funds from operation. I am long Main ( best, but ya pay for it), PSEC, FSC, all three monthly payers. FSC is best priced, but they just cut the divvy again :-( NII had been negative, so no surprise), MCC, TCAP and have Puts in on ARCC.

    Since they issue shares to get new funds, like most high payouts, it is best to buy on dip when they issue or market mania. Again I watch all my cash cows looking for below 200 day moving average, or technical lines of support to sell Puts. Good idea to learn what the share Value is at the last quarter, discounts great but seldom.

    Good luck
    Jan 11, 2014. 02:39 AM | 1 Like Like |Link to Comment
  • What's Your (Dividend Growth) Number?: Part 2  [View article]
    Obie-yep and she is very healthy. Exactly why I focus on what comes to me in Real money. Will say though, LTC is one of those threats that can force a sale. I usually am very careful to be slightly over insured on things that can do that. We have double coverage on our health care, 1 mill on car, 1 mill on house, and 1 mill on rentals. Crap happens, sounds like you were side wacked with medical crap also. I stay ready.
    Jan 11, 2014. 01:29 AM | 1 Like Like |Link to Comment
  • What's Your (Dividend Growth) Number?: Part 2  [View article]
    Just can't help beating what may be a dead horse. But the main key with RE is the fact RE investments pay off the leverage with growing rents. This is a double use of compounding, and for many hard to conceptualize. Look at an amortization table for a loan and notice almost pure Interest on beginning payment and pure Equity pay back on last payment. That is compounding working for the bank and most people are amazed when they actually look at a table.

    But it also works for the Investor, because loans get paid off quicker and quicker over time. Now couple that with either growing rents or stock divvies and you start to realize how quickly you can pay off the loan and in the end you have a far greater cash flow. Remember the amortization payment stays the same, but the equity build portion keeps increasing and the real Interest cost keeps decreasing at compounding amounts.


    I made the realization after my first RE investment was paid off early. The compounding working both ends of the debt "problem", and just chews up the debt extraordinarily fast.


    I now buy my cars with OPM, using the manufacturers FICO to get .9%. In the end The cash I did not spend is still there, continuing to grow the Income being generated and the car is mine, paid off. Mine only has 40K, so many good years left. If/when I get the Itch again for a new car, I will do the same thing. Not using that same cash from me.

    Old school says debt is bad, I dis agree. If I had used the cash, I would have no Income and a declining asset. Needing to save more cash, and MAYBE be able to get another car when I have saved ANOTHER big chunk when it inevitably dies. I used to play the used car game to keep cash. MY way now, using leverage, I never give up the Income generating cash and it's Income stream. Always building passive Income is my goal, and there are many subtle ways to do it.
    Jan 10, 2014. 12:55 PM | 2 Likes Like |Link to Comment
  • What's Your (Dividend Growth) Number?: Part 2  [View article]
    Yes, agree Mike. Leverage means bigger price moves. If one is the type of person that worries over price first, you will get ulcers watching the extra movement. Hard not to when the media does nothing but harp on it. Articles are spot on, the real deal is Passive Income growth and I am glad you write on the subject.
    Jan 10, 2014. 12:25 PM | Likes Like |Link to Comment
  • What's Your (Dividend Growth) Number?  [View article]
    2nds are deductible, if you do ANYTHING to your house during a year.
    as1076- that is how I started and how I worked my RE. What is amazing is the compounding, from both ends on the equity/Income growth. The loan gets paid down ever faster from compounding and divs go up from compounding. Using both, at the same time increases real Income MUCH faster, than either one alone. Truly amazing stuff to watch over time and not taught in school. Tax brackets matter on what kinds of Income to choose, that 1.9% is a great rate, mind if I ask who?. I pay 2% over LIBOR.
    Jan 10, 2014. 12:20 PM | Likes Like |Link to Comment
  • What's Your (Dividend Growth) Number?  [View article]
    To qualify for a Roth, you must have "earned " income. Sounds like you do. You can contribute 100% of it up to the limit for your age, but it is an either or situation on that limit. You must choose one or the other. Never had the ability to double with match. We had been maxing the Roths for many years until my wife retired and now neither has earned Income.
    Jan 10, 2014. 12:01 PM | Likes Like |Link to Comment
  • What's Your (Dividend Growth) Number?: Part 2  [View article]
    Miz, bad enough the Rose Bowl has such nice weather every year! Keep it quite, we are all crazy hippies, it is hell, surfing sucks, lousy fishing, camping, desert riding, skiing- hate it, hate it. Way to crowded and expensive, especially for newbies.

    Was @ Knotts Berry Farm ( amusement park ) the day before the Rose Bowl and every Michigander was giggling about what they were missing at home.
    Jan 10, 2014. 04:07 AM | 1 Like Like |Link to Comment
  • What's Your (Dividend Growth) Number?: Part 2  [View article]
    II, imagine that RE Investor working stocks and you would have me. I started in RE and still consider it core. I set my retirement table with four legs-Pension, stocks, rents, SS. My stocks now bring in more in Income than rents, only because I leveraged my RE. Ah what a wicked web we weave!

    I will say my RE is just quality. For the same money I could have a triplex inland as a single ocean view condo. The cash flow is better with the triplex, but 3x the work and only 1.5 more flow, the value goes up slower inland. My stocks, I have the opposite view. Stocks are easy to evict. i read earnings anyway, just as much work to read a low yield as high yield. I like the high rents in stocks, middle class neighborhood is fine. I don't plan to live there myself, unlike the beach condo.

    Go with what makes you comfortable and you will be able to sustain.
    Jan 10, 2014. 03:56 AM | Likes Like |Link to Comment
  • What's Your (Dividend Growth) Number?: Part 2  [View article]
    Innz-treadmill desk is on my to do list. Unfortunately so are many things!- LOL
    Jan 10, 2014. 03:41 AM | 1 Like Like |Link to Comment
  • What's Your (Dividend Growth) Number?: Part 2  [View article]
    Small- love Zumba, helps with the footwork as my balance sucks. Also take a yoga, both with wife. Good to get out and sweat together, although she kicks my butt as I have two left feet and little flexibility.
    Jan 10, 2014. 03:35 AM | 1 Like Like |Link to Comment
  • What's Your (Dividend Growth) Number?: Part 2  [View article]
    Dave, my experience is 1) is not true. Conversion is taxed as Income and due April 15th like all taxes. It was a choice to pre pay the taxes or just put the extra ordinary on my end of year statement. If paying quarterly the extra Income just need to be added in for each quarter. Good idea anyway, I got bit a little last year for estimating low.

    For me it is knowing who I want in my Roth from my IRA, and then doing the conversion when they are most beat up. As I think the pricing discount from market gyrations beat out compounding from beginning of year. Did PMT last year at little over 10% cheaper than original buy.
    Jan 10, 2014. 03:28 AM | Likes Like |Link to Comment
  • What's Your (Dividend Growth) Number?: Part 2  [View article]
    Be glad you can still get LTC Obieephym. They laughed at me. My wife can and we almost did, but I ran the numbers and or flow can handle one in LTC. Everything else is hedged with good insurance. Why we grow the divs- I want us both to be in LTC together, say 60 years from now when were teenagers again, like one hundred and teens.
    Jan 10, 2014. 03:16 AM | Likes Like |Link to Comment
  • What's Your (Dividend Growth) Number?: Part 2  [View article]
    yep old habits die hard. I can't help dividing by the oz to see if bigger is better. Makes my wife crazy, but I get the best deals!
    Jan 10, 2014. 03:05 AM | Likes Like |Link to Comment
  • What's Your (Dividend Growth) Number?: Part 2  [View article]
    Great points Mike and Heg. But if Kolpin is that young his SS projections won't mean much.

    I will just say I was diagnosed with Diabetes @16 and never planed to live a long life. Back then Diabetes care was nothing like today. Luckily, like so many things, I was wrong.

    So my solution was to just always maximize passive Income. Period. Any way possible, and believe looking at things like that helped tremendously. Growing your passive Income is critical for everyone. Young, healthy, employed can change in an instant. Get ready, life gets tough sometimes. Money in the bank is good, checks coming every month no matter what is better.


    Roths are you're friend-learn what a yield trap is, then maximize with big yields. CEF's & BDC's are best deal in market now. Put the the low divs in a taxable if you have the money and are sure you will keep til yield well actually yield's a liveable amount. Get the passive cash going now.
    Jan 10, 2014. 02:55 AM | 1 Like Like |Link to Comment
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