myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.

Sunday, 31 May 2009

10 shares that pay good dividends

10 shares that pay good dividends

Dividend payments are once again under pressure – no sooner had BT announced a 60pc cut in its dividend than M&S said its payout to shareholders would be 30pc lower– its first cut for nine years.

Last Updated: 1:24PM BST 27 May 2009

Nick Raynor of The Share Centre, a stockbroker, said: "The past year has been one of turmoil for income-seeking investors as historically favoured sectors such as banking have either seen an aggressive cut or a complete erosion in dividends as the credit crunch took effect.

"However, there are still some great opportunities for those wishing to generate income from their investments. In particular, investors should be looking out for companies that are traditionally defensive, coupled with an ability to expand operations around the world."

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The Share Centre has identified a number of investment opportunities for income seekers.

National Grid
Currently trading at 590p and offering a yield of 5.7pc.

Comment from The Share Centre: "National Grid said recently that it intended to grow its dividends by at least 8pc this year and is due to progress at the same level until 2012. In the long term we feel that this is a solid performer; income and growth seekers can expect stable dividend payments from a good solid company."

Northumbrian Water
Currently trading at 245p and offering a yield of 4.7pc

Comment: "The last trading update from Northumbrian Water reported a 1pc (£4m) fall in revenue. Considering the performance of other water companies in the utilities sector this is not bad.

"From a cash position the company is financially sound, currently sitting on a cash pile of £371m with a further £75m available through drawdowns. With this in mind we expect the dividend to remain secure, and a rise should not be ruled out."

British American Tobacco (BAT)
Currently trading at £16.61 and offering a yield of 4.2pc.

Comment: "BAT's defensive nature has helped to keep the company buoyant in a choppy market. Last year pre-tax profits rose from £3.1bn to £3.7bn, therefore the likelihood of BAT cutting its dividend is minimal. BAT also has a reasonable dividend cover of 1.76 and is therefore suitable for income seekers and the risk averse."

Centrica
Currently trading at 243p and offering a yield of 5.6pc.

Comment: "As well as being the biggest provider of gas in the UK, Centrica now generates a quarter of revenues in the US, which could protect it from the group's exposure to the volatile commodity market."

BP
Currently trading at 501p and offering a yield of 7.5pc.

Comment: "For those wanting exposure to the oil sector, we believe BP is the best bet. Dependency on oil is unlikely to reduce and BP's profits remain strong. BP has a high level of reserves, and as a financially strong company it has plenty of cash available to purchase additional reserves should the need arise."

GlaxoSmithKline
Currently trading at £10.52 and offering a yield of 5.2pc.

Comment: "Despite the company's share price dropping by around 20pc so far this year, we believe GSK's defensive nature will stand the company in good stead throughout 2009. GSK has a significant pipeline of drugs either at late stage testing or due for release very soon. It is suitable for investors seeking income and growth."

Vodafone
Currently trading at 115p and offering a yield of 6.5pc.

Comment: "Vodafone continues to be a favourite of The Share Centre. Vodafone recently announced a strong set of full-year figures, after the weaker pound helped boost the value of overseas sales. Due to the increase in profit, Vodafone has an attractive dividend and growth prospects."

Scottish & Southern Energy
Currently trading at £11.63 and offering a yield of 5.4pc.

Comment: "In these volatile times a well managed utility has many attractions for investors seeking a safer haven. Scottish & Southern pays consistent dividends to shareholders and is attractive for those looking for steady growth and a reasonable income.

"Due to the company's steady and solid earnings figures, the management has set its sights on improving performance of its assets and pushing up the dividend further."

Rexam
Currently trading at 302p and offering a yield of 6.6pc.

Comment: "Rexam is one of the world's leading packaging companies, specialising in beverage cans and bottles. The promise of a long hot summer is something Rexam can look forward to and it will be hoping that this will give the company a boost. The dividend looks as if it will remain unchanged and stands at well over 6pc."

RSA Insurance
Currently trading at 127.5p and offering a yield of 5.8pc.

Comment: "Now that the reconstruction of RSA [formerly Royal & Sun Alliance] is finally complete, shareholders will hope that chief executive Andy Haste shows as much flair for increasing profits as he did for stemming losses. This signs are good so far, with a refocusing on new markets and a hefty dividend increase.

"Recent figures were solid but not exciting. However, there has been no news of any cut in the dividend, so for those looking for an income this should remain a favourite."

http://www.telegraph.co.uk/finance/personalfinance/investing/shares-and-stock-tips/5393529/10-shares-that-pay-good-dividends.html

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My 18 points guide to Successfully compounding your money in Stocks

Be a good stock picker.
Think as a business owner.
Always look at value rather than the price. Do the homework.
Buy and hold is alright for selected stocks.
Compounding is your friend, get this to work its magic.
Mr. Market is there to be taken advantage of. Do not be the sucker instead. BFS;STS.
Always buy a lot when the price is low.
Never buy when the stock is overpriced.
It is alright to buy when the selected stock is at a fair price.
Phasing in or dollar cost averaging is safe for such stocks during a downtrend, unless the price is still obviously too high.
Do not time the market for such or any stocks.
By keeping to the above strategy, the returns will be delivered through the growth of the company's business.
So, when do you sell the stock? Almost never, as long as the fundamentals remain sound and the future prospects intact.
The downside risk is protected through only buying when the price is low or fairly priced.
Tactical dynamic asset allocation or rebalancing based on valuation can be employed but this sounds easier than is practical, except in extreme market situations.
Sell urgently when the company business fundamental has deteriorated irreversibly.
You may also wish to sell should the growth of the company has obviously slowed and you can reinvest into another company with greater growth potential of similar quality. However, unlike point 16, you can do so leisurely.
In conclusion, a critical key to successful investing is in your stock picking ability.

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html

11 Lessons From Peter Lynch

Peter Lynch taught me:

1. Behind every stock is a company. Find out what it’s doing.
2. Never invest in any idea you can’t illustrate with a crayon.
3. Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
4. Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
5. Time is on your side when you own shares of superior companies.
6. Owning stock is like having children. Don’t get involved with more than you can handle.
7. When the insiders are buying, it’s a good sign.
8. Unless you’re a short seller, it never pays to be pessimistic.
9. A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
10. Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
11. Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

Capital Expenditure

A great company with a Durable Competitive Advantage will have a ratio of Capital Expenditures to Net Income of less than 25%. Less is better.

Capital Expenditures are expenses on:
- fixed assets such as equipment, property, or industrial buildings
- fixing problems with an asset
- preparing an asset to be used in business
- restoring property
- starting new businesses

A good company will have a ratio of Capital Expenditures to Net Income of less than 50%.

A great company with a Durable Competitive Advantage will have a ratio of less than 25%.

Less is better.

Benjamin Graham's 113 Wise Words

The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."

Philip Fisher's Wise Words

"The refusal to sell at a loss, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process.

More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous."

(Common Stocks and Uncommon Profits)

The Ultimate Hold-versus-Sell Test

Here is the overriding primary test, followed by observations on why it is so critically important:

Knowing all that you now know and expect about the company and its stock (not what you originally believed or hoped at time of purchase), and assuming that you had available capital, and assuming that it would not cause a portfolio imbalance to do so, would you buy this stock today, at today's price?

No equivocation. Yes or no?

Answers such as maybe or probably are not acceptable since they are ways of dodging the issue. No investor probably buys a stock; they either place an order or do not.

Here is the implication of your answer to that critical test: if you did not answer with a clear affirmative, you should sell; only if you said a strong yes, are you justified to hold.

Some thoughts on Analysing Stocks (KISS)

Ideally a stock you plan to purchase should have all of the following charateristics:

• A rising trend of earnings dividends and book value per share.
• A balance sheet with less debt than other companies in its particular industry.
• A P/E ratio no higher than average.
• A dividend yield that suits your particular needs.
• A below-average dividend pay-out ratio.
• A history of earnings and dividends not pockmarked by erratic ups and downs.
• Companies whose ROE is 15 or better.
• A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Margin of Safety Concept: Stocks should be bought like groceries, not like perfume

The high CAGR in the early years of the investing period, due to buying at a discount, tended to decline and approach that of the intrinsic EPS GR of the companies over a longer investment time-frame.

Chapter 20 - “Margin of Safety” as the Central Concept of Investment

A single quote by Graham on page 516 struck me:

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

Basically, Graham is saying that most stock investors lose money because they invest in companies that seem good at a particular point in time, but are lacking the fundamentals of a long-lasting stable company.

This seems obvious on the surface, but it’s actually a great argument for thinking more carefully about your individual stock investments. If most of your losses come from buying companies that seem healthy but really aren’t, isn’t that a profound argument for carefully studying any company you might invest in?

myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Sunday, 31 May 2009

10 shares that pay good dividends

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All equity security investments present a risk of loss of capital

The Ultimate Hold-versus-Sell Test

Some thoughts on Analysing Stocks (KISS)

Benjamin Graham

Sell the losers, let the winners run.

Investment Style

Warren Buffett

Political and Economic News

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