Dividend Stock Investing

[The Virginian]

Dec 9, 2015 10:19:18 GMT -5 ModE98 said:

Kinder Morgan has slashed its 2016 quarterly dividend to $0.125/share from the current $0.51, marking the company's first-ever dividend cut. The company said the move will enable it to use a significant portion of its cash flow to fund the equity portion of its expansion capital requirements, eliminate any need to access the equity market for the foreseeable future, and maintain a solid investment grade credit rating.

I know - I'm hoping that it drops to $10 a share so I can pick up 200 more shares but it was actually going up today !

[Deleted]

Give it time; oil keeps mucking about, it will drop: just as will some utilities file for bankruptcy.

[The Virginian]

just as will some utilities file for bankruptcy.

Which Utilities are having financial problems DI ?

I only own two : DUK & AWK

[Deleted]

There are quite a few, which have dropped significantly in value over the last year. Many others are cutting dividends.

Pre negotiated contracts for energy supply at past higher cost, the strong dollar and no interest rate are crushing weights.

By the time that interest rates go up (maybe this month); most of the cash reserves on a large swath of these will be all but gone.

Interestingly also We have noticed that a swath of companies that were listed as Utilities  just a year ago, are now listed as: ENERGY; OIL & GAS CONSUMABLES

Mergers could save some of these; but historically mergers between Utilities have had a rough time gaining approvals; more never consummating than those that do.

And in this environment gaining the approvals needed, looks as though it would be even harder for Utilities seeking to merge.

We are very wary of combinations of factors like above & Dividend cuts; as much as We are about Dividends which seem far to high when crossed against the standard basket of valuation metrics (PE, BETA, Earnings, Short Interest).

Toss in the increased Volatility as of late, and the concern grows; IOHO.

[Ombud]

Ok. Obviously I've not been paying attention. FWIW: I'm beginning to think that DIS is heading lower enough for me to buy stock instead of just STO puts. Although it's currently not rated well, the mouse will always be around .... just like ED & PGE just my opinion

[Deleted]

Ombud

Thought(s) to keep in mind:

• If You STO PUTs & then are assigned; your actual Cost Basis will be lower than the Strike. {Fairly sure you are aware of this; but it bears repeating}

• The lower the Cost Basis; the Higher the actual Yield. This doesn't change the actual dollars & cents that one receives from a dividend; but it does change the "balance" equation {higher portion of principle outlay, can be very helpful; especially if the underlying ends up being an Accidental High Yielder}

• Long Term Returns (Dividend) is set by entry point {Cost Basis: Annum Dividend divided by the ABS of the Principle Amount} and is Modified by any future Dividend Increases or Decreases}; Capital Appreciation potential is set by Cost Basis modified by probability of Upside move from Stock Price at the particular point of entry which is based on the then current strength of the Company and all other applicable Economic factors germane to that particular industry.

[ModE98]

Bought a few lots of NLY, HRZN and NMFC today.  Prices down, so hope they just do not continue the trend.

[Deleted]

Given that 2 are highly interest rate sensitive & 1 is not only highly interest rate sensitive as well as being tied to instruments which are quickly losing liquidity; more pain could be ahead.

[ModE98]

Yes, D.I., risky.  Will collect the dividends and sell at the first good rally.  They are not dead yet! (I hope),  

[The Virginian]

Mod - take a look at NGL - about a 26% yield. They and the analysis  saying it is safe from a dividend cut but it will be frozen for 2016 ! I could live with a "frozen" 26% dividend, could you ?


NGL Energy Partners LP is a limited partnership company that is a vertically-integrated service provider. The Company operates through the following segments: Crude oil logistics, which purchases crude oil from producers and transports it for resale at owned and leased pipeline injection stations, storage terminals, barge loading facilities, rail facilities, refineries and other trade hubs; the water solutions segment, which includes water treatment and disposal facilities; the liquids segment, which purchases propane, butane and other products from refiners, processing plants, producers and other parties, and sells the products to retailers, refiners, petrochemical plants and other participants in the wholesale markets;.......................... data.cnbc.com/quotes/NGL/tab/4

I hope to pull the trigger on Monday.

[ModE98]

It will no doubt make a comeback when oil prices rise again.  Until such time, what could get the stock price to rise?  Nice dividend, but at my age do not want them frozen for another year.   With the price of NGL down from mid-30's to current level the stock could be in a good buying range if one sees a good rise in oil prices on the horizon. 

[The Virginian]

Dec 12, 2015 12:56:42 GMT -5 ModE98 said:

It will no doubt make a comeback when oil prices rise again.  Until such time, what could get the stock price to rise?  Nice dividend, but at my age do not want them frozen for another year.   With the price of NGL down from mid-30's to current level the stock could be in a good buying range if one sees a good rise in oil prices on the horizon. 

Frozen in that they will not Raise the Dividend in 2016 - but at 26% I could care less if they ever raise it. Also look at SXCP - over a whopping 40% ! They provide Coke to US Steel and others and export. US Steel suspended its operations but they have a contract to pay SXCP regardless. That might make a good short term play for you.

[ModE98]

OK, will do some due diligence on those stocks.  Need fo do a bit of selling to get $$$ though..  Do not on margin.

[The Virginian]

I'm going to buy the NGL Monday if conditions are favorable. I'm still wanting to buy CVRR also.

[The Virginian]

Here's an article on JNJ and a promising company GERN . GERN does not pay a dividend but JNJ is funding some research on a Cancer treatment - At only $ 4.50 a share it might be a good play. I already own JNJ so I might invest in GERN just for speculative investing. If it pays off it will be huge returns but who really knows. JNJ must think it has potential. I will take a small position in it. Here is a link to an article:

seekingalpha.com/article/3749616-investing-in-johnson-and-johnsons-pharmaceutical-collaborations-can-provide-dramatic-returns

[The Virginian]

Sold AWK & Bought VGR.


Bought NGL

[Deleted]

Saw an article which We think is a must read, here is an excerpt from it:

The largest banks have significant amounts of their assets in federal-funds securities and other extremely low-yielding investments, which have been required by the Basel III capital rules and liquidity requirements. We therefore think the very largest banks, including JPMorgan Chase, Bank of America, Citigroup and Wells Fargo will immediately benefit from rising short-term interest rates.

If the Fed goes ahead with a rate hike on Wednesday, December 16, we expect to see their stocks rise faster than the market. We also think regional banks will benefit from rising short-term rates.

The full article can be found here:

www.cnbc.com/2015/12/14/rate-hike-could-boost-bank-stocks-this-time-commentary.html

[The Virginian]

PFE raises Dividend from .28 to .30 per quarter or from 1.12 to 1.20  annually.
This represents an increase of 7.1% ! Payable in March 2016.

[The Virginian]

Purchased CVRR today. I got tired of waiting for the price to hit my target but still respectful. 

[Bluerobin]

Mod, I have some ETG, an Eaton Vance Fund.  Pays a pretty good dividend.  You may want to check out their funds.

[ModE98]

Ole Blue, have not heard from you lately.  I very rarely buy Funds, but will check it. 

Sold HRZN yesterday, bought back today 20 cents p/s lower.  Made a modest cap gain.  Pays nice dividend, monthly.

[Bluerobin]

Dec 17, 2015 15:58:25 GMT -5 ModE98 said:

Ole Blue, have not heard from you lately.  I very rarely buy Funds, but will check it. 

Sold HRZN yesterday, bought back today 20 cents p/s lower.  Made a modest cap gain.  Pays nice dividend, monthly.

Neither do I, but this is an exception.  It trades like a stock.  They have a whole family of funds.  I mostly just read this forum.  

[The Virginian]

AT&T Raises Quarterly Dividend by 1 cent from .47 per share per quarter to .48 per share per quarter
or to $1.92 per share on a yearly basis. The Dividend represents
 a 2.1% increase over the previous year. Many were calling for a much larger increase but due to debt and recent acquisitions of Direct TV and Mexican phone companies this seems to me to be the responsible course to take.

Long AT&T (T)

[The Virginian]

Well - What a bad day ! I hope 2016 is better than this year. Anyone care to make predictions?

With only two weeks left in the year it is that time again. My prediction for 2015 was way off ! I had said DOW 20,500 if memory serves me. We are actually as of today about 1000 points below last year.  Bear market? If not , I'm not sure what to call it. As I have stated before though my Dividend Income increased substantially this year despite the market going the wrong direction.

Personally - I don't have a clue about 2016 but I do expect my Dividends to keep growing as my share counts keep growing. Some are saying we are in a Recession again (not sure we ever got out of the old one)

I am still buying Oil & Related stocks - in small amounts.
I think there is more potential in them than some of the Blue Chips as their PE ratios are out of this world.
Another area is Basic Materials - Beaten down
REITS look good - They have lost a lot of value this year

All three are paying great dividends for the risk and wait. I of course am keeping my core quality Stocks as is.

My prediction for 2016 ? DOW 20,000 - but the truth is - I don't have a clue !

[ModE98]

Anything could occur as we get nearer to the elections.  Depending upon the election results, stocks may go either way.  Up until mid-September, would not be too surprised if DJIA reached 19,000; but, all bets are off after that.  There's always the possibility the 20,000 mark could be reached.  Just not that bullish (IMO). 
You are correct on the dividends adding up.  it sure is a "comfortable" feeling.    

[Deleted]

2016 may be the year of the Banks.

[ModE98]

Hey, D.I., that is more likely than not.  Good thinking!

[Deleted]

ModE98

Well folks need to think about it; really. I mean the FED just raised 0.25% and the Banks followed by immediately raising the PRIME RATE to 3.50%; but they refuse to raise the rates which they pay savers.

With the average Savings, Money Market and General Cash Position Rates at 0.10%; this means the Profit Spread for Banks & Brokers just widened.

For Banks that Profit Spread just widened to 3.40% from the prior 3.15% Profit Spread.

In real terms it means a lot more money in the Banks pockets. Don't think so ? Take a look:

PRE FED Raise

Type	Rate	Amount	Profit/Liability
Borrowers	3.25%	$10,000	$325.00
Savers	0.10%	$10,000	(-$10.00)
Per $10k	Profit	Spread	$315.00

POST FED Raise

Type	Rate	Amount	Profit/Liability
Borrower	3.50%	$10,000	$350.00
Saver	0.10%	$10,000	(-$10.00)
Per $10k	Profit	Spread	$340.00

So the Banks now will make $25 more per $10,000. That may not seem to be that much, until that is you run the "averages".

"Average" Loan Amount: $400,000

"Average" Saving Account Balance: $2,500

Now take a Bank with a Million Customers (at least); take a low estimate that 25% have Loans (which is low) and run the math:

Type	Customers	Average Amount	Rate	Profit/Liability
Borrowers	250,000	$400,000	3.50%	$3.5 Billion
Savers	1M	$2,500	0.10%	$2,500,000
		On Balance	Profit Spread	$3,497,500,000

That BOLD Number, is a QUARTER BILLION Dollars more now that the FED raised rates; than it was prior.

AND that is skewed BECAUSE 3.50% (Prime) is what Banks charge the Most Credit Worthy Customers. Therefore, the Profit from the Hypothetical 250,00 Borrowers @ the "average" is going to be LOW, due to the fact it does not account for the Borrowers that pay PRIME + Points (Extra Percentage).

Which means that the Profits will be larger.

And Brokerages? Their Profit Spreads will be even larger on Margin Loans v Cash Positions. Reason they are raising the BASE RATES for Margin Loans; but not the Interest they pay on Cash Positions.

With Brokers it is always the BASE RATE + Points (Extra Percentage) on Margin Loans; How many Points depends on how much your Margin Loan is, the smaller the Margin Loan the more Points.

Example here: TD Ameritrade.

As Of Jan 1, 2016 the Base Rate For Margin Loans Goes Up to 8% (from 7.75%); but Interest on Cash Positions (no matter the "flavor"; Sweep, MM, Cash) remains at present @ 0.099%.

So there you have it, the case for Our call that 2016 may be the Year Of The Banks.

[Ombud]

Own BAC & JPM

Looking to add to both positions as the fed may raise rates quarterly throughout 2016

FOMC projections showed they expect the rate will rise to about 1.4 percent by the end of 2016, suggesting four more increases over the coming 12 months. news.yahoo.com/fed-announces-historic-rate-increase-first-since-2006-191248404.html;_ylt=AwrXgCNd9nVWuSgAqiiZmolQ;_ylu=X3oDMTBya2cwZmh2BGNvbG8DZ3ExBHBvcwM1BHZ0aWQDBHNlYwNzcg--

[Deleted]

Ombud

Still working on the BAC trades myself. A little behind in posting but will post in my thread soon...