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Posted by Martin August 19, 2013
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New trade – Ferrellgas Partners LP (FGP) new put selling

New trade - Ferrellgas Partners LP (FGP) new put selling

My previous put selling trade on Ferrellgas Partners LP (see the trade here) expired worthless for full profit last Friday. I still like the stock and decided to continue selling puts against it.

As I wrote in my previous article about selling puts, you should do it only against stocks, you like to own. When I opened the previous contract I was sure for about 98% that I wanted the stock. Today I am 100% sure about this paper.

Nevertheless I opened quite a long contract today and collected $110 premium.

If this contract expires worthless I will make 5.5% or 11.02% annualized profit. If the stock drops below my strike price I will get assigned and yet keep the premium. My cost basis will be $18.9 a share. If the stock drops below my cost basis (break even price) too deep I will roll the put lower and further in time.

08/19/2013 09:41:27 Sold 1 FGP Feb 22 2014 20.0 Put @ 1.1

 




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Posted by Martin August 18, 2013
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My inspiration in the last week #33

My inspiration in the last week #33

I often browse the internet to find ideas about investing, trading stocks, options, investing opportunities and strategies. I like to read about investors and what their investing/trading approach to create income you can live on is.

 

  • Five Golden Rules for Dividend Investors – The Dividend Theory – by thedividendtheory
  • When should you sell a dividend stock? – Get Financially Integrated! – by Integrator



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    Posted by Martin August 18, 2013
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    An Anatomy of Dividend Investing

    An Anatomy of Dividend Investing

    Most of the investors look for highly secure way to invest their hard-earned money which will not only let them to save for their retirement but also supplement their income. No matter how much return you want to earn out of your investment portfolio, it is essential that you should understand the risk and return associated with your investments. Most of the people have very basic understanding of the way stock market work and they believe that all types of investing are same but it isn’t true. Divided investing is one of the exceptional investing strategies where investors mainly focus on companies which pay regular dividend and possess history of raising dividends on constant basis. Go through following guide to know about extraordinary challenges associated with dividend investing and what are the tactics to manage them –

    Consider Payout Ratio

    When you are considering dividend investing, it is extremely essential to do some comprehensive research on the history of company in which you are planning to invest your money. One of the vital things which you must consider is the payout ratio demonstrated by company to investors. Always remember that, though higher payout ratio sounds like you will be earning significant money, they can actually set your money at higher risk. The standard thumb rule tells that not to mess with the companies which have payout ratio of more than 65%.

    Capability of Company

    One more thing worth looking is since how long a company has been offering dividend payment to investors. Is it a new company which has been demonstrating profit since last 2 years or is it a well established company with lot of satisfied shareholders? If you are investing in a company which is fairly young and wants to pay dividends to investors then it makes sense to ask important question whether it will able to sustain the dividend payout.

    Dividend Growth is a Heart of a matter

    As with human heart rate, inconsistency can be a big sign of problem, the same holds true when investing in selected dividend stocks. The consistency in growth of dividend is a key point to consider. Though significant amount of percentage increase in recent years is great, it is very important that the dividend percentage has been increasing by some consistent amount every year. As a thumb rule, you can opt for companies which have 5 to 7 year average of increasing their dividend by 6 to 10 percentage. You can think it in the way that each year company gives you consistent amount of pay raise. In current market scenario, you will find yourself lucky to avail raise of 5-6% from a well performing company.

    Don’t fall in love with your stocks

    If things don’t work out in your personal relationship then breaking up is hard thing to do but it normally turns out as a perfect decision in long term. The same scenario holds true in owning a stock of particular company.  It is fine to like your stocks, but don’t ever fall in love with any of those. Money combined with emotions can’t break your heart but it will definitely break your wallet. So make yourself aware of the signs when market scenario keeps changing. Most of the times, market provides you an opportunity to book your profits earlier than you have anticipated. It is not advisable to do short term trading, but if your stock has appreciated substantially in very short period then it definitely makes sense to book your profits in prior time.

    Selecting high dividend paying companies

    The best dividend investing is rarely about the biggest payout and highest yields but it is about highly safe and consistent payout. The best strategy of dividend investing is not to get tempted by high yield. Dividend is nothing but a portion of a firm’s earning offered to you in cash form and it is mainly based on sustainability and reality, and not on falling fundamentals. Your approach to stock selection should be as serious as you are purchasing an actual business. So don’t invest in companies which are fundamentally doubtful and don’t possess capability to provide high dividend yields.

    Have a decent level of patience

    The important element of using dividend to build significant cash flow and accumulate powerful wealth is to have enough patience. Give your investments sufficient time to grow as most of the lucrative investments tend to be long term investment. You should definitely monitor your investments from time to time but if you have done your all homework properly, the best strategy will be to sit back and wait.

    Consider market volatility

    If your objective is to build a significant stream of income then give higher importance to dividend payment history of company instead of its share price history. When you give emphasis on dividend payment instead of share price of company then you are more likely to earn consistent returns even during market downturn.

    Identify the trend of dividend payment

    Make proper analysis of how often your stock pays dividends. Semi-annual and Quarterly dividends are very common. The frequency and trend of dividend payment becomes critical issue when you require regular income. Sometimes, you may have to arrange your budget considering the period of your stock dividend payments.

    Conclusion

    Dividend investing is one of the greatest ways to earn passive income from companies which distribute their retain earnings among shareholders. Dividends not only provide you constant source of income but they provide long term stability to your investments. If an individual select fundamentally strong companies then dividend investing along with dividend reinvestment is a key formula for long term financial success. Above discussed anatomical applications to dividend investing will definitely help you to make proper diagnosis when designing your portfolio. Weighing the advantages of dividend investing against the drawbacks, it is fantastic strategy to generate some passive income by investing your money in high quality companies.  But the real key lies in having proper strategies, discipline and planning to capitalize on it.

     




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    Posted by Martin August 16, 2013
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    My Private Investment Fund Dream


     
     

    Can you help with my dream fundraising? If so, please donate.

     
     




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    Posted by Martin August 16, 2013
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    Trade exit – Realty Income (O), Ferrellgas Partners LP (FGP), MBIA Inc (MBI)

    Trade exit - Realty Income (O), Ferrellgas Partners LP (FGP), MBIA Inc (MBI)

    Today is expiration Friday and a few of my options trades are closing with full profit:

    Realty Income (O) covered call – cash received $32.21 0.77% gain 15.88% annualized

    See the original trade here.

    Ferrellgas Partners LP (FGP) put selling – cash received $185.00 10.57% gain 22.06% annualized

    See the original trade here.

    MBIA Inc (FGP) put selling – cash received $118.00 13.11% gain 27.68% annualized

    See the original trade here.

    And what will follow next? Well, most likely I will open another trade in Realty Income (O) covered call and FGP put selling. I am no longer interested in MBI.




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    Posted by Martin August 15, 2013
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    Help me creating a private investment fund


    My dream was to start and manage a private investment fund and potentially, one day, go public and offer investing services to general public. I have been investing for several years and became quite successful in it. So far my investments make in average 13% ROI annually.

    I would like to raise money to boost my investment account and create my own mutual fund. I believe that if I can get more cash I will be able to make more money using a power of compounding my gains. Of course, investing may be risky, but I am quite confident in what I am doing and I know I will make money.

    I will use raised money invested in Lending Club for 5 years. You can see my results in Lending Club here and see for yourself that I can invest successfully.
     
     

    And here is a deal

    If you help me to start my dream goal and donate even 1 dollar, I will use the raised money for 6 years (5 years investing, 1 year for liquidating the investments).

    After this period (6 years) I will keep all proceedings or gains reinvested and donate the principal ($5,000) to other projects and charity via GoFundMe.com or any other charitable project you choose (use the commenting below to recommend a charitable event).

    I will continue posting regularly how this fund performs.

    So do you think is this a crazy enough idea that you decide to help me and raise the cash? Even Warren Buffett started his investment empire using his own money and money of his friends and colleagues. I would like to do something similar. But after the investment period of time I will return the fundraiser by donating it back to others in need and continue reinvesting my gains.

    You may ask a question, what happens if I lose money

    Well, it may happen. With investing everything is possible even loses. If I lose money at the end of the 5th year investing period, I will withdraw what’s left and make up the loss from my own cash up to $5,000 and donate the whole $5,000 to charity. Is that fair deal?

    I can put down this guarantee, because I am quite confident that I can invest in Lending Club and make money. So, will you help me with this idea?

    Then please, go and donate anything you can. You will help me to start my dream fund and also help to charity. Click on the button below and donate. Thank you very much for your participation.

    Thank you!




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    Posted by Martin August 14, 2013
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    Great dividend stocks offering a good entry point

    Great dividend stocks offering a good entry point

    As stocks are on the verge of fall there are now stocks which are providing yet another great entry point in my opinion. Since I started investing into dividend growth stocks last year I love to see stocks of my interest falling down. They still pay the same dividend payout or even increased their dividend rate, but some investors dump those stocks because they think that those stocks are doomed just because they missed one quarter or their outlook for next period is weak.

    When looking at human life what is 80 or so years compared to eternity? Nothing. A spit into an ocean. I have the same look at Wall Street’s obsession about evaluating stocks based on one quarter. What is one quarter compared to 30 years of your investing time frame? Nothing.

    Of course, you shouldn’t ignore those stocks. Our investing strategy isn’t buy and forget. But in our case we will see the troubles coming well before the Wall Street gurus tell us based on their thinking of a missed quarter. We will see a stagnant dividend or even a dividend cut and many times before it really happens. If the company is still doing great, increases the dividend and other metrics point to a fat cash flow, so the dividend remains sustainable, there is no need to panic. There actually is a need for opening our wallets and buying.

    I believe, there are now stocks in this category offering nice entry point for your 30 year long dividend accumulation journey. Here they are:

    Kinder Morgan Partnership (KMP)

    I love KMP. It pays nice dividend. It’s current yield is at 6.40% and the company paid the dividend and increased it in 16 consecutive years. Do you think this long dividend increase history will suddenly stop today? I doubt.

    It is one of the largest master limited partnerships with a very large economic moat. It’s recent acquisitions and portfolio cultivation poised this stock to a steady growth and there is no sign of troubles in the horizon (correct me if I am wrong).

    Let’s take a look at the chart:

    KMP

    The chart shows 6 months time frame. The white lower line indicates a 5 year long support trend. the stock broke below this support time several times in 2009, 2011, 2012 and twice this year (both shown on the chart). It always recovered and continued higher. The entire stock history since 1992 is even better and I wish I could buy this stock back then.

    Anytime KMP falls below a certain level when the yield gets close to 6.5% or above it more buyers chasing nice YOC step in and start buying. With current yield we are close to this point.

    Stock details

    Consecutive Dividend Increase: 16 years
    Dividend yield today: 6.40%
    Dividend 5yr Growth: 6.68%
    Dividend paid since: 1992

    Morningstar provides a fair value of this stock at $98 a share, so if that is something we can rely on, the stock is trading at a discount. An estimated growth rate is at 31.20%

    Continue reading…


    Pages: 1 2 3



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    Posted by Martin August 11, 2013
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    My inspiration in the last week #32

    My inspiration in the last week #32

    I often browse the internet to find ideas about investing, trading stocks, options, investing opportunities and strategies. I like to read about investors and what their investing/trading approach to create income you can live on is.

     




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    Posted by Martin August 11, 2013
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    How to Build your Ideal Retirement Plan

    How to Build your Ideal Retirement Plan

    In past times, people used to work for all their lives long and they preferred to retire only after accumulating sufficient amount of wealth which they could utilize for their retirement period. But in today’s time, people who have retired still need to remain active during their retirement period as high cost of living may vanish their savings in quick time. There are many strategies available today with the help of which you can build your ideal retirement plan so that you don’t have to face any trouble after retirement.  Go through following list of strategies which will help you to build a successful retirement plan –

    Recognize your Retirement Needs

    Retirement is one of the expensive things you may have to deal with in your life time. Financial experts recommend that you will need more than seventy-five percent of your retirement income to maintain same standard of living when you get retire. So it is always advisable to recognize your retirement needs in prior time and start accumulating money according to your requirement.

    Stick to basic investment principles

    In which products you are investing your money is as important as how much money you are saving. Invest your savings in diverse kind of investment products. By diversifying your portfolio, you can manage investment risk and earn stable returns in long term. You must upgrade your portfolio over the time considering various factors such as your goals, age and monthly income.

    Don’t withdraw your retirement savings

    If you withdraw your entire or partial retirement savings prior to your retirement period then you may lose interest earned on your savings. Besides this, you can’t avail any tax benefits and you may have to bear significant amount of withdrawal penalties. In case, you are planning to switch your job, keep your entire savings invested in your existing retirement plan. You can also think of rolling your investment to your retirement plan of your new employer or to an IRA.

    Know more about your employer’s retirement plan

    If your employer wishes to cover you under traditional retirement pension plan then understand how the plan exactly works and what benefits are offered under plan. You can ask for individual benefit statement to check whether benefits you are going to avail are worth paying high amount of premium. In case, you are planning to switch your job, check out how it will impact your retirement plan. If your spouse is working as well, then analyze whether you are entitled to receive any retirement benefits under the spouse’s plan.

    Keep saving regularly

    If you are saving already, whether for the purpose of retirement or some different goal, keep continuing. Saving is highly rewarding habit, which every individual must imbed in himself at right time. You can begin with very small amount and increase some percentage amount every month. The earlier you start saving, more time your money gets to grow. No matter in which stage of life you are, it’s never too late to start contributing for your retirement. If your retirement is far near then there are several tactics you can follow to enhance your retirement savings.

    Look for what your employer is trying to match

    If you are participating in employer sponsored retirement plan like 403(b) or 401(k) then find out whether your employer is providing you matching contributions. You can increase your contribution to avail complete benefits of employer match. If you are not participating in the plan in which your employer is providing matching contributions then it means that you are not taking complete advantage of your retirement benefits. Generally, employers try to match up six percent of an income of employee.

    Consider Roth IRA

    If you have availed tax benefits of every option your employer is offering but you have still significant amount of money left in your pocket then invest it in Roth IRA. It is similar to other IRA account in which an individual can add regular amount into the account and divert that amount in mutual fund, bonds or variety of stocks. However, one important thing to note is that all the contributions made to Roth IRA are done after your income is taxed. The money invested in the account appreciates tax free and you don’t have to pay any taxes when you apply for withdrawal of funds.

    Map your future

    Make a retirement plan considering your financial goals and capabilities to invest. A comprehensive retirement plan can assist you in addressing several issues such as estate planning, succession planning, profit sharing, pension, employee benefits, insurance planning, risk and investments. A nicely designed retirement plan helps an individual to understand how much he has to save outside his employer’s plan in order to enjoy secure retirement life.

    Important questions to consider

    • Do you need to make any mortgage payments?
    • Are you planning to work on part time basis to earn an additional income?
    • Will you need more income during retirement than you are earning currently?
    • Would you prefer to opt for travel or vacation? If yes, what are the overall expenses involved?

    Get rid of all debt

    Control your unnecessary expenses by living frugally. Stick to your ‘needs’ rather than your ‘desires’. Try to pay off your high interest rate credit cards by contributing some amount from your existing savings. You can also reduce your large part of debt by getting in touch with debt relief companies. Don’t put yourself into the situation when you have to utilize your retirement savings in order to clear your debts.

    Conclusion

    As soon as you enter into your golden age, you can’t wait to achieve things you have always dreamed of. So don’t jump into the dreams without making a proper retirement planning. Try to differentiate the definition of retirement today as compared to decades ago. The downsizing and challenging economic situation of today’s time force many seniors to do part time job or start new business which can help them to meet their daily needs and achieve financial stability. Above discussed strategies will not only act as your retirement planning guide but those will also act as road map to your long term financial success.




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    Posted by Martin August 09, 2013
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    New trade – Legacy Reserves Lp (LGCY)

    New trade - Legacy Reserves Lp (LGCY)

    Are you looking for a stock to buy? I am too! I had cash available in my TD account to invest and I wanted a stock which has a solid dividend growth and nice yield.

    Since I started my portfolio accumulation unlike some of my fellow investors (for example Dividend Mantra, who started very early and is accumulating like crazy) quite late, I tend to be looking for a higher yield and higher growth investment. I need to catch up with my late start.

    For that reason I am even willing taking in more risk in exchange of higher yield. I still plan on 20 years of intensive saving and investing, but if I am able to shorten this period I will go for it.

    REITs and MLPs can offer such opportunity of higher yield. I thing that MLPs offer safer yield and growth than REITs. Although I still invest in REITs, I am fully invested in this industry, so I needed to look for an alternative, which MLPs could offer. This was the case for my last week search. What stock can offer higher yield, higher growth and be safer than REITs?

    I believe that that stock was Legacy Reserves (LGCY). It offers nice 8.40% yield at 12.1% 5yr annual avg. growth. It has risen the dividend for 2 consecutive years and although it is not a dividend champion I think it is an acceptable trade for me.

    Legacy Reserves, LP, is engaged in the acquisition and development of oil and natural gas properties mainly located in the Permian Basin, Mid-continent and Rocky Mountain regions of the United States.

    Today I bought 36 shares of this stock which added $83.52 annual dividend to my portfolio. My projected annual dividend payout is now $897.12 or $74.76 monthly dividend (getting close to my $100 monthly dividend goal!).

    Trade detail

    08/09/2013 15:37:10 Bought 36 LGCY @ 27.1

    Stock detail

    Total shares held as of today: 36
    Estimated annual dividend: $83.52
    Consecutive Dividend Increase: 2 years
    Dividend yield today: 8.55%
    Dividend 5yr Growth: 12.10%
    Dividend paid since: 2007



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