Help with portfolio

[booze007]

hello people

i am really new to dividend investing , i been trading forex all along .
i have 10000 to invest and want to cash in on the cheap oil , please put forward your suggestions

EVEP
CVX
LINE
BP
XOM

SDRL(may be )

Thank you

Kumar

[DividendDragon]

(01-08-2015, 05:15 AM)booze007 Wrote: hello people

i am really new to dividend investing , i been trading forex all along .
i have 10000 to invest and want to cash in on the cheap oil , please put forward your suggestions

EVEP
CVX
LINE
BP
XOM

SDRL(may be )

Thank you

Kumar

You need to consider a few things.

1. Starting yiled
2. How undervalued the stock is <--- Maybe look at historic p/e
3. Debt/equity
4. Dividend streak
5. Dividend Growth over 5/10 years e.t.c

PLUS many more...

What I learnt on here a while ago is that the decision is yours. People are reluctant to tell you where to invest as it's your money.

I bought into BP yesterday at a 6% yield but it's one of the more risky oil plays due to the Mexico oil spill i.e legacy issues plus they have a much lower streak due to cutting the dividend around 5years back. Not to mention the stake in OAO ROSNEFT.



Ask these questions and make a choice

Lewys

[daat99]

Welcome to the forums, I hope you'll prosper here.

I would like to recommend that you'll delay your first purchase and create a "purchase plan".
Basically create a list of rules that you want the companies you purchase to meet before you consider buying them.

Common rules are:
1. How many years the company increased the dividends (the longer streak the better).
2. How much money do they give as dividends compared to how much they actually earn (if they earn $1 and give $2 then they'll most likely go bankrupt before you get your money worth back).
3. How much debt do they have compared to their real value (Debt on Equity or D/E) - the lower debt the safer the investment.
4. How fast are they increasing the dividends in the long term (giving a single increase of 100% and the rest or 0.1% isn't usually a good investment).
5. Are they increasing dividends faster than they increase the profits? if so than they won't be able to keep it up for long.
6. Is this a small company or a big company that can sustain a lot of pain and still be around to recover when everything settled down?
7. Does the market require a lot of money compared to the company earnings? (price/earnings - P/E) it's common to go for companies with PE that is lower than the SP500 PE (some go for PE below 20 as an arbitrary number too).


After you came up with the set of rules that will help you sleep well at night without selling the stock even if it'll go down by 50% or more than you can take a look at David Fish CCC list.
You can go to his website: http://dripinvesting.org/tools/tools.asp
and download the latest "U.S. Dividend Champions"

This list includes all companies that increased dividends for at least 5 years in a row.
You can filter this list based on your rules (at least most of them should be there already) and then conduct further research on the companies that remained intact.

I added the list of companies you provided to my filtered CCC list and came up with the following:
1. LINE, BP and SDRL are not in the CCC list anymore.
2. EVEP has 9 red flags out of 11 criteria that I look for.
3. XOM has 2 red flags out of 11 criteria - their past 5 year growth is -3.2% and their estimated 5 years growth is 3.38%
4. CVX has a single red flag out of 11 criteria - their past 5 year growth is -1%.

From the list you posted I would consider CVX and XOM (in that order) for further research and then decide.

Another 2 names you didn't mention are COP and HP.
COP currently meets all my 11 criteria (and I already maxed out my position in COP).
HP has 2 red flags - estimated 5 years growth of 1% and past 5 years DEG or 5.3 - I made an option play on HP and if all goes according to plan I should get my shares in 2 weeks.

[EricL]

(01-08-2015, 05:15 AM)booze007 Wrote: i am really new to dividend investing , i been trading forex all along .
i have 10000 to invest and want to cash in on the cheap oil , please put forward your suggestions

EVEP
CVX
LINE
BP
XOM

SDRL(may be )

EVEP will likely be cutting its dividend as the current 17% yield is unsustainable.

CVX is a great company and one that I own personally. Of the stocks on the list this would be my first choice.

LINE recently cut the dividend and has a high debt load. I would avoid this stock.

BP is one I own but am not terrible comfortable with. They are still dealing with litigation from the Gulf oil spill and I think will be hurt by the sanctions on Russia.

XOM would be my second favorite on this list behind Chevron. Financial rock but provides a lower yield and slower growth than Chevron.

SDRL recently suspended its dividend and has very high debt. I would avoid this stock.

Some other stocks to consider that I own would be Occidental Petroleum (OXY), Kinder Morgan (KMI), Conoco Philips (COP), Helmerich & Payne (HP), and if you are looking for higher growth EOG Resources (EOG).

[DividendDragon]

(01-08-2015, 10:54 AM)EricL Wrote:

(01-08-2015, 05:15 AM)booze007 Wrote: i am really new to dividend investing , i been trading forex all along .
i have 10000 to invest and want to cash in on the cheap oil , please put forward your suggestions

EVEP
CVX
LINE
BP
XOM

SDRL(may be )

EVEP will likely be cutting its dividend as the current 17% yield is unsustainable.

CVX is a great company and one that I own personally. Of the stocks on the list this would be my first choice.

LINE recently cut the dividend and has a high debt load. I would avoid this stock.

BP is one I own but am not terrible comfortable with. They are still dealing with litigation from the Gulf oil spill and I think will be hurt by the sanctions on Russia.

XOM would be my second favorite on this list behind Chevron. Financial rock but provides a lower yield and slower growth than Chevron.

SDRL recently suspended its dividend and has very high debt. I would avoid this stock.

Some other stocks to consider that I own would be Occidental Petroleum (OXY), Kinder Morgan (KMI), Conoco Philips (COP), Helmerich & Payne (HP), and if you are looking for higher growth EOG Resources (EOG).

Eric,

I just bought into BP and believe that the Russia sanctions have already been factored into the price. With a payout ratio of only 18% I feel comfortable that there's plenty of space to increase dividends despite the forecast EPS. If in any case they don't I'll surely sell.

EDIT: BP FORWARD PAYOUT IS: 77% for some reason I pasted the TTM payout,

Lewys

[EricL]

(01-08-2015, 12:17 PM)Lewys120 Wrote: I just bought into BP and believe that the Russia sanctions have already been factored into the price. With a payout ratio of only 18% I feel comfortable that there's plenty of space to increase dividends despite the forecast EPS. If in any case they don't I'll surely sell.

Lewys

As a fellow shareholder I hope you are correct. Its a decent company with a nice yield, I just don't feel it is as high a quality as Chevron or Exxon.

Also, with expected earnings of $4.04 in 2014 and projected earnings of $3.12 for 2015, the $2.40 dividend payment is at a current payout ratio of 59% and forward ratio of 77%.

It appears to be safe, but not at the levels of CVX or XOM.

[DividendDragon]

Agree with CVX and XOM being much safer but that's why they're Under 4% yiled and BP is yileding 6%
Mr Market knows!

[booze007]

Hello Everyone

thanks alot for reply and kind words,
i have few question
from the posted comments i got a brief idea how to screen dividend stocks .

for example
CRRC Courier Corporation

according to daat99 list

1.dividend payed years 24
2 i am not sure how to find out this ? eps next 5 years is at 36 percent
3.debt/eqty 0.23
4.good increase
5. its really small company , i am not sure about the rule, in selecting over 2 bln companies .
if a small company has a good track record with dividends and healthy finance . why not ?
well most of the companies i found were way below 2bln .
is not safe?

6.PE =18.88

please put forward your thoughts ,

evep had similar figures during the 2008 oil crash ,but still managed to pay the dividends.history doesn't count here?

this may be a stupid question . but whats this company gni paying 97 percent for 26 years ,is this a scam ?

(01-08-2015, 08:08 AM)daat99 Wrote: Welcome to the forums, I hope you'll prosper here.

I would like to recommend that you'll delay your first purchase and create a "purchase plan".
Basically create a list of rules that you want the companies you purchase to meet before you consider buying them.

Common rules are:
1. How many years the company increased the dividends (the longer streak the better).
2. How much money do they give as dividends compared to how much they actually earn (if they earn $1 and give $2 then they'll most likely go bankrupt before you get your money worth back).
3. How much debt do they have compared to their real value (Debt on Equity or D/E) - the lower debt the safer the investment.
4. How fast are they increasing the dividends in the long term (giving a single increase of 100% and the rest or 0.1% isn't usually a good investment).
5. Are they increasing dividends faster than they increase the profits? if so than they won't be able to keep it up for long.
6. Is this a small company or a big company that can sustain a lot of pain and still be around to recover when everything settled down?
7. Does the market require a lot of money compared to the company earnings? (price/earnings - P/E) it's common to go for companies with PE that is lower than the SP500 PE (some go for PE below 20 as an arbitrary number too).


After you came up with the set of rules that will help you sleep well at night without selling the stock even if it'll go down by 50% or more than you can take a look at David Fish CCC list.
You can go to his website: http://dripinvesting.org/tools/tools.asp
and download the latest "U.S. Dividend Champions"

This list includes all companies that increased dividends for at least 5 years in a row.
You can filter this list based on your rules (at least most of them should be there already) and then conduct further research on the companies that remained intact.

I added the list of companies you provided to my filtered CCC list and came up with the following:
1. LINE, BP and SDRL are not in the CCC list anymore.
2. EVEP has 9 red flags out of 11 criteria that I look for.
3. XOM has 2 red flags out of 11 criteria - their past 5 year growth is -3.2% and their estimated 5 years growth is 3.38%
4. CVX has a single red flag out of 11 criteria - their past 5 year growth is -1%.

From the list you posted I would consider CVX and XOM (in that order) for further research and then decide.

Another 2 names you didn't mention are COP and HP.
COP currently meets all my 11 criteria (and I already maxed out my position in COP).
HP has 2 red flags - estimated 5 years growth of 1% and past 5 years DEG or 5.3 - I made an option play on HP and if all goes according to plan I should get my shares in 2 weeks.

[Dividend Watcher]

(01-08-2015, 05:15 AM)booze007 Wrote: i have 10000 to invest and want to cash in on the cheap oil , please put forward your suggestions

Welcome to the forum, Kumar.

What I bolded above has me a little concerned. The mindset that you're going to "cash in" on whatever is the either 'hot market' or one that's going through recent turmoil such as the oil patch is not conducive to building a strong, long-term portfolio. For the last couple years it was biotech, last year utilities vastly outperformed even though it wasn't talked about much. Sure, you can reap some good rewards for the short-term but can you do that consistently? I know I can't do that and don't even try.

Right now, the changes in the oil field for the most part have not even shown up in financial statements. Most of the action has been corporate announcements or actions "on the ground". The entire world's economy is based on carbon in one way or another adding a layer of complexity. These things, to me, seem to take longer to play out and I'm not sure the effects can be quantified generically for every company.

What happens if Saudi Arabia & Kuwait decide to increase production to support their own obligations regardless of the OPEC quotas? Cheap oil really isn't going to hurt them much with their extraction costs being so low. Likewise Venezuela & Argentina flooding the market just in an attempt to forestall another round of social unrest? Venezuela just seized all of HP's land rigs last year and HP is now in a protracted battle to get reimbursed. That will probably end up taking years to get settled. Look at CVX's ongoing battles with Ecuador.

My gut feeling is that we have a year or two before the whole picture plays out and the supply/demand factors again are the major factor in determining corporate pricing power, hence profits, and stock prices. Afterall, I haven't seen any credible reports that the world is awash in petroleum products. Any glut seems to appear at the margins and that can be eaten up pretty quickly. Just yesterday I heard a report that auto manufacturers can't keep up with the increased demand for trucks and SUVs again.

So, all that being said, I'd recommend with staying with the majors and conservatively financed E&P companies rather than speculating. CVX, XOM, COP, OXY (which has similar specs to CVX except the dividend streak) would be be my first picks. Then BP, TOT, RDS.B. For E&P and suppliers HP stands out with hardly any debt and some pretty powerful intellectual property in their FlexRigs. There's SLB, HAL and NOV with NOV being the baby of the bunch but an interesting niche. Later in the cycle, when pricing & supply get sorted out, I'd look at the deepwater companies and see how they fared. I still like ESV due to their conservative debt levels and they're safety and customer service records but wouldn't put money in here yet.

(01-11-2015, 01:32 PM)booze007 Wrote: ... from the posted comments i got a brief idea how to screen dividend stocks .

for example
CRRC Courier Corporation

according to daat99 list

1.dividend payed years 24
2 i am not sure how to find out this ? eps next 5 years is at 36 percent
3.debt/eqty 0.23
4.good increase
5. its really small company , i am not sure about the rule, in selecting over 2 bln companies .
if a small company has a good track record with dividends and healthy finance . why not ?
well most of the companies i found were way below 2bln .
is not safe?
6.PE =18.88

please put forward your thoughts ,

I did a quick look. CRRC is NOT on the CCC list (big deal, I know, but they can't even make the Challengers list?) and their market cap is around $150M, they've been in the book publishing business for almost 200 years, a lot of the stats look OK except trailing P/E is over 21 (for a book publisher???) and the payout ratio is 124%(!). Doesn't look good for the dividend. Lastly, the top 3 officers' pay is almost 3% of their market cap. I didn't dig much further but it looks like a small cap that's run for the benefit of the employees and especially senior management.

(01-11-2015, 01:32 PM)booze007 Wrote: evep had similar figures during the 2008 oil crash ,but still managed to pay the dividends.history doesn't count here?

EVEP is a limited partnership with EV Energy GP being the general partner. EVEP was founded in 2006 so there isn't that much history here. They do have some proven reserves although I didn't dig much deeper (pun unintended) to find out if it's tight oil or free oil. I would dig deeper into their financials for the last 8 years to find out all the details. Just because they paid a dividend in 2008 doesn't tell you where the money came from to pay those dividends. It may be a good company but I have no interest to do more research.

It would be nice of you to introduce yourself in the Introductions section. I have no idea of your age, your goals, nor whether you have substantial assets outside of your seemingly speculative portfolio (you mentioned trading forex also). For that, I'm hesitant to give you a rah, rah cheer. Sorry to be the Debbie Downer of the bunch. I get a little nervous when everyone starts chiming in on making a quick kill in something. Perhaps someday my tulip bulbs will bring me great wealth.

I wish you luck but recommend you tread gently into whatever you decide.

[EricL]

Courier Corp. (CRRC) has had its dividend frozen at $0.84 per share since 2008 and has a market cap of just $165M. Average trading volume on the stock is less than 9,000 shares per day. It's in the book publishing business, which is a declining industry.

According to Yahoo Finance there is no analyst coverage for the stock.

With 1000's of companies to choose from and 100's of high quality dividend growers out there, I personally wouldn't want to invest in something like this. The yield is nice, but that's about all I see that is attractive with the stock.

[DividendDragon]

Hi Booze 007.

I'd really recommend reading some books on Dividend investing before getting started. Shareholder Yiled a better Approach to Yiled investing helped me a bit. It's very 'on the surface' and doesn't go into detail and can be read in a day easily. Then you can build on this knowledge with more in depth books.
What helped me a lot when I JUST started (I'm still a newbie) was Dividend Mantra's blog (google it).

Check out his methodology and evaluation of stocks.

[DividendDragon]

(01-11-2015, 05:03 PM)EricL Wrote: Courier Corp. (CRRC) has had its dividend frozen at $0.84 per share since 2008 and has a market cap of just $165M. Average trading volume on the stock is less than 9,000 shares per day. It's in the book publishing business, which is a declining industry.

According to Yahoo Finance there is no analyst coverage for the stock.

With 1000's of companies to choose from and 100's of high quality dividend growers out there, I personally wouldn't want to invest in something like this. The yield is nice, but that's about all I see that is attractive with the stock.

I'd like to echo this. Why buy this small cap with over 100% payout ratio when there are some stocks which I consider more secure with a higher cap, more history and a more sustainable payout ratio.

You need to rationalise your purchases. For example I could justify exactly why I own all my stocks and believe strongly in them. Any risks I do take I'm aware of and only take them if I feel the market is rewarding me for this risk.

For example;

Would I take BP at a 3% yield considering oil $ atm and pressure on bottom line and it's mexico spill? No

at a 6% starting yield it's worth the risk (for me)

Sure I could go CVX as a SAFER investment buy then I don't get that high starting yield of 6%. (CVX is around 4% at the moment)

But then CVX has a slightly higher forecast dividend increase (in terms of %)
for next year.

There's WAY more to consider. I just scraped the surface in an attempt to inspire you to justify your purchases.

Regards
Lewys