Wednesday, August 31, 2016


Help for this beleaguered Dividend Machine I hope. M*

CNBC's Faber: Potential Potash-Agrium deal weeks away, talks in early stage $POT, $AGU, $MOO, $PAGG, $VEGI, $SOIL

China Mobile raises semi annual dividend

China Mobile Limited goes ex-dividend today $CHL


Gentex declares $0.09 dividend $GNTX

Sunday, August 28, 2016

WPZ better than WMB

Let's hope this analysis is right. A 20%return would help my beleaguered 2015 Model Portfolio. M*

20% Return Expected From This 10% Yielder In One Year $WPZ

Thursday, August 25, 2016

Waste Management (WM) recycle those dividends

Waste Management declares $0.41 dividend $WM

Micron (MU) bond

I was going to buy this bond last week and time got away from me.  That happens when you are retired.   I decided to write up why I liked this bond although I am not going to buy today.

As a stock Micron, symbol MU, is not on my radar. It doesn't pay a dividend and the P/E is higher than I like.  Earnings are quite a roller coaster.  Nasdaq shows an 11 year earnings history where 2008 and 2009 earnings were negative.  2010 earnings staged a bounce back.  2012 was weak and 2013 shows another return to positive earnings.  This year earnings are weak but not disastrous.

5.5% Senior Unsecured Note due 2/1/2025

This bond is rated BB.  Coupon on this bond is 5.5% and it trades at a discount.  The time to buy it was in April when it traded around $75.25 per bond with a yield to maturity of 9.584%.   I was tempted last week when the bond traded around $96 for a yield to maturity of 6.1%.  Today it is trading closer to $97 putting the yield below 6%.

Balance Sheet Consideration

This bond, CUSIP # 595112BC6 is available through Schwab and you can check the bond trade activity at the Finra site shows the quarterly debt to equity ratio (D/E ratio) at .6948 and MSN shows the D/E ratio at .73.  These ratios are quite adequate.  While industry standard is a bit lower, any D/E less than 1 is acceptable.

Interest coverage ratio is 1.6.  I always look for an interest coverage ratio greater than 1.  Market watch pegs free cash flow at 1.19 billion, so MU should be able to service this debt.

Should I buy it?

I provided an 11 year look into their earnings.  This bond is just over nine years, will Micron be around in 9.5 years.  My answer is probably and at a yield of 9% it was very worth a buy.  However, at $97 and a yield under 6%, this bond is not worth the risk for me.  Should the value of the bond continue to increase as it has over the past 4 months, I could sell it at a profit, but that scenario is not guaranteed.

I am writing about this bond, because a reader with a longer time frame may find it valuable.  Hard to find any bonds of interest and this one is definitely of interest.

M* MoneyMadam

Wednesday, August 24, 2016

CAT hits highs

I hate to lose CAT, but I am selling calls anyway.  If it is called away before it corrects,  there is always another stock to buy. M*

Caterpillar: Questions Mount $CAT

Monday, August 22, 2016

Are Micron's (MU) bonds safe?

Intel And Micron Technology: Optane Vs. QuantX $INTC, $MU

A positive view of COP

ConocoPhillips Is Moving In The Right Direction $COP

Friday, August 19, 2016

JCS major dividend reduction

Knew this had to happen.  Sold my personal shares a few months back. Have to keep it in the 2011 Model Portfolio by rule.   2011 is up over 80% so it can handle this dog.  M*

Communications Systems declares $0.04 dividend $JCS

Wednesday, August 17, 2016

MSFT Call Exercised Early

Our MSFT August$55 call was exercised yesterday,  This is a savvy call buyer.  Took the stock early to reap both the capital gain (MSFT is $57.50) and the dividend (MSFT ex-dividend 8/17.)  Well done.  We all win as our basis is $50.40 and we received two $.36 dividends  per share plus two calls worth a total of $2.10 per share.  Our total return of $626 is a 12.42% in 6 months.  Do that on every stock and you are one happy income investor. M* Disclosure still long MSFT personally.

Tuesday, August 16, 2016

Riding the Rails for income GATX

EMD GP38-2 locomotive GMTX 2146, owned by GATX...
EMD GP38-2 locomotive GMTX 2146, owned by GATX Rail Locomotive Group, a locomotive leasing company. Photo taken in the Union Pacific Railroad depot at Anaheim, California, USA. (Photo credit: Wikipedia)
One of the consequences of going on vacation is being behind on investing available cash. 

Every income investor is struggling to find a place to invest cash for income.  Since this is my specialty, I look everyday for an opportunity. 

One place you will not find opportunity is the bond market so I am looking for yet another dividend stock. 

You need to spend a lot of time researching a stock so I am behind on my research.   In spite of being behind, I found a stock I like and will add to my portfolio.

Why add a new holding?

Quite often, I just add to already existing positions but most of the dividend stocks I own have appreciated to the point where new money doesn't generate much income.  My minimal yield requirement is 2.75%.  With 2.75% yield, I really also need covered call income to generate the 4-6 percent return that I am used to.   I could not even find a holding in my portfolio with this minimal yield and covered call income to make up the difference.  Hence I am adding a new position.

GATX Corporation symbol GATX

GATX has been in business for 117 years.  They have weathered many storms.  Dividend yield is a very healthy 3.68%.  Dividend growth over the past five years has been over 7% per year.  Revenue growth over the past three years exceeds 5%. 

This company has a debt to equity ratio of 3.35 which may seem too high.  Clearly 3.35 is well above my requirement of 1.  I also add the option of accepting a stock with a higher debt to equity ratio (D/E ratio) if that ratio is within industry standards.  Caterpillar  (CAT) is one of those stocks and so is GATX.  Industry standard is 3.36.  Click on this link to review the strength of GATX's balance sheet.

GATX is globally diversified and well managed.  It seems to be inexpensive with P/E ratio (price earnings ratio) of 8.01. 

GATX Fundamentals

The fundamentals I use to evaluate a new holding are presented below. 

Consider GATX for the income producing portion of your portfolio.  Take care of the fundamentals and the stock will take care of you.


Sunday, August 14, 2016

Really nice dividend increase ITW

Illinois Tool Works declares $0.65 dividend $ITW

Dividend dog PBI yields 4%

Pitney Bowes declares $0.1875 dividend $PBI

MCHP raises dividend

Microchip Technology declares $0.36 dividend $MCHP

Meredith continues to deliver dividends

Meredith Corporation declares $0.495 dividend $MDP

MDU another good Dividend Machine

MDU Resources declares $0.1875 dividend $MDU

CINF great Dividend Machine

Cincinnati Financial declares $0.48 dividend $CINF