It's Okay To Wait For A Dividend Cut Before Selling [View article]
>>> Time will tell more for BP along with your sales of PFE, CTL, BMY, PGN and WFC <<<
Yup Elle, I guess they will. That's why I put them out there, for people to learn from the successes or failures. The money has to go somewhere. Don't you think that might be important?
Would be nice to see how you handle your losses though. I might pick up a tip or two.
It's Okay To Wait For A Dividend Cut Before Selling [View article]
Elle, in my case selling BP worked out for me because I replaced it with MCD which brought me a greater total return since I made the switch. MCD has produced at a higher return rate than BP has recouped some of its losses. So a lot depends on where the funds go.
Are Streaks And Current Yields The Best Metrics For Dividend Growth Investors? [View article]
@Craig ... >>> I suspect that when P & G was building its first few factories, it wasn't paying a 3% dividend <<<
I opened a DRIP with PG directly from the company about 15 years ago, give or take a couple of years. The yields weren't as high then as they are today.
Back then I wasn't aware of the dividend growth strategy. I only thought of PG as a company that paid a dividend and I was going to reinvest the dividends.
Here are the Average Annual Dividend Yields for PG going back to 1997: (Source ... Value Line)
I think that data supports your thesis about lower yields and higher dividend growth. It depends on the strength of the company when at the lower yielding levels.
It's Okay To Wait For A Dividend Cut Before Selling [View article]
I realize some people prefer to wait for a dividend cut, but with most companies I own, a dividend freeze is enough for me to sell and I say that because the juice that makes my portfolio run is dividend growth. The dividend has to grow.
From 2008-2010 I had a few companies freeze, lower or eliminate the dividend. What most people need to realize is, that doesn't mean your position wasn't still profitable.
Here are the companies I owned during the time frame above, that I sold once the company either froze, cut or eliminated the dividend.
I got nailed with BP when they eliminated the dividend. I'm going to chalk this one up to stubbornness and stupidity on my part. When the rig blew in the Gulf, I knew the price was going to drop but I decided I would stick with it as long as they continued paying the dividend. I figured I'd reinvest the dividends.
BP said the dividend would not be affected. In fact, they declared the dividend and issued the payment date. I was satisfied with that. A day or two before the dividend was to be paid, the CEO of BP was called to the White House and ordered to eliminate the dividend, which BP did. I ended up selling and locking in the loss. My loss was 47.8%.
Here's the good part though! I insured myself against stupid mistakes. I own quite a few companies and try to keep them equally weighted. At the time BP represented 4% of my total portfolio value. Since I lost nearly half of that, the loss only represented a 2% loss to the overall portfolio. That's nothing! Whew! Proper portfolio positioning and weightings bailed me out of what could have been a disaster.
I could have held BP and I could have recouped some of the loss, but if I held on, I'd still be showing a loss. I was better off emotionally just taking the 2% portfolio loss and moving on.
I held PFE when they cut the dividend. I sold immediately taking an 8.1% loss on the position which was nothing on the overall value of the portfolio.
Those were my only two losses, the others were all profitable.
When CTL froze the dividend after having raised it for 37 consecutive years, I didn't think twice about selling. I was out immediately and locked in a 57.5% gain. CTL later went on to cut the dividend.
I sold BMY when they froze the dividend. I was out with a 21.2% gain. What I didn't know at the time was that BMY would start raising the dividend a year later. I made a decision based on what I knew at the time, and I still ended up with a profit.
When PGN froze their dividend, in anticipation of a merger with DUK, I held for a period of time, but the merger was taking longer than expected and I didn't want to risk losing my capital gains in the event the merger didn't go through, so I locked in profits of 45.4%.
I held WFC during the bank crash. It's the only bank I owned that got hit hard and had to eliminate the dividend. I sold and had a 20.0% profit when the dust settled.
So all in all, even though I got hit with freezes, cuts and elimination of the dividend, I was still profitable, and had capital gains to reinvest elsewhere and keep the dividend growth machine moving.
It's Okay To Wait For A Dividend Cut Before Selling [View article]
I agree with Rich. I think it's important to head things off at the pass if you can.
People who are against the dividend growth strategy are always keen to throw General Motors, Eastman Kodak and others in our face. Those companies didn't go from top of the table to relegation without a regression state of operations.
It usually starts with high dividend growth, to slow dividend growth, to a freeze, to a cut, to elimination. There is plenty of warning along the way.
I like to look at a company's history and then will monitor anything that falls out of their historical performance.
For example, GIS has been paying a dividend for over 100 years. In that time they have never lowered the dividend. Not once! They have frozen it on many occasions, but they have never lowered it. Therefore, slower dividend growth or a freeze wouldn't cause me to sell.
On the other hand, CTL had a 37 year consecutive string going where they raised the dividend and they simply stopped without any comment or guidance about future dividend growth. That was out the ordinary for them and I sold immediately. I saved a lot of capital gains that would have disappeared if I held until the cut came along.
I used to own NUE and when I owned them, they were raising the dividend in the high single digit range. That dividend growth is now down in the low single digit range and the payout ratio continues to rise. I was out last year. I wasn't waiting around for a potential cut. The cut may not come, but two things happened with my NUE which I think are significant and your study doesn't cover.
The first point is that even if NUE is able to reverse the dividend growth trend, they never would have had an opportunity to catch me holding them if a cut were to come.
The second and more significant point is, where were the funds invested?
You know what Giorgio, I retract my statement! I think it's horrible that NBC will be broadcasting games.
The soccer pub we go to will open the pub for 7:45 AM matches on Saturday and Sunday mornings. We're sitting in the parking lot at 7 AM tailgaiting, waiting for the pub to open. They don't open for early matches when shown on ESPN 2. They won't open for NBC matches either. They will show the matches in the afternoon which occur during the week.
I don't want to sit at home when watching most of these early matches. I want to be trashtalking with my soccer buddies as most of them are either Man United or Chelsea fans.
Dripping Works: A Real-World Example [View article]
There are quite a few things that are disturbing to me about mutual funds.
I used to carry a Series 6 license, so I was up to date on funds at one time, but like most things in life, you use it or lose it. So, I forgot a lot of information I used to know.
The one thing that really bugged me about mutual funds is that you could show a loss on the year and still have to pay a capital gains tax.
Lose money and pay a capital gains tax? Are we nuts?
Well, yeah actually.
When people start making a run on their funds, as happened in 2008 - 2009, the funds have to sell positions to meet redemptions. They have to sell companies they don't want to sell. But, since they are forced to sell because the public wants out, they have to sell winners and winners have capital gains. The funds don't pay capital gains taxes, the fund owners do. Good luck with that!
Most funds have what I think was called a 4b fee. I forget the designation, but that sounds right. Anyway, that's a fee the fund charges you to offset their advertising costs as they try to generate more clients. The fund owner pays those advertising costs!
Now here's the good part, for the funds anyway, if they decide to close the fund to new investors, that means no more advertising. Guess what? Most of them keep charging the 4b fee, or at least they used to when I was involved in the mutual fund business. ... Ha! Ha! What a crock. No funds for me babee unless the 401K doesn't allow any other choices.
6 Lessons Learned From Up And Down Markets [View article]
Small, you can do the same thing with TD Ameritrade, but I don't know where to find the button. All I do is send them an e-mail and they handle everything.
One of the portfolio's I manage is for a friend who collects the dividends in cash and we selectively pick the next purchase, but he owns EPD and he wanted to take advantage of the 5% discount you get when you reinvest the distributions. So, I sent an e-mail off to TDA and asked them to set that one position up for reinvestment and they did. No charge. No muss, no fuss. ... Ha!
'Savvy Senior' Conservative IRA Portfolio Returns 16.4% In 2012 [View article]
@user 427801 ... You know what? I actually agree with most of what you say. I wish we could see what people truly hold and see what they used to hold that they don't want us to see.
One of the portfolio's I manage for someone is posted online. It's there for everyone to see. I can't hide anything. I can't go back and change anything. I announce all moves before they are made. I don't come back three months later and say see what I bought after it has run up. I announce before the move is made.
It's a real portfolio using real money and the brokerage statement material is updated every month.
I took it a step further! At the bottom of the monthly reviews are the positions the portfolio used to own. You see the losers right along side the winners, and you see where the money went from those positions. I challenge anyone to give as much transparency as I do.
The following link is to the online portfolio. Scroll down to the third message for the portfolio positions. The second message down is a review of positions sold a couple of years ago and comparing those positions to the positions that replaced them in an effort to determine if the move was the right thing or whether I should have just sat tight.
There are a couple of losers there that are painful to see, but they are there. I don't hide anything.
Take a look-see and let's eliminate any sneaky suspicions. ... Ha!
I don't profess to be the next Warren Buffett, but I have no fear of letting others see what I do. They can learn not only from my successes, but also from my failures, and I've had a few.
This is a different market. What makes it different isn't people chasing high PE companies, the latest technology, or speculating, it's that the Fed is pumping $85 Billion per month into the economy, and until that stops, or a target date is stated, the market is going higher.
Tulips had no value other than what people perceived. The tech boom saw companies with no earnings being run up in value. The real estate boom saw real estate rise on speculation. This market is seeing companies with real earnings, and earnings that are rising leading the market.
When you have the residuals of that $85 Billion and the money is going into companies with earnings, the bull can run a little more. That's what makes it different.
I never said a serious correction wasn't coming. It will one day.
I think that might help promote the sport here in the States, something that is going to happen sooner or later whether people are ready for it or not.
There is too much money involved not to come here and it's why more and more American owners in other sports are showing an interest in EPL. Hell, Manchester United is worth twice what the Yankees are worth!
I continually rag on my brothers about the World Series only allowing maybe Toronto to participate. I think baseball should be sued for using that name when the World isn't invited. ... Ha!
At least when World Cup play comes around, there are teams from all over the world. That makes sense to me.
Goodbye and good riddance Sir Alex! Mourniho is gone and I'm dreading it if it's to Chelsea. I'm thankful that Arsenal squeezed in and qualified for Champions league. And where in the world did Wigan come up with a Championship in tournament play when they are getting relegated from EPL? Blows my mind.
Looking forward to the transfer window. Wenger says he's going to spend money. I'll believe it when I see it. If we kept Van Persie, Nasri and Fabregas, and all it would have taken was money, then we could have been top of the table. No doubt in my mind. Damn tight Frenchman, lighten up.
Now don't get me wrong, I don't see anything wrong with easing into cyclical's at this time, but the higher the market goes, the more I focus on my conservative holdings.
In the event the market does correct here, I am confident my core positions will weather the storm more that the cyclical's will. This is important because the conservative, high quality companies may not have to make up as much ground on a rebound. ... Just a thought.
You do what you think is right. Your objectives, which I have no clue about, may dictate the exact strategy you wish to enforce.
Larry, good for you! Keep the longer term view. A lot of people are going to be talking about market corrections, taking profits, holding cash, etc. For one in retirement, it's the prudent thing to do.
For one still in the accumulation phase, keep accumulating quality. My attitude is that I want to keep adding shares, adding shares, adding shares.
Dividends are based on shares. The more shares I own, the more that dividend income grows.
I took a look-see at your link above and if I may, I'd like to add a comment. It's not a critique, so please don't take it that way.
With the market setting new highs, I thought I read that you were increasing your risk. I have to think about that. As the market heads higher, until today, I was only willing to add to my conservative positions.
I think the time for risk is in the early to mid stages of a market turnaround, not at ever increasing all-time highs. I don't know, just some random thoughts mentioned aloud.
It may turn out okay for you, and I hope it does. I just never thought of increasing my risk level at all-time highs. Well, not since the tech crash where I got my hat handed to me on a paper plate. ... Ha!
It's Okay To Wait For A Dividend Cut Before Selling [View article]
Yup Elle, I guess they will. That's why I put them out there, for people to learn from the successes or failures. The money has to go somewhere. Don't you think that might be important?
Would be nice to see how you handle your losses though. I might pick up a tip or two.
It's Okay To Wait For A Dividend Cut Before Selling [View article]
Are Streaks And Current Yields The Best Metrics For Dividend Growth Investors? [View article]
I opened a DRIP with PG directly from the company about 15 years ago, give or take a couple of years. The yields weren't as high then as they are today.
Back then I wasn't aware of the dividend growth strategy. I only thought of PG as a company that paid a dividend and I was going to reinvest the dividends.
Here are the Average Annual Dividend Yields for PG going back to 1997: (Source ... Value Line)
1997 ... 1.6%
1998 ... 1.3%
1999 ... 1.3%
2000 ... 1.5%
2001 ... 2.1%
2002 ... 1.9%
2003 ... 1.9%
2004 ... 1.9%
2005 ... 1.9%
2006 ... 2.0%
2007 ... 2.1%
2008 ... 2.1%
2009 ... 2.8%
2010 ... 3.0%
2011 ... 3.1%
2012 ... 3.3%
I think that data supports your thesis about lower yields and higher dividend growth. It depends on the strength of the company when at the lower yielding levels.
It's Okay To Wait For A Dividend Cut Before Selling [View article]
From 2008-2010 I had a few companies freeze, lower or eliminate the dividend. What most people need to realize is, that doesn't mean your position wasn't still profitable.
Here are the companies I owned during the time frame above, that I sold once the company either froze, cut or eliminated the dividend.
I got nailed with BP when they eliminated the dividend. I'm going to chalk this one up to stubbornness and stupidity on my part. When the rig blew in the Gulf, I knew the price was going to drop but I decided I would stick with it as long as they continued paying the dividend. I figured I'd reinvest the dividends.
BP said the dividend would not be affected. In fact, they declared the dividend and issued the payment date. I was satisfied with that. A day or two before the dividend was to be paid, the CEO of BP was called to the White House and ordered to eliminate the dividend, which BP did. I ended up selling and locking in the loss. My loss was 47.8%.
Here's the good part though! I insured myself against stupid mistakes. I own quite a few companies and try to keep them equally weighted. At the time BP represented 4% of my total portfolio value. Since I lost nearly half of that, the loss only represented a 2% loss to the overall portfolio. That's nothing! Whew! Proper portfolio positioning and weightings bailed me out of what could have been a disaster.
I could have held BP and I could have recouped some of the loss, but if I held on, I'd still be showing a loss. I was better off emotionally just taking the 2% portfolio loss and moving on.
I held PFE when they cut the dividend. I sold immediately taking an 8.1% loss on the position which was nothing on the overall value of the portfolio.
Those were my only two losses, the others were all profitable.
When CTL froze the dividend after having raised it for 37 consecutive years, I didn't think twice about selling. I was out immediately and locked in a 57.5% gain. CTL later went on to cut the dividend.
I sold BMY when they froze the dividend. I was out with a 21.2% gain. What I didn't know at the time was that BMY would start raising the dividend a year later. I made a decision based on what I knew at the time, and I still ended up with a profit.
When PGN froze their dividend, in anticipation of a merger with DUK, I held for a period of time, but the merger was taking longer than expected and I didn't want to risk losing my capital gains in the event the merger didn't go through, so I locked in profits of 45.4%.
I held WFC during the bank crash. It's the only bank I owned that got hit hard and had to eliminate the dividend. I sold and had a 20.0% profit when the dust settled.
So all in all, even though I got hit with freezes, cuts and elimination of the dividend, I was still profitable, and had capital gains to reinvest elsewhere and keep the dividend growth machine moving.
It's Okay To Wait For A Dividend Cut Before Selling [View article]
I was just trying to add some color where color wasn't needed. ... Ha!
It's Okay To Wait For A Dividend Cut Before Selling [View article]
People who are against the dividend growth strategy are always keen to throw General Motors, Eastman Kodak and others in our face. Those companies didn't go from top of the table to relegation without a regression state of operations.
It usually starts with high dividend growth, to slow dividend growth, to a freeze, to a cut, to elimination. There is plenty of warning along the way.
I like to look at a company's history and then will monitor anything that falls out of their historical performance.
For example, GIS has been paying a dividend for over 100 years. In that time they have never lowered the dividend. Not once! They have frozen it on many occasions, but they have never lowered it. Therefore, slower dividend growth or a freeze wouldn't cause me to sell.
On the other hand, CTL had a 37 year consecutive string going where they raised the dividend and they simply stopped without any comment or guidance about future dividend growth. That was out the ordinary for them and I sold immediately. I saved a lot of capital gains that would have disappeared if I held until the cut came along.
I used to own NUE and when I owned them, they were raising the dividend in the high single digit range. That dividend growth is now down in the low single digit range and the payout ratio continues to rise. I was out last year. I wasn't waiting around for a potential cut. The cut may not come, but two things happened with my NUE which I think are significant and your study doesn't cover.
The first point is that even if NUE is able to reverse the dividend growth trend, they never would have had an opportunity to catch me holding them if a cut were to come.
The second and more significant point is, where were the funds invested?
In my case I switched out and purchased LNT.
Last 3 years dividend growth: (rounded)
NUE ... 2010 ... 3% ... 2011 ... 1% ... 2012 ... 1%
LNT ... 2010 ... 5% ... 2011 ... 8% ... 2012 ... 6%
Total return in 2013:
NUE ... 7.7%
LNT ... 21.7%
I think the choice was clear! It depends on where the money goes when you switch out.
The Trend Is Your Friend [View instapost]
The soccer pub we go to will open the pub for 7:45 AM matches on Saturday and Sunday mornings. We're sitting in the parking lot at 7 AM tailgaiting, waiting for the pub to open. They don't open for early matches when shown on ESPN 2. They won't open for NBC matches either. They will show the matches in the afternoon which occur during the week.
I don't want to sit at home when watching most of these early matches. I want to be trashtalking with my soccer buddies as most of them are either Man United or Chelsea fans.
Dripping Works: A Real-World Example [View article]
I used to carry a Series 6 license, so I was up to date on funds at one time, but like most things in life, you use it or lose it. So, I forgot a lot of information I used to know.
The one thing that really bugged me about mutual funds is that you could show a loss on the year and still have to pay a capital gains tax.
Lose money and pay a capital gains tax? Are we nuts?
Well, yeah actually.
When people start making a run on their funds, as happened in 2008 - 2009, the funds have to sell positions to meet redemptions. They have to sell companies they don't want to sell. But, since they are forced to sell because the public wants out, they have to sell winners and winners have capital gains. The funds don't pay capital gains taxes, the fund owners do. Good luck with that!
Most funds have what I think was called a 4b fee. I forget the designation, but that sounds right. Anyway, that's a fee the fund charges you to offset their advertising costs as they try to generate more clients. The fund owner pays those advertising costs!
Now here's the good part, for the funds anyway, if they decide to close the fund to new investors, that means no more advertising. Guess what? Most of them keep charging the 4b fee, or at least they used to when I was involved in the mutual fund business. ... Ha! Ha! What a crock. No funds for me babee unless the 401K doesn't allow any other choices.
6 Lessons Learned From Up And Down Markets [View article]
One of the portfolio's I manage is for a friend who collects the dividends in cash and we selectively pick the next purchase, but he owns EPD and he wanted to take advantage of the 5% discount you get when you reinvest the distributions. So, I sent an e-mail off to TDA and asked them to set that one position up for reinvestment and they did. No charge. No muss, no fuss. ... Ha!
'Savvy Senior' Conservative IRA Portfolio Returns 16.4% In 2012 [View article]
One of the portfolio's I manage for someone is posted online. It's there for everyone to see. I can't hide anything. I can't go back and change anything. I announce all moves before they are made. I don't come back three months later and say see what I bought after it has run up. I announce before the move is made.
It's a real portfolio using real money and the brokerage statement material is updated every month.
I took it a step further! At the bottom of the monthly reviews are the positions the portfolio used to own. You see the losers right along side the winners, and you see where the money went from those positions. I challenge anyone to give as much transparency as I do.
The following link is to the online portfolio. Scroll down to the third message for the portfolio positions. The second message down is a review of positions sold a couple of years ago and comparing those positions to the positions that replaced them in an effort to determine if the move was the right thing or whether I should have just sat tight.
There are a couple of losers there that are painful to see, but they are there. I don't hide anything.
Take a look-see and let's eliminate any sneaky suspicions. ... Ha!
I don't profess to be the next Warren Buffett, but I have no fear of letting others see what I do. They can learn not only from my successes, but also from my failures, and I've had a few.
http://bit.ly/rBJkXG
The Trend Is Your Friend [View instapost]
Tulips had no value other than what people perceived. The tech boom saw companies with no earnings being run up in value. The real estate boom saw real estate rise on speculation. This market is seeing companies with real earnings, and earnings that are rising leading the market.
When you have the residuals of that $85 Billion and the money is going into companies with earnings, the bull can run a little more. That's what makes it different.
I never said a serious correction wasn't coming. It will one day.
The Trend Is Your Friend [View instapost]
The Trend Is Your Friend [View instapost]
There is too much money involved not to come here and it's why more and more American owners in other sports are showing an interest in EPL. Hell, Manchester United is worth twice what the Yankees are worth!
I continually rag on my brothers about the World Series only allowing maybe Toronto to participate. I think baseball should be sued for using that name when the World isn't invited. ... Ha!
At least when World Cup play comes around, there are teams from all over the world. That makes sense to me.
Goodbye and good riddance Sir Alex! Mourniho is gone and I'm dreading it if it's to Chelsea. I'm thankful that Arsenal squeezed in and qualified for Champions league. And where in the world did Wigan come up with a Championship in tournament play when they are getting relegated from EPL? Blows my mind.
Looking forward to the transfer window. Wenger says he's going to spend money. I'll believe it when I see it. If we kept Van Persie, Nasri and Fabregas, and all it would have taken was money, then we could have been top of the table. No doubt in my mind. Damn tight Frenchman, lighten up.
The Trend Is Your Friend [View instapost]
Now don't get me wrong, I don't see anything wrong with easing into cyclical's at this time, but the higher the market goes, the more I focus on my conservative holdings.
In the event the market does correct here, I am confident my core positions will weather the storm more that the cyclical's will. This is important because the conservative, high quality companies may not have to make up as much ground on a rebound. ... Just a thought.
You do what you think is right. Your objectives, which I have no clue about, may dictate the exact strategy you wish to enforce.
The Trend Is Your Friend [View instapost]
For one still in the accumulation phase, keep accumulating quality. My attitude is that I want to keep adding shares, adding shares, adding shares.
Dividends are based on shares. The more shares I own, the more that dividend income grows.
I took a look-see at your link above and if I may, I'd like to add a comment. It's not a critique, so please don't take it that way.
With the market setting new highs, I thought I read that you were increasing your risk. I have to think about that. As the market heads higher, until today, I was only willing to add to my conservative positions.
I think the time for risk is in the early to mid stages of a market turnaround, not at ever increasing all-time highs. I don't know, just some random thoughts mentioned aloud.
It may turn out okay for you, and I hope it does. I just never thought of increasing my risk level at all-time highs. Well, not since the tech crash where I got my hat handed to me on a paper plate. ... Ha!