Investments Trade Log

RelicO · Post by **RelicO** » Thu May 31, 2012 5:35 am

M, wow, that is an impressive CSX position. Congratulations.
As REITS go, I own UHT and an investor whom I greatly admire also recommends NNN.

George the original one · Thu May 31, 2012 4:03 pm

@M - When it comes to long term care REITs, I prefer OHI & LTC to UHT. Right now, LTC is overpriced by at least 10% IMHO. OHI & LTC are consistent dividend growth, UHT grows the dividend, but doesn't keep up with inflation. All 3 can be worthwhile when bought at the right price.
In the commercial retail REITs, GOOD and ADC are in my portfolio. GOOD is probably pushing the edge of what is possible in a REIT. ADC had allowed Borders Books to be too large of their holdings which led to a dividend cut when Borders went bust, but have been nimble in recovering their business.

jennypenny · Post by **jennypenny** » Thu May 31, 2012 5:46 pm

Anyone following the "rebalancing into poverty" thread(s) over at bogleheads?
@George--Do you ever worry that you have so much tied up in real estate with 2 houses and reits? Or is that not an accurate picture because you don't discuss everything here? (which is fine)

George the original one · Thu May 31, 2012 7:45 pm

@jennypenny - Yes, I do worry about the amount that is in real estate. However, there are different aspects of real estate, so as long as my residential real estate (2 homes) is balanced with commercial and other real estate, there's some diversification. That's one reason I'm gunshy of the mREITs and hop out of them at the slightest sneeze -- I don't want to concentrate too heavily in residential real estate.
Looking at all the portfolios, I'm at 25% REITs (doesn't count the 2 homes). Unless I see a huge bargain, that's probably as much as I'd like to go.

M · Post by M » Fri Jun 01, 2012 12:04 am

@George
I currently own shares of LTC and O. I bought them when they were cheaper - they both seem overpriced now, which is why I'm looking for other REITS
GOOD looks like it has a high payout ratio and a high debt load. A little too high for my tastes. What are your thoughts on this? ADC looks like a good bet - I love investing in solid long term companies that have something temporarily wrong with them.
I recently(yesterday) sold off all of my long term government bond fund shares for a nice profit, so am on the prowl for dividend paying companies to invest in. I never thought I would get such a huge capital gain from the appreciation of a bond fund before...

George the original one · Fri Jun 01, 2012 2:39 am

@M - I think you have the correct picture on GOOD. It's why I wrote that it's at the edge of what a REIT can do. On the positive side, they weathered the great recession without cutting the dividend. An interesting assessment is at http://seekingalpha.com/article/585191- ... l-so-cheap.
ADC has a good story. I owned it for about a year before Borders went broke (knowing full well that it was imminent) and watched Borders like a hawk to know when to let go of ADC. ADC was very open about their status and a profitable & safe exit was possible. That provides one with a sense of trust in the management and I waited for the market to set the yield with the new dividend before buying back in. I like how ADC is geographically diverse, too.
I will not hold these if recession is likely. As long as we plod along, however, I'm perfectly willing to rake in the dividends.

George the original one · Fri Jun 01, 2012 2:55 am

Froth alert! Bubble, bubble, toil & trouble!
My favorite muni bond fund, VKQ, is trading at nearly a 5% premium to NAV. I try to buy it when it's trading at a discount to the NAV. I don't _think_ the NAV has been appreciating at a fast enough rate to justify this sort of premium, but I have to admit I haven't been watching closely.
Consequently, if you're a holder of muni bonds or bond funds, I'd suggest checking if the premiums are getting out of line. In VKQ's case, I'm leaning towards selling my remaining shares.

George the original one · Sat Jun 02, 2012 4:06 am

Blue chip dividend growth bargains galore!
COP, LMT, MAT, INTC, KLAC, GE, CLX, AVA, PG, JNJ, JCS, & CBU are all appearing more attractive today than the 30-yr treasury bond (yielding a mere 2.54% today, sheesh!).
That's not to say they won't go lower in the short term, but I do think it's an excellent time to start picking these off. I probably wouldn't jump into the oil/gas names for a couple weeks, though, not until you see oil prices bottom.
My number one concern is whether we're headed into a recession, but I don't think so (yet) based on a lack of more layoff announcements from big companies... layoffs have been centered around only certain high tech firms like HP. Like last summer, political stalemates and extremely slow growth seem more likely to dominate.

jennypenny · Post by **jennypenny** » Sat Jun 02, 2012 11:11 am

I don't know, I'm (mostly) holding off for a little bit. I did change our allocation on new tax-defered investments back to stock/int'l stock. And I added VTIAX and VTSAX to another tax-deffered account, but that account is still mostly cash at this point.
None of this applies to my trading account--I'm working that like crazy. (correlation, straight lines up or down, no earnings news--all good for trading)
I like your list though (except for GE--I don't like their management and wonder if they'll be the next to have an "oops, we lost a billion" moment). I also talked to a fund manager yesterday who's looking at Duke Energy again. He said the consensus (among managers) is Duke is the best in that group right now. Just FYI since a lot of you seem to like energy plays.

jennypenny · Post by **jennypenny** » Sat Jun 02, 2012 11:35 am

For you dividend investors...

http://www.frbsf.org/publications/econo ... 07-32.html

(scroll down to first chart)
I'm trying to find one with more recent data. If not, I'll just look up the info and plot it myself.

George the original one · Sat Jun 02, 2012 3:14 pm

@jennypenny - the biggest problem with the charts in that piece is that the S&P 500 has lots of stocks that don't pay dividends, so the dividend payer information can be squeezed out by non-payers added to the index.
This is one time that I'd pick the Dow to chart because all the stocks in the Dow pay dividends.

FI Fighter · Post by **FI Fighter** » Sat Jun 02, 2012 9:24 pm

Just bought 14 shares of Chevron (CVX) at $96.92/share and 33 shares of Seadrill (SDRL)at $32.21/share.
Too many good deals, I couldn't resist.

RelicO · Post by **RelicO** » Sat Jun 02, 2012 10:15 pm

Hey George TOO,
Thanks for your post regarding REITS and for pointing out OHI and LTC. OHI looks pretty good to me. I guess it is not on some dividend growth investors' charts because it doesn't have 10 years of raising their distributions yet, but it's almost there.
Regarding the dividend growth of UHT, it has exceeded inflation in its distribution growth from 2000-2010. The distribution in 2000 was 1.84, the distribution in 2010 was 2.415, which is around an annualized increase of 2.78%, and inflation during that time was around 2.39%.
NNN indeed has grown distributions less than inflation in that time period. I guess what people like about UHT and NNN is that they have both grown their distributions for 24 years and 22 years, respectively. That kind of track record is valuable to me because I am 30 years old, and I want to be somewhat confident that my portfolio will continue raising distributions, and I dislike dividend/distribution cuts very much. I don't want to worry about my dividend income getting cut years down the line (out of the 47 companies in my portfolio, I am expecting a couple of cuts down the line but I would like cuts at a minimum).
For REITS in general I would expect that after a growth and acquisition phase, the earnings would slow to about the rate of inflation, and would probably stay there (due to rents not really growing at a high rate in general). Being that my investing focus is pretty long term, that is where I look. But OHI looks pretty good to me though I want to do further research before I buy.
EDIT: As a postscript, upon further thought and in retrospect, the lack of growth in NNN is why I sold my entire position in the company. And that is why I only own UHT. And thanks to your suggestion, I will consider OHI. As of now REITs are exactly 2.39% of my very diversified dividend growth portfolio.

jennypenny · Post by **jennypenny** » Mon Jun 04, 2012 10:00 am

quote of the weekend "the S&P 500 broke beneath its 200-day moving average late Friday...the last time the S&P broke through what many consider this key technical barrier - August 2 - the index lost 12% over the next 5 trading sessions"
re:chart--I can't find a similar chart for just the DOW. I might have to plot that one out myself. I'm curious to see how different they would look.
I added RIO to my watch list.

Obadobadope · Post by **Obadobadope** » Mon Jun 04, 2012 9:07 pm

1500 shares of SVU at $4.25. My first big move in a while. P/E of 3 or so, dividend yield of 8%. And I shop there every other day.
I've also been holding my EBIX shares which I piled up on last summer. They are back at low prices again, but I already have enough.

George the original one · Tue Jun 05, 2012 7:29 pm

I bought MAT and LMT today, nibbling on GE. Debating on PG vs. JNJ; figure there's plenty of time to decide.
In the Roth IRA, I repurchased MVO because I think oil prices have stabilized for now.
@Obadobadope - I notice Yahoo says SVU has -$4.91/sh in earnings for the past 12 months. Why are you optimistic that now is a good time to buy?

Maus · Post by **Maus** » Tue Jun 05, 2012 10:24 pm

Anyone have qualms about EMR. With the Friday dip below $45/share, it is now yielding north of 3.5% and I'm tempted.

George the original one · Tue Jun 05, 2012 10:49 pm

EMR missed earnings and pushed guidance lower. Most electronics/computer firms are going through similar announcements, so I'd wait a bit more before biting on EMR.
http://finance.yahoo.com/news/emerson-m ... 47898.html

jennypenny · Post by **jennypenny** » Wed Jun 06, 2012 11:12 am

I'm very encouraged that the S&P held this week. I think I'm moving some money out of cash and bonds today and into stocks. I got very lucky because I rebalanced back in April (only because it's my usual schedule--feb, apr, jun, etc) and captured a lot of the gains in the stock funds. I'm willing to take a little more risk this month.
I want to buy JNJ, but I've seen a hundred articles about buying PG and JNJ this week and I hate feeling like a lemming. Also thinking about buying more gold (which means buying more GLD or similar).

Obadobadope · Post by **Obadobadope** » Wed Jun 06, 2012 5:46 pm

Hey George. SVU's losses in FY 2008, 2010, and 2011 were due to good-will charge-offs. If you take a look at operating income, cash flow from operations, non-GAAP earnings.... all these have still been in the green every year. In 2006 SVU acquired Albertson's on debt, and it was a bit of a flop. Not sure exactly what happened, but I think a lot of the Albertson's properties went non-performing within the first few years, possibly in conjunction with the recession, or maybe it was just a poorly executed merger. Walmart and Target started offering groceries around that time too, increasing competition. Revenues declined. Add it all up, and they had to do good will charge-offs.
Prior to 2010, I believe SVU was a dividend champion. Not 100% sure about that, but I do know they return value to shareholders well. Their non-GAAP earnings were $1.25 last year, and they have guided at $1.35 GAAP earnings for 2012. They are paying down the acquisition debt at $500mil per year, with $6.5 billion of debt left on the balance sheet. The price to EBITDA ratio is about 1. I think the damage is all done already. Nearly all the goodwill has already been charged off from the weak merger. WMT and TGT can't really add much more grocery. Recession ending. Revenues stabilizing. If all that went wrong, and they still earned money every year, it seems like a very safe play to me, given the price. At the very least I expect them to paydown the debt and gradually rebuild the balance sheet to about $3 or $4 billion equity over the next 10 years, and increase dividends along the way. At best, they could get a revenue bounce-back and accelerate that process.