DGI For The DIY

[EricL]

Haven't pulled the trigger yet, but I'm leaning towards selling ROST after the dividend suspension and adding to my positions in AMP, AWK, NEE, and HRL with the proceeds.

They are all underweight positions that I feel pretty confident about maintaining dividends during the pandemic.

[fenders53]

(05-22-2020, 02:36 PM)EricL Wrote: Haven't pulled the trigger yet, but I'm leaning towards selling ROST after the dividend suspension and adding to my positions in AMP, AWK, NEE, and HRL with the proceeds.

They are all underweight positions that I feel pretty confident about maintaining dividends during the pandemic.

All of those should at least maintain the dividend.  Retail is likely to be a bumpy ride.  You might wait a year for your dividend to return in ROST.

[EricL]

(05-23-2020, 06:27 AM)fenders53 Wrote:

(05-22-2020, 02:36 PM)EricL Wrote: Haven't pulled the trigger yet, but I'm leaning towards selling ROST after the dividend suspension and adding to my positions in AMP, AWK, NEE, and HRL with the proceeds.

They are all underweight positions that I feel pretty confident about maintaining dividends during the pandemic.

All of those should at least maintain the dividend.  Retail is likely to be a bumpy ride.  You might wait a year for your dividend to return in ROST.

I read ROST's conference call transcript and it didn't do much to encourage me on its near-term expectations. I think earnings estimates are still too high, and with shares trading at over 20X next year's rosy estimates, I don't see much upside. Management didn't elaborate on the dividend at all, and with a yield of just 1.25% to begin with, I don't expect it to be a priority.

My replacement stocks aren't values either, but I have more faith in their earnings prospects than ROST at this point, and I get paid to hold them in the meantime, which is the goal behind a DGI portfolio to begin with.

[fenders53]

(05-23-2020, 08:11 AM)EricL Wrote:

(05-23-2020, 06:27 AM)fenders53 Wrote:

(05-22-2020, 02:36 PM)EricL Wrote: Haven't pulled the trigger yet, but I'm leaning towards selling ROST after the dividend suspension and adding to my positions in AMP, AWK, NEE, and HRL with the proceeds.

They are all underweight positions that I feel pretty confident about maintaining dividends during the pandemic.

All of those should at least maintain the dividend.  Retail is likely to be a bumpy ride.  You might wait a year for your dividend to return in ROST.

I read ROST's conference call transcript and it didn't do much to encourage me on its near-term expectations. I think earnings estimates are still too high, and with shares trading at over 20X next year's rosy estimates, I don't see much upside. Management didn't elaborate on the dividend at all, and with a yield of just 1.25% to begin with, I don't expect it to be a priority.

My replacement stocks aren't values either, but I have more faith in their earnings prospects than ROST at this point, and I get paid to hold them in the meantime, which is the goal behind a DGI portfolio to begin with.

No the replacements are exactly undervalued, but they won't cut IMO, and several of them are well off their highs.  It hasn't worked perfectly but I shoot my Div cutters and ask questions later.  I've never had more div cuts, and my incomes is up for the quarter.  ROST would be gone for now if I owned it.  I'm confident you'll get another chance to buy it back cheaper if you wish but I doubt you do.

[EricL]

Now thinking of starting a position in Dollar General (DG) with some proceeds and then putting the rest into Hormel (HRL) and Flowers Foods (FLO).

This way I get a growthier name in DG to replace the growth from Ross, while building up a couple under-weight positions a bit too.

Have to think DG will continue to do well with the current economy. I know they are building stores like crazy across small towns in the midwest.

[fenders53]

Sounds logical to me. I've looked at DG and HRL many times. I've always been a few months late and the price had recently spiked. I am underweight consumer staples. I may just start a small position in HRL and sell a put until I eventually get a dip and a larger position. I don't think you can go wrong adding a few shares at about any price. Between Covid and trade escalations, I think HRL input prices (AG in general) will swing around at some point. There is just too much going on near-term.

[kblake]

(05-25-2020, 11:36 PM)EricL Wrote: Now thinking of starting a position in Dollar General (DG) with some proceeds and then putting the rest into Hormel (HRL) and Flowers Foods (FLO).

This way I get a growthier name in DG to replace the growth from Ross, while building up a couple under-weight positions a bit too.

Have to think DG will continue to do well with the current economy. I know they are building stores like crazy across small towns in the midwest.

DG had had such a big run. If I remember you bought ROST near the highs as well over $100; so you would be taking a loss on it if you sell.  I just feel like your chasing DG at these levels. Think about it. A dollar store trading at $190 a share 

Why not just buy TJX or TGT? Both those companies will continue to do well.

[EricL]

(05-26-2020, 08:58 AM)kblake Wrote: DG had had such a big run. If I remember you bought ROST near the highs as well over $100; so you would be taking a loss on it if you sell.  I just feel like your chasing DG at these levels. Think about it. A dollar store trading at $190 a share 

Why not just buy TJX or TGT? Both those companies will continue to do well.

I bought ROST at $60.77 back in 2013. With reinvested dividends I am sitting on a gain of 237%.

I own eight shares of DG that I bought in August of 2016 in another account and am up 126% on that purchase.

The unemployment rate is over 20%, don't you think dollar stores will do well in that environment? I have more faith in DG's sales over the next twelve months than I do ROST's.

I already own a full position in TGT in this account. Agree that TJX is a good company too, but considering it's also suspended the dividend, I put it in the same boat as ROST.

[fenders53]

Your thinking is sound Eric. You must get weary of our short-term comments at times. No offense intended kblake. I do it as well sometimes. The holding time matters. He isn't planning to get euphoric or scared and dump shares, or cash out his entire port if they run 10% up or down next week. There is a difference between trading and investing. A big difference.

That said Eric is dreaming he can grow his port income 10% annually for infinity years in a row. I follow along and remain a skeptical cheerleader. So far so good lol.

[EricL]

(05-26-2020, 09:31 AM)fenders53 Wrote: Your thinking is sound Eric. You must get weary of our short-term comments at times. No offense intended kblake. I do it as well sometimes. The holding time matters. He isn't planning to dump shares or cash out his entire port if they run 10% up or down next week. There is a difference between trading and investing. A big difference.

That said Eric is dreaming he can grow his port income 10% annually for infinity years in a row. I follow along and remain a skeptical cheerleader. So far so good lol.

No, I don't get weary at all, I like to be challenged. That's the reason why I posted what I was thinking about so I can get other views.

I take having a public portfolio seriously, especially considering it's been public for over 7 years now. When every trade you make it being watched by others, you don't want to do anything too stupid! =)

[fenders53]

(05-26-2020, 09:34 AM)EricL Wrote:

(05-26-2020, 09:31 AM)fenders53 Wrote: Your thinking is sound Eric.  You must get weary of our short-term comments at times.  No offense intended kblake.  I do it as well sometimes.  The holding time matters. He isn't planning to dump shares or cash out his entire port if they run 10% up or down next week.  There is a difference between trading and investing.  A big difference.

That said Eric is dreaming he can grow his port income 10% annually for infinity years in a row.  I follow along and remain a skeptical cheerleader.  So far so good lol.  

No, I don't get weary at all, I like to be challenged. That's the reason why I posted what I was thinking about so I can get other views.

I take having a public portfolio seriously, especially considering it's been public for over 7 years now. When every trade you make it being watched by others, you don't want to do anything too stupid! =)

Good to hear that.  There is very little we can do on the long side right now that isn't riskier than normal, if there even is a normal.  Fundamentals are completely out the window.  We can't know if it that lasts for weeks or years, but I'm confident it has an end date.   There was only one more time in my long investing career that was more out of touch with the true company financials.

[EricL]

Here is my latest update.

Dividend Growth Digest: June 2020

Just 4% income growth for May, but I'm still well on pace for double-digit growth this year.