Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

Don’t Look Now….

Tuesday, January 16. If you haven’t looked yet, you should see what S&P 500 and Dow 30 futures are trading like overseas, before our markets open at 9:30 am EST. It’s not yet 6:45 am here, and as I look in on the pre-openers, I am seeing what will result in an explosive upside opening in stocks!

The Dow currently looks to open… 234 points higher, to clear 26,000! It only just surpassed 25,000 within the past, what… 2 weeks? Glad I’m invested in stocks, but, I’ve not had an opportunity to deploy new cash into any in quite some time. That’s okay, because, as I will be reporting shortly, our January portfolio dividend income will be up sharply, and our income will have advanced considerably toward our personal retirement income goal! And, that, my friends, is what I am really all about!!!

Sort of the best of all worlds!

Harold

Advertisements
Standard
Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

Ponderous Thoughts I Be Ponderin’!

Friday, January 12. I started in the markets more than 33 years ago, in November of 1984. My father gave me a check for $10,000 to get started with. I didn’t ask for it, he just freely gave it to me that day!

Today, having multiplied that original $10,000 many times over, my wife and I live the American Dream in an upper middle-class home and life-style. That’s not to brag, but to state a particular fact. That fact is: With time and an appropriate strategy, with some discipline, real wealth can be achieved in America by means of investing!

I don’t do, today, anything that I did with money back then. The reason is that I never stopped reading, thinking and learning about how money can be invested. I went through a spell where I convinced myself I could trade my way to riches, but learned fairly quickly that I neither have the discipline, nor the constitution for such a thing, and gave that up. I tried to go back to it from time to time, thinking I’d improved, but I had not.

In ’08, I was referred to a book, “The Single Best Investment,” by Lowell Miller. It really fired me up, and we committed to the strategy in it in ’11, nearly 7 years ago now. O’Shaughnessy, from his tome, “What Works On Wall Street,” validated the safe-dividend growth strategy as being one of the very best, by means of his research. Our results have been very good employing it. I thought I’d settled on the best at last, and would simply stick to it for all the rest of our days. But, things are not quite always that easy, as you probably know.

Some years back, maybe it was in ’09, I’d learned of another strategy that I thought made some good sense. Not necessarily better, but good sense in any case. It went like this: Among high-yielding securities, mainly CEFs, ETFs and the like, you buy from among these, take the high-yield payouts, and reinvest them into more shares. You harness a compounding by doing so, ala Miller and his book. I liked it, but felt there was something missing, and couldn’t quite put my finger on it. But, then, a new concept fell into place.

Just within ’17, a friend referred me to a Brett Owens and his site, Contrarian Outlook. He has some associates, and a Michael Foster caught my attention. Between these two, they have a couple of newsletters, Contrarian Income Report, and CEF Insider. What I found to be so intriguing was that these guys scan the realm of high-yield securities and, by their search criteria, determine those which are best managed. This is typically done by charting how these fund managers grow their fund’s NAV. By charting the payout, they are also able to get a take on the quality of management. It can be difficult to generate a high payout and maintain it. This usually requires the deft use of leverage, without incurring too much risk. But, the next thing they do, and I think this is brilliant, is they historically chart the fund’s trading price against it’s NAV, looking for those times when the price discount to NAV appears extreme… and, THAT’S when they issue a buy recommendation!

While the discount is relatively fat, you buy and receive the high-yield payout. You hold until they say to sell, which will be at a time when the price of the fund has significantly closed the gap between it and the fund’s NAV. Simple!

The result, when executed well, results in a high yield payout, as well as a degree of capital appreciation. This can work especially well in this particular manner: If you should sell at a profit, and they have another such opportunity already to go. You can sell for that gain, and use the proceeds to go right into another similar situation, and possibly generate even more high yield income and appreciation! Is this a better strategy than my safe-dividend grower plan? I don’t know, there’s no research to demonstrate that, but, in my mind, I can conceive that it can be.

My strategy is very dependent upon time. Income begins small, and grows more and more rapidly with time. But, it requires the buying and holding of specific securities that you trust will do what you bought them for… for decades to come! In order for that to happen, the company’s business model has to be ‘just the ticket’ for all those future years… and, there’s no real way to be sure of that! This high-yield strategy is not dependent upon time, the high income commences immediately. And, it’s not dependent upon a particular business model being especially successful for many years to come.

The high-yield strategy is dependent upon quantifiable things like the quality of current management, and irrationality of investors, who occasionally drive the price of a high-yielding security to an unusually large discount to NAV; which means you’re buying value, until that value is realized, and the discount gap closes… which need not take decades, or even years, necessarily.

I think the underlying principles and premises of Contrarian Outlook, and their Contrarian Income Report and CEF Insider newsletters, though untested and compared with other strategies, as O’Shaughnessy has done, may be superior to my own. I’m somewhat convinced of that.

Therefore, what I have done, is to incorporate the strategy of Owens and Foster into our portfolio. It has immediately resulted in a huge boost to our portfolio dividend income, as each purchase of these securities buys us, typically, more than five and a half times the income my safe-dividend growers commence to bring to us.

In retirement, I am, and everyone should be, all about INCOME. With the strategy and recommendations of Owens and Foster, via their newsletters, CIR and CEFI, I think that the income they are able to bring to the game… is an absolute game-changer!!!

Got to their site: https://contrarianoutlook.com/   Read what you can, and see if it doesn’t strike you in the same manner it has me. Then, if you would, write and ask questions, and let’s discuss these ideas, and their merits and drawbacks.

Here’s to your successful investing!
Harold F Crowell

Standard
Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

Why BMY?

Friday, January 5. I was recently asked why I held BMY, as it did not meet my selection criteria. They were correct about that, but I had said I would write why I have some. I was just reminded of that a moment ago, when I saw this line, “Pharmaceutical giant Bristol-Myers Squibb (NYSE: BMY), makes the immunotherapy drugs Opdivo and Yervoy. The success stories are amazing. These drug companies are literally saving lives.”

Further, excerpts from the original July ’17 research report on BMY, “Bristol-Myers Squibb (NYSE: BMY) – has first-mover advantage in cancer immunotherapy.” “Bristol-Myers has the top drug in the space – Opdivo – and solely controls Yervoy and its market. Together, that’s a $6 billion annual cancer-immunotherapy market next year for Bristol-Myers, growing at more than 30% per year.” “The second major franchise at Bristol-Myers is a blood-thinner pill called Eliquis.” “As of last quarter, Eliquis sales are up 50% year over year.” “Opdivo, Eliquis, and Yervoy are Bristol-Myers’ largest and fastest-growing drugs. Together, these three drugs make up about 50% of Bristol-Myers’ gross revenue.” “Bristol-Myers has a deep and rich pipeline…Overall, it has 32 other drugs in development.” The entire report was a number of pages long, and I only snagged a few lines. Understand, I bought it for me, it doesn’t meet my search criteria, and, in fact, it’s been one of my very poorest holdings since I bought it. So, here’s what I will likely be doing with it in the near future.

As I conducted my recent year-end review, BMY held my total results for 2017 back. My performance would have been better without it. As it was, I beat the S&P 500 again, even with BMY in my holdings, but it proved to be something of a drag. Since I am now at the place where I don’t want to add a new issue, unless I first select something to jettison, I expect that the next time I decide I really do want something, BMY will probably be the most likely candidate to get the axe! So, there you have it… generally speaking, I pick better stock ideas than BMY is working out to be. What was particularly galling to me, was that only just last month I received their dividend increase pay raise of… only $.04, from $1.56 to $1.60 a share. That’s a measly 2.56%. That’s not for me. In fact, you know what? After reviewing this thing, I’ve talked myself right out of it! BMY is going to be sold just as soon as I decide what else I’d rather have!

Thank you, kind reader, whoever you were! I’ve come back to my senses!

Harold

Standard
Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

2018… Good or Bad?

I’ve promised to write of this. What indicators can predictive of the market’s next big swoon? Do we need to wait until it’s fallen 20%, and Wall Street pronounces it a Bear Market? Really? After one entire fifth of stock value has been frittered away? That’s really not necessary.

If we watch to see if 1.) the Transportation Average continues to confirm the Industrials Average, like it has been, we have an all clear. That wasn’t the case just back in October and November, but it came back.

If we pay close attention to 2.) the Advance/Decline line to see if stocks of all sizes are participating in the market rise, all is good. It’s making new highs with the indexes. All hands are on deck!

Key economically sensitive issues are great leading indicators, too. Like 3.) paperboard container stocks, and 4.) diesel engine stocks. These are all fine.

So, don’t worry, be happy! This Bull is still running! When the warning bells begin to ring, I’ll bring them to your attention. Right now, enjoy the ride. I had thought the market would begin the new year by correcting… I was wrong, but I didn’t sell a thing, so my opinion cost me nothing.

Harold

 

Standard
Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

Not Gonna Believe This….

Wednesday, January 3. The December monthly brokerage statements are now available online. So, what’s the report? You’re not gonna believe this. I’m embarrassed to report it.

Now, understand, first of all, that there were a lot of special December, end-of-the-year distributions from a number of our holdings. And, some of those were pretty substantial, too. So, these had a large impact on the result I’m about to report.

Our December portfolio dividend income from all four of our brokerage accounts was… 119.93% above September’s, 209.52% above June’s, 538.31% above March’s, and, finally, 426.41% higher than last December’s! Yes, that’s right, it was more than 5 times greater than December of 2016. Now, I’ll say this again, there was a considerable number of year-end distributions, and they were quite large, too. But, that is the actual result, and even I can hardly believe it, except that I keep meticulous records, and I’m looking right at the actual statements on my screen.

And, I’ll add this: Because I also keep a file of what our anticipated income will be, looking forward, based on the increases to, or additions of, new income from added holdings; our anticipated income for the new year of 2018 should continue to demonstrate incredible growth going forward this year.

I must state this plainly. I am no longer only relying upon my safe-dividend growing stocks for our income and its growth. I had begun, back in the summer, to also add purchases of high-yielding securities as recommended by Brett Owens and his colleague, Michael Foster, at Contrarian Outlook, and their 2 letters, Contrarian Income Report and CEF Insider. I highly recommend them. I’ve blended their strategy with my own, and their picks have greatly increased the amount of portfolio income we are generating.

I’ve more to speak of later….

Harold

Standard
Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

My Pick Kingstone!

Tuesday, January 2. Well, well, whatayaknow… Something just came in my inbox from a famous and highly respected research firm. And among their very favorite top ideas was my very own Kingstone (KINS). I don’t recall when I bought mine, but it’s been a true winner, having risen 28.6% to me since purchase. But, you know why I buy my selections: Safe-dividend growth! They pay a very safe, and rapidly rising dividend. My yield is already 2.14%, and growing at a rate that will double to me in under 5 years to 4+%; to possibly double again, in well under 10 years, to an 8+% yield. Now that’s what I’m talking about! So, let me see if it’ll copy and paste here:

“Kingstone (Nasdaq: KINS) was founded in Kingston, New York, back in 1886. But for all intents and purposes, Kingstone’s history begins in 2001, when current CEO Barry Goldstein took over.

In the 115 years preceding 2001, Kingstone – known by various other names – had been a chain of “independent storefront insurance agencies.” In other words, the company was just brokers and agents selling policies backed by various other insurance underwriters.

When Goldstein joined the firm, he began completely restructuring its business model – gradually transforming a loose confederation of agents and brokers into an underwriting powerhouse. It was a massive undertaking. In a little less than 10 years, Kingstone transitioned from selling insurance policies to actually creating them.

Today, Kingstone focuses primarily on homeowners’ insurance. It also does commercial-liability insurance and has carved a special niche in “livery” insurance, which insures physical damages on taxis and car services such as Uber and Lyft.

We’re buying because property and casualty (“P&C”) insurance is the best business in the world… and Kingstone is an unusual opportunity to buy a great P&C insurer that is also primed for explosive growth.

Longtime readers know we came to appreciate the P&C business after years of studying and writing about the world’s best investors – like the legendary Warren Buffett, Benjamin Graham (Buffett’s college professor and mentor), and Shelby Davis, who spent 40 years turning $50,000 into $1 billion focusing solely on insurance companies.

The power of the P&C model lies in the interplay of three important industry terms: float, underwriting profit, and investment income. People pay insurers premiums, but the events insured by these premiums – an auto accident or a medical-malpractice lawsuit – will only be triggered in the future, if at all. If over time, the total collected (premiums) exceeds the total paid (claims), the company is generating an underwriting profit.

But the real secret is the float – the premiums collected but not yet paid. The insurer gets to invest

this money and keeps all the investment income. In every other financial-services business, using others’ capital costs you money, usually in the form of interest on deposits or loans. But a successful P&C insurer effectively gets paid to invest other peoples’ money.

We launched our proprietary scoring model – the Insurance Value Monitor – more than four years ago as part of our supplementary Stansberry Data service. And we focused on the 12 attributes Buffett himself uses.

Each month, we rank companies using hundreds of data points for dozens of fiscal periods. When a top-10-ranked company trades for a 50%-plus discount to its float plus its book value, we buy it. The system works. Since 2012, the P&C insurance picks generated by our proprietary ranking have crushed both the overall market and the related insurance index.

While our monitor has done a great job identifying large-cap P&C winners, Kingstone is a great small-cap company. It has many of the attributes we look for in P&C investments… and it has massive growth potential.

Under Goldstein, Kingstone has grown quickly. Compounded annual growth rate for revenue is 23%. Operating cash flows are growing 29% per year. Book value per share is compounding at 12% per year. (And we estimate it is now well over $9 per share.)

Kingstone’s rapid growth makes this a big opportunity. But we must remember it’s still a very small company, operating primarily in one region of one state in one country. Specifically, New York City, coastal Long Island, and Westchester County, New York. Goldstein and the rest of Kingstone’s management are committed to expanding into other markets.

In 2017, Goldstein began implementing the “Kingstone model” in other parts of New York and beyond. Kingstone’s first New Jersey revenues hit the books in the third quarter of 2017. Partnerships with Rhode Island agents should soon bear fruit. The company recently earned approval to expand into Massachusetts, and has pending applications in Maine and New Hampshire. Texas and Pennsylvania should be next, as Kingstone already has regulatory approval in those states.

Of course, rapid growth in the new states won’t happen overnight. But over the next 10 to 20 years, if Kingstone replicates just a fraction of its New York foothold in a handful of other states, the growth potential is staggering. Kingstone shares rose more than 50% in 2017, earning it Stansberry Diamond status. We can’t wait to see what the next decade brings.

Action to take: Buy shares of Kingstone (Nasdaq: KINS). Use a 25% trailing stop once you have established a position.”

Here’s to your successful investing!

Harold F Crowell

Standard
Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

Watching What Actually Matters

Monday, January 1. Price appreciation is nice, but what really matters, when it comes time to enter retirement, is INCOME, people! INCOME!!!

So, what did our safe-dividend growers do for us this year? Alphabetically:

AFG raised from $1.25 to $1.40 for a 12% pay raise. AOS raised from .48 to .56 for 16.67%. AVGO raised me from 4.08 to 7.00 for a 71.57% dividend increase pay raise! BMY, my cancer treatment hope, only raised from 1.56 to 1.60. Let’s see if 2018 brings my hoped-for investment result. I’ll look it back up and share some of that research report. CHD increased their divvy from .71 to .76 for only a 7.04% increase. CVS had raised from 1.70 to 2.00 for a 17.65 raise. FDS grew theirs from 2.00 to 2.24; that’s 12%. HRL went from .68 to .75 for 10.29%. JKHY raised me 1.12 to 1.24 for 10.71%. KINS increased theirs from .25 to .32 for a 28% dividend increase pay raise. MA raised me from .88 to 1.00 for 13.67% increase. OZRK raised by .02 each qtr., so that it went from .66 to .74. That’s 12.5%, but there is a small compounding factor there, when it’s being raised each qtr. Also, the actual annual rate of growth is slowing, as each new .02 increase is smaller than all of the previous ones, on a % basis. If they do not begin to turn it into a .03 dividend increase per qtr., and the % rate of increase slows to a point I find unacceptable, say under 8 or 9% annualized… I’ll sell OZRK. ROL gave me a boost from .40 to .46 for a 15% increase. ROST increased their dividend from .54 to .64, for a lovely 18.52% raise! SYN lifted theirs from 1.00 to 1.20 for a 20% increase. SYK was good to us going from 1.70 to 1.88. That’s a 10.59% increase. Finally, UNH lifted their dividend from 2.50 to 3.00 for a 20% dividend increase pay raise to us.

The average was 24.41%. And, what did the 2 I recall selling bring to us? I recall selling TJX and UGI. Well, I see that TJX didn’t bring us anything by way of appreciation, but 1.77%, so that would have dragged my average appreciation number above down. But, they did raise my dividend in ’17 from 1.04 to 1.25, for a 20.19%, which I received at the time it was paid. Then, there’s UGI. UGI rose all of 1.88% in ’17, and they raised their dividend to me from .95 to 1.00, for a 5.26% increase.

Now, I’m not one to mask poor results, and I did say that it is very hard for me to compare my performance against the market, because I do things through the year that an index does not. So, just for the sake of keeping me honest, I added those two back into the mix to say that having 19 symbols averaged, the average gain of those for ’17 was lowered to a 23.22% appreciation, against the 500’s 19.42%. My average dividend increase, including TJX and UGI changes to 23.39%. What did I report earlier? Oh, yeh, 24.41%. Not much difference. Still doubles at that rate in 3.08 years. If I sold or swapped out any others, I don’t recall, and I’m not going to bother to look that up. I’m too forward-looking to get caught up in the minutia of looking back and analyzing. I’m growing a portfolio dividend income here, and that’s what I am accomplishing!

Finally, because this IS about income, the average dividend increase among the stocks in the 500 was only 8.03%! And, that, my friends, is where the real difference lies between what I do, and what a passive index will do for you! Whereas, I’m looking to double my income in under 5 years, the index might do that for you in about 9 years!!! The difference there is absolutely staggeringly huge, if you will think about it!

And, still more to come, because I am awaiting the December brokerage statements. That’s when reality will be examined, and where the actual results will best shine. Just you wait, and see!!!

Here’s to your successful investing! Happy New Year!
Harold F Crowell

Standard