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Posted by Martin May 31, 2013
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Dividend paying stocks worth adding to portfolio

Dividend paying stocks worth adding to portfolio

Although the markets are undecided in the trend, which seems to be slowing down, some stocks continued with sell off today. I am not watching all stocks, but some, mainly dividend paying stocks. And these are under pressure. My almost entire watch list is in red.

Some stocks are retreating slowly in small amounts, some have substantial declines. And those are now worth to consider adding them.

American Capital Agency (AGNC)

A real estate investment trust (REIT). The Company earns income primarily from investing on a leveraged basis in agency mortgage-backed securities. These investments consist of residential mortgage pass-through securities and collateralized mortgage obligations (CMOs) for which the principal and interest payments are guaranteed by government-sponsored entities, such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), or by a United States Government agency, such as the Government National Mortgage Association (Ginnie Mae) (collectively, GSEs). It may also invest in agency debenture securities issued by Freddie Mac, Fannie Mae or the Federal Home Loan Bank (FHLB). The Company is managed by American Capital AGNC Management, LLC, which is an affiliate of American Capital, Ltd. (Source: Thomson Reuters)

AGNC

Dividend Yield: 18.80%
5 yr. Dividend Avg. Growth: 0.00%
Consecutive Div. Increases: 0 years
Gross Margin: –
Cash Flow: 852M
Cash per share: –
Dividend Rate: 5.00

The Coca-Cola (KO)

The Coca-Cola Company, incorporated on September 5, 1919, is a beverage company. The Company owns or licenses and markets more than 500 nonalcoholic beverage brands, primarily sparkling beverages but also a variety of still beverages, such as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks. It owns and markets a range of nonalcoholic sparkling beverage brands, which includes Coca-Cola, Diet Coke, Fanta and Sprite. The Company’s segments include Eurasia and Africa, Europe, Latin America, North America, Pacific, Bottling Investments and Corporate. In September 2012, it acquired approximately 50% equity in Aujan Industries’ beverage business. In January 2013, Sacramento Coca-Cola Bottling Company announced that it had been acquired by the Company. Effective February 22, 2013, Coca-Cola Co acquired interest in Fresh Trading Ltd. Effective February 22, 2013, Coca-Cola Co acquired interest in Fresh Trading Ltd. (Source: Thomson Reuters)

KO

Dividend Yield: 2.60%
5 yr. Dividend Avg. Growth: 8.35%
Consecutive Div. Increases: 50 years
Gross Margin: 64.5%
Cash Flow: 1,243M
Cash per share: 2.06
Dividend Rate: 1.12

Realty Income (O)

Realty Income Corporation (Realty Income) is an equity real estate investment trust (REIT). The Company is engaged in acquiring and owning freestanding retail and other properties that generate rental revenue under long-term lease agreements (primarily 10 to 20 years). The Company has in-house acquisition, leasing, legal, credit research, real estate research, portfolio management and capital markets. At December 31, 2011, it owned a diversified portfolio of 2,634 properties with an occupancy rate of 96.7%, or 2,547 properties leased and only 87 properties available for lease. It leased properties to 136 different retail and other commercial enterprises doing business in 38 separate industries. It properties are located in 49 states, with over 27.3 million square feet of leasable space, and with an average leasable space per property of approximately 10,400 square feet. In January 2013, it acquired American Realty Capital Trust. (Source: Thomson Reuters)

O

Dividend Yield: 4.20%
5 yr. Dividend Avg. Growth: 3.89%
Consecutive Div. Increases: 15 years
Gross Margin: –
Cash Flow: 149M
Cash per share: –
Dividend Rate: 2.17

PPL (PPL)

PPL Corporation (PPL) is an energy and utility holding company. The Company operates in four segments: Kentucky Regulated, U.K. Regulated, Pennsylvania Regulated and Supply. Through its subsidiaries, PPL generates electricity from power plants in the northeastern, northwestern and southeastern United States; markets wholesale or retail energy primarily in the northeastern and northwestern portions of the United States; delivers electricity to customers in Pennsylvania, Kentucky, Virginia, Tennessee and the United Kingdom, and natural gas to customers in Kentucky. As of December 31, 2012, the Company’s subsidiaries were PPL Energy Supply, LLC (PPL Energy Supply), PPL Electric Utilities Corporation (PPL Electric), LG&E and KU Energy LLC (LKE), PPL Global, LLC (PPL Global), PPL EnergyPlus LLC (PPL EnergyPlus), PPL Generation LLC (PPL Generation), Louisville Gas and Electric Company (LG&E) and Kentucky Utilities Company (KU). (Source: Thomson Reuters)

PPL

Dividend Yield: 4.80%
5 yr. Dividend Avg. Growth: 3.01%
Consecutive Div. Increases: 13 years
Gross Margin: 41.7%
Cash Flow: 2,713M
Cash per share: 1.44
Dividend Rate: 1.47

AT&T (T)

AT&T Inc. (AT&T) is a holding company. AT&T is a provider of telecommunications services in the United States and worldwide. Services offered include wireless communications, local exchange services and long-distance services. AT&T operates in four segments: Wireless, Wireline, Advertising Solutions and Other. Its Wireless subsidiaries provide both wireless voice and data communications services across the United States, and through roaming agreements, in a substantial number of foreign countries. Wireline subsidiaries provide primarily landline voice and data communication services, AT&T U-verse TV, high-speed broadband and voice services (U-verse) and managed networking to business customers. AT&T’s Other segment includes customer information services (operator services) and corporate and other operations. On May 8, 2012, AT&T sold its Advertising Solutions segment. (Source: Thomson Reuters)

AT&T

Dividend Yield: 5.00%
5 yr. Dividend Avg. Growth: 3.36%
Consecutive Div. Increases: 8 years
Gross Margin: 56.8%
Cash Flow: 29,429M
Cash per share: 0.72
Dividend Rate: 1.80

There are definitely other companies available which are recently declining, but the above companies I have in my portfolio (except Coca-Cola) and my rules are now to accumulate instead of buying new companies into my portfolio. I described my rules in this post how many companies I want to hold in my portfolio based on the size of the portfolio. I am not strictly following that rule, however, I want to be accumulating more rather than adding new companies.

Happy Trading!




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Posted by Martin May 30, 2013
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Next dividend paying stock worth adding to my portfolio – Kinder Morgan Partnership (KMP)

Next dividend paying stock worth adding to my portfolio - Kinder Morgan Partnership (KMP)

Stock sell off on every battle front continues. Well not every battle front but this shout sounded appealing to me so I used it. Yesterday and a few days ago I was interested in Realty Income, which fell from its parabolic run to sky heights. So it was obvious that it would fall. Many stocks had similar run up pattern, for example PPL or JNJ to name a few.

I am still very interested in adding more Realty Income shares to my portfolio, but my exposure to REITs industry is already too large and I need to look at other opportunities the market is now providing.

I have a few stocks in my portfolio which are now getting lower such as AT&T (T), KMP, MCD, and NGLS. Right at this moment, the most appealing stock to me is Kinder Morgan Partnership. As of this writing it is down -2.18% and it broke thru 200 day MA (see the chart below).

Kinder Morgan

When taking look at the 5 year chart, you can see similar dips along the way:

Kinder Morgan charts

(Click to enlarge)

Look at the bumpy road on the right lower corner in the smaller window showing 5 yr chart. KMP was growing and every time it touched 200 day MA, it bounced and continued higher. If you pull a chart on Yahoo.com and select maximum time frame, this trend is even more apparent.

Of course, this isn’t a guarantee, that KMP will behave this way in the future, but we can expect, that it will most likely do so.

Here are some numbers, why I like Kinder Morgan Energy Partnership

Dividend Yield: 5.90%
5 yr. Dividend Avg. Growth: 7.14%
Consecutive Div. Increases: 16 years
Gross Margin: 47.3%
Cash Flow: 3,134M
Cash per share: 2.85
Dividend Rate: 1.30

KMP’s operations span the entire midstream energy space, with a network of pipeline and storage assets that crosses the continent and is capable of transporting and storing natural gas, natural gas liquids, crude oil, refined product, and ethanol. Kinder even does a fair amount of business handling coal and steel for export in its terminals segment. With its presence in many segments and dominance in some, Kinder routinely earns well in excess of its capital costs, supporting its wide moat rating. In this business, the bigger the asset footprint, the greater the opportunity set for new investment, allowing firms like Kinder with competitive advantages to maintain their competitive position. (Source: Morningstar)

Although there is risk with this company (mainly regulatory and legislative risk), I think this is a good company and I am taking advantage of the recent price drop to add more shares to my current holdings.

If the last of KMP is greater or equal to 87.01
Buy 11 KMP at limit $87.01

 

There are other great companies which suffered loses and broke thru 50 day MA which I would consider adding. Among those I mentioned above the hottest candidates would be addition of MCD and opening a new position in Coca Cola company.




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Posted by Martin May 29, 2013
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Mr. Market’s bad mood seisure


Mr. Market

The stock market is in a selling mood. But the selling isn’t that bad yet. It can get worse, although today the DOW was losing a triple digit loss.

When I woke up this morning – and I heck didn’t want to – I saw my account completely in red. The biggest losers were REITs and since my account is quite exposed to REITs I was losing a lot.

One idea struck me when looking at my account

I saw Realty Income losing a lot this morning… Well, still not that bad as AGNC or ARR or other REITs. And I was thinking why investors would be dumping Realty Income along with AGNC, AVB, EQR, ARR, and others.

Realty Income is a totally different business compared to AGNC, for example. I even cannot grasp why people are afraid of stocks like AGNC or ARR if the FED stops the stimulus. And I would appreciate my readers if you can educate me a bit thru the comments.

But here is how I see it

Many times I read and heard that FED stimulus caused REITs to shrink their margins and thus their ability to make money due to very low interest environment. I heard that their space for profit was very narrow. So my understanding was, that it would be better if the spread between interest rates on mortgages increases. So I felt FED actions to be bad for REITs.

And yet REITs ran up like a crazy horse

But that is (or should be) true when talking about REITs investing into MBS (mortgage-backed securities) such as AGNC, ARR and others named above.

But why the heck people would be dumping Realty Income, which owns properties and make money on renting it. This company has nothing to do with mortgages and any sort of MBS trading. Their risk is in a totally different zone. Their problem could be in tenants not paying on time or at all, inability to rent and have their properties vacant, etc.

The market was overbought and Realty Income was overbought as well, you can clearly see in any long term chart. But this sell off based on FED tapering the stimulus is just a pure excuse to profit taking and some short selling.

The only thing which makes me mad is that I bought too early yesterday. But sometimes that happens in the markets.




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Posted by Martin May 28, 2013
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Trade Adjustment – adding Realty Income (O)

Trade Adjustment - adding Realty Income (O)

Today, Realty Income ran up in the morning and my conditional order triggered my limit order. The limit order was filled and I bought 19 more shares of this monthly dividend payer.

However, later in the trading session, the stock reversed and continued down. The loss today was -1.77%. This purchase is now losing me some money. It is not anything dramatic, since I am still 13.13% profitable (capital appreciation only).

If I add dividends to my calculations, I am 15.19% profitable with this stock.

And my average yield on cost with this stock is currently 5.09%. It is not bad at all!

However, today’s trade execution made me think about adjusting my conditional order system. I was thinking to provide more room for the stock to move during the day without being executed too early.

How To Buy Stocks To Increase Profit Potential

If you remember my post about entering into a stock position I calculate the stock entry price the following way:

(0.5 (Day High price – Day Low Price)) + Last Price = New Entry Price

I think, this equation doesn’t provide enough “wiggling” room for the stock to trade higher or lower during the day without being executed prematurely.

I decided to increase the result by 1%:

((0.5 (Day High price – Day Low Price)) + Last Price) * 1.01 = New Entry Price

Maybe you are asking, why I am calculating the entry price this way instead of waiting for the stock or using charts (technical analysis), etc.

The reason for this is that I (must admit) am not good at timing the stock market. I always get trapped into a circle of questions such as “Is this the low? Will it go lower? Is it turning around already?” etc.

The equation above helps me eliminate such questions and sort of automate my trading. It eliminates my emotions. All I have to do is watch the stock and as it starts going lower (but it must be based on panic or predictions of talking heads who start predicting gloomy future for the stock based on their thinking and crystal ball reading, and not based on dividend jeopardy) then I put the equation into play and let it go.

Buying A Monthly Dividend Paying Stock

Today I bought my 19 additional shares of Realty Income. Although the stock may go even lower than my today’s purchase price, I am happy with this addition.

Total shares held as of today: 117
Estimated annual dividend: $253.89
Consecutive Dividend Increase: 15 years
Dividend yield today: 4.40%
Dividend 5yr Growth: 3.62%
Dividend paid since: 1994

The stock may continue falling lower. Although today we touched its 50 day MA, so I am not expecting (from technical analysis perspective) the stock really going lower. We should bounce from here and move upwards. Such bounce may only be a temporary rally and the stock may turn back down. Or the bounce may be the end of this correction (which would indicate a very healthy price action) and we will continue to new highs.

If the stock goes lower I may be considering adding more shares of this monthly dividend paying stock.




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Posted by Martin May 26, 2013
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My inspiration in the last week #23

My inspiration in the last week #23

This week I would like to present the following interesting web sites and links.

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 May 23, 2013
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An ultimate dividend payer


Realty IncomeAlthough you won’t find a perfect stock across the market floor, there is one which earned attention of millions of income seeking investors. You won’t find too many companies out there which mission is to provide income. I am talking about a California-based real estate investment trust – Realty Income (O).

It may not be a perfect stock, but it is getting closer to that definition.

This monthly dividend paying stock was beaten severely down by Mr. Market these last two days. To me the drop provided enough correction to consider adding shares to my holdings.

If you want to find why the stock fell, you probably won’t find a meaningful reason. Most of the blatant explanations out there would be circling around Big Ben’s proclamations, visions, speeches or who knows what and insane investors out there guessing what impact that may have to the nearest market’s future.

Who cares? All I care about is whether this stock will be able to continue paying the promised dividend or not.

The company has been paying dividends for consecutive 19 years and it has been raising it for consecutive 15 years. It paid dividends and raised it during 1998 – 2000 severe drop (the stock lost 30%) but the dividend never dropped, was never cut or suspended.

There are other great companies I was looking at possibly buying, such as AGNC, PPL, AT&T (T), WMT, and many others which were beaten down by market participants’ irrationality, but I decided to accumulate Realty Income stock and add more shares.

I am not buying out right, but again I will use a contingency order to buy only if the stock reverses. I entered the following order:

If the last of O is greater or equal to 51.7
Buy 19 O at limit $51.7

 

If the stock continues falling, the order will not execute and I will be lowering the buy price along with the new lower stock price. If the stock reverses and continue moving up, the order activates the limit order and I will buy 19 more shares.

I have two reasons for adding this stock. One reason is that this is a good, stable, and reliable dividend payer, the second reason is that with this purchase I will exceed 100 shares and I am planning on applying covered call strategy (although I will be very careful with this strategy, because Realty Income is not a stock I want to have called away).

What do you think? DId Realty Income dropped low enough to buy or would you wait more?

 




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Posted by Martin May 23, 2013
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I miss my spam!

I miss my spam!

This post will be a bit off topic. But it will demonstrate how crazy and retarded I became about blogging and checking comments.

I used to receive 90 – 100 spammy comments every day. All of them were captured by Akismet. But time to time a legit comment was detained and I didn’t want to miss those comments, so every day I browsed thru the spam to see if there are some legit posts.

Recently, I installed another feature eliminating spam and I now have ZERO spam! Opening my admin dashboard on my blog is now so boring! I miss my spam! Can you believe how crazy I am!?




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Posted by Martin May 20, 2013
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Commission free wealth building new trade RWX

Commission free wealth building new trade RWX

Another recent flow of trades I realized last week on Friday was a purchase of a commission free ETF SPDR Dow Jones International Real Estate ETF (RWX).

This trade is a part of my small money investing experiment. Thus on Friday I invested $91.18 to buy 2 shares of this dividend paying REIT. This ETF pays 5.83% annual dividend and 5.79% distribution yield. I bought this ETF into my ROTH IRA account and I will continue investing all small money (received dividends and contributions) into this commission free ETF as long as I save enough money to buy a lot of a stock of my interest.

To do that if I save let’s say $1100 in this ETF, I will sell $1000 worth of the holdings and buy a stock, while continue saving small contributions and dividends into this ETF to raise the holdings back up to $1100.

Then rinse and repeat…

Here is the trade from last Friday:

5/17/2013 14:58:28 Bought 2 RWX @ 45.589

Happy commissions free wealth building!




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Posted by Martin May 20, 2013
3 Comments



 




My inspiration in the last week #22

My inspiration in the last week #22

This week I would like to present the following interesting web sites and links.

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 May 20, 2013
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Trade adjustment – Demand Media (DMD) – new covered call (11.24% gain)

Trade adjustment - Demand Media (DMD) - new covered call (11.24% gain)

Another stock I used for covered call writing in my portfolio was Demand Media (DMD). You can see the previous trades here.

As you can see I opened the first covered call in December last year. The trade didn’t go as well as I would expect (the stock wasn’t called away), so I bought back almost worthless covered call and sold a new one. Since then the trade progressed in my favor and brought 11.24% gain as of the last Friday (31.60% annualized return).

Since the last covered call expired worthless this morning I could sell another covered call against this stock, generate more income, and improve overall trade.

Trade Detail

This morning I sold another covered call:

05/20/2013 09:30:02 Sold 1 DMD Nov 16 2013 10.0 Call @ 1.2

 

Own 100 shares DMD: $9.50
Strike: $10.00
Sold 1 Covered Call: $1.20
Total Purchase: $120.00
Commissions: $8.78
Total purchase: $751.31
Expected Option Assignment: $1000.00
Option Assignment Fee: $19.00
Expected Proceeds: $981.00
Expected Net Gain: $229.69
Expected ROI: 30.57%

This trade added to my overall income generated in May 2013 to be $220 so far. This helped me to meet and maintain my goal to generate monthly at least $100 thru options trading. If this trend continues I should be able to exceed my goal.

How are you generating income from your investments?




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