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  • Dividend Growth Investing: An Introduction To Creating Wealth [View article]

    Little thing called opportunity cost.

    What is the thing with a business keeping all cash the best option for everyone?

    Many people are better off with some growth and some income at the same time.

    "If you simply write about your beliefs you will be writing to your choir—it is large, but don’t confuse numbers with reality." Ok. I guess you have not read the extremely strong evidence in Stocks for the Long Run and The Future for Investors in which the S&P 500 was dividend into quin-tiles by dividend rate. Guess what? The quintile with the highest dividend yield performed the best.

    You know which quin-tile performed the second best? The second highest yielding quin-tile. Third? Third quin-tile. Worst - lowest and non-dividend payers.

    The highest quin-tile was around 14.5% per year from the 1950's until 2008 i think. The worst was around 9%.

    I think I will take my chances as for my 25 years of investing it has worked well. Seems like it worked for Dave as well.

    Dividends also allow you to diversify without having to add money or sell anything. Dave stated earlier that he has 20,000 shares of KO. That probably throws out around $25,000 per year in cash. Dave could sit on it, spend it, or buy some other stock or stocks that are cheap. If you don't have dividend payers you need to sell something you may not want to in order to take advantage of another opportunity, thus the opportunity cost I mentioned earlier. Include the data on the S&P 500 quintiles by yield and....I'm not going to fight it too hard. I have my traders but the bulk of my holdings are payers.

    Per your words "but when it comes to investing belief must always be tested by reason." So read the two books I mentioned above. The data is based on over 50 years of the S&P 500.
    Mar 22 10:19 AM | 3 Likes Like |Link to Comment
  • Dividend Growth Investing: An Introduction To Creating Wealth [View article]
    "I mean, if no one is counting the "I's" then what's next? People will be gratuitously using the term "they."

    What will happen if the articles are not personal then some readers, or Uncles, will then complain that you are just spewing theory and that you should give real word examples....which mean the use of 'I', 'me', and 'we'.

    Mar 21 08:53 PM | 2 Likes Like |Link to Comment
  • Dividend Growth Investing: An Introduction To Creating Wealth [View article]
    "The personal pronoun "I" appears 51 times in this short article. Lots of "me" and "my" words, too. The article is not so much about dividend growth investing as it is a recitation of the author's opinions and his personal story."

    Um...I took the article to be about what was covered in the introduction. The reason for words like 'I' and 'me' occurring frequently is due to using his personal investing life as the example.

    -1 to Uncle Pie.
    Mar 21 08:50 PM | 2 Likes Like |Link to Comment
  • The Tortoise Strategy: Part 7 - Buy Altria For 5.0% Yield; Add 11.35% Boost With Calls [View article]
    " If it were to get called away you would have short term capital gains taxes."

    Don't let taxes make all your decisions.

    I don't mind paying short-term cap gains, which you pay on the option premium anyhow in a non-IRA account that you sell options on.

    I surely don't mind a total return of 4% over a month that is reduced to 3% due to taxes. Or I don't plan on complaining about making 12.3% on DOW over the last couple of month on options just because my actual net is closer to 9.25%.

    FYI frrizzo, I am also not going to complain about the 2% gross profit I made on MO in less than a month ( I was recently called out at a 1.5% net profit). I still made an annualized 18% after taxes. I would be stupid to not take that trade. MO was moving up and the dividend was coming so my risk of losing the stock was high which reduced my risk of loss. I decided to take that 1.5% net gain for less than a month. Maybe I could have done better, maybe not but from my pre-trade analysis on the transaction - it was very low risk and easy money even after taxes so I took it.
    Mar 19 04:10 PM | 1 Like Like |Link to Comment
  • The Tortoise Strategy: Part 7 - Buy Altria For 5.0% Yield; Add 11.35% Boost With Calls [View article]

    Long-term investors in stocks may have some of that money, or all of it, inside an IRA in which you can sell CC on, thus no tax issue.
    Mar 19 04:01 PM | Likes Like |Link to Comment
  • The $1 Million Perpetual Income Portfolio: ETF Edition [View article]

    Do you read?

    The article is not about grossing 4% total return, thus your gross 32% in 2013 is comparing apples to oranges. The article speaks to a portfolio that has a dividend yield of 4%.

    I do see that the second paragraph of your comment then addresses the dividend income. So this leads me to ask - did you post in order to simply brag about your performance and portfolio? I mean your active swing trading grossed pretty much what the indexes did last year.

    PFN's total return since inception is barely over inflation and the price is down almost 50% since it came out. Thank God it pays what it does, but barely beating inflation for the risk level = no way I would touch it.

    The story is very similar for PMX, PGF, FFC.

    Do you do research or just swing trade based on charts? Being happy with market like performance with more risk and then recommending risky high yielders that barely beat inflation over time based on total return and three out of the four have lost principal value since they came public...pretty scary stuff there.
    Mar 15 06:27 PM | 6 Likes Like |Link to Comment
  • The $1 Million Perpetual Income Portfolio [View article]

    Those corrections are merely potholes on the road of investing at this point in time. As raykrv6a points out - those that sold out are the ones that got killed. Just reinvesting dividends or as the market was on the way down, if one had cash reserves to take advantage of pullbacks they were much better off by the time the market price returned to par as they would have been picking up great stocks on sale.

    In the 2008/2009 crash you could have picked up high yield corporate bond ETFs that would have you bring in 20% on your investment on just the income alone! Or, if you were a DGI investor you would have been picking up stocks at huge discounts that due to the discount were yielding 20, 25, 30% more than they typically did. Why not pick up some PFE at $14 per share? Even without reinvesting dividends your current yield on cost would be almost 7.5% annually, not counting the 125% return since the March 2009 time frame. You could have also just bought the indexes like DIA, near the 2009 lows and you'd be getting over 5% today on your investment in addition to a 150% capital appreciation.

    Seems like optimism is the only way to think and that does not mean one is stupid about it. You can be optimistic while also having the ability to wait out ugly times or for some people, having several buckets one of which is cash, to take advantage of pull backs.

    People will drive across town for an estate sale or for a $900 tv being marked down to $750 but stocks are something to fear? Not really unless you buy stocks that you don't research and you let emotion make your buying a TV just because it is on sale and cool even when you don't need one. Most investors do poorly because they act like impulsive 12 year olds. The frontal lobes must be used!
    Mar 13 01:04 PM | 3 Likes Like |Link to Comment
  • The Tortoise Strategy: Part 5 - Buy Verizon Or Get Paid 12.8% Annual Yield Not To [View article]
    Got it. Sounds logical.

    Thanks :-)
    Mar 12 12:50 PM | Likes Like |Link to Comment
  • The Tortoise Strategy: Part 5 - Buy Verizon Or Get Paid 12.8% Annual Yield Not To [View article]
    I never could figure out when the $0.05 increments kicked in or what securities they applied to. I don't see it often, but every now and then it comes up when the option premium seems to be under $0.25. Even then I have sold some for $0.11 & $0.07.

    The $0.05 metric might be based on multiple variables. The $0.11 and $0.07 were on AT&T and XLF for the two and three weeks coming up to the main option expiration (3rd Friday of March).

    I think if I was pure online I would probably use Options House. Their commissions are pretty good and their margin rates are pretty low.
    Mar 12 11:16 AM | 1 Like Like |Link to Comment
  • The Tortoise Strategy: Part 5 - Buy Verizon Or Get Paid 12.8% Annual Yield Not To [View article]
    "Schwab charges $8.95 per order + $0.75 per contract. They also pass through exchange fees imposed which can add up to about $0.02 per contract."

    If you account balance is at a certain point or your trading volume is high enough you can get $6.95 + $0.50 per contract. Not a huge discount from their standard but it still matters over the long haul.

    Their are cheaper than Schwab and I only stick with them because they have a bricks and mortar location in my city.
    Mar 12 09:54 AM | Likes Like |Link to Comment
  • The $1 Million Perpetual Income Portfolio [View article]
    "You don't mind providing the links to the actual number of fatalities for BP over the last 10 years, in comparison of the other oil suppliers, in proportion to number of employees."

    In addition to Grat's query, make sure to include the countries of each death for the oil companies too as the amount of government control, in regards to sometimes most all aspects of safety, worker qualification, etc. can vary widely and can often be outside of the control of the companies themselves.
    Mar 11 10:24 PM | Likes Like |Link to Comment
  • The Tortoise Strategy: Part 5 - Buy Verizon Or Get Paid 12.8% Annual Yield Not To [View article]
    Love it.

    VZ is one of my covered call holdings.

    Been using it off and on for around 5 years for a little cash flow booster.
    Mar 11 02:36 PM | Likes Like |Link to Comment
  • The $1 Million Perpetual Income Portfolio [View article]

    seems like it was pretty clear that he was speaking to income tax and not everything else you listed.

    "income tax min. is 15%" (your reference to fed income tax rate that people pay)

    How did you come up with that? A married couple, even without kids gets the first $12,200 free from federal income taxes. If you itemize it is even higher. Then you get to deduct charitable donations, any 401K contributions (IRA too if you qualify). Top that off with a bracketed tax system and you end up having to make quite a nice income to actually pay 15% fed rate.

    I think in 2012 my wife and I made $80,000, no kids to deduct, maybe $500 in charity (that we counted as we give all the time without claiming it all) and took the standard deduction of $11,500 or so at the time. Our adjusted income was then taxed. The tax amount was right at 7.8% Fed rate base on our gross income.

    You'd have to be well into the $100,000 to hit 15% Fed income tax rate. For 2014 you aren't paying 15% rate or more until $18,151 of ADJUSTED income. Throw in that the standard deduction is $12,400 for 2014 with no other deductions (make it simple as possible) and your income tax looks like this:

    First $12,200 Federal income tax free
    Next $18,150 10%

    Summary: the first $30,350 for a married couple with the least complex filing won't come close to 15%. The above example is around 5.9% federal.

    If you happen to hit the top end of the 25% bracket, or $148,850 adjusted which will be $12,200 higher minimum for a married couple for gross income you get this outcome.

    first $12,200 0%
    next $18,150 10% $1,815
    next $55,650 15% $8,348
    next $75,050 25% $18,763

    Total Fed taxes due: $28,926 which is an adjusted rate of 18% or so. What is my point? Even at the absolute highest end of the "25%" bracket you are still well under 25% due to the bracketed tax rates and standard deductions. Again, if people contribute to deductable retirement plans or pay college expenses, heck, have kids as my scenario was a married couple zero kids, your rate goes down from there.

    Do you know how taxes work or do you just look at the Fed tax tables and think that is what you pay? those are adjusted income rates and not gross income rates.
    Mar 10 11:44 AM | 2 Likes Like |Link to Comment
  • The $1 Million Perpetual Income Portfolio [View article]
    Oi, mlasell.

    Mar 8 01:59 PM | 2 Likes Like |Link to Comment
  • The $1 Million Perpetual Income Portfolio [View article]
    ""out performance on NAV doesn't mean much to me or most anyone else."

    Why not? That is the only thing that really matters(actually after tax total return)."


    I friggin told you that the market price closed today right around $12.50 which is over $1.00 per share below the NAV. The NAV is never a price that you can buy or sell at UNLESS the market price is 100% the NAV (i.e. no premium or discount on the market pricing).

    I did forget to point out the obvious, but any 5 year returns that you see now pretty much start near the 2009 lows, or during a global mud pit for most every market. Five year returns are all going to be exaggerated and are almost like data mining.

    "Return of capital means that the payout is larger than the dividends" No duh. Didn't ask for the meaning. Mearly stated that it appears as though their income stream includes return of capital and I also stated that I did not see on their website distribution data older than one year but in the last year there was no return of capital. What question do you think you are answer here? If the payout is larger than the dividends of course they are returning part of the principal. I spoke to generally I guess and should not have smeared terminology together.

    "Morningstar. Morningstar assumes closed end fund distributions are reinvested at market price on the ex dividend date" I guess don't trust Morningstar since the actual fund company has the data out there for everyone to see so why Morningstar would not just get the information from the source seems strange. Did you look at older MS data? ING has up through 2/28/2014.

    We agree that NAV is good to use for entry points, but again, there are times that you might have to sell. In addition to ignoring NAV for performance reasons - the premium or discount to NAV is not something that is in lock-step. NAV and price are all over the place. Sometimes you have a premium, other times you have a nice discount. The share price does not have to move a penny for the NAV to change. And, again, you don't get to sell at the nice 8% premium that the current NAV has over the market price today.

    "IHD has outperformed EEM over the past year on an NAV basis." Who cares?!? I used EEM for illustration only. I was not saying it was good to buy or bad to buy but it was an example of one of many ETFs that represent sectors that you can use when they appear to be undervalued. Of course then you got into the stupid NAV argument again. Well, by PRICE and dividend income, which is what you have to use when purchasing them, EEM over 1 year is down 7.6% and IHD is down 15.6%. Yet you want to talk about how the NAV performance is better? NAV performance means nothing in this case, nor in many other cases.

    See, NAV is like this. Fund A trades at $10.00 per share but has an NAV of $10.00 per share. One year later the price is $9.50 per share and the NAV is even better at $11.00. your stupid NAV performance numbers. You would brag about your 10% NAV return when if you tried to realize a return you'd be sitting with a 5% loss.

    The other time I had this NAV argument the guy was using Nuveen funds like DPO when the market pricing that is what you use to buy in and sell out , had the DIA, SPY, RSP and many other funds spanking them but the guy kept arguing the NAV despite the fact that nobody was getting the same returns as the NAV moves. Even though I should him with the very data from Nuveen itself that DPO was a long-term boat anchor he still pushed the NAV as the metric. NAV is just one of many guides and you also need the history of NAV discount / premium to even know anything.
    Mar 7 06:00 PM | Likes Like |Link to Comment