Showing posts with label SO. Show all posts
Showing posts with label SO. Show all posts

Friday, December 2, 2016

Income Investors have done well in 2016

Look at the enormous improvement in the 2015 portfolio in the last few months.

2015 M* Dividend Machine Holdings as of February 19, 2016

2015 M* Dividend Machine Holdings as of December 2, 2016

My picks increased from a negative 8.28% to a positive 11.46%.  SDY improved from a positive .41% to a positive 11.92%  and VIG rose from a positive .59% to a positive 8.03%.

What are we to make of these moves?

The individual stocks selected for inclusion in the 2015 portfolio number 19.   Their individual performance is presented below. 

SDY ,a low cost ETF that I use as a benchmark, holds about 100 stocks.  Clearly, this diversification allowed the fund to weather the difficult first quarter of 2015. 

The problem with 2015 is that we all ended up buying high.  This is always a nerve racking situation. The market does not go up in a straight line and maybe we could have waited and bought at a better price.  Eventually, you have to invest when you have money sometimes you just have to wait for your stocks to break out. 

VIG another low cost ETF that I use as a benchmark made a nice move as well.  Yet, this group of stocks concentrates more on stocks that increase their dividends and therefore, the influence of potential interest rate increases that compete with dividend growth stocks made VIG the poorest performer of the three.

Income investors should take heart in the fact that all three of these portfolios have done very well. 

M* Money Madam

Disclosure Long: CAT, CMI, COP, CVX, EMR, LHO, MDP, MHLD, PAYX, SO

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Wednesday, December 2, 2015

Price matters Southern Company

When I profiled SO, Southern Company earlier this year,  the stock price was at a high.  Although SO met all my four Dividend Machine criteria, and still does, the stock price  has suffered and pulls down the 2015 Dividend Machine portfolio performance.  

This article supports SO's fundamentals.

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Tuesday, January 20, 2015

2015 Dividend Machine - SO

My theory of investing evolves around simplicity and that is because I found that my clients would get lost in the weeds of research before they could make a decision on which stock to buy.   In some ways, that was good news for me because if they could have done the research themselves they would not have needed an adviser.

Measuring how my stock picking criteria performed needed to be easy as well.   Easy for me to track and easy for you to understand.   This lead to my using the model portfolios as a way to measure how well the stocks I picked, using very limited criteria, performed.

Nothing is perfect and I picked some bummers, but over all, this simple technique has worked well as you can see by looking at the model portfolios.  If you are not familiar with my stock picking criteria, please see the Dividend Machine Criteria page.

Money to Invest from Covered Calls

This last week was call expiration for January.   Several of my calls were assigned.   That means that whoever bought my calls, also bought the stock.    I never understand call buyers, I am just happy they exist. Most call options expire.   But this week several were taken.

For instance, I had calls on Intel, symbol INTC, at $36.   INTC closed at $36.45 and the call buyer exercised their right to buy INTC from me at $36.   Right now this buyer is just breaking even and is either covering a short position and had to buy it, or is counting on INTC going up over time.   

INTC’s yield is bit weak for me at 2.49%.   Plus, INTC has not increased the dividend in 10 quarters.   I decided to put that money to work in a stock with a higher yield and better dividend growth.

Southern Companies (SO) Dividend Machine Fundamentals

Today, I am profiling a utility company, Southern Companies, symbol SO.   Utilities tend to perform like bonds and so are kind of expensive now.   But, I have never used stock price as one of the criteria I use to pick a stock.   Moreover, I have never used, factors such as what sectors are expensive or which are cheap to determine which stock to buy at a given time.

Southern Companies is a very good utility.   It pays 4.09% based on Friday’s closing price of $51.35.  Dividend increases have averaged 4% per year for the past 5 years.  D/E Ratio is 1.09 which is within industry standards.

See the table below to review SO’s Dividend Machine Fundamentals.

Consider SO as one of the stocks you use for income.


I want to remind you that I will use the closing price on Tuesday as the basis for tracking SO performance in the 2015 Dividend Machine Portfolio.  I do this when I profile a company before or after market hours.   When I profile a company during intraday trading, I will use the price the stock trades at when profiled.

Disclosure:  Long SO for a long time.
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