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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…


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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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Posted by Martin August 08, 2013
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Update to closed ARR put trade -10.56% loss

Update to closed ARR put trade -10.56% loss

I was so excited writing about my reasons why I no longer wanted to invest in ARR or trade its options that I forgot to mention how my trade went wrong. So this is an update to my previous post.

I closed this trade with -10.56% (loss) or -46.55% annual loss. On this trade I lost $158.33 total amount. It is not that bad when you compare it to my options income tracking chart on which it looks horrible, see below:

Options income

Click to enlarge

I track income or expenses as it arrives in the account. Today’s ARR put option buy back was a single expense of $729 to buy the puts back. This is not the loss! From this money an income of 571.22 dollars which I have received when I sold the puts must be deducted.

 




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Posted by Martin August 08, 2013
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Trade exit – Armour Residential (ARR) put selling

Trade exit - Armour Residential (ARR) put selling

I decided to take a loss at my Armour residential put selling trade. Originally I believed in this stock, but lately I consider Armour residential a junk every dividend investor should avoid.

There is plenty of investor out there I could see who think this stock is a great value because of its book value (BV) is at around 5.43, it pays dividends (currently $0.07 a share) and who knows what else.

In the past I was buying this stock (you can see my trades in the ARR archive) and enjoyed dividends this stock was paying.

I even started selling puts to generate more income because I was OK to buy more shares in case of assignment.

But then situation changed.

ARR started cutting its dividends. In 2011 the company paid 0.11 a share monthly dividend. It kept on that level for some time, but then started cutting it. For a dividend investor this should be a reason to sell the stock. No exceptions, no reasoning, no discussion. Yet I was ignoring it and continued buying. I too was excusing myself, that mREIT is a different beast and all this can be temporary.

ARR

Then the management issued an SPO (secondary public offerings) to further damage investors. People out there will tell you that that is how mREITs work, how they get their money. Well, I would agree on that if the management wouldn’t wait for the stock price to climb from $6.5 a share up to $7 a share to issue SPO. Once SPO was out the stock plummeted back to $6.5 and never recovered.

Many out there were saying that this was ruthless step from the management ignoring shareholder and that they did this just to collect nice fees, which were tied to how much cash they were able to raise. Why would a management not care? It’s because ARR is managed externally by a private company Armour Residential LLC. Thus they are milking Armour Residential fund as much as they can. Their primary interest is their own company and their own beings. The fund is just a cow to them and they do not care that there were investors giving them money.

I still was OK with that. I still thought, that this was overreaction from the market and tough times in real estate and mortgage markets and this will be overcome over long period of time.

And then, short after SPO another dividend cut came. This time from 0.09 to 0.08 a share. I suffered one cuts from 0.12 down to 0.10, 0.09, and 0.08 during my holding period since March 2011 when I first bought this stock. that was enough even to my excuses and I sold.

Lucky enough, because then the stock plummeted after yet another dividend cut from 0.08 to 0.07. I sold at $6.5 a share and thanks to collected dividends I got out break even. Since then the stock trades at $4.45 a share as of this writing. A 50% loss!

I still got stuck with a short put in my account

To protect myself I decided to roll the put far away in time to avoid potential assignment into stock I no longer wanted. You can see my put trades in this archive.

I sold two puts as far in January 2014. My plan was to let time decay erode the puts as much as possible so I can buy puts back and get break even (at least) or smaller loss.

So why I decided to close this trade prematurely and take large loss?

ARR seems to be doomed and problems are piling. I was watching this stock briefly just to make sure everything went so-so that I could keep puts open. But today I saw that the CEO Jordan Zimmerman stepped down. That can be a good sign when you could see so many bad results this stock was presenting to investors. You could say that a new CEO would do a better job. But the following event convinced me that I didn’t want to have anything in common with this stock.

Arr received a delisting notice from NYSE. If the company doesn’t fix what NYSE has to say by August 12, 2013 (next Monday), it will become delinquent in compliance or to use the notice language “will be deemed non-compliant” or “below compliance” and can be delisted.

What can happen if the stock gets delisted? The stock will move to OTC market and I can get assigned prematurely. And that would be a step I definitely don’t want.

I wasn’t expecting being right all the time, and sometimes I will be taking a loss. This one was one of those trades.

Trade detail

I bought back ARR puts to close the trade:

08/08/2013 11:59:59 Bought 2 ARR Jan 18 2014 7.5 Put @ 3.6

At this point I hold no ARR trade and the ARR file is closed.




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Posted by Martin August 06, 2013
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Trade adjustment – Kinder Morgan Partnership (KMP) addition

Trade adjustment – Kinder Morgan Partnership (KMP) addition

Recently I was piling cash in my TD account waiting for an opportunity to buy dividend paying stocks. It wasn’t and it still isn’t easy to find a good dividend stock which would be priced at a value I would be willing to pay.

I saw many great stocks seeing running up and I was telling myself “Why I didn’t have more cash available when those stocks were lower and didn’t buy them?”

Kinder Morgan Partnership was one of the stocks which early this year got overly overpriced by investors rushing into nice yield paying stocks. Later the stock lost the momentum and started drifting lower. Currently the stock is showing loss, but it seems finding a support at the short term (1 year) trend line.

The picture below shows this price action. In January 2013 the stock sky rocketed and somewhat continued climbing higher just to peak at the end of April. Since then it continued downward.

See the green line indicating the short term support I spoke above. Two months ago the stock created the short term low and offered an entry opportunity. These days the stock re-tested this support and it seems the stock will bounce and continue higher.

KMP

Click to enlarge

Of course the trend continuation reversal may fail and the stock may continue drifting down. I do not think this will happen. So far the stock found its buyers at these levels and as the stock would drift lower the rising yield would attract more income seeking investors.

I don’t think the stock is in trouble. It recently increased increased its distribution rate or yield and it currently pays $1.32 per share quarterly, which translates to 6.38% yield. The company continues in acquisitions (recent Copano Energy transaction) and plans on increasing its exposure in Canadian market. As the US and Canadian energy production continues rising, Kinder Morgan will have great opportunities for further growth.

Contingency order to increase profit potential

From the long term perspective I consider this decline temporary and providing a great chance to add to my portfolio. To get into this stock I used my contingency order strategy.

I entered my first contingency order to buy 11 shares of KMP if the stock rises at 87.64 per share on June 22, 2013. As the stock continued drifting lower I was lowering my price entry target:

  • 07/25/2013 If the last of KMP is greater or equal to 87.26 Buy 10 KMP at limit $87.26
  • 07/26/2013 If the last of KMP is greater or equal to 86.77 Buy 11 KMP at limit $86.77
  • 07/29/2013 If the last of KMP is greater or equal to 86.77 Buy 11 KMP at limit $86.77
  • 07/30/2013 If the last of KMP is greater or equal to 84.93 Buy 11 KMP at limit $84.93
  • 07/31/2013 If the last of KMP is greater or equal to 83.96 Buy 11 KMP at limit $83.96
  • 08/02/2013 If the last of KMP is greater or equal to 83.66 Buy 11 KMP at limit $83.66
  • 08/06/2013 If the last of KMP is greater or equal to 83.00 Buy 11 KMP at limit $83.00

As you can see, lowering my entry target paid big time as I was able to enter into another position pretty cheap. This method of waiting for a good price AND a trend reversal at the same time is not 100% bulletproof. But as a long term investor I am not that much concerned if the stock fails continuing higher.

If this reversal is false and the stock turns lower, I would expect it to go as low as the long term trend (see the red trend line almost parallel to the green one representing 13 years long trend). If that happens I will be adding more shares of this stock into my portfolio.

Trade details

Today the order fired and I bought 11 shares of KMP:

08/06/2013 09:40:12 Bought 11 KMP @ 82.999

Stock details

Total shares held as of today: 33
Estimated annual dividend: $174.24
Consecutive Dividend Increase: 16 years
Dividend yield today: 6.38%
Dividend 5yr Growth: 7.43%
Dividend paid since: 1992

This trade increases my overall dividend income in TD Ameritrade account to $813.60 annually.




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Posted by Guest August 06, 2013
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Save Up for a Cause

Save Up for a Cause
This is a guest post by Jeremias. He introduced himself.
My knowledge regarding stocks or investments I would say is quite on the average compared to people on the same age as I am, 15 years old. My parents introduced me to mutual funds when I was seven years old and I place money there on a yearly basis. I have quite saved a large amount of money ( for me), but I intend to use it at my senior years.
For me it is impressive, and I am happy, to meet a young man like Jeremias who is interested in saving and investing cash in such young age. I believe, if he continues educating himself in investing, he will be able to retire early. Very early.

 

Saving money is a very important term to remember in personal finance. Such action plays a very big role in building ones future. People save up to buy things or acquire the services they want in the future. It is very simple to save, even kids can; but the very people who often save are teenagers and adults. Everyone has a reason for saving money, what is yours?

On what purpose do people save? Why is it so important for us to save? There are three major reasons why people save. First, an individual wants or needs something so he/she saves up money to be able to buy it in the future. Second, a parent’s priority is to provide what the family needs. Lastly, people want to have a secure senior citizen life.

As part of our human nature, we have the feeling of wanting something. We have worldly desires. These things are those we buy to fulfil our desires. They should only be of secondary priority in life. We can live without them. On the other hand, we also have needs. These help us live. Without having them, we might already be dead. These are our basic needs like shelter, clothing, and food.

In life, people usually do not want to live alone, so eventually, they find a partner in life and have a family of their own. They become parents, but it is not simple being a parent or having a family of your own. Being a parent has its responsibilities. One has responsibilities to his/her partner, to the children, and to the family. Parents have to, of course, provide the needs of the family. This includes the basic needs to live (as stated above), and the children’s education. These are not the only needs of the family, there are a lot more and the parents have the responsibility to provide them.

Being a senior citizen is still difficult even at these times or in any country. Many are not provided with their needs. Some are not financially stable and do not get enough medical needs and attention. No one wants his/her children who already have their own families to worry about them too much. Some think they are a burden to the family and they do not want it. This happens because the pension other countries provide is not enough to help their senior citizens. So, for life to be easier when one reaches seniority, he/she must save up money for the future.

These are only some of the many possible reasons a person must save money. They save for the needs and wants of the person himself/herself, for the family, and for the senior citizen years of a person. The very solution to accomplish all this is to save money at an early age or as soon as possible. Everything is possible, you just have to work hard and wait for it.




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Posted by Martin August 04, 2013
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My inspiration in the last week #31

My inspiration in the last week #31

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 02, 2013
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Credit Card Debt Solutions

Credit Card Debt Solutions

Credit card debt is something which is very easy to compile but it is relatively difficult to eliminate. Credit card debt is very different from home loan or mortgage payments where the creditors have at least a tangible asset to back up their money. This is the reason why credit card debt has become extremely concerning issue among both credit card holders as well as creditors these days. Credit card debt has been paralyzing many households across the world and if the issue is not handled with diligent mind then it can put your finances on roller coaster ride. If you really wish to get out of your miserable credit card debts then you should collect some reliable information about credit card debt solutions. Here are some useful tips on how to get out of credit card debts –

Self Help Tactics

If you don’t owe much of the amount then you can talk with your bank and shift the amount to your account with lower interest rate. This will help you to lower your monthly bills. This is one of the effective credit card debt solutions which you can use to lower your interest payments. If you are in a position of making your credit card payments but you think that the balance is going out of control then check the interest rates of all the credit cards and pay one which has high interest rate attached to it.

Manage your Credit Card transactions

Stop making any new purchases on your credit card. Paying in cash will make you aware of your spending habits and you will able to spend within budget rather than tempted by splurge. Most of the times, even a best deal turns out into a high value purchase by the time you pay several months of interest on it. If possible, try to make your credit card payments in early time instead of waiting till the final due date. This will help you to save significant amount of interest and lower the chances of incurring any excessive credit card debt.

Selection of perfect credit card solution

Customers searching for credit card debt solutions have diverse options from debt consolidation loan to balance transfer. They can even seek advice from any debt relief company if the debt is too high to resolve on their own. No matter what credit card debt solution you choose, it is extremely essential to check credentials of debt relief company you are planning to work with. If you are considering any debt settlement plan then consult a company which provides diverse credit card debt solutions and not just a conventional type of plan.

Balance Transfers

Most of the people opt to consolidate their all debts by transferring balances from several credit cards into one. This can be an effective strategy, but you have to be extra careful. Most of the credit card companies charge more than 4 % for balance transfers. Apart from this, many companies appear as they are strongly supporting credit debt relief and discount transfer fees during initial transfers. You can utilize the strategy of balance transfer to manage your debt effectively, but make sure you read all the terms and conditions properly.

Late Payments

Apart from varying interest rates as a part of introductory periods, you must be aware of changes in payment rates in case of late payment. In a particular month you will get so busy that you find yourself not meeting your payment deadlines. It may create very strong impact on your credit card payments. Most of the times, consumers find themselves in absolute financial jeopardy as their credit card interest rates get skyrocketed because of late payments.

Teaser Rates

You must be getting emails from several credit card companies offering you attractive interest rates on credit cards. Most of times, credit card companies promote loan plans by providing you higher interest rates which are also referred as ‘Teaser’ rates. That’s the reason why it is extremely essential for you to figure out what the annual percentage rate would be after your introductory period will get over. Credit card companies want to run their businesses in profitable way and though their attitude towards you is always helpful, you have to identify things important which they are not explaining you.

Debt Management Plan (DMP)

In Debt Management Plan, you can pay affordable monthly payment to DMP provider in order to cover your credit cards. The DMP provider does some negotiation with credit card company on behalf of you and distributes payment in appropriate proportion. The single monthly payment makes easier for consumer to manage his debts in effective way. Some other benefits of DMP include reduced late fees, lower interest rates and less time consuming process to manage your credit card debts.

Debt Settlement Plan (DSP)

In Debt Settlement Plan, you have to make monthly payment which you can afford to DSP provider. The amount will be held in escrow when they negotiate a modified settlement amount with credit card companies. Once an agreement has been made, the funds will be released from your escrow account and you have to pay only certain portion of your overall debts. However, one important thing a credit card holder must understand that DSP may create a negative influence on his credit as compared to DMP.

Conclusion

Credit card can be a great convenience for anyone but most of the people end up incurring too much of debt on it as they fail to utilize it in effective way. Getting out of credit card debt is not as easy as getting into it, but it can be achieved through proper planning. There is no magic wand which can resolve your credit card debts overnight. But with consistent efforts, you can definitely set yourself on a way to achieve safer financial future. By taking into consideration above mentioned tactics, you can definitely manage your credit debts in effective way. Above mentioned credit card debt solutions have produced successful results for many credit card holders and you can also utilize these tactics to live comfortable and debt-free life.




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