SDS (Seductive Dividend Stocks)

SDS (Seductive Dividend Stocks)
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  • Buying On The Dip, A Strategy  [View article]
    Bob,
    Thank you for good article. We all know "buy low, sell high" concept and dips allow us figure out "low" in comparison with recent market prices. Such "low" might trigger "buy" decision ONLY after DD. You refer to M* fair value, they also have the buy price which is often too low IMO but can be used as a reference point.
    SDS
    Feb 10, 2014. 09:54 AM | Likes Like |Link to Comment
  • The Importance Of Consecutive Dividend Increases In Stock Selection  [View article]
    Fibonacci Sequence
    If you reply to me:
    I don't benchmark because I have nano-caps (often non-liquid without institutional support) and ~ 20% of non-US stocks. l love Vanguard for their low fees but even they can be avoided - http://seekingalpha.co...
    SDS
    Feb 7, 2014. 10:09 AM | Likes Like |Link to Comment
  • Warren Buffett Is Wrong About Dividends  [View article]
    Barry,
    Thank you for the explanation but it sounds like active management with fuzzy "quality" term + S&P500 is also actively managed index.
    SDS
    Feb 7, 2014. 09:52 AM | Likes Like |Link to Comment
  • Warren Buffett Is Wrong About Dividends  [View article]
    Recently few dividend investigations in SA created tons of comments with the same arguments from both sides. It is waste of time to go in circles IMO. Nevertheless here is a continuation of my comments on some comments:
    SDS: “So W.B. pushes folks to be speculators being himself an investor.” Sorry my bad English. I mean So W.B. “invites” folks to be speculators being himself an investor.
    To David Fish reply: I’m sure BRK is legally correct enterprise. I do not say that some stocks are "wrong". I just separate investment from speculation. Silicon Valley (there I prosper) die if people stop buy non-dividend stocks. IMO such non-dividend stocks cannot be named “investor grade” using bonds terminology.
    “Is there a possible scenario that forces all companies to stop paying a dividend?” Collapse of economy. Look on Japan.
    “As Mr Buffett has repeated over and over, his preferred holding time is forever.” Me too but lifetime of an investor and probably human civilization has a limit (well quite long in second case). BTW it is strange that many financial advisors (FAs) do not recognize that in our time investment life-time for a person can be ~ 60 years due to progress in medicine and even more FAs ignore that ~ 20 -30 years of this are during retirement.
    “The only reason companies don't pay out dividends from earnings, is because they use the money to fund capex for long term growth.” Seriously? Look on CEOs salaries and perks….
    Barry North : What is the source for your WWW site? How calculations were done? Why only 1,171 stocks? (Please shut SA email, I’m not sure that will return here).
    “Paying a dividend is a capital allocation choice made by a company.” Well, any shareholder is co-owner of company. See http://bit.ly/I73GqU how it might influent dividends.
    “Buffett (correctly) believes he can reinvest the cash better than the owner of the stock, so he correctly retains those earnings. GE knows they cannot, so they pay a dividend.” Probably yes because W.B. has better flexibility than GE. Can you imagine GE buying Hertz?
    SDS
    Feb 7, 2014. 01:03 AM | Likes Like |Link to Comment
  • The Importance Of Consecutive Dividend Increases In Stock Selection  [View article]
    IMO firm should adjust DGR to its own "business interval" which might be different from common calendar, see e.g. http://seekingalpha.co...
    SDS
    Feb 7, 2014. 12:03 AM | Likes Like |Link to Comment
  • Warren Buffett Is Wrong About Dividends  [View article]
    My comments on some comments:
    Anybody who read W.B. recognizes that he is very smart. Word savant wasn’t in my vocabulary till today, I use word idiot probably too often. What is the difference between idiot-savant and pundit?
    Taxes on dividends are the same as for cap. gains. Dividends are tax-free in IRA accounts. Double taxation is a crime IMO. Share buybacks are usually destructive (http://seekingalpha.co...).
    Add to David Fish comment (6 Feb, 05:57 PM ) – see http://seekingalpha.co... It is a bit foolish approach but to buy stock to have only capital gain is more foolish IMO.
    BRK needs cash because they are insurer and “responsible” for others risk. I guess it would not punch the company if they distribute a part of this cash pile as PTI proposed.
    “the question many of us should ask is what is the best way to accrue wealth PRIOR to retirement.” – It was asked few times in SA. IMO, you can walk from point A to point B by different ways in pre- retirement but DGI gives you experience you’ll need in retirement.
    “But why invest in a company doing poorly with its investments?” – I’d agree but now average CFO is more creative in accounting than my detective skills.
    I’d agree with Kurtis Hemmerling that company should not pay dividends during some stages of it live. May be BRK is still in this stage.
    A small investor has now more opportunities than W.B. , e.g. good micro-caps. On another hand, W.B. has better access to instruments than small investor, e.g. preferred specially issued for W.B. at conditions W.B. can dictate.

    OFFTOPIC for myself only: <I read till Offline_A comment>

    SDS
    Feb 6, 2014. 08:56 PM | Likes Like |Link to Comment
  • How I Can Explain 96% Of Your Portfolio's Returns  [View article]
    Larry,
    I just said that I need fresh head to read.
    How do you know that valuation is high or low if "...there is no real mean ... anyway."? I might agree that "Mean reversion isn't a law" but data show that something like it happens. Can you claim a law that "if you have an asset that has higher than expected returns because valuations rose more than earnings then you must then have lower future expected returns". What are forces behind this? Etc, etc, etc.....
    Again let's discuss in the blog, it is quite far away from this good article.
    SDS
    Feb 6, 2014. 08:24 PM | Likes Like |Link to Comment
  • Warren Buffett Is Wrong About Dividends  [View article]
    The Part-time Investor
    Thank you for good research. I didn't read the comments, so sorry if it was said.
    Warren Buffett (W.B.) has dual position - he like to receive dividends but don't like to pay. So conflict is obvious. He has good explanation. W.B. stated many times that his major job is to allocate capital. If a person delegates this responsibility to W.B. (s)he probably should buy BRK, if not - it is better to be DYI and use W.B.'s maxim “A girl in a convertible is worth five in the phonebook.”
    Moreover there is the second more hidden conflict. W.B. distinguishes investment and speculation as "Consciously paying more for a stock than its calculated value—in the hope that it can soon be sold for a still-higher price—should be labeled speculation (which is neither illegal, immoral nor—in our view—financially fattening).
    ... uncertainty frequently occurs when new businesses and rapidly changing industries are under examination. In cases of this sort, any capital commitment must be labeled speculative. Now, speculation — in which the focus is not on what an asset will produce but rather on what the next fellow will pay for it — is neither illegal, immoral nor un-American."
    I agree with it except that moral principles are different in various countries and in some places speculation is immoral.
    Now let me be radical: IMO when we speak about stocks, any capital injection can be named investing ONLY if firm behind the stock pay dividends. All other stocks including BRK are objects of speculation. So W.B. pushes folks to be speculators being himself an investor.
    You can argue that price of BRK will increase with time because W.B. is perfect assets allocator (and I'd agree with this definition) but it is not always true because Mr. Market might be in terrible mood when you need cash and have to sell BRK. With all my respect to W.B. I prefer to be DG/HY investor not speculator.
    Although the presented study is a bit artificial (dividend is function of BRK stock price) due to computation limitation of the author and obligation to make a simple hypothesis of dividend amount, I think it is worth to send it to W.B. If he changed dividend policy of BRK, I would consider his company for my portfolio.
    SDS
    Feb 6, 2014. 07:54 PM | 3 Likes Like |Link to Comment
  • 3 U.K. Dividend Champions  [View article]
    Halma div history starts from 2005/06 according to the company WWW site, while your wrote "has increased its dividends for the past 34 consecutive years. "
    Feb 6, 2014. 11:18 AM | Likes Like |Link to Comment
  • How I Can Explain 96% Of Your Portfolio's Returns  [View article]
    Thank you, Larry. I just finished another experiment, will go sleep an when try to understand your explanation for RTM. Let discuss it in blogpost http://seekingalpha.co...
    SDS
    Feb 6, 2014. 04:24 AM | Likes Like |Link to Comment
  • 3 U.K. Dividend Champions  [View article]
    Junius,

    Thank you for article.
    Unilever: I wait ~ 15% price reduction.
    PZCUF - according Yahoo there is no market for this stock in USA
    HLMAF - where did you get their dividend history?

    SDS
    Feb 5, 2014. 11:55 PM | Likes Like |Link to Comment
  • Dividend Gain And Opportunity Again Despite Portfolio Pain  [View article]
    A bit OFFTOPIC:
    There is some discussion here on cash emergency fund. I put a simple schedule to
    http://seekingalpha.co...
    SDS
    Feb 5, 2014. 11:44 PM | Likes Like |Link to Comment
  • A Dividend Growth Investor Looks At AAII's Stock Screens  [View article]
    OFFTOPIC:

    A joke of the day (my own sorry for bad English, a'la Ambrose Bierce "The Devil's Dictionary"):
    Accounting is the art of violation of 4 rules of arithmetics.

    SDS
    Feb 5, 2014. 10:55 AM | 1 Like Like |Link to Comment
  • A Dividend Growth Investor Looks At AAII's Stock Screens  [View article]
    These 2 screen should have ZERO common stocks if you interpret the screens correctly.
    Feb 5, 2014. 10:54 AM | Likes Like |Link to Comment
  • How I Can Explain 96% Of Your Portfolio's Returns  [View article]
    Larry,

    Thank you , you missed one /RTM/ I really don't know. Let's move mean reverting discussion to my blogpost - it will be easy to find it in future.

    Well dividends again.....
    I have the paper by Shefrin and Statman in my collection but I didn't read it yet (I read "Beyond Greed and Fear" there this paper is reviewed). In books on dividend policy I recommended you probably much more reasons to shareholders and executives are discussed, but my favorite one is Warren Buffett's “A girl in a convertible is worth five in the phonebook.”

    As you know point that "It is generally accepted" does not exclude that it is the error. I have now objection that dividends must be subtracted from opening price. I have objection on double taxation of dividends but some folks have only IRA accounts and don't face this problem.

    Returning to Warren Buffett (I don't want to discuss his dual dividend policy here) let use his definition for investing versus speculation:
    "Consciously paying more for a stock than its calculated value—in the hope that it can soon be sold for a still-higher price—should be labeled speculation (which is neither illegal, immoral nor—in our view—financially fattening).
    ... uncertainty frequently occurs when new businesses and rapidly changing industries are under examination. In cases of this sort, any capital commitment must be labeled speculative. Now, speculation — in which the focus is not on what an asset will produce but rather on what the next fellow will pay for it — is neither illegal, immoral nor un-American."
    I agree with it except that moral principles are different in various countries and in some places speculation is immoral.

    Now let me be radical: IMO when we speak about stocks capital injection can be named investing ONLY if firm behind the stock pay dividends. Therefore I prefer yield as signature of value to P/B. Another reason that book (B) cannot calculated precisely in many cases - I know several companies where major assets are brains of employees, patents and know-hows - elements not included in book.
    BTW when scholars compared performance based on yield and based on P/B did they limit set of companies for P/B to only the same companies which have non-zero yield (i.e. pay dividends)? If not - such comparison is incorrect (kind of apples to oranges or more precisely investing vs investing+speculation).

    A joke of the day (my own sorry for bad English, a'la Ambrose Bierce "The Devil's Dictionary"): Accounting is the art of violation of 4 rules of arithmetics.

    SDS, an investor not a speculator.
    Feb 5, 2014. 10:52 AM | Likes Like |Link to Comment
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