Tuesday, May 19, 2020

McDonald's Corporation (MCD) Dividend Stock Analysis

Linked here is a detailed quantitative analysis of McDonald's Corporation (MCD). Below are some highlights from the above linked analysis:

Company Description: McDonald's Corporation is the largest fast-food restaurant company in the world, with about 35,000 restaurants in 119 countries.


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Friday, May 15, 2020

Simon Property Groups (SPG) is Ambiguous on Dividends

I read the latest press release for Simon Property Group (SPG). I was expecting them to announce their dividend announcement as part of that release, given the fact that they are about 2 weeks late to their usual dividend declaration.

They did mention the word dividend in their latest press release, but I found it to be very ambiguous.

Simon's Board of Directors will declare a common stock dividend for the second quarter before the end of June. Simon intends to maintain a common stock dividend paid in cash and expects to distribute at least 100% of its REIT taxable income.

This is a very carefully crafted message that probably took their investor relations team 10 days to come up with. It gives the company some time to defer the difficult decision on cutting the dividend. They remind me of a teen-ager who procrastinates on a difficult assignment, because they do not want to do it, and face the consequences.

On one hand they are announcing that they will pay a dividend, in order to maintain REIT status. But they leave open the possibility that there will be a dividend cut. The way this was worded, implies a dividend cut in my opinion. Some investors have misread this statement to say that they will keep the dividend unchanged. This is incorrect - they are keeping a dividend payment, which mostly likely will be lower than the last quarterly payment.

I will stick to my strategy for now, and not sell. I am pretty certain that they are cutting the dividend with this ambiguous message, but I will not sell until they state it firmly. That being said, I am dissapointed by corporate double-speak. I am perhaps sticking to this stock for educational purposes only, because owning a stock forces me to keep up on it, as I am fed press releases, 10-k and 10-q reports on it.

In my opinion, Simon's management is not frank and upfront with their investors. I also do not like the fact that they have not shared the percentage rent collected from tenants, which is a statistic that is now commonly shared by many REITs. It sounds to me like they are trying to hide something, when we all know and expect to hear that things are not rosy.

It also seems to me that the Taubman Centers acquisition may have to be re-negotiated. Back in February, Simon (SPG) decided to acquire Taubman (TCO) for $53/share in cash. Subsequently, we had all the lock-downs, the economy going into a tailspin, but this deal is still going as if it is going to happen at the original terms. This deal needs to be renegotiated, because those assets are impaired as of today. It is basically lighting shareholder funds on fire, if they really were to acquire Taubman at the original terms from February. However, Simon management is refusing to say anything about it. Hopefully they are doing something behind the scenes to renegotiate the deal and its terms ( or walk out). Otherwise...

When I reviewed Simon Property Group (SPG) in December, I concluded that it is a high yield and a high-risk investment. It did remind me at the time of Tanger Factory Outlets in 2017 however. Both Simon in late 2019 and Tanger in early 2017 we yielding about 5%, had low valuations, and FFO/share growth was grinding to a halt. Yet, Tanger kept deteriorating over the next 2 - 3 years. It is possible that Simon is deteriorating at a faster pace over the course of the past 2 - 3 quarters.

If I were to sell Simon Property Group, and keep the money in REITs, I would probably replace it with W.P. Carey (WPC) or Realty Income (O). The first one received a 95% collection rate on rent, while the second company collected on 83% of rent in the most recent month. Sadly, National Retail Properties (NNN) collected only 52% of rent last month. I believe NNN is at a high risk of a dividend cut. I will turn off the DRIP for this stock too.

This is an interesting chart I found on Twitter, which shows April rent collection rates. If you want to think about which dividend is at risk, think about this chart and collection rates. A low collection rate in 12%, such as Tanger Factory Outlets is basically telling you that the dividend is toast ( it was suspended yesterday).



Simon Property Group is not on this list, and very likely will not appear on it for some time.

Relevant Articles:

Simon Property Group (SPG): A High Yield and High Risk REIT
Tanger Factory Outlets (SKT) Suspends Dividends
Twelve Companies Raising Dividends To Their Investors
Five Things to Look For in a Real Estate Investment Trust (REIT)


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Tuesday, May 12, 2020

Baby R2R’s Portfolio Update – Q1 2020

This post is part of the series where I share the progress of Baby R2R’s investment portfolio. I started documenting this in Q3 2017 and intend to provide quarterly updates.


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Friday, May 8, 2020

22 Dividend Bloggers Share Their Top Investing Advice

When learning about investing, sometimes it can be a bit overwhelming. There are tons of books and investment sites available ready to teach you.

There are many different investment strategies available, tons of tips from the pros and lots of advice. All to try and help you be a better investor.

I’ve reached out to some of the best dividend bloggers on the web and have asked them for their #1 investment advice for beginners.  This is an epic post with over 2,000 words of advice.  In the end, you’ll see that investing doesn’t have to be that difficult.

And be sure you are signed up for my free dividend growth investing newsletter where I will be sharing my own #1 advice for new investors in my next monthly newsletter released next Saturday April 12th!

Top Advice from Dividend Bloggers

Brick by Brick Investing – “Read, read, then read some more. Educate yourself because at the end of the day nobody cares about your money more than you do. I’m not saying you have to take control of all your investments but at the very least you should understand what your financial advisor is saying. More importantly you need to understand the strategy he/she is trying to implement for you.” 

 
A Wealth of Common Sense – “My advice for new/beginner investors is to simply get started.  When you are starting out saving is far more important than how you invest.  You are bound to make mistakes, but it’s better to mess up when you are just starting off so you can learn from them.  Whatever process you choose, just make sure it’s one that you can stick with through both gains and losses without losing your head.”

Get Financially Integrated – “Whatever you do just get started!  Having money invested in the market and working for you is much better than sitting on the sidelines waiting to invest.  Start with companies that you know and whose business models you understand. And of course, if direct investing is too much for a new investor, there is no reason not to start out with a low cost index fund, and move to a direct investment approach in individual equities over time.”

Dividend Gamer – “I try to show them that the most important step with a beginner when making their first investments is to never put money at risk that they cannot afford to lose. They need to have a plan in place, so they do not panic and run the risk of letting their emotional state take control of their financial decisions. They should strive to invest early, and save at least 10% of each paycheck if they can, to put towards debt and investments. At least for the first couple of trades, it would be wise for them to invest in what they know, and can understand.

This should be an activity that brings them joy, they are taking control of their future by the actions they complete today. Seek knowledge to build wealth to gain freedom. Learn to ask, and love to help teach others.
Imagine the good you could accomplish if you and all of your friends would pool even 1% of what you all made together to better your local communities.”

The Dividend Guy – “Read and build your own investing strategy. Don’t invest a dollar prior to have a solid investing strategy that you believe in.”

Starting From Zero – “I think my best advice for beginner investors would be to try to read and learn as much about investing as you can before you actually start buying stocks.  You can find a ton of great investing books at local libraries and of course all the great financial teaching out there in the blog world. I spent about a year before I bought my first stock reading everything I could get my hands on when it came to stock investing and finances: Peter Lynch’s books, Rich Dad/Poor Dad, books by Jim Cramer, and all the great articles over at Seekingalpha.com. You should use these resources to get an idea of what you are going to do before you actually start. I recommend actually writing down your plan with guidelines for your portfolio. Regardless of whether you want to invest in dividend growth stocks, small-cap growth stocks, or just index fund investing, you need a plan to keep you on track so you don’t get discouraged and sell low when you experience your first loss, because your stocks are going to go down in value at some point. Having a plan in place and sticking with it will help a lot, especially when first starting out.”

Retire Before Dad – “I’d advise any new investor to read three stock investing books before putting money to work. It can be any three, but I’d lean towards long-term growth stock investing. My first was Peter Lynch’s “One Up on Wall Street”. It’s a little outdated now, but still relevant. I also read William O’Neil’s “How to Make Money in Stocks” many years ago and it was a very different investment philosophy. Newer books could be anything by Jim Cramer, Jeremy Siegel’s recently updated “Stocks for the Long Run”, or any number of e-books out there. The point here is to read about many different types of investing strategies by different writers, not necessarily dividend growth proponents, so that you learn about stock investing and markets more broadly before starting your dividend growth portfolio.”

Buy Smart Never Sell – “Don’t get too concerned about how much your investments are returning in the first year. It will take a while before your portfolio is properly diversified and can thus average out in the long run. As long as you did your homework ahead of time, you should see great returns on a long enough timeline, so be patient and stick to it.”

Financial Freedom – “Start saving and investing as soon as you can.  Time is your friend the sooner you start.”

Dividend Hawk – “Make an investment plan and follow it, keep a record of why you bought or you sold investment.  Do not panic if the value of your investments sometimes go down a bit.  They will usually bounce back long term.”

Dividend Vet – “The number one advice I can give for the beginning investor is to start saving as much money as you possibly can.  Stop spending your money lavishly and living like a rockstar.  Calculate how much of your income is coming in and how much of it is going out.  Before you can invest, you have to save the money.  Therefore, if you are only saving 10%-20% of your monthly income it will take you much longer rather than someone who saves 50%-60% of their income and invests that money constantly.  Saving and investing work in correlation.  It is that simple, by focusing on savings you will do much better deploying your capital into dividend growth stocks, which in turn will give you even more returns in the future.”

Income Surfer – “In my opinion the most important thing is to save early and often.  The more time you can give your investments to compound, the better off you’ll be.  For people just starting out…..save what you can.  If you’re not comfortable investing in individual stocks, or don’t have the time to research them, it is probably best to invest in a low cost total stock market index ETF and total bond market index ETF.”

Dividend Growth Investor – “The best advice for beginning investors is to learn as much as possible about investing through reading and following great investors.  I would read anything about Warren Buffett, including his letters to shareholders. I would then read books by Peter Lynch and The Single Best Investment by Lowell Miller. I would also recommend following the individual investors who are part of The Dividend and Value Investing network at thediv-net.com.  I would not stop there however, but keep learning about investment, until you develop the investment strategy that works for you.”

My FI Journey – “New investors need to do two things.  First, they need to read and research as much as they can can.  The more familiar they become with the principles of investing the less likely they’ll be to lose money.

Second, every investor should write up an investment plan or philosophy.  Try answering the following questions:

Why do I want to invest?
How much effort am I willing/able to devote to investing?
What will my target savings rate be?
How much money will I put into tax deferred accounts vs taxable accounts?
What does my asset allocation look like?  Or how much money do I want invested in stock market index funds, bond funds, dividend growth stocks, aggressive growth stocks, peer to peer lending, real estate, MLPs, REITs, etc.  The list goes on.
What criteria will I use to determine whether I should buy a stock?
When should I sell?”

RoadMap2Retire – “Every investment should be very well understood. If you don’t understand a company’s business model, do not invest in it.”

HelloSuckers.net – “Over the years of looking for an investment strategy, I realized that the beginning investor has to answer yourself one important question: “What do you want from your investments and how much time do you have?” I was pondering about this question for many years and yet failed to see the answer laying right under my nose.  When I finally realized that it was income, ever growing, safe income, without me working for it which I can reinvest and release my tight family budget, it was then easy to come up with a proper strategy – dividend growth strategy.  I knew immediately, that instead of waiting for a stock appreciation sometime in the future, which can be lost if the market crashes, unless you sell the stock (with a tax impact), the dividend growth strategy provides me with income NOW and that income is relatively safe and growing every year without me working for it.  Once you find out what you want, it will be easier for you to work on your strategy – when to invest, what to invest, what investment vehicles to use, etc.  And once you know your strategy, find bloggers in your niche (such as dividendgrowthstockinvesting.com) and read.  Read a lot, learn, and use those blogs as inspiration and investment ideas.”

The Conservative Income Investor – “Don’t be afraid to ask questions, and get started. The only thing that impedes progress is pride or fear. There was a time when Warren Buffett didn’t know what a stock split was, John Templeton didn’t know what a dividend was, and Benjamin Graham didn’t know what a price-to-earnings ratio meant. Malcolm Gladwell says it takes 10,000 hours to master a skill. It’s a lifelong journey, and if you approach it in the spirit of being an unabashed student, you’re going to be fine and be more knowledgeable with time, which is a great personal measuring stick.

The other thing to remember is to get started. It’s easy to spend weeks and weeks reading about the best way to do something, but at some point, you have to take action. The guy that puts $100 into a random mutual fund is probably going to be in a better place than the guy that reads about stocks all day long and doesn’t actually get around to investing. A high savings rate is the secret to everything. A woman saving $1,000 per month will likely end up in a better place than a guy who saves $300 per month and happens to be a better investor. A high savings rate is a major ingredient in damn near every investing goal.”

Write Your Own Reality – “Figure out what style of investing fits your lifestyle, and plan you goals and investment strategy accordingly. Don’t feel compelled to follow a strategy because others are doing it, but because it matches your personality, risk tolerance, and available time for research.”

All About Interest – “My advice for a beginner is to just get started!  I think it’s important to start making consistent contributions.  I recommend diverting a percentage you are comfortable with into your brokerage account each paycheck and then purchasing shares when you have accumulated at least $1000.  This is doable for most people.

I’m also a big fan of putting your money in and maxing out your Roth IRA first if you qualify for one.  Your dividends can grow and be reinvested tax free here for as long as your account is open.”

The Loonie Bin – “Read books and ask as many questions as you can. Knowledge is the key to success.“

Compounding Income – “My advise for beginners of dividend growth investing is to turn off the tv!  TV personalities sure have charisma and they sure are entertaining, but they tend to think short term and are overly focused on quick gains.  They will spout all kinds of advise and produce fancy charts; none of that should concern you.  A dividend growth investor makes money holding stock in high quality companies for long periods of time.  You need to give your investments time to grow and time to compound.  The compounding effect will simply not take place if you’re darting in and out of stocks all the time.  Remember that the dividend growth investing strategy is NOT a get rich quick scheme!  Instead of watching Cramer, I’d recommend reading articles at a website called Seeking Alpha.  Seeking Alpha is the unofficial home of dividend growth investing and boasts writers who have a lifetimes of investing experience.  Seeking Alpha authors I would recommend: David VanKnapp, Dividend Growth Machine, David Fish, and Chowder.  A wealth of knowledge can be found on that one single site.  I’d also recommend a few blogs just in case that’s not enough: Dividend Mantra & Project 3 Million.  Here you can watch real life dividend growth portfolios in action and also get stock ideas, budgeting tips, and articles to keep you motivated.”

Simply Investing – “My #1 advice for new investors is to learn how to become a dividend investor. Learn which stocks are worth buying and which ones are worth avoiding. Learn the basics of investing, this education will ensure success as dividend investor for life.”

That’s All Folks!

Well there you have it!  Over 2,000 words of investing advice from some of the best dividend investing bloggers around!

This post originally appeared on Dividend Growth Stock Investing blog a few years ago. 


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