Thursday, December 31, 2015

Model Portfolio Updates

Prices Updated 3/4/2016  

A comparative review of the 2011 - 2015 Dividend Machine Model Portfolios and SDY and VIG dividend income ETF's.


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Wednesday, December 9, 2015

Portfolio Analysis and Web/Blog update

December 9, 2015

I will be away until early 2016.  During that time I will work on evaluating my work on Dividend Machines.   I will formulate a strategy that tracks the use of covered calls on dividend stocks and I will have a new look to my blog.
I wish everyone Happy Holidays and a prosperous New Year.

Yours Truly,


a.k.a. M*
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Tuesday, December 8, 2015

Arch Coal Bond Update

Update on ACI bond 7.25% due 10/1/2020.
There was a re-organization issue so the CUSIP has changed to 039380AC4.

Qualified institutional investors had a chance to do a swap but I believe that fell apart. Currently, the individual investor still owns the full face value which is trading at about $2.00.

The 10/1/2015 interest payment was made and the bond is not considered to be in default. Theoretically, principal could be returned in 2020 but it is dicey due to the heavy debt load that the issuer Arch Coal carries. We will have to wait for the next expected interest payment of 4/1/2016 to see if they have the cash to pay their interest payment.

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Thursday, December 3, 2015

Westwood Holding Group 2015 Dividend Machine

I used to manage other people's money and I find more and more folks needing help with their investments.   Many amateur investors do very well, but I cannot tell you how many very well educated, wise, disciplined  and successful people cannot successfully management their portfolios.

Companies like Westwood Holding Group, symbol WHG, fill that void.  Moreover, I like WHG because for the second time in five years, WHG qualifies as a Dividend Machine and I will add it to the 2015 Dividend Machine Model portfolio.  WHG is the 19th stock added to this portfolio.

WHG Dividends

To remind you, I am looking for stocks that provide a minimum yield of 3.5%.   Today, WHG is trading around $57.15.  It has declared the next dividend to be $.57 for those who own the stock on 12/11/2015.  This most recent dividend is a 14% increase over the previous quarter's dividend of $.50.  Forward yield on today's price is 3.99%.  

The 14% increase is consistent with WHG's history of increasing the dividend.  Over the past five years their dividend increases have averaged 14.5%.     On occasion, WHG sweetens the dividend pot.   In November of 2010, they paid a double dividend (which is not included in the dividend increase calculation; I used the basis dividend in 2010 compared with 2015 to determine average annual increases.)

WHG Earnings

Dividend are nice but they must be less than EPS (earnings per share) or I consider the dividend in jeopardy.   One can make the argument for a stock that is turning around, or going through acquisitions and mergers to have less EPS than dividends, but those are not the kind of stocks I like to include in my Dividend Machine Portfolios.   Without a doubt, I have selected stocks whose EPS drop below the dividend.  I don't like it but it happens to the best stock pickers.

WHG has ample earnings to fund the dividend.   Their past four quarters of dividend payout was $.50 for 3 quarter and $.57 for the most recent quarter.   Their most recent four quarters of EPS equals $3.52, well above their future annual dividend payout of $.57 * 4 or $2.28.   You have to go back to 2009 and 2010 to find evidence of EPS being less than dividend.  

The poor earnings during the 2009/2010 period is not surprising for a financial services company as the country, in fact, the entire world suffered during the disruptions in the credit markets and equity markets in the U.S.    This could happen again, but it is comforting to know that WHG had the reserves necessary to continue to pay and increase the dividend. 

WHG Debt/Equity Ratio

WHG carries no debt.  This is a fundamentally sound enterprise.

WHG Dividend Fundamentals

The table below presents the Dividend Machine Fundamentals of Westwood Holding Group.  Consider WHG for the income producing portion of your investment portfolio.


Disclosure:  no position in WHG

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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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CMI nice entry point $92

Bank of America downgraded CMI providing a nice entry point for this fine Dividend Machine.   MM
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