Investing

Investing Idea - Dividend Growth

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  • Jan 20th, 2019 12:40 am
Deal Addict
Mar 4, 2009
1177 posts
247 upvotes
Toronto
rodbarc wrote:
Oct 28th, 2018 11:49 pm
Just a note that my summary on the recession thread was simply data that I use to trade for the short term. None of that goes into account when I invest in dividend stocks for the long term. Only earnings and cash flow estimates matter when I calculate valuation (as the quality screening was already done and it's reviewed yearly). As an investor, I remain invested and continue to buy even during recessions, as the dividends generate more cash to buy more stocks cheaper, compounding it further. Also, remember that are lots of companies that continue to grow dividends and earnings during recession. I vividly remember Johnson & Johnson earnings in 2008, where they kept growing earnings and dividends. But the media could only report that "the bluest of the blue-chips are down 30% on market fears / recession". Same with Ross Stores, down 40% on massive earnings and dividend growth. Many consumer staples and utilities continued to grow. MAXR, MFC and TRP will probably be more negatively affected, so my personal approach is to focus on the companies that still have healthy estimates and have a diversified portfolio on sectors that are recession proof.

But nothing wrong with your plan, it's rational and aligned with your risk tolerance - and that's what matters in the end.


Rod
Thank you for well thought out response as always.
I haven't looked into consumer staples and utilities other than the few big ones like L and FTS.
Which sectors other than consumer staples and utilities do you think are defensive during recession?

EDIT: read up on it a little.
Looks like top stocks that did well during 2008 were indeed consumer staples like Ross Stores, Walmart, McDonalds and Dollar Tree.
[OP]
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Dec 14, 2010
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promiseland wrote:
Oct 28th, 2018 11:57 pm
I just sold on Friday 90% of my Dividend Growth and other stocks we are in the last inning of the stock market bull run. This is a heads up to all don't be left holding the bag because the smart investors got out in January at all time high and they have been selling ever since then with every dead cat bounce.

There are so many uncertainty in the market right now to be holding stocks i.e. Fed raising rate, 10 year yield rising, USA-China Trade war, mid-term election, semiconductor stocks may be a sign the US economy is slowing down (https://www.cnbc.com/2018/10/26/the-slu ... -down.html) ...

Markets don't like uncertainty sell your Dividend Growth or any other stocks position and you will get some great value stocks in a few month as the stock got a lot lower to go before it bottoms out.
We don't know that. It's extremely difficult to time the market, and investors more often than not are better off not doing it. Nobody rings a bell when the market tops or bottoms. It's fine to sell if it was one's plan all along. But it must be because of a rational decision, not an emotional one, based on feelings and gut instincts. What metrics do you have to determine that this is the last leg of the bull run? There are always uncertainties, so that cannot be a reason. CEOs and their team, for well managed businesses, are smart enough to remain profitable in uncertain / challenging conditions. Market movement shouldn't be a reason if we are invested in individual companies, as the company performance has nothing to do with the market.

Since my goal is to never sell any shares, I'll always hold the bag, by design. It will give me perpetual income to be invested and reinvested, and the more these good companies fall in price, the more confident I get they will bounce back (since its earnings and cash flow growth that drives the stock return in the long run).

It makes sense for a lot of people to sell when their individual companies are overvalued, but very few companies are in that state after the recent decline. Selling a company for less than they are worth it, considering their current intrinsic value and discounted future earnings, is a worse proposition in my opinion.

Execute your plan as you initially thought, but don't let Mr Market influence on your decision.


Rod
Build a comprehensive portfolio based on Investing and Trading strategies. Check out these threads and join the discussion:

Investing strategy based on dividend growth

Trading strategy based on Graham principles.
Newbie
Dec 2, 2017
65 posts
27 upvotes
Hi Rod,
What's your intake on CGNX? It hit 52w low. And after Q3 earnings another 10% down today. However, they increased the dividend (growing for 8 years) and authorized another 200m buyback. 800k in cash and no debt.
It looks very attractive now I think.

Appreciate your opinion on this one.
Member
Oct 13, 2009
215 posts
16 upvotes
North York
Hi, Rodbarc

Are we still staying with MAXR? Any feedback for today?

Thanks and regards.
Newbie
Nov 24, 2017
50 posts
9 upvotes
coolkecool wrote:
Oct 31st, 2018 10:16 am
Hi, Rodbarc

Are we still staying with MAXR? Any feedback for today?

Thanks and regards.
My feedback: I picked the wrong day to average down (<1 week ago!) :(
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coolkecool wrote:
Oct 31st, 2018 10:16 am
Hi, Rodbarc

Are we still staying with MAXR? Any feedback for today?

Thanks and regards.
I never make a decision on extreme days. I'm holding and will dive through more info later. Management had warned of weak guidance, but results came far worse than expected. MDA always had a stellar operating record, and every time a large acquisition is made, there are risks on how that will be executed. I can give lots of examples on that, the most recent on EMP.A acquisition that was poorly executed and took a hit on their operating results. But they expect to be back on track (operating results) for the next year and after that - stock price will follow accordingly. Same thing with MDA, which did a massive purchase funded with debt, which is now MAXR. Management made very clear that cash will free up by 2020, and there are no major debts to be paid by then. But the market has been paying attention to what Spruce Capital highlighted, on negative GAAP earnings, and the fact that another big transformation will need to take place regarding geosat elephant in the room. By end of this year it will be known what management plans to do, either scale down or sell assets. The current price dive will make dividends look higher than it should, putting further pressure on management to cut it to repay debt.

MAXR is facing several challenges, and it's too early to make any decision. I usually don't let a bad quarter or bad year influence on selling unless dividends are cut. Nothing changed in that regard, for now. I'll get more info and post here, but will likely need a few more quarters to get a better idea.


Rod
Build a comprehensive portfolio based on Investing and Trading strategies. Check out these threads and join the discussion:

Investing strategy based on dividend growth

Trading strategy based on Graham principles.
Member
Oct 13, 2009
215 posts
16 upvotes
North York
Hi, Rod

Thanks and appreciate your feedback. I will be sticking with this as well until you update your blog:)

Ke
Member
Jan 30, 2017
211 posts
26 upvotes
Hi Rod

I came across TFI international.. a serial dividend increased and a surging business.. but I’m surprised it’s not on your watchlist.. is it because it’s good only during good times of the exonomy?? It is a pretty good growth stock
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Jul 7, 2004
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rodbarc wrote:
Oct 3rd, 2018 10:45 pm
It's not a concern for me, because what matters is the operating cash flow to maintain liquidity in the short term and a long term plan to reduce that debt. They are on track so far and guidance didn't change. MAXR has a plan to address the current debt it by deleveraging it.

First, it's important to understand their liquidity position. MAXR has $600 million undrawn bank revolver line of credit as per their latest statement (June 30, 2018). There are no material debt repayments required until 2020. MAXR is expected to achieve full-year 2018 adjusted cash flow targets driven by working capital improvements and the securitization of orbital receivables in the 2nd half of this year. Furthermore, CAPEX is estimated to decline considerably in 2021 (no expected satellite construction until 2023), following construction of WorldView Legion satellite constellation, which will provide collection continuity for Worldview 1 and Worldview 2, as they reach end of life. Also, WorldView Legion has lower cash requirements and depreciation expenses, which will improve capital efficiency and ROIC for MAXR (Worldview Legion constellation expected costs are more than 60% lower than the current on-orbit satellites original costs, largely due to newer technology that is lighter, cheaper and can benefit from economy of scale, and due to lower construction and launch costs).

Management confirmed that limited delevering will occur the near-term as MAXR continues to work on Legion Constellation belt. However, once it's done, MAXR expects to generate free cash flows streams to allow for significant reduction in debt and leverage. Also, the increase of interest rates are not a concern because management forecast a higher rate than the current ones, and they have locked in now over $1 billion of MAXR debt with interest rate swaps which will secure those interest rate cost over the next three to four years on portion of their debt.

For these reasons, although I agree that the debt and leveraging level is high, I think it's well under control, and they have a solid plan to bring to lower levels without compromising growth.


Rod
God damn

** just read your reply few posts up. You'd think now would be the time to buy. I mean could it possibly go any lower.
Member
Jul 4, 2012
219 posts
41 upvotes
Can someone help me with the adjusted cost base for loblaws after the spinoff? How should it be calculated?
Jr. Member
Sep 27, 2004
157 posts
17 upvotes
Vancouver
Salomon1260 wrote:
Nov 8th, 2018 7:14 pm
Can someone help me with the adjusted cost base for loblaws after the spinoff? How should it be calculated?
what are you doing with your WN shares? I'm not sure whether to sell it or just keep it
Jr. Member
Nov 21, 2015
114 posts
24 upvotes
Vancouver
Hi Rod,

What do you think of Pepsi? I am thinking to buy and hold. The dividend payout is not bad?

Thank you in advance.

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