Investments Trade Log

[Dunkelheit]

Total is the other oil major I used to own when I was living in France, but now that I live in Italy I have sold it because of the double taxation on dividends.
There are some forms to get the extra taxes paid back, but they are an administrative pain.
Any dividend from French companies gets taxed 30% first (the French rate), then another 26% (the Italian rate).
If you live in Europe (I guess you do since Burzum is not well known in the USA - I'm a big fan by the way) you'll probably get the same double tax.
Not sure if you love in the USA, they maybe have ADRs or whatever they are called, like for royal Dutch.
One underestimated advantage of royal Dutch is their dividend reinvestment program (scrip).
Instead of paying out the dividend, they give you the equivalent value in free stocks, so basically you pay NO taxes today.
Example: say your gross dividend is 102€, and the stock goes for 25€.
If you take the cash you get 102€, minus the 15% Dutch tax, minus the 26% Italian tax, getting approx 64.16€.
If you ask for the dividend in stocks, you will get 4 stocks for 0€ added to your total, plus 2€ in cash taxed the normal way.

Hi Seppia,

Thanks for such a valuable information! You guessed well, I am an spaniard, so I will suffer unfortunately the same double taxation issue. Thanks for sharing this info about the Shell's dividend reinvestment program, I will contact my broker because it seems the most tax-friendly option. I didn't give much importante to this double taxation, but as you say, it is a painful administrative work. I still have taxes to recover from Nestle since 2015...

It is a pity that for Total the reinvestment plan is only possible for french residents. Do you know more european companies with a good yield and this option?

Greetings,
Dunkelheit

[George the original one]

VZ has dropped back into the 5% yield range, so consider adding it if you're wanting a telecom.

[halfmoon]

VZ has dropped back into the 5% yield range, so consider adding it if you're wanting a telecom.

I have VZ and think every day about selling it (but the dividend!). I'm worried about debt levels, especially with the Straight Path purchase. What are your thoughts on this?

[cmonkey]

T is also above 5% again and has much better debt/book value, although that might change if/when they buy TWX. It all depends how they put the merger to work, same with VZ.

[George the original one]

VZ & T are masters at working with debt, so I'm not too worried about it for them. VZ & T in the past year have become much different companies than what we used to think of them as and I think they both have good potential. Execution is what will matter in the long run; historically T is better at execution, but VZ seem to finally be getting their act together. Paradoxically, Mr. Market valued VZ above T for the past 7-8 years and are now removing the premium VZ enjoyed.

Basically, I think they're both a buy when their dividends are above 5%. Watch the upcoming year to see what they do with recent purchases and we can readjust our holdings as needed.

[halfmoon]

These are encouraging words, as I also hold T (both long-term). I've been concerned about their payout ratios, debt and valuations. Holding now.

[Dunkelheit]

I have just found that IB only accepts dividend reinvestment plans for US-based companies

VZ sounds good, but unfortunately the €/$ doesn't help today. In Spain we have a similar one with high-yield, but smaller, Telefonica. They are trying to reduce debt without success since decades.

Greetings,
Dunkelheit

[Chad]

If you buy VZ and/or T it is probably a good idea to plan on holding them until at least 2019 or 2020 when they are scheduled to roll out true 5G. Their spending, such as their bidding war the last couple weeks for Straight Path, will definitely be big during this time frame. However, 5G will be major improvement and will really be the beginning of broad adoption of "everything talking to everything".

T seems to be the best positioned for vertical integration of services with the DirectTV purchase, but I don't think either is bad long-term.

I'm probably going to purchase one or both of them in my taxable portion of my investments and add to my father's holdings of both at these levels.

[halfmoon]

Because I received great input on VZ & T here, I'm going to angle for more. No good deed goes unpunished.

We hold GILD in two accounts (makes us twice as dumb?). I've been teetering on the verge of selling one of the holdings, but I keep thinking it should be a good long-term investment. I know they've suffered from actually curing Hepatitis C instead of just treating it...what were they thinking?? Still (and even saying this makes me feel like capitalist scum), the rising heroin epidemic could bring a lot of new and repeat customers.

Scummy profiteering aside, the company has things I like: low P/E, pretty good dividend, low payout ratio, deep enough pockets for additional pipeline acquisition. Analysts on Fidelity somewhat favor it. Yet the stock price is in the basement, and it's pretty dark down here.

Thoughts? Cut and run or hold? Just don't say "buy more", because I already did that at 66.70.

[jacob]

Since nobody has mentioned it yet, I will.

There's a reason that T and moreso VZ are dropping in price, namely that they have used debt (not earnings) to fund their big acquisitions (and growth) and therefore now hold large debt positions. These aren't quite the same companies they were a few years ago. In VZ's case, the current S&P report, for example, questions whether VZ's dividend is even sustainable at these levels. So the question is whether they will each be successful using this leveraged position on the plans Chad mentioned.

Since they aren't exactly selling bleach or cigarettes, it's not guaranteed that they can sustain this level of leverage.

[Chad]

That's a valid point and both T and VZ are being squeezed by T-Mobile for customers right now. They are not without their warts.

[cmonkey]

The debt might not have been as big of a deal with ZIRP in place, but now that rates are rising its definitely going to put more pressure on them.

[cmonkey]

Considering MOS after today's drop. Not sure it's the right time quite yet, but prices are firming and their cost management looks good. They also have a decent amount of cash on the balance sheet and so can support the dividend.

Glad I waited to see what they would do with that dividend. Putting my money elsewhere.

[George the original one]

I hope T and VZ will transform themselves. Telecom will be a small part of what they do in the future. At least that's the justification for the debt.

[halfmoon]

Interesting point, George. Most successful tech companies are in the process of transforming themselves, and I like to think that T and VZ will be tech companies of a sort in the future. From what I read, 5G will be key to Internet of Things.

As long as I'm on the subject of hope-based investing: any thoughts on GILD?

[cmonkey]

After seeing so much money flowing into growth away from value, its nice to see a reversal start!

[C40]

Bought some O in my Roth. (most of the money I used was from a conversion from Traditional to Roth, to start my ladder, and that all came from dividends from stocks in the Traditional).

And made these changes in my Traditional to push up my dividend income there:
- Sold a chunk of VYM. (I bought it in August last year. Gained 7% of capital gains, and 2.3% from dividends). And spent the proceeds evenly on these:
- OHI
- SBRA
- WPC

The VYM was yielding around 3%, and the ones I bought yield around 7%. These changes in my Traditional increase my dividends by $1,300 per year, and the O in my Roth gets me another $600/year.

[George the original one]

Verizon buying Yahoo is complete now and Marissa Mayer has resigned. Stock price is down something like 13% since Jan 1 if you're shopping. Here are some notes I've pulled from the Reuters article:

Verizon, the No. 1 U.S. wireless operator, is combining Yahoo with AOL, which it bought two years ago, to form a venture called Oath, led by AOL CEO Tim Armstrong. Oath's more than 50 brands include HuffPost, TechCrunch and Tumblr.

Reuters reported last week that Verizon planned to cut about 2,000 jobs, or 15 percent, of the 14,000 employees at its Yahoo and AOL units. Verizon is expected to make cuts as early as Wednesday. Yahoo cut 15 percent of its workforce last year and AOL cut 500 jobs.

On Friday, the remainder of Yahoo not acquired by Verizon will be renamed Altaba Inc, a holding company whose primary assets will be its 15.5 percent stake in Alibaba Group Holding Ltd (BABA.N) and a 35.5 percent holding in Yahoo Japan Corp <4689.T>.

[Chad]

Verizon buying Yahoo and combining it with AOL will only really matter if the FCC and current administration manage to break the current open internet model.

[cmonkey]

Any thoughts on SSW? Seems their biggest headwind might be the future of international trade agreements, but I don't know how much these concerns will pan out since Trump can't seem to get anything done. Revenues are higher than ever, but have plateaued a bit. EPS has gone down due to more shares being issued. P/E and P/B are very good.