Showing posts with label Retirement Income. Show all posts
Showing posts with label Retirement Income. Show all posts

Tuesday, March 17, 2020

How low can it go - nibble

Remember Mark Haines or Haynes, a former anchor on CNBC called the bottom in March 2009.   Sadly, Mark left us not long after that.  Wish we had his instincts.

I am thinking we could touch 15,000 on the DOW.   I know that sounds terrible but if you look at P/E's and realize earnings will go down during the recirculation of the effect of shut downs and therefore prices will follow.  Without a doubt the market looks forward.  When it does turn up it will be telling us the market expects earnings to improve.

Constipation is the worse thing for the economy.  Velocity of money is so necessary.  Turnover is so important.  Each of us can make money when a trade occurs.

This is terrible news for retirees especially those of us without a pension.  And it is wonderful news for wealth builders with cash to invest.  That would be young people.

For me, I just keep selling calls and nibbling.  I have enough positions that I bought when the DOW was under 15,000 that I can afford to take a chance that the market will shoot up in the next 40 days and my calls will be taken.   I am keeping expirations short so calls either expire and I can sell another call on the position to supplement my income and or raise cash for the next buying opportunity.

I believe the next nine months will be very volatile providing opportunities to put those proceeds to work.

If you have the money, buy whole lots, but don't be embarrassed to buy less than 100 shares.  You can add 10 or 25 shares at a time.  It's like dividend reinvesting but on your schedule.  Put your buys in really low and see what happens.

You have to be brave and stick with your disciplined approach.  When you nibble make sure you are nibbling on stocks that meet Dividend Machine fundamentals:

  • Solid Balance Sheet
  • Dividend Yield for me above 3% - Jim Cramer at CNBC says he wants 4%
  • P/E ratios below the historical level for that stock - please use trailing P/E's not forward.  Who knows what forward earnings will be
  • No dividend reductions during the previous crisis

M* MoneyMadam
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Tuesday, September 17, 2013

Dividends & Income - COP a well oiled money machine

Conoco Philips (COP) is truly a well oiled money machine.   

I am not profiling this stock as a dividend machine because it is already included in the 2013 Dividend stock portfolio.    By the way, COP was a Dividend Machine in 2011 as well.  The point of this post is to illustrate the money making potential of a company like COP.    

COP has provided a consistent dividend, it gave 2011 holders an extra 50 shares of Phillips Refinery (PSX) and as you will see below, COP has call option income opportunity.


COP is at historical highs trading close to $70 today.    Even at this high price, the dividend yield is still 3.94%.   When I own a stock that is at a record high and I have significant profit, I try to work it for even more income by using covered calls.   

My theory is that if I lose the stock, there is always another stock to buy.   But, can I really find another stock that can deliver the returns that COP has?   Maybe I can find one, but probably not with the market at these lofty levels.   I may have to wait for a correction to find a good replacement. 

If I am going to take the risk that I lose COP to the call buyer,  I want to make sure the strike price is greater than the all time high and I want the call out far enough that I get the next expected dividend.   COP’s next expected ex-dividend date is October 11, 2013 and that dividend should be $.69.

COP Covered Call Calculations

I am going to show you two covered call options using two different cost bases.    First let’s look at how you would fare if you had bought COP when it was first profiled as Dividend Machine on May 16, 2011 and you sell a November $72.50 for a premium of $.50 or a January $75.00 call for a premium of $.66.


Next, look at the result if you bought COP as a 2013 Dividend Machine when it was profiled on April 9, 2013, using the same two calls.


Finally, what if you bought COP today?   See this table to determine your return.

Only you can decide if you want to trade into or out of a stock or when you are willing to risk losing a great Dividend Machine like COP to a call buyer.   

I still work my portfolio constantly and this post illustrates the analysis you can perform to help you make good income investment decisions.  

I will not add COP today but I am going to sell the January call on some of my position (cost basis is $55.37.)

The Money Madam
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Monday, April 29, 2013

2013 Dividend Machine BCE - Canada's largest Communications Company

In 2013 I changed my dividend machine strategy.    I still use the same four criteria to screen for these stocks that I used in 2011 and 2012.   The difference is that in 2011 I picked one stock every week with no regard for anything other than the four criteria.   I did not try to diversify, I did not try to buy on dips, I did not select a stock that was trendy.     In 2012, I used that same technique, but I picked 48 stocks over the year instead of one per week.  My approach in 2013 has changed.

2013 Dividend Machine Strategy change:

You can see both income portfolios (see pages on 2011 DIVIDEND MACHINES and 2012 DIVIDEND MACHINES) and see that the technique created two successful portfolios.    The portfolios are diversified, their income is nearly four percent and growing and they each have capital gains.    In 2013, I am simply picking stocks as I find a stock that meets all four criteria and that I think is a good fit based on either industry or price for me instead of picking based on a schedule.

When I find a stock that I want to add to my holdings, I profile it in my 2013 DIVIDEND MACHINE list.  We will see over time if this more personal technique, which I think is more similar to how most investors buy stocks, beats the scheduled technique.

With that in mind, the next 2013 Dividend Machine is profiled below:

BCE Telecom
Price when profiled
Last 4 Qtrs Earnings
Last 4 Qtrs Dividends
Current Qtr Dividend
Annualized Div Yield
No. Years Div Increase
        since 2006
Debt/Equity ratio
BCE Company, symbol BCE 2013 Dividend Machine:

BCE Company is Canada’s largest communications company.   I like to own several companies in one arena.   I already own AT&T, it is an income investor’s dream, but with the stock price at or near highs and the challenges it faces, I have a stop on it.    I own two China telecoms and Vodafone so adding BCE is a good fit.

BCE Dividend Machine Fundamentals:

I remain committed to stocks that meet all four of my dividend machine criteria and BCE fills the bill.     Based on the closing price on 4/29/2013 of $46.20 the annualized dividend is $2.33 for a yield of 4.92%.    Earnings far exceed the dividend; their last four quarter earnings were $3.45.   Debt to equity ratio (D/E) is within industry standards at 1.15.  The table on the right clearly illustrates why BCE will be in my portfolio soon.

Income investors, if you want income to retire, consider BCE for your portfolio.


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