Income & Dividend Investing

Anything but .01% (by Gross at PIMCO)

yogibearbull — Thu, 19 Nov 2009 15:05:33 GMT

http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2009/Dec+Gross+Anything+but+01.htm

Dividend Income stock Excelon?

btrain26 — Wed, 18 Nov 2009 04:29:17 GMT

EXC

Any opinions about this M* 5 star stock with a 4.49 projected dividend.

http://stockcharts.com/h-sc/ui?s=EXC&p=D&yr=1&mn=0&dy=0&id=p08576498483

It looks early chartwise.....but it may be opportunistic. Red flags, anyone?

Interview with TIBIX Manager

Kenster1 — Thu, 19 Nov 2009 18:38:31 GMT

http://www.smartmoney.com/Investing/Stocks/In-Search-of-Dividends-and-More/?page=all

In Search of Dividends...and More

BRIAN MCMAHON, THE 53-YEAR-OLD chief investment officer and CEO of Thornburg Investment Management, has overseen both stock and bond funds for the company since 1984. The blended $4.1 billion Thornburg Investment Income Builder Fund (TIBAX), which he manages, has boosted its dividend 14.2% annually, on average, over the past five years. The dividend went from 55 cents per class A share for the year ended Sept. 30, 2004, to $1.07 for the year just concluded.

Canadian Royal Trust distributions- taxes, comparison to MLPs

dobetter — Fri, 13 Nov 2009 20:16:43 GMT

CanRoy folks-

I started this thread to ask a few questions on the taxation of CanRoy distributions. (these questions didn't get much response when I asked them in my MLP thread)..

-does tax handling of distributions vary from one CanRoy to another? What's the difference in taxation of distributions between those that have converted to corporations and those that haven't?

-it’s my understanding 15% off the top is withheld by Canada, then you apply to get that 15% amount credited back to you, which you can use towards any tax you owe on your return. Do you submit that application for credit as part of your annual tax return, or is it a separate process?

-is the other 85% of the distribution handled the same as MLP distribution (i.e. 80-90% is tax-deferred return of capital, which reduces your cost basis, and the remaining 10-20% is taxed at the special 15% dividend rate)?

-with CanRoys do you receive K-1s just like with MLPs?

-for MLPs or CanRoy distributions do you have to pay any state taxes in your state of residency (assuming you don't live in a state where any of the business activities occurred).

-with MLPs or CanRoy unit holders have any type of potential legal liability that shareholders of corporations don't have?

-do you folks who own MLPs and CanROys include the full distribution amounts in your calculation of your portfolio withdrawal rate?

-I'm already aware of some CanRoy focused newsletters and web sites, but can anyone recommend an investment advisor who will manage a portfolio of CanRoys for individual investors?

thanks

Is OAKBX still good to buy in taxable a/c?

wistrick — Thu, 19 Nov 2009 14:27:23 GMT

early 50's unemployed ,25% tax bracket, Is it still good to buy OAKBX as a steady income stream in a taxable a/c? (No more room in my retirement a/c)

Any input much appreciated.

VFINX vs. VWEHX (King Kong vs. Godzilla!)

ElLobo — Fri, 13 Nov 2009 01:08:59 GMT

We've discussed the differences between holding VWEHX and both VBMFX and VUSTX in other threads. That is, how one bond fund compares to another. We looked at cash flows as well as total returns.

The advantage of VWEHX over all others is the higher cash flows involved, that is, the distributions for $10000 invested. And the correlation of the returns for each were detailed. The disadvantage with VWEHX was the falling NAV.

The idea is that VWEHX could be used as a substitute for stocks, given that the fund had equity like returns with bond like volatility (risk). I mentioned that, over similar 30 year lifetimes, the return of VWEHX has been remarkably close to that of Vanguard's S&P500 index fund, VFINX.

I challanged TR proponents to look at this, but got no real takers. That is, taking a TR look at both a VWEHX/VBMFX portfolio AND a VFINX/VWEHX portfolio. We looked at the former, in terms of the cash flows involved and will skip, for the moment, the later.

So, with Norberts help, I show the following 3 figures:

VWEHX vs. VFINX, in terms of 'Growth of $10k'

VWEHX vs. VFINX, in terms of NAV

VWEHX vs. VFINX, in terms of rolling 3 month returns

The average annualized TR for VWEHX was 8.65% over the last 30 years, while that of VFINX was 10.29% over a slightly longer time period. Given that the average annualized NAV loss for VWEHX was 1.55%, that means the average annualized yield of the fund was 10.2%. The first figures shows that, although the TR difference between the two average 1.64%, the difference added up over 30 years, to the point where $10k initially invested in each, with all distributions reinvested, was worth double for VFINX then for VWEHX.

The second chart shows, however, that almost all of that growth came from NAV appreciation for VFINX, while all TR came from yield for VWEHX. This gets into the tradeoff of withdrawing yield versus selling shares, for income.

Finally, the third chart shows the volatility difference between the two, the real reason for this thread.

I'll leave it up to you portfolio optimization specialists to comment on the VFINX/VWEHX portfolio.

Finally, given these figures, would anyone care to comment on a 50/50 VFINX/VWEHX portfolio whereby rebalancing is always done by moving money from VFINX to VWEHX, never the other way. That is, you always take some capital gains in VFINX off the growth table and move them to the income/yield table.

The comments would be in regard to the distribution yield income stream thrown off by such a portfolio.

This chart is kind of freaky............

bilperk — Sat, 14 Nov 2009 00:31:12 GMT

Whatever happend to Risk/Reward correlation?

Thanks to Norbert for posting this on another thread. Almost 40 years and Wellington with 50% more equities can only squeek out a $768 advantage, about $20 per year.

Most interesting to me, look at Wellesley during the high inflation and interest rate years from the late 70's through the 80's. I had its greatest separation when rates were rising. Go figure..

Anyway, I'm beginning to wonder why I should hold Wellington at all

Master Limited Partnerships and non-traded REITs

dobetter — Sun, 25 Oct 2009 04:30:40 GMT

Looking for opinions on these two types of investments, also seeking good sources of info (books, newsletters).

Also, does anyone know of investment advisors who specialize in these investments?

MDLOX versus TIBAX

schmitzl1 — Fri, 13 Nov 2009 11:36:34 GMT

Any thoughts on which of these funds is better for a world allocation fund?

KMR / KMP

statsguy — Mon, 04 Feb 2008 20:11:40 GMT

KMR (Kinder Morgan Management LLC) and KMP (Kinder Morgan Energy Partners Limited Partnership) are two fine energy companies. I wish I had bought them in 2006 when I was first considering them... anyway thinking about them again.

How does one choose between these two? Both are very attractively priced right now... we are a little overweight in the energy area so we may make another choice... but still I have thought about this before and never come to a satisfactory answer.

I understand the MLP issues with KMP and they do not present a problem for us. M* says "Mathematically, KMR shares should trade in lockstep with KMP shares. One share of KMR gives its owners essentially the same rights, ownership interest, and partnership distributions as one KMP unit. The only difference is that KMR holders receive their distributions in additional shares instead of cash. Think of KMR shares as KMP units with a built-in dividend reinvestment plan."

Does that mean that one is preferable in a tax deferred account or taxable account?

Since KMP and KMR should theoretically trade in lockstep, I think that means that KMR is relatively cheaper because it currently has the higher dividend

What do others think?

Stats

JNJ or VIG?

judybarnes — Sun, 15 Nov 2009 01:34:07 GMT

This will be a small investment, so the decision is no big deal. I was set to buy JNJ, but saw a thread about VIG and got interested. They're both 5-star offerings with similar risk. JNJ's dividend is higher.

Any thoughts?

WGL Holdings for Dividend Income

KAWill70 — Sat, 14 Nov 2009 20:42:42 GMT

I'm interested in any comments on WGL Holdings as an Income Investment.

The stock dropped over 3% yesterday and I assume that was related to the latest earnings report.

WGL has been a solid dividend paying company and it also held up very well in 2008.

Two Year Chart - Click Here

It does appear to trade relatively low volume. I noticed a large price swing on 11/6 and wonder if selling a large block of shares can be a problem.

Thanks for any input.

VWEHX vs. VBMFX

chipmunk — Mon, 02 Nov 2009 14:35:31 GMT

I'd like to ask a simple question, and it would be nice if ElLobo could respond. I'm trying to decide if keeping VWEHX long-term makes sense (I purchased some earlier this year after the collapse).

Just looking at the past 10-year period only, it appears that Vanguard High Yield Corporate (VWEHX) has averaged 4.96% total return (income less NAV erosion) per year, while Vanguard Total Bond Market Index (VBMFX) has averaged 6.04% per year (income with stable NAV), or over 1% more.

My question is this: What is the difference over the long-term of getting 8% yield from VWEHX (reinvesting 4% to boost # shares at lower NAV and drawing 4% income) and 4% yield from VBMFX (no reinvesting necessary and drawing 4% income)? Thanks in advance for any responses.

Note: I realize VWEHX's current yield has fallen to below 8%, and VBMFX's current yield has fallen to below 4%, but I'm guessing 8% and 4% long-term yields, respectively, are reasonable to expect.

Dan

Freaky

bilperk — Sat, 14 Nov 2009 00:31:04 GMT

duplicate post

bond purchase

thermalg3ed — Fri, 13 Nov 2009 04:06:51 GMT

which is the best buy? A 3 year bond purchased at par that pays 1.35% coupon, or one purchased at a premium of 107.075 that pays 4% with a YTM of 1.266%?

VUSTX / VWEHX

helmut — Wed, 11 Nov 2009 05:58:59 GMT

Not sure if I'm looking at the 3 month rolling returns for the last ten years correctly, but notice the negative correlation during 2000-2002 and 2008-2009.

If my math is correct with a combined current interest yield of 5.73% (not bad at today's rates) and a disciplined 10% rebalancing band, at 50%/50% you might have a fairly good combination for your fixed income allocation.

It seems to me that this combination would be a good fix for VWEHX's NAV erosion.

helmut

Innovation is not rewarded for the innovator.

TaylorZR — Tue, 10 Nov 2009 17:02:48 GMT

"So, the fact that most atheists in America, who are the minority, are smarter, does not imply that Atheism is necessarily a smarter choice, but rather, that in general elites tend to deviate from the default choice"

http://falkenblog.blogspot.com/2009/11/innovation-is-not-rewarded.html

===

'Income Growth Investing' is the deviation from the default choice.

J.W.R. R.I.P.

SmartSometimes — Mon, 02 Nov 2009 17:52:13 GMT

John passed away on Tuesday, October 27, 2009.

http://www.tributes.com/show/John-Russell-87058885

Adding two new MLPs. Any suggestions?

Jim333 — Mon, 09 Nov 2009 20:44:25 GMT

I currently hold KMP, KMR, EPE, EPD, and PAA.

I am at my max on each of these stocks.

I would like to add two new MLPs to my income portfolio.

Any suggestions?

Thanks, Jim333

Dividends verse selling shares No. 2 !

copie — Mon, 09 Nov 2009 13:26:07 GMT

Two stocks that would have been good to compare when the big seed corn debate was going on is KMP and KMR. Both are owned by same company, but KMP pays dividends and KMR pays shares like a stock split each quarter. If you could go back and set it up with same amount of money in each one and then sell enought shares of KMR each quarter to get same amount of cash that KMP pays at same time would that not give you some idea of which is the better way to go?

Some one that has the know how, which I do not, would have to set it up. Since I have KMP in my taxable account and KMR in IRA we could wait ten years and I might could tell you, but in ten years I maybe in rest home and have no idea what you are talking about! :)

Copie

Canadian Income Trusts

BillinNC — Sat, 17 Oct 2009 20:57:17 GMT

I own a number of Canadian income trusts and believe a number of them continue to look attractive currently. Is anyone else active in this area, and what sources do you use for ideas and information?

Thanks in advance

Bill

FYI: Quarterly MLP report

cliff — Fri, 06 Nov 2009 19:59:59 GMT

I look at my own MLP cash results and that of the Alerian MLP Index on a quarterly basis. All 50 entities in that Index have now reported results for, and announced distributions based upon, Q3 2009.

Of the 50 entities in the Index, 47 announced distros equal to or greater than Q3 2008 - 30 have increases and 17 have the same distribution.

At the end of Q3 '08, the overall yield of the Index was 9.3%. It was 8.2% at the end of Q3 '09.

The average amount of the distribution increase for the 30 was 5.2%. The overall average distribution increase of the 47 was 3.3%.

There were 3 that cut their distribution an average of 46% vs. last year. None were pipelines - one is a tanker and two are oil and gas production outfits.

I hold 15 of the 50 Index entities (Teppco and the Magellan GP are now gone). 12 increased their distribution and 3 remained the same.

The oil and cash keeps flowin' . . . . ;)

Regards.

Cliff

Rega

New I bond rates out....3.36% for next 6 months....

bilperk — Mon, 02 Nov 2009 16:38:04 GMT

if bought today. My 2% I-bonds will pay 5.10% for the next 6 months.

http://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm

Corporate Bond Laddering, What do you think of these

ptnewyork — Sun, 08 Nov 2009 18:03:00 GMT

Hi - I had several CDs come due. I also want to protect my networth from further erosion. I have about 100K sitting in my SEP now earning .05!!!! I don't want to get into more bond funds, because of the potential for erosion with interest rate changes (the perception of which is hurting bonds now) flood of money into them, and price appreciation... So that leaves me pondering - I am not sophisticated at all like the poster who pondered what the heck to do and has an impressive dividend capture strategy (can I hire you)? I want to be conservative with this money... part of me could even leave it alone! and see what the heck happens in a year or two...

I am working with someone who put together a corporate bond proposal, which includes CVS. I will nix CVS - now under investigation by FTC for price fixing and its stock (which I hold) had a 20% decline the other day (it didn't sign numerous contracts and it lost billions in its networth)... Here's what the proposal could look like (I know the offer prices have become less attractive, to say the least):

Wells Fargo, 5.125 coupon, maturity 9/2012, 106.52 offer price, yield 2.69, modified duration 2.594

MetLife, 5.375 coupon, maturity: 12/2012; 107.84 offer price; yield: 2.710 modified duration, 2.803;

JNJ: coupon: 3.80, maturity, 6/2013, offer price 107.7893; yield - 3.82; modified duration - 5.208;

Oracle: coupon 5.875, Maturity - 5/2016; offer price 107.79; yield, 3.82, modified duration, 5.208;

Abbott Labs: coupon 5.874, Maturity 5/2016; offer price 111.36; yield, 3.892,mofidcied duration 5.320

CVS - I am nixing, duration was to be until 2017

Walmart - coupon 5.80; Maturity 2/2018; Offer price 111.35, yield, 4.160, modified duation 6.556

I'm not thrilled with the idea of going long given so many unknowns (the new normal). 1) I could keep all corporate bonds short, max 2-3 years, and revisit this in 2-3 years (?)

2)? Take the money back or some of it and park it in Vanguard GNMA and some Vanguard TIPs (which i already have positons in).. Then i'd have the stress of having to manage more of my own money (I don't like it now with the new normal and inherited money)...I'll have to watch it and then figure out what to do if assumptions change - GNMAs get hit for some unforseen reason (duration is about 2 years but they will get hit down the line with interest ratet change); TIPS, if deflation is the norm for a long time...

I already have a host of bond funds, and am looking to tighten up duration a bit. (Largest positions I noted in another post are in PIMCO Total Return - $25K, Blackrock Intermediate Muni, $42K.. the rest are in a smattering of funds and CEFs).

What are you folks doing if anyone is considering individual bonds?

I'm 56, self-employed working at this point part-time and dipping substantially into my savings in a high cost area (NYC).. Thanks, as always. I would like to stay in NYC for the long haul but probably can't afford it down the line. Patty

Your crystal balls

ElLobo — Wed, 19 Aug 2009 04:44:38 GMT

Do you see future earnings growth in health care related companies if the health care bill is passed into law. Specifically,

1) Companies that run hospitals, clinics, and such.

2) Health/medical insurance companies.

3) Healthcare related REITs

4) Medical equipment and supplies

5) Pharma