Just over a year ago, InfoSonics was discussed on this site as a potential value investment. The stock promptly rose in the ensuing couple of months, but then got absolutely annihilated in the 3rd quarter of last year when double-dip and sovereign default fears reigned over the market. The stock has now bounced back, and while it may still be undervalued, value investors may want to take some off the table in order to pursue today's best opportunities.
For your weekend reading pleasure, the articles listed below contain some of the best dividend and value investing insights found on the web. They were written by various members of the Dividend Investing and Value Network over the past week:
Articles From DIV-Net Members
There are some really good articles here, please take time and read a few of them.
I wrote last month of my hopes for a correction, yet none has come. I think that simply proves that the more you try to predict the market, the more you'll likely be frustrated. There are many, many examples out there of studies showing professional stock pickers and market timers handily under-performing the general market. That's why I continue to stick to my plan of investing in quality and attractive dividend growth stocks every single month, no matter what the market is doing.
The Dow Jones Industrial Average is up 5.9% YTD, and we're not even two months into the year. The DJIA recently eclipsed 13,000 points, which is a sentimental number for many investors. I don't hold much credence or confidence in round numbers like that, but it does show the confidence in the hearts of investors. I think some of this confidence is a bit of a self-fulfilling prophecy as investors continue to buy into a rising market. That is a bit troubling, as the fall could be harder and faster than the rise as the self-fulfilling prophecy comes full circle. We'll see.
Next week the DJIA could rise 200 points, it could fall 200 points or it could stay static. The point is that nobody knows. The quicker you realize this and ignore the noise, the faster you'll be better off for it. You're simply a cork floating in a giant sea. You do not have power to move the sea, but you do have the power to buy when you're at the bottom of a wave. Buy on the dips.
For me, I'll continue to find the best values that Mr. Market presents me. If I truly find none, then I'll hold my cash and wait for an opportunity to come to me. I don't chase stocks, but I also don't enjoy holding on to large amounts of cash. Cash is a terrible investment historically.
What about you? Are you a cork floating in the sea, buying on the dips?
Thanks for reading.
This article was written by Dividend Mantra. If you enjoyed this article, please consider subscribing to my feed.
For your weekend reading pleasure, the articles listed below contain some of the best dividend and value investing insights found on the web. They were written by various members of the Dividend Investing and Value Network over the past week:
Articles From DIV-Net Members
There are some really good articles here, please take time and read a few of them.
The market has been on a tear to start 2012. The S&P is up 6.81% YTD, and it's showing little signs of slowing. This is a good thing or a bad thing, depending on your investment strategy. If you're a value-oriented dividend growth investor like myself, a market on fire can dim the prospects of finding a good value with which to put your capital to work.
There's a lot of talk about a forthcoming pullback in the market, due to the strong performance out of the gate. I agree that there is probably a pullback on the horizon, but when will it come and how large will it be? I lack the ability to answer these questions so I do one thing: I stick to my plan.
I have a plan. My plan involves saving a high percentage of my net income (over 60%) and using that excess capital to invest in attractive dividend growth stocks month after month after month. The market will go up and down by many percentage points during the course of this plan, which is likely going to be more than a decade long. After I'm done with the plan, I'll have a large portfolio filled with dividend growth stocks that pay out dividends in amounts that exceed my monthly expenses, and continue to raise those dividends at rates that exceed inflation. This way, even as my expenses go up over time my income rises even faster.
I'm showing my dedication to that plan. Even though the market is strong and many are awaiting an eventual pullback I entered the fray and recently added to my positions with PEP and NSC. The market could drop like a rock tomorrow, and you know what? I'll just buy some more. That's me sticking to my plan.
What's your plan? Are you sticking to it?
Thanks for reading.
This article was written by Dividend Mantra. If you enjoyed this article, please consider subscribing to my feed.
Walter Schloss had a superb 45-year investing record. Want to know his advice for beating the market? Here are his 16 Golden Rules, as summarized by Business Insider:
For your weekend reading pleasure, the articles listed below contain some of the best dividend and value investing insights found on the web. They were written by various members of the Dividend Investing and Value Network over the past week:
Articles From DIV-Net Members
There are some really good articles here, please take time and read a few of them.
Diebold Incorporated (DBD), a manufacturer, supplier and servicing company for ATM's and security systems has recently declared a raise in the quarterly dividend for the 59th year in a row. The quarterly dividend is now $0.28.5 cents per share, up from the previous quarterly dividend of $0.28 per share. This new dividend amounts to $1.14 per share on an annual basis, which is an increase of 1.8 percent from the previous annual dividend payout.
Per Morningstar:
Diebold builds, sells, and services ATMs and security products and systems. The majority of Diebold's revenue comes from the sale and service of ATMs, split about equally between the two. The firm also provides security solutions such as access control products, video surveillance, and communications systems. The company derives roughly half of its revenue from overseas.
Diebold has one of the longest known records of raising its dividend. Usually, a company that has raised its dividend for 59 years in a row is a prime candidate for my stock portfolio. Unfortunately, this company's future prospects concern me. Earnings and revenue are on the severe decline and the payout ratio is sky high. I admire the company for continuing to raise the dividend, even if it's a token amount, but I'll be putting my capital to work in other places. DBD currently does not have a P/E ratio due to negative earnings and they sport a fairly high debt/equity ratio of 0.8. I don't see a large economic moat or competitive advantage here, and I also don't see a lot of growth in its business going forward.
Full Disclosure: None
Thanks for reading.
This article was written by Dividend Mantra. If you enjoyed this article, please consider subscribing to my feed.
You probably won't find a lot of value investors in the solar industry. As a relatively nascent industry, it hasn't yet proved its economic viability. Moreover, that viability is based on the prices of substitutes (e.g. natural gas, wind power etc.) and perhaps the support of the agents of taxpayers (i.e. politicians). Finally, there is a commodity-like element to this industry, as companies fight to provide relatively undifferentiated products to customers only interested in price.
This introduces a ton of risk into the equation for anyone trying to value a solar stock to any reasonable degree of certainty. But sometimes, could a balance sheet be so pristine that it trumps many of the downside risks, leaving only the upside potential of this volatile industry to the investor?
For your weekend reading pleasure, the articles listed below contain some of the best dividend and value investing insights found on the web. They were written by various members of the Dividend Investing and Value Network over the past week:
Articles From DIV-Net Members
There are some really good articles here, please take time and read a few of them.
Currently Johnson & Johnson is attractively valued at 18.80 times earnings, has a sustainable dividend payout and yields 3.50%. I would consider adding to my position in the stock on any weakness in the stock price.There are many ways to make money in the stock market. There are a lot of pundits and followers of different strategies that would have you believe that they have a magic way to exploit the market for extraordinary profits with minimal work and time. Every time I read claims like that, I ask myself: "If it was so easy, and it makes you rich so fast, why are you busy writing articles instead of making millions of dollars?". Believe me, if someone has a "secret" that makes tons of money in a short period of time they're not going to share it with the world.
This leads me to the concept of stock trading. To me, stock trading is basically buying an equity with a short-term time horizon with the plan of selling it at a higher price in the near future. You are essentially trying to buy an asset with the hopes that you can quickly turn it and sell at a higher price to a sucker down the line. This is akin to gambling, in my view. There are day traders, who try to close buy-and-sell transactions in the same trading day. There are swing traders who try the "buy Y at $X and sell at $X+" game, and try and sell Y within days, weeks or even a month or two. Make no mistake, however, these are not investors. These are traders. They are trying to exploit an inefficient market by buying an equity at a distressed price and quickly make money on that equity. They try to repeat these transactions over and over again until they make significant profits. Traders are speculators, not investors.
There are a number of reasons that I don't actively trade. First, I can't predict the future. If I buy stock Y at $50, I have no idea if it will be worth $51 tomorrow or $48 tomorrow. Because of my inability to predict the future, I don't buy assets with the plan to quickly sell for a profit. There are analysts and money managers that try to follow trends and predict the way the stock market is going to react to certain news. Some of these money managers are paid millions of dollars to do this. Yet, I read countless articles about money managers that under-perform the general market. When you are actively trading in and out of positions you must remember that you are incurring taxes on capital gains and you are also incurring trading fees on transactions. I can see how taxes and fees could quickly erode any profits one would make with day trading or swing trading. In addition, you have to keep in mind that you are going to incur losses unless you're Nostradamus.
The main reason I don't trade, however, is that I'm an investor first and foremost. I believe the stock market is a wonderfully efficient platform for an average Joe like me to take my middle class income and invest with some of the biggest and best companies in the world. I like to invest with quality companies that have a history of rising earnings, revenues and dividends. I invest with companies that have an economic moat, economies of scale, large distribution networks, brand name products that people want and/or need. I invest with companies that can raise prices on their products at a percentage that exceeds inflation. I invest with companies like Johnson & Johnson (JNJ), Philip Morris International (PM) and Coca-Cola (KO) because I believe that they do an excellent job of making money and I believe that over the course of many, many years they will grow my investments many times over.
Stock trading is relying on your ability to forecast the future, stock trends, market efficiencies and your chances at selling your asset for a higher price in a short period of time. Many people have thought this was the true path to riches, and many people have failed. I'm not saying that day trading or swing trading can't make you money, but I don't believe it's the most efficient or reliable way of doing so. It's speculating. You could go to Las Vegas and double your money tomorrow. But how repeatable is that?
I like investing. I like putting my chips on major, multinational companies and letting them churn out profits over decades. They pay me dividends to invest with them, which I use to reinvest into my portfolio. Those reinvested dividends then accumulate additional shares, which then pay out larger dividends and this repeats itself over and over again. This is a reliable, repeatable and true way to build wealth over time. It's not speculating, it's not trading, it's not gambling and it won't make you rich over night. But, I believe for an investor who can spot value, is willing to be patient and who knows quality when they see it one can slowly build their wealth over time.
Keep in mind, however, that there is a difference between buy-and-hold and buy-and-monitor. I'm an investor of the latter type. I'm not saying that a long-term value-oriented dividend growth investor should never sell shares of a company. It's important to always monitor your investments and keep an eye out for any changes in a company's fundamentals. For instance, I spotted some changing fundamentals in one of my investments, Telefonica S.A. (TEF) (ADR) recently and I sold my shares because I believed the dividend was not sustainable. The dividend was cut a week later. It's important to keep a checklist of when to sell a dividend growth stock.
All in all, a speculator could make money trading in and out of the stock market. Trying to buy stocks at one price, just to sell in quick order at a higher price is simply not a game I'm willing to play. I have a full-time job and I have other things to attend to, and things I'd rather do than fret around my computer waiting for the right price to come. I'd rather invest my money for the long-term with excellent companies that are wonderfully proficient at making money and paying me dividends. The share prices of these companies naturally rise over time because these companies are efficient at increasing earnings and revenues, so their market cap naturally follows as more investors pile money into these companies' shares. I like investing in appreciating assets that rise in value over time, that also provide cash flow until the time comes to sell those assets, if ever.
What about you? Do you execute a trading strategy at all?
Full Disclosure: I'm long JNJ, PM, KO.
Thanks for reading.
This article was written by Dividend Mantra. If you enjoyed this article, please consider subscribing to my feed.
Virco Manufacturing's market cap has fallen from $50 million a few months ago to about $24 million today, giving it a P/B ratio of under 0.6. The company manufactures and distributes desks, tables, chairs and other furniture for the education sector. It is the largest such manufacturer for the preschool through grade 12 market in the US, and offers a range of services from installation to classroom design capabilities.
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