New Portfolio in 12 months - 1042 Rollover

[EricL]

I think FAST Graphs offers a free trial as well. Might be worth it to check it out while you build out your portfolio.

[ChadR]

If you're OK with some non dividend payers, you might want to look at FB, GOOG, and AMZN. I believe that FB and GOOG will eventually pay a dividend. Similar to what AAPL did.

[coffeyman76]

(01-17-2018, 02:29 PM)EricL Wrote: Just a few thoughts.

I'll point out that airlines are historically pretty cyclical companies, so keep that in mind with DAL.

The FAST Graph on SAFT looks pretty bad. Volatile earnings and little growth over the years. ORI, SUP, and PACW have similar trends.

Also not a fan of GME. In a raging bull market and decent economy it has grown EPS at a negative rate over the last 5 years. It's also just BB rated, which is junk bond status.

Also might want to look at D, DUK, WEC, LNT, NEE, AEP as potential alternatives to ED. They have similar or higher yields but are all growing at faster rates.

Just my $0.02 if you wanted some input.

Eric,

Thanks for the feedback.  I feel ok with DAL and the way the airlines have restructured and redone their business models in general.  I know it might be a little more of a ride then some stocks but was an industrial sector that I felt I needed to at least have a toe in.  They are my favorite name in the space at least at the moment.  Grabbed the name originally on a little pull back and as noted I'm pretty short in the space already.  Tough to swallow the HON, MMM, BA or GD pricing sometimes.

I have D and DUK along with NEE also already in full positions.  I also have some SCG which I don't like but should covert to D and be a pretty nice deal (got it the day before the announcement).  ED is my other name there.  I really picked them up because they have been sold off so hard, I thought it was a bit overdone.  I'm certainly not doing back flips over them that's for sure.  The utility guys have been my worst performers but also perhaps best opportunities to purchase on sell offs in this market.  Time will tell I guess.  I really like D and DUK for sure.  If nothing else they make a really nice dividend boost to the overall portfolio.

SAFT, ORI, SUP, PACW and GME are all flyer names - 100%.  I think PACW is getting it together.  Honestly I went with future estimates and the fact that in the interim they all throw off some pretty decent yields.  I know that sounds absurd and I agree with your premise that they are all under performers, so I will re-evaluate holding them all before it reaches my deadline.  They each hold less than 1/100th of the portfolio currently and may very well stay at that level.  But you're right in the sense they've been around a while and don't show real signs of "taking off".  Having a hard time finding those sort of speculative names.  The smaller firm that has great patents or tech, new products, new batteries...whatever the case may be.  I realize they won't have a dividend and I'm ok with that.  Guess if I knew about them so would everyone else ;-)

Again really appreciate the feedback and don't disagree with a single thing you offered.

[coffeyman76]

(01-17-2018, 04:47 PM)ChadR Wrote: If you're OK with some non dividend payers, you might want to look at FB, GOOG, and AMZN.  I believe that FB and GOOG will eventually pay a dividend.  Similar to what AAPL did.

Thanks Chad!  Yeah I watch those names all the time.  I am an avid user of AMZN but it's hard to swallow that P/E even though everyone swears they are taking over the world...I actually like NFLX which has a similarly ridiculous P/E multiple.  I just think they have such a content edge and momentum they will stay the leader in that world for a while.  The FANG group is always watched nonetheless.  

Ultimately the goal of this portfolio is a secure, stable dividend growth platform.  I really want the dividends to offset the cost to carry the monetization loan for the 1042 rollover.  Once monetized I will have this portfolio to sit on for 30+ years but have cash from the loan to create an entirely new portfolio without the crazy rules.  One where I can use ETFs, foreign firms, REITs, MLPs, etc.  So ultimately I am trying to stick with relatively sane P/E's that throw off some dividend, focusing on growing the dividend over consecutive years and/or stock buybacks (not by using excessive debt to do so).  I wanted to beat the S&P dividend average and get closer to 3% for the total portfolio which I've managed to do.  I've got a little room for some speculative names, even non-dividend players to stick in various sectors if I wanted to.  

I'm short on IT so I probably need to focus on GOOG some more.  I sure wish they'd pay a dividend!

[coffeyman76]

And to extrapolate a little more on the monetization loan it charges a LIBOR based rate that floats along with my floating rate notes.  So the spread is always the same.  The 10% of my portfolio that is equities will hopefully generate additional cash from dividends that is used to offset the spread between what the notes pay and the loan charges.  Depending on where I land with the final portfolio I should be looking at roughly a 1 to 1.5% pre-tax interest cost.  Effective cost should be much less.  So I'm avoiding a near 30% cap gains hit for a cost of probably sub 1% per year.  Even the most conservative portfolio should come out ahead over the long term.  

The cherry is at my death it goes to heirs at a stepped up basis so there is a built in inheritance portion as well.  What could that portfolio look like in 30-40 years if left to grow, even without dividend re-investment.  Hopefully decent!

And the Floating Rate Notes are in Citi, JPM, UPS, USBank, JNJ, & Colgate Palmolive.  You aren't allowed to have one name make up more than 25% of the portfolio (another rule!). Anyways, they are about as secure as you can get.  That's why banks will loan back 90% on the value of the note.