Will You Have Seven Swans a Swimming this Christmas ?

“On the seventh day of Christmas
my true love sent to me:
Seven Swans a Swimming”

The Christmas carol the “The Twelve Days of Christmas”  receives many articles written on it each year . The vast majority of the articles are written on the topic of “how much would it cost to purchase the Twelve Days of Christmas for your loved ones”. It is usually tied to some loose attempt to measure the inflation for the previous year or the past decades. Maybe the Federal Government  should start using this as their official measure of inflation for that year!

I have a different perspective on the song however, in that there is only one day of the song that catches my attention as a Dividend Income Investor. That day is Day Number Seven – A “gift of Seven Swans a Swimming”. For me this one day represents “True Love”.

Okay, for those of you that have not figured out where I am going with this I’ll explain. The term SWANS in investing lingo is an acronym that stands for “Sleep Well At Night”, meaning stocks that you don’t have to worry about.

12 Days of Christmas Lyrics

by Christmas Song

On the first day of Christmas
my true love sent to me:
A Partridge in a Pear Tree

On the second day of Christmas
my true love sent to me:
Two Turtle Doves
and a Partridge in a Pear Tree

On the third day of Christmas
my true love sent to me:
Three French Hens
Two Turtle Doves
and a Partridge in a Pear Tree

On the fourth day of Christmas
my true love sent to me:
Four Calling Birds
Three French Hens
Two Turtle Doves
and a Partridge in a Pear Tree

On the fifth day of Christmas
my true love sent to me:
Five Golden Rings
Four Calling Birds
Three French Hens
Two Turtle Doves
and a Partridge in a Pear Tree

On the sixth day of Christmas
my true love sent to me:
Six Geese a Laying
Five Golden Rings
Four Calling Birds
Three French Hens
Two Turtle Doves
and a Partridge in a Pear Tree

On the seventh day of Christmas
my true love sent to me:
Seven Swans a Swimming
Six Geese a Laying
Five Golden Rings
Four Calling Birds
Three French Hens
Two Turtle Doves
and a Partridge in a Pear Tree

On the eighth day of Christmas
my true love sent to me:
Eight Maids a Milking
Seven Swans a Swimming
Six Geese a Laying
Five Golden Rings
Four Calling Birds
Three French Hens
Two Turtle Doves
and a Partridge in a Pear Tree

On the ninth day of Christmas
my true love sent to me:
Nine Ladies Dancing
Eight Maids a Milking
Seven Swans a Swimming
Six Geese a Laying
Five Golden Rings
Four Calling Birds
Three French Hens
Two Turtle Doves
and a Partridge in a Pear Tree

On the tenth day of Christmas
my true love sent to me:
Ten Lords a Leaping
Nine Ladies Dancing
Eight Maids a Milking
Seven Swans a Swimming
Six Geese a Laying
Five Golden Rings
Four Calling Birds
Three French Hens
Two Turtle Doves
and a Partridge in a Pear Tree

On the eleventh day of Christmas
my true love sent to me:
Eleven Pipers Piping
Ten Lords a Leaping
Nine Ladies Dancing
Eight Maids a Milking
Seven Swans a Swimming
Six Geese a Laying
Five Golden Rings
Four Calling Birds
Three French Hens
Two Turtle Doves
and a Partridge in a Pear Tree

On the twelfth day of Christmas
my true love sent to me:
12 Drummers Drumming
Eleven Pipers Piping
Ten Lords a Leaping
Nine Ladies Dancing
Eight Maids a Milking
Seven Swans a Swimming
Six Geese a Laying
Five Golden Rings
Four Calling Birds
Three French Hens
Two Turtle Doves
and a Partridge in a Pear Tree

Source :http://www.metrolyrics.com/

As a Dividend Income Investor I not only want “Swans” but “I want my cake and eat it too”! This means I not only look for Swans but I look for Swans that have a higher than average yield than the majority of stocks.

So keeping in mind the needs of safety and higher yields here are my personal  “SWAN” picks that I would love for my true love to give to me on the Seventh Day of Christmas:

  1. Realty Income (O) – Equity REIT
  2. AT&T (T) – Communications/ Entertainment
  3. Main Street Capital (MAIN) – BDC ( Business Development Company)
  4. Preferred Apartment Communities (APTS) – Apartment REIT
  5. Omega Healthcare Investors (OHI) – Medical REIT
  6. Duke Energy (DUK) – Diversified Utility
  7. Lamar Advertising Company -(LAMR) – Billboard REIT

I own all these stocks in my personal portfolios and while prices of course fluctuate with the constant whims of the typical stock market, I know that when I wake up the next day these investments are rock solid and safe.

Almost everyone knows the story of AT&T, while not 100% the same company it was as the old “Ma Bell” in many ways it has evolved into something even better. It is a complete package.

Since its founding in 1969 Realty Income has grown from a single Taco Bell to almost 5,000 properties in 49 of the states and Puerto Rico. It is considered the “gold standard” of Net Lease REITs.

Another company that is considered the “Gold Standard” of its market sector is Main Street Capital a BDC (Business Development Company) which funds businesses that are starting out or growing. When people talk BDCs – the name Main Street always is singled out as the investment to be in.

When you invest in Preferred Apartment Communities you have just become the proud owner of over 31,000 multi-family units located in over 20 U.S. markets. There is no question in my mind of the viability of the rental housing markets for the foreseeable future. See related article :8 Great Stocks Yielding 8%

Omega Healthcare Investors is another great company. It is poised to take advantage of the ever growing Senior Housing and Assisted Living Facilities market. Baby boomers are a huge potential market. Omega Healthcare Investors has blessed its investors with constant Dividend increases over more than 20 consecutive quarters! See Related Article: In The Spotlight – Omega Healthcare Investors Inc.

When it comes to energy few can compete with Duke Energy. Duke Energy not only provides investors with a top notch Dividend Yield but it is one of the largest power companies in the United States. It has about seven and a half million electric customers, and approximately one and a half million natural gas customers. It produces over 52,000 megawatts of electricity. It has operated for over one hundred and fifty years.

And last but not least is Lamar Advertising Company. Lamar has many forms of advertising but perhaps the best known is its roadside billboards that are found along highways and other media forms located on transit and airports. Lamar has over 325,000 displays and in addition operates over 2,600 digital displays. There is little downside to this business. It has been in operation since 1902 – over one hundred and fifteen years.

Can you see why I sleep well at night? With great investments like these its hard not to. So maybe you should consider asking for these Seven Swans from your true love this Christmas.  It will make for a very merry year this coming year and perhaps for many more.

As always be sure to do your own due diligence prior to investing.

Here’s wishing you and yours a very Merry Christmas and a Prosperous New Year !

 

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It’s the Most Wonderful Time of Year!

Anticipating that Special dividend from Main Street Capital (MAIN) !

That’s right – Anticipating that Special dividend from Main Street Capital (MAIN) !

Main Street Capital will pay a special dividend to owners of record as of 19 December 2017 (Ex Dividend December 18) on December 27th this year. The special dividend rate is $.275 per share.

Main Street Capital is a Business Development Company that pays monthly dividends of $.19 per share and in addition historically pays a Special Dividend twice a year once at mid year and once at the end of the year. This marks the 5th year of MAIN paying  special dividends of at least $.55 per share in addition to its normal monthly dividends.

MAIN is considered a top notch BDC among investors and is a great investment consideration for those that seek current investment income.

Main Street Capital is currently in two of my portfolios – Should it be in yours ?

Thoughts and comments re always welcome.

 

No Need to Own it All !

It seems many investors are in the mindset that in order to be properly diversified you have to own stocks in every single corner or subset of the market.

I was reading an article lately about Farmland Partners (FPI). The article was centered around whether or not FPI would be able to cover its future dividends or not because so many of their land leases were being terminated despite the fact that they have a 25% penalty for early termination. One of the commenters on the article stated that maybe people should consider owning (CUT) Guggenheim MSCI Global Timber ETF instead. Get real ! First of all you are paying middle men (which my readers know I despise) and second it has a yield of less than 2% !

This got me to thinking in an entirely different direction. Why would I want to own this REIT sub segment at all ? The fact is there are lots of areas that I shy away from in the markets. Some examples are most Retail, Airline Stocks, Railroad Stocks, Banks, and many others. I avoid these areas because I have learned for various reasons not to trust them as they can be very volatile, subject to high Bankruptcy rates, have below average dividend yields etc.

It seems many investors are in the mindset that in order to be properly diversified you have to own stocks in every single corner or subset of the market. This is not true. My advice is to give as much thought to the types of stocks you are investing in as to which stocks you are investing in. By avoiding segments that are traditionally low performing areas you can help to avoid potential losses in the markets. There  are no rules saying you have to buy these stocks just because someone dreamt them up.

While it is wise to invest in a diverse area of stocks it is equally unwise to invest in all areas of the stock market just to be in them. Only invest in areas that you believe will not only pay good dividends abut will continue to thrive. Be selective and cautious about your investments.

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Dividend Yield Levels

“Official” Dividend Stock Yield Level Chart:

What are the Dividend yield Levels of Stocks?

I know there has been no “official” categorization of Dividend Yield levels so I am taking it upon myself to attempt to give clarity to a subject that quite frankly has irritated me for many years.

As a Dividend Income Investor that invests in high yield stocks it just angers me to read articles that call a stock yielding 2% “high yield” ! Sorry, but it is a just one of those things that is so absurd it makes me angry every time I read something like that. So, in lieu of Anger Management classes I have decided to make up my own “official” chart for the classification of Dividend Stock Yield levels.

Many have asked the following questions :

What is a Normal Yield for a Stock?

What is a High Yield Stock?

What is considered a low yield Stock ?

So here it is:

“Official” Dividend Stock Yield Level Chart:

  • None Dividend Stock – No Dividend Yield – 0%
  • Extremely Low Yield Stocks – 0% -.9%
  • Low Yield Stocks – 1.0% – 1.9%
  • Normal Yield Stocks – 2.0 % – 3.0%
  • Moderate Yield Stocks – 3.1 – 4.9%
  • High Yield Stocks –  5% – 10.9%
  • Extremely High Yield Stocks – 11% & above

 

I believe you will find this chart useful in that it gives clarity to the classification of stock dividend yields. So the next time you read an author that states that a yield of 2.5% is “high Yield” please feel free to promptly correct them and refer them to this “official” dividend yield chart!

 

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DOW Hits 30,000!

I Would I have loved to been invested back then !

DOW Crosses 30,000 !

Wow ! Wouldn’t that be a nice Headline !

I’m not usually one to predict where the DOW will be because for me I know that as a Dividend Income Investor its more about the journey than the destination. But as I see how the world economics are playing out I can see this happening very soon. In fact I am going out on a limb and predict that the we will see DOW 30,000 by 31 December 2018. That would represent a 30% gain from where we are today.

Impossible you say ? Well looking back in History you will find that in the early 1900’s the DOW made the following total returns:

1904 – 41%

1905 – 38%

1908 – 46%

1915 – 81%

1933 – 66%

I Would I have loved to been invested back then !

Of course things have slowed considerably in modern times as the market has matured but even going back to as recent as 1995 the DOW gained 33.5% followed in 1996 and 1997 by a 26% gain and a 22.6% gain respectively.

So my prediction may sound ridiculous to many but history shows it is not out that far out there. The question is what will drive a 30% gain in the next 16 months?

In my opinion the market, while in some areas is clearly over valued there are many that are still under valued. Corporate earnings have been great this year and the world stage is setting itself up for an economic boom to occur. Many investors are buying International stocks in anticipation of great performance outside the United States but I believe they forget that many of our companies operate on a global basis. I believe along with the weakened  dollar these companies will see record profits in the coming months and of course will lead to great gains in the market. The only question is – Will you be the one sitting on the sidelines?

 

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All Millionaires Are Not Equal !

Having accumulated just at a million dollars just before his retirement has left him feeling very good about his keen foresight of hiring Mr. Fancy Dancy of the “Fancy Dancy Brokerage Firm,

Not all Millionaires are Equal –

Some are Richer than Others !

Here’s Why !

Here’s a fictional story about three individuals. Mr Regular, Mr. Knowledgeable and Mr. Fancy Dancy. The story is entirely fictional yet I believe many will believe it is someone they know, perhaps even about themselves.

Let’s consider two Millionaires – A regular old Millionaire (Let’s call him “Mr Regular”) that has a Fancy Dancy Stock Broker at some Fancy Dancy Brokerage Firm making his Investment decisions for him ( Let’s call him “Mr. Fancy Dancy”) and a another millionaire who is a Dividend Income Investor ( Let’s call  him Mr. Knowledgeable).

Mr. Regular is a busy guy, He has done well in life and has set aside a portion of his income for retirement. Mr. Regular always thought of investing in the stock market a risky venture and decided early on that he best leave that the Mr. Fancy Dancy at the Fancy Dancy Brokerage firm to do that for him. After all, how could Mr. Regular ever expect to find the time to learn about investing, it is a really complicated venture and if done incorrectly he could end up losing all his money and have nothing to retire with.

Having accumulated just at a million dollars just before his retirement has left him feeling very good about his keen foresight of hiring Mr. Fancy Dancy of the “Fancy Dancy Brokerage Firm,  to handle his financial affairs. That is he was feeling very good about his decision until his latest visit with Mr. Fancy Dancy only a month before he officially retires.  The first thing his old buddy Mr. Fancy Dancy tells him is about the “4% rule”. Most studies come to the conclusion you will need to make your money last for at least 30 years and that the maximum you can withdraw each year to last the entire 30 years is 4% of your savings ( adjusted for inflation). So he is told his withdrawal will have to be limited to $40,000 per year in order to last for the expected 30 years of his remaining life. This comes out to $3,300 per month. Added to his $1,500 Social Security this comes out to about $4,800 per month. Not bad considering but Mr. Regular is not happy at all. He was bringing home over  $10,000 per month with his job (his salary was $125,000 per year) and now he finds out that he will have to live on half that amount in retirement. Mr. Fancy Dancy explains to Mr. Regular that this is just the way  it has to be. He has him in bonds and stocks (chances are 60% equities and 40% bonds) and they are returning about 2.5% in his investments.  Mr. Regular is now desperate and is trying to think of ways to reduce his cost of living in order to make ends meet. Possibly selling his beautiful home and moving to a lower cost area, cutting back on expensive hobbies like golf or cutting back on vacations. He is even thinking about working part time then he suddenly finds out that he will lose $1 of his social security for every two dollars he earns over a certain amount so that limits his prospects there also. So Mr. Regular has to make a decision, take a drastic cut in his lifestyle or continue working until he has much more than one Million saved for retirement. By holding off he can better retire and because he will have a shorter life expectancy at that point he can safely withdraw a little more than 4% , maybe as much as 5%.

As it turns out Mr. Regular is friends with Mr. Knowledgeable. Mr. Regular shares his story with Mr. Knowledgeable. Mr. Knowledgeable tells Mr. Regular his thoughts about Mr. Fancy Dancy at the Fancy Dancy Brokerage Firm. He tell Mr. Regular while Mr Fancy Dancy is a nice guy that the reality is that he is there to make money for himself and that is understandably his primary focus. He further explains to Mr. Regular that he is a Dividend Income Investor (DII). As a Dividend Income Investor he controls his own portfolio and only buys individual stocks. In this manner he immediately earns more on his investments because he cuts out the middle man.

Mr. Knowledgeable continues to explain to Mr. Regular that he too has One Million dollars saved for his retirement, but he has no worries what so ever about maintaining his life style while in retirement and does not limit himself to the 4% rule, is not worried about running out of money even if he lives to be 115 years old. Okay, now Me. Regular is fascinated and asks him to please continue explaining more about his investment philosophy and about Dividend Income Investing.

Mr. Knowledgeable gladly offers to explain the Dividend Income Investing philosophy. First he explains that as previously stated he has one million dollars invested for his retirement. His current yield on cost is 9%, meaning that his returns from his dividend income is $90,000 per year. This equates to $7,500 per month. When he adds this to his Social Security of $1,500 per month his total income in retirement is $9,000 per month. This is only around one thousand dollars a month shy of what he was making at his full time job. Or in other words  he is only taking a 10% pay cut by retiring.  In addition some of his stocks will increase their dividends from time to time giving Mr. Knowledgeable a hedge against inflation. In the event of a a company announcing a dividend cut ( believe it or not this is a rare event ) Mr. Knowledgeable simply sells that stock and finds a similar yielding stock to replace it.

So what are the mechanics of the Dividend Income Investing?

  • First buy only Dividend paying stocks.
  • Never buy stocks below 4% dividend yields.
  • Try to buy stocks with yields in the 4-11 % yield range.
  • Identify stocks that are out of favor but are good solid companies that have sound financial fundamentals yet pay higher than usual dividend yields.
  • Don’t follow the “herd” – when everyone else is running to get out of a stock, that’s the time to start planning your purchase. Recent examples are oil stocks, Retail REITS, Coal stocks, Tobacco stocks. Just because they have become out of favor or socially unacceptable to many doesn’t mean the company will not continue to make money. Use logic and ask yourself basic questions – how many more years will this company be around? Is the market just overreacting to some bad news? Are things really that bad? – Quite often the answer is that everyone is just overreacting. This is when the great buying opportunities present themselves.
  • Don’t buy Speculative stocks – you know like the next great tech company that will make you rich. 99% of the time you will only get poorer – not rich.
  • Don’t buy ETFs and Mutual Funds – You are paying dearly for the middlemen.

 

So is really that easy ? The answer is yes. Of course you have to keep a close eye on your investments and it does take a little work to find stocks that will average a yield of greater than 9% but it is far from  impossible. In fact I have managed to do that with my personal portfolios for some time now. I, and many others like me are reaping the rewards of Dividend Income Investing. Follow the advice above, and keep focused on what is important, the Dividend Income!

Your comments are always welcome. Please comment below and also consider following me for more on Dividend Income Investing.

Market Sectors

“Market sectors are especially important to investors trying to make sure your portfolio is well diversified”

What are the different Sectors of the Stock Market ?

There is no consensus on what constitutes a Market Sector but we are listing the major sectors and sub-sectors of the Stock Market. Market sectors are especially important to investors trying to make sure your portfolio is well diversified. By purchasing stocks from differing sectors you help isolate your portfolio from large losses should a particular sector experience a “bubble” ( a phenomenon that occurs when a particular sector is extremely overbought, usually due to speculators). It is advisable for investors to buy stocks in every major sector of the market if you can, while nothing will help with a general market downturn it can help stabilize your portfolio during turbulent market sector volatility..

Stock Market Sectors with their respective sub-sectors:

Technology Stocks

  • Internet Stocks
  • Software & Services
  • Applications
  • Networking
  • Semi Conductors & Microchips

Commodities & Basic Materials

  • Agriculture& Cattle
  • Basic Materials
  • Metals( Aluminum, Gold, Silver , Steel, Copper ..)
  • Chemicals

Energy

  • Oil & Gas
  • Refineries
  • Pipelines & Storage
  • Coal
  • Machinery & Support Services

Healthcare

  • Pharmaceuticals & Drug Manufacturers
  • Biotechnology
  • Medical Appliances & Equipment
  • Medical Laboratories & Research
  • Medical Instruments & Supplies
  • Healthcare Diagnostics
  • Hospitals
  • Medical Research

Financials

  • Banks
  • Investment Brokerages
  • Property & Casualty Insurance
  • Accident & Health Insurance
  • Life Insurance
  • Credit Services
  • Asset Management

Consumer

  • Discretionary – Leisure & Entertainment…….
  • Non-Discretionary – Autos, Food,Beverages ……..
  • Tobacco, Alcohol Products

Industrial

  • Machinery
  • Aerospace & Defense
  • Electric Equiment
  • Farm Machinery
  • Lumber & Wood
  • Small Tools

Telecommunications

  • Telephone Services
  • Internet Services
  • Entertainment Services
  • Cable TV

 

Utilities

  • Electric Utilities
  • Gas Utilities
  • Water Utilities
  • Renewable Utilities
  • Diversified Utilities

Transportation

  • Airlines
  • Railroads
  • Trucking
  • Shipping

Services

  • Entertainment
  • Home Improvement
  • Restaurants
  • Delivery Services
  • Mail & Internet Orders
  • Delivery Services
  • Department Stores
  • Specialty Stores
  • Grocery Stores
  • Casinos

REITS & Real Estate

  • Agriculture & Land REITS
  • Data Center REITS
  • Diversified REITS
  • Healthcare REITS
  • Industrial REITS
  • Infrastructure REITS
  • Lodging REITS
  • Office REITS
  • Retail REITS
  • Residential REITS
  • Specialty REITS
  • Storage REITS

 

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