Jan Port Results-Income Projection '17

Investment Analysis Clubs Saul’s Investing Discussions
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I started buying HASI on Feb 9, 2015 at $14.31 In the 2 years since I have added 17 more cash purchases plus 4 dividends were dripped and cash taken for the others in that account. Stocks like this will move the needle of my portfolio while an AMZN and Chipolte and AAPL will not.

HASI closed today at $18.35, up $4.04 (29.6%) since then, plus it’s paid dividends totaling $2.31. I don’t have a DRIP calculator handy, so I’ll be generous and say the full $2.31 is also up 29%, which makes another $0.67. That totals up to 49%.

So, better than CMG of course. And, better than AAPL, even with its dividends DRIPped. But, not better than Saul-stock AMZN, which is up 116% since Feb 9,2015. That really moved the needle.

And if it doubles in price HOW MUCH WILL YOU MAKE BASED ON THE LIMITED NUMBER OF SHARES OWNED-No income is paid along the way so the only thing you can hope for is capital gains.

“Limited number of shares owned” is not an argument. One can say the thing about any stock, whether dividend paying or not. That’s why we talk AAR (Average Annual Return) as a metric that let’s us compare how well vastly different portfolios do. Perhaps I’m missing something, but it seems pretty clear to me that making 116% in 2 years is better than making 49% in the same 2 years.

As for “income along the way,” you can’t have your cake and eat it too. You can either DRIP or you can take the dividends to live on, but not both - at least with the same money - and have the same returns. AMZN doesn’t pay dividends, but you can sell share to pay your living expenses. Yes, that hurts your returns, but then so does not DRIPing dividends.

I believe it’s a question of perspective and time frame. Some companies pay profits as dividends because they don’t have better uses for that money, except to buy back stock (which involves less commitment than paying dividends). Apple’s in that boat, having more money than they have imagination. Other companies, like Amazon, reinvest their profits into new businesses that will accelerate the company’s growth and future profits.

I understand the appeal of dividend paying stocks. It’s the bird in the hand, and so is appropriate for people who can’t or don’t want to take on as much risk in their portfolio. But, beware that along with the potential advantages of DRIP in a dividend paying stock, there is also the risk that your “If I’m wrong along the way I will sell probably have a big chunk of change to move on to something new” statement ignores the risk that if you’re wrong, the stock could actually decrease in value, perhaps even wiping out the gains you made via dividends.

There are many investment strategies from which to choose, and that’s good. Some are not appropriate for some investors, and it’s fine to point that out. But, saying that AMZN wouldn’t have moved the needle in one’s portfolio in the past two years just isn’t true.

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So, better than CMG of course. And, better than AAPL, even with its dividends DRIPped. But, not better than Saul-stock AMZN, which is up 116% since Feb 9,2015. That really moved the needle.

How much of that 116% AMZN appreciation were you able to corral into your portfolio? Was that 116% the movement of your portfolio’s needle or AMZN’s needle? Did Bezos make that 116% or did you?

The important metric for me is that in 13 1/2 years my ENTIRE portfolio is up 13 times after paying all my bills. I guess that’s unimportant for many here because they have as good or better results over the same time frame. I would be interested in hearing the portfolio results of others over that time frame if you are willing to share.

b&w

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According to Standard & Poor’s, the dividend component was responsible for 44 % of the total return of the last 80 years of the index.

http://www.simplestockinvesting.com/SP500-historical-real-to…

This site has excellent with and with out dividend graphs of the S&P 500 and also with inflation adjusted.

There’s no arguing that dividend reinvestment works well. It’s just that typical dividend paying stocks do not usually have very good price growth. They are usually more steady stocks compared to the growth stocks that may have much higher price appreciation, but also have the large swings in performance.

They say politics is local, well investing is personal. It depends on your tolerance for risk and your time frame of interest.

Good luck to all whatever path you use. Just own it.

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ANY stock I buy COULD MAKE ME A MILLION DOLLARS OR MORE if it works out-- However When I start to buy it. all I’m buying is 100-200-300 shares and it pays a growing dividend . As time goes on as it proves itself in my portfolio I allocate additional cash. If it doesn’t make me money it gets no more money from me and if necessary it gets sold. Stocks that perform get additional monies For example-Take HASI as an example. I own it in 4 accounts-but we’ll talk about 1 because they are similar I started buying HASI on Feb 9, 2015 at $14.31 In the 2 years since I have added 17 more cash purchases plus 4 dividends were dripped and cash taken for the others in that account. Stocks like this will move the needle of my portfolio while an AMZN and Chipolte and AAPL will not. If I’m wrong along the way I will sell probably have a big chunk of change to move on to something new.

B&W,

2 points:

  1. Let me edit to make that last sentence more clear: “If I’m wrong along the way I will sell AND LOSE MONEY.” I’m happy for you that you have been able to grow your portfolio however many times over the last several years, but recognize that if you had picked different stocks you might very well have LOST money over that time period. It doesn’t much matter if your stock pays a dividend or not if shares crater 50% or something. It’s the same as if that happens to AMZN or CMG. I’m glad you’ve done well, but there’s no magic in the method. You must have just chosen the individual stocks well.

  2. To misquote Acts 19:15, “XOM I know, and KO I know, but who is HASI?” I agree that dividends can be a nice, safe, less volatile strategy than growth stocks. It’s what I’ve helped my dad do to reduce risk, and it’s been great. But you have to distinguish between the risk in blue chip companies who are almost certainly going to be around for years and years, and the risk in companies no one has heard of. It’s completely believable that you’ve done your homework and totally understand what you’re doing. You just haven’t displayed that on these boards. You say to stay away from the darlings of wall street, but when someone asks about one of your stocks like HASI you say “go do your own research.”

Bear

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Was that 116% the movement of your portfolio’s needle or AMZN’s needle? Did Bezos make that 116% or did you?

B&W, apparently you’ve been successful, which is great, but you’re just carrying this argument too far. The objective measurement is that for the past couple/few years, AMZN has had better returns than HASI.

I’m not knocking your returns, it seems like you’re doing really well, exceeding an CAGR of 21% for those 13.5 years, which is great.

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Paul:

1) Let me edit to make that last sentence more clear: “If I’m wrong along the way I will sell AND LOSE MONEY.” I’m happy for you that you have been able to grow your portfolio however many times over the last several years, but recognize that if you had picked different stocks you might very well have LOST money over that time period. It doesn’t much matter if your stock pays a dividend or not if shares crater 50% or something. It’s the same as if that happens to AMZN or CMG. I’m glad you’ve done well, but there’s no magic in the method. You must have just chosen the individual stocks well.

You can interpret anything anyway you want But let’s be clear. From time to time stock selections have not performed up to my expectations and I have sold them --AT A LOSS— MY portfolio results to date include the winners-the losers and the ugly and those results are after deducting the losses and the cash I have removed over the years to pay my bills. To say dividends don’t matter is incorrect because dividends have represented 44% of all portfolio growth over the past 80 years. Stocks that pay dividends that are reinvested or spent is free money or stock (If the distribution is tax deferred) that decreases your investment cost. If you receive enough income along the way your cost basis can approach or reach “ZERO” while you still own the stock and it keeps generating more cash to be invested or spent and the market value can keep increasing. That is not the same as investing in AMZN CMG AAPL GOOG or other stocks you “know” that pay very little or nothing and you are dependent upon the capital appreciation to be there when you need the money (less capital gain taxes). If we are in a Bear market and stocks are down 50%, I would rather take my chances and have my portfolio with stocks that have a “Zero Cost Basis” or close to it that have been paying my bills for years

2) To misquote Acts 19:15, “XOM I know, and KO I know, but who is HASI?” I agree that dividends can be a nice, safe, less volatile strategy than growth stocks. It’s what I’ve helped my dad do to reduce risk, and it’s been great. But you have to distinguish between the risk in blue chip companies who are almost certainly going to be around for years and years, and the risk in companies no one has heard of. It’s completely believable that you’ve done your homework and totally understand what you’re doing. You just haven’t displayed that on these boards. You say to stay away from the darlings of wall street, but when someone asks about one of your stocks like HASI you say “go do your own research.”

XOM and KO also can be very volatile over time. They shake people out just like Kodak and Polaroid and all the newspapers and a lot of Department stores and shopping malls.

You say— You don’t know who is HASI-- THAT’s YOUR FAULT not mine. I’ve been writing about it for about 2 or 3 months now and you’ve been writing me about it I told you it occupies 18.4% of my portfolio. HASI is a public company for about 4 years They have been in business as a private company for over 30 years. They are in the “Green Energy” business they have increased their dividend each year since going public.(They are a REIT)
Another “Green Energy” security I own is EVA (They are an MLP)

I have disclosed my portfolio and the results I have achieved so far. I suggested that anyone interested in any of the securities that they “Do their own research” which everyone should do anyway. I don’t know what your goals or needs are. Maybe you are doing better than me. Wonderful-I’m glad for you. Maybe you are right and dividends aren’t for you
But please don’t tell me dividends don’t mean anything. Maybe they mean nothing to you, but I live off of them and they pay all my bills for the past 13 1/2 years and for all the growth of my portfolio over that same time.

Best regards
b&w

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Here’s my issue with the whole HASI situation. There’s very little public information out there compared to some stocks. Why did HASI drop 1% on Friday, while the rest of the market was up 1%? Every REIT I own was up, even the high risk MORL and CEFL were up. What news or situation caused the price to drop on an up day like that?

Secondly, why is it trading 8% under its secondary offering price of $20 a share from a few weeks ago? Based on your understanding of it, is the current price of $18.35 a share a decent entry point for both stock price appreciation and dividend growth?

B&W, there are a lot of good REITs out there to choose from, including the SWANs (sleep well at night) that Brad Thomas and others pick. Why should someone put money into HASI, instead of OHI, SOHO, or some of the other options? What made you pick it, and how did you evaluate it’s financials (FFO, debt-level, dividend growth history, etc).

Also, if you do sell the losers and just add to winners, aren’t you just chasing past performance? Blindly doing that without understanding the entire business you are invested in can lead to financial catastrophe.

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There’s very little public information out there compared to some stocks. Why did HASI drop 1% on Friday, while the rest of the market was up 1%?

Let’s be fair here - the daily gyrations of a stock aren’t worth considering.

As for other information, here’s a link to HASI insider buying: https://www.holdingschannel.com/insider-buying/hasi-insider-… and for both buys and sells: http://www.insider-monitor.com/trading/cik1561894.html

Lots more Insider Buys than Sells of HASI by various directors and C-level execs. That’s a very bullish sign. Only the CFO has been selling - the President & CEO, Exec VP, a Director, General Counsel & EVP have all been buying since 2013.

That said, it does seem Mr. Market is mixed on what to expect from HASI. The stock price peaked last Sept and has been on a downtrend ever since.

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Welgard,
Can you please provide a link to the REIT SWAN’s, or tell me where to find them? Presently I am working on the dividend portion of my portfolio and this information would be most appreciated.

Kindest Regards,
Steve

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Look up Brad Thomas on Seeking Alpha, and read a bunch of his articles. Most in-depth articles I’ve seen in a while on REITs. He has some articles about the SWAN REITs, which might not have the high mid-teens dividends that some do, but have a lot less risk and can be bought and sat on for years.

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Here’s my issue with the whole HASI situation. There’s very little public information out there compared to some stocks. Why did HASI drop 1% on Friday, while the rest of the market was up 1%?

Don’t judge a security by a few days of market action. If you are concerned with Friday’s price drop, then by all means you should be selling. I have no inside knowledge as to why the price is down over the past few weeks. Maybe its because the president is talking about coal and oil and gas and not talking about renewable energy.

Secondly, why is it trading 8% under its secondary offering price of $20 a share from a few weeks ago? Based on your understanding of it, is the current price of $18.35 a share a decent entry point for both stock price appreciation and dividend growth?

Same question-same answer–
Current price IMHO is a decent entry point at the current price. I added a few on Jan 31 at $18.39.
Dividend growth- Management just increased the Dec dividend 10% from $0.30 to $0.33 and it was paid in early Jan

B&W, there are a lot of good REITs out there to choose from, including the SWANs (sleep well at night) that Brad Thomas and others pick. Why should someone put money into HASI, instead of OHI, SOHO, or some of the other options? What made you pick it, and how did you evaluate it’s financials (FFO, debt-level, dividend growth history, etc).

You are giving me Your opinion-Brad Thomas’s opinion and a mysterious “others opinion” those opinions don’t pay my bills My opinion on HASI have already in the 2 years paid 7 to 8 months of my bills for ONE YEAR. I am sure other stocks maybe could do as well or better. The problem is there are 15K to 20K stocks on wall street and I am not ready to start DD on them all.
How I picked HASI? It came across my radar-I investigated-I made a small investment in it and it did the rest so far. It has given me a lot of opportunities to have funds added to it and as I said, it has supported me by paying about 7 to 8 months of my bills .

I follow winners- Does it work all the time? No but it works for me a lot more than it doesn’t.

What I do is not for everybody. It works for me-It might not work for you. I would like to take HASI off the table because you and everyone else is looking at it as if it is the anchor of my portfolio when I told everyone here numerous times it is just another stock in the portfolio and nowhere even near the most important. It doesn’t merit all the close examination everyone wants to give it. It’s just a little “Green Energy” company that makes money, that I picked 2 years ago that has cranked out a lot of income and appreciation over that time.
Everyone here appears to be looking for guarantees. I was told many years ago by someone smarter than me, that Wall Street has no guarantees—And if you wanted a guaranty, you would have to buy a washing machine. They all come with Guarantees.

Best Regards
b&w

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I’m happy for you that you have been able to grow your portfolio however many times over the last several years

That’s 13 times over 13.5 years or wait, was it the other way around :wink:

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Hey guys, that’s 32 posts now on an off-topic thread which is filling up the board. Can you bring it to a close?

Thanks

Saul

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From a note I sent to the Fool Editor:

I don’t know if you are still recognizing exceptional posts, but I would nominate this one to be highlighted to the overall Fool community:

http://discussion.fool.com/i-started-buying-hasi-on-feb-9-2015-a…

Rob

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SHOP, AMZN, FB, NFLX, or AAPL."
uldportfolio holdings or did you before?