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  • Should I Sell? A Selling Approach For Stock Purchase Mistakes [View article]
    Chowder, thanks for your comments. You brought back a painful reminder concerning VFC that I also sold for the same reason. I also sold some Apple with a 50% gain a few years ago only to see it skyrocket the next year and still up there with growing dividends averaging 11.5% over the first two years of payments (currently a 3% overall position at the market price). I am no longer quick to pull the trigger and hold GIS, KRFT, PG, etc. and struggle with SYY and their small dividend increases. My current yield is close to 4% and I have few acceptable replacements right now. I think Aflac may go first. Patience is a lesson worth learning more than once. Regards
    Apr 29, 2015. 09:09 PM | Likes Like |Link to Comment
  • Diageo: Forget Short-Term Volatility And Buy For The Years To Come [View article]
    AV, I am at a loss to understand your implied cost of equity at 4.4%. This number is way too low. I understand the CAPM. The cost of equity, broadly defined, is the cost at which buyers will purchase your stock based on the total return they expect, namely capital appreciation plus dividend, if any. (The cost of equity, as some people beleieve, has nothing to do with the underwriting cost of the stock issuance). I would view the "cost" of equity for your model around 8-10%.

    I am a long term holder of DEO and like the business model. I would need a dividend of at least 3% and a P/E no greater than 16.5 for this consumer staple, as most staples today are overvalued at +20x earnings. DEO's price has pulled back and is getting in range for me to consider adding more shares. Regards
    Apr 29, 2015. 08:53 PM | 2 Likes Like |Link to Comment
  • Equity Residential misses by $0.01, misses on revenue [View news story]
    Who writes these ridiculous headlines? The company reported a 5% increase in same store and an 11% bottom line increase. These are excellent results and the company didn't "miss" anything. It's the analysts who missed the actuals. Stop reporting Wall Street analyst nonsense.
    Apr 29, 2015. 02:42 PM | Likes Like |Link to Comment
  • Should I Sell? A Selling Approach For Stock Purchase Mistakes [View article]
    DH, Aflac has been a struggle for me and I continue to debate whether or not I should sell it. The last three years have seen dividend raises between 5-6% and they are dependent on the Japanese penchant to buy this type of insurance as well as the yield curve to invest the premiums. I own one other insurance firm, Travelers, who has managed double digit dividend growth the last few years. David Van Knapp included this stock in his best 40 Stocks for 2013 and 2014 and the stock has grown some 12% over that time. I see a flattening yield curve for the next few years (slight increase in the short term yield with the ten year flat), so Aflac will most likely have decreasing dividend raises with modestly growing earnings. AFL current yield 2.42%, my YOC is 2.77%. Regards
    Apr 29, 2015. 02:30 PM | Likes Like |Link to Comment
  • Learning From The Masters: Q&A Session With Buyandhold 2012 [View article]
    djsulli, thank you, Sir!
    Apr 29, 2015. 02:05 PM | Likes Like |Link to Comment
  • Learning From The Masters: Q&A Session With Buyandhold 2012 [View article]
    Robert, after reading the previously mentioned Chowder article, I went back to my Excel spreadsheet and added all the investment grade ratings for my stock holdings. It gave me a chance to review the overall credit quality of each and why I hold them. I would also point out that I have a few of investment grade stocks, defined as BBB+ or better, that have large embedded capital losses due to purchases at much higher prices prior to 2008. I'm willing to hopefully ride them back up in price versus selling now and adding to my current tax loss carry forward that I acquired in 2009 due to my love affair with money center banks and their generous dividends. It was a very messy "divorce" and I paid a big price!) I agree with avoiding the lower quality stocks. Regards
    Apr 29, 2015. 01:47 PM | Likes Like |Link to Comment
  • Learning From The Masters: Q&A Session With Buyandhold 2012 [View article]
    Rose, thank you for your response and I always enjoy reading your comments. You should feel very proud that some here on SA, including myself, appreciate your civility versus some of the occasional nasty stuff from the maddening crowd. I'm working on an article for young investors on DGI/cash flow investing. Regards
    Apr 29, 2015. 01:34 PM | 2 Likes Like |Link to Comment
  • Learning From The Masters: Q&A Session With Buyandhold 2012 [View article]
    RAS, I agree that you give up the future dividend of a stock you sell and this can be a risk. My decision is one where I have to find a replacement stock of equal or better quality (less than fair value, credit, etc.). Whereas I can increase my overall cash flow from dividends (existing and new combined), I struggle with the initial sale and don't do it very often. I have many stocks (i.e. JNJ, MO, BMY, CVX) that have large long term unrealized capital gains that I am not contemplating selling.

    For example, I once owned Travelers (TRV) with a $20 basis and sold most of it at $80 to significantly improve my cash flow and diversify away from financials. I still own a few shares that now yield 10.74% on my original cost. (Those of you who don't like this metric can hold your comments. I know them already!) Was this a mistake? Let's see: The five year average dividend growth 2008-2012 was 9.73% and the last dividend increase/payout in June 2014 was up 10%. At the time I sold TRV, I didn't "see" the potential growth and thought it would flat line. Can't win them all. TRV now trades around $103 and I'm keeping the remaining shares. As a result, I rarely sell my core positions and my most recent sale was ENI (E), the Italian super major oil company and non-core holding. My yield was over 5%, but they cut their dividend and I didn't like their prospects. Luckily I got out around my cost. I do not recommend active unrealized gain harvesting for some of the reasons you mentioned. Regards
    Apr 28, 2015. 02:01 PM | 7 Likes Like |Link to Comment
  • IBM: What's The 2015 Dividend Raise? [View article]
    rockjcp, I like to see "net buybacks" where the majority of cash is used to buyback shares and not where more than 33% or more of the buyback is offset by the issuance of new shares to executives. Buybacks are usually a sign that 1.) the company doesn't have better investment opportunities or the need for more R&D, or 2.) the executives need to get the price up to cover the strike price on previously issued restricted shares and options. Otherwise, declare a special dividend and return the cash to shareholders. I get why tobacco companies do buybacks with their high dividends in a very mature business, but what does this say about IBM and other companies? Financial engineering for insiders. Long: IBM
    Apr 27, 2015. 04:20 PM | 4 Likes Like |Link to Comment
  • Learning From The Masters: Q&A Session With Buyandhold 2012 [View article]
    Nicholas, thanks for the interview. I would reiterate a few points that all young investors should consider:

    1. Have a plan and stick with it. It might change over time, as mine did. I went from Total Return to Dividend Growth Investing and went from mutual funds to individual stocks. Not all financial advisors (formerly called stockbrokers) are bad, but their job is to generate fees from your portfolio. Your individual plan should meet your needs and goals, not some investment advisor or newsletter.

    2. Don't follow the advise on TV. It's all for entertainment (and selling spot time for commercials) and mostly for short term traders.

    3. I generally "buy and hold" certain stocks that I consider core (CVX, XOM, T, JNJ, PG, KMB, KO, SO, MSFT, INTC, ITW, EMR, etc.). However, I would disagree that I should never sell. I am primarily a "cash flow investor", namely, I want my DGI portfolio to increase the cash flow to me each year. If a given stock increases 50% or more in value, I might sell some shares and monetize the unrealized capital gains and buy another dividend growth stock. Assuming I do my home work, purchase below fair value and have some reasonable diversification, I will have net additional cash flow. I don't consider this "selling my winners", but buying another winner and increasing the cash flow. Capital gains usually follow my portfolio. Generally speaking, there is usually some good stock on sale.

    4. Diversification matters. I have approximately 75 stocks spread among different industries and no position greater than 3.5%. (I learned this lesson the hard way in 2008).

    5. Patience is a virtue and key to successful investing. Follow the herd and you will have below average returns. The herd is frquently late to the game. If you made good decisions with your initial purchases, hold during downturns and use dividend-sourced cash to purchase new positions. I haven't purchased much in the last few years because I see the overall market as fully to overvalued. It's tough waiting, but occasionally individual stocks that I like sell off and I buy a few more shares (I bought some PM recently).

    Best of luck!
    Apr 27, 2015. 04:00 PM | 14 Likes Like |Link to Comment
  • Why I Purchased Schwab's U.S Dividend Equity ETF As A Dividend Growth Investment [View article]
    DVK, Merkel is referring to bond or a combination stock/bond ETF that partial invests in thinly traded, small bonds. At times, there is a limited to no market liquidity for these bonds. This, in theory, could also refer to thinly traded micro caps. Generally not relevant to SCHD.
    Apr 27, 2015. 03:18 PM | 2 Likes Like |Link to Comment
  • Why I Purchased Schwab's U.S Dividend Equity ETF As A Dividend Growth Investment [View article]
    six, AMEN!
    Apr 27, 2015. 01:57 PM | Likes Like |Link to Comment
  • Why I Purchased Schwab's U.S Dividend Equity ETF As A Dividend Growth Investment [View article]
    aymo0003, sounds like a good plan. I too recommend a diversified approach with a few higher yielding stocks, but only at a discount to fair value. Best of luck.
    Apr 27, 2015. 01:49 PM | Likes Like |Link to Comment
  • Why I Purchased Schwab's U.S Dividend Equity ETF As A Dividend Growth Investment [View article]
    David, perfectly stated. Most mutual funds do not beat their respective index because the "professionals" don't know the future anymore than most individual investors. ETF's are a relatively new product. My mantra is "cash flow" for my personal taxable account which is 60% DGI, 20% cash and 20% in various bond mutual funds (mostly Muni's). I own three ETF's (Europe, Financials, Healthcare). I was taught MPT in business school and realize now that it is a modern version of what you describe as "three-card-monty". I was in the finance world for over 35 years and I can guaranty that the investing world is full of inefficiencies in pricing. I'm weighted towards cash flow from my investments and total return also follows. Regards
    Apr 27, 2015. 01:38 PM | 3 Likes Like |Link to Comment
  • Cheap Access To The Investment-Grade Bond Market [View article]
    Thanks for a well written article explaining the different options for bond ETF's and funds. We don't know when rates will rise, but I have a sneaking suspicion that the Fed will raise shorter rates by 25 basis points by the end of the year or first quarter of 2016 as an experiment in seeing how the market reacts. Bond holders will be in for a surprise as a 25 bp rise in rates may amount to a 1% loss of principal on paper (assuming a duration of four years in the investor's holdings). Most investors can handle the 1% drop, but will get very nervous if the herd starts talking about further near term rate hikes for the balance of 2016. Ladies & Gentlemen: Fasten your proverbial seat belts. The ride on the Great Anxiety Roller Coaster is about to begin in ---!
    Apr 26, 2015. 09:33 PM | Likes Like |Link to Comment