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cliff
Explorer ○○

Moats On Sale — Buying Low

 

I check my account four times a year.  I know, I know.  That’s far too often.  But November is one of those months that delivers a gusher of cash and I can’t help myself.  I do it for two reasons primarily — first, to see if the expected cash materializes, and second, to see what price the market gives me on the designated reinvestment date for each part of the gusher.

For whatever reason, the other day when I checked on those two things, one thing led to another and I found myself down an interesting rabbit hole.  Morningstar has a screen of WIDE moat stocks with 4 or 5 stars that shows the discount from Morningstar’s fair value.

 I hold five of the companies on that list and I reinvested a healthy cash payout in 4 of those 5 in the last couple of weeks.  The four are . . . .

Altria (MO) — selling at about 80% of fair value, about 26% below its 52 week high.  Yield = 6.9%.

Enterprise Products (EPD) — selling at about 73% of fair value, about 15% below its 52 week high.  Yield = 6.7%.

Magellan Midstream (MMP) — selling about 87% of fair value, about 10% below its 52 week high.  Yield = 6.7%.

Philip Morris ( PM) — selling about 80% of fair value, about 16% below its 52 week high.  Yield = 5.7%.

 

No dividend showed up for the fifth company that I hold that is on the list. This company is selling at about 84% of fair value but is only 2.5% off its 52 week high.  The lack of a dividend by this company has been a source of irritation to me for many years.  As a feeble protest against management’s lack of appreciation for loyal shareholders, I have boycotted See’s candy and fast forward through Geico commercials.  I also will never buy a meal at the Omaha McDonalds for fear I’ll cause a scene.

21 Replies
FD1001
Valued Contributor

Re: Moats On Sale — Buying Low

Go moats have to be HIGHER income stocks?  :-)

ElLobo is about to show up quickly with his new ideas....2X leveraged ETNs that El owns:

PFFLETRACS 2xMonthly Pay Lvrgd Pref Stk ETN                 Preferred Stock
MLPZUBS ETRACS 2x M Lvg S&P MLP ETN SerB                 MLPs
BDCLUBS ETRACS 2xLvg Lng WF Busn Dev Co ETN            BDCs
DVHLUBS ETRACS M Py 2xLvg Divers Hi Inc ETN                High Income
HDLVUBS ETRACS M Py 2xLvg US HiDivLowVol ETN          High Div/Low Volatility
SMHDUBS ETRACS M Py 2xLvg US Sm Cp HiDiv ETN           Small Cap high div
LMLPUBS ETRACS M Py 2xLvg WF MLP Ex-Engy ETN         MLP ex-energy
LRETUBS ETRACS MonPay 2xLvg MSCI US REIT ETN         US REITs
SDYLUBS ETRACS Mthly Pay 2xLvrgd S&P Div ETN             S&P1500 Divey Aristrocrats
CEFLUBS ETRACS Mthly Py 2xLvg Closed-End ETN             CEFs
DVYLUBS ETRACS Mthly Py 2xLvg DJ Sel Div ETN               DJ Select Divey payers
MORLUBS ETRACS Mthly Py 2xLvg Mortg REIT ETN             MREITs

 

Is MO going to perform better than Google in the next several years?  they are both moats

0 Kudos
cliff
Explorer ○○

Re: Moats On Sale — Buying Low

 

Look, FD

This is the INCOME forum.  I know you like to troll around, but give us a break.  There are some, including me, who have a financial situation such that they are interested primarily in income.  Total return, part of which is speculative and unrealized, does not enter into my investing decisions.

You of all people should understand that there are those who have a different investing objective than total return.  So what if Google or XYZ has a greater total return than one of the wide moat stocks identified by Morningstar.

After all, YOU have an objective of minimizing standard deviation (I think you actually like to minimize the downside deviation but like to brag about the upside deviation when it occurs).  You have stated that you are terrified - TER-RI-FIED!! - of a 5% downdraft.  Okay, that’s your objective.  If you avoid that teensy 5% oops, then you’re a happy camper, right?  So it would seem to me that as long as you are camping happy, then you don’t much care if you don’t maximize total return.  Plus you’re not much of an equity guy, so right there you don’t have a chance of maximizing total return over the long haul.

Spare us the total return comparison of XYZ against one of these wide moat dividend payers.  It’s irrelevant to those who invest for income and some of us giggle when we get a chance to buy a solid company at a discount.

By the way, Alphabet irks me, also.  It’s the other company I hold that shirks it’s responsibility to its owners by not sharing the profits.  With what should partially be my money, they sometimes make crappy acquisitions and investments that make some doofus millennial a billionaire and come next year he’s just going to have to give 98% of it to the government.

 

NOTE TO RYAN:  You’ve got a problem, pal.  I know the difference between the word ‘it’s’ and the word ‘its.’  In my penultimate sentence in my post above I use both of those words.  And trust me, I used them correctly.

Upon reading my own post (to make sure I had no typos) I note that your system has changed my its to it’s.  When I go back to edit I see my correct usage, yet when the correct version is then posted again, your system changes it to the incorrect word.

This is a major problem and I think you should get someone on the fix immediately.  This is even more of a problem than FD thinking everyone needs to invest the way he thinks they should invest, even though he doesn’t invest that way.

chang
Valued Contributor

Re: Moats On Sale — Buying Low

cliff: I also own EPD and MMP. They’ve had a topsy turvy year but are still hanging in there. PM is on my list to buy on the next dip.

Congratulations in getting that second circle! Explorer ○○

arriba
Participant ○○

Re: Moats On Sale — Buying Low


@cliff wrote:

 

Look, FD

This is the INCOME forum.  I know you like to troll around, but give us a break.  There are some, including me, who have a financial situation such that they are interested primarily in income.  Total return, part of which is speculative and unrealized, does not enter into my investing decisions.

You of all people should understand that there are those who have a different investing objective than total return.  So what if Google or XYZ has a greater total return than one of the wide moat stocks identified by Morningstar.

After all, YOU have an objective of minimizing standard deviation (I think you actually like to minimize the downside deviation but like to brag about the upside deviation when it occurs).  You have stated that you are terrified - TER-RI-FIED!! - of a 5% downdraft.  Okay, that’s your objective.  If you avoid that teensy 5% oops, then you’re a happy camper, right?  So it would seem to me that as long as you are camping happy, then you don’t much care if you don’t maximize total return.  Plus you’re not much of an equity guy, so right there you don’t have a chance of maximizing total return over the long haul.

Spare us the total return comparison of XYZ against one of these wide moat dividend payers.  It’s irrelevant to those who invest for income and some of us giggle when we get a chance to buy a solid company at a discount.

By the way, Alphabet irks me, also.  It’s the other company I hold that shirks it’s responsibility to its owners by not sharing the profits.  With what should partially be my money, they sometimes make crappy acquisitions and investments that make some doofus millennial a billionaire and come next year he’s just going to have to give 98% of it to the government.

 

NOTE TO RYAN:  You’ve got a problem, pal.  I know the difference between the word ‘it’s’ and the word ‘its.’  In my penultimate sentence in my post above I use both of those words.  And trust me, I used them correctly.

Upon reading my own post (to make sure I had no typos) I note that your system has changed my its to it’s.  When I go back to edit I see my correct usage, yet when the correct version is then posted again, your system changes it to the incorrect word.

This is a major problem and I think you should get someone on the fix immediately.  This is even more of a problem than FD thinking everyone needs to invest the way he thinks they should invest, even though he doesn’t invest that way.


+1M

===========================

cliff,

Great to see you posting, if only sparingly so as not to lose your "Explorer" status.

arriba

Community Manager RyanM Community Manager
Community Manager

Re: Moats On Sale — Buying Low


@FD1001 wrote:

Go moats have to be HIGHER income stocks?  :-)

ElLobo is about to show up quickly with his new ideas....2X leveraged ETNs that El owns:

PFFL ETRACS 2xMonthly Pay Lvrgd Pref Stk ETN                 Preferred Stock
MLPZ UBS ETRACS 2x M Lvg S&P MLP ETN SerB                 MLPs
BDCL UBS ETRACS 2xLvg Lng WF Busn Dev Co ETN            BDCs
DVHL UBS ETRACS M Py 2xLvg Divers Hi Inc ETN                High Income
HDLV UBS ETRACS M Py 2xLvg US HiDivLowVol ETN          High Div/Low Volatility
SMHD UBS ETRACS M Py 2xLvg US Sm Cp HiDiv ETN           Small Cap high div
LMLP UBS ETRACS M Py 2xLvg WF MLP Ex-Engy ETN         MLP ex-energy
LRET UBS ETRACS MonPay 2xLvg MSCI US REIT ETN         US REITs
SDYL UBS ETRACS Mthly Pay 2xLvrgd S&P Div ETN             S&P1500 Divey Aristrocrats
CEFL UBS ETRACS Mthly Py 2xLvg Closed-End ETN             CEFs
DVYL UBS ETRACS Mthly Py 2xLvg DJ Sel Div ETN               DJ Select Divey payers
MORL UBS ETRACS Mthly Py 2xLvg Mortg REIT ETN             MREITs

 

Is MO going to perform better than Google in the next several years?  they are both moats


What’s the point of mentioning El Lobo when he hasn’t even commented on this topic yet? Stop stirring the pot. 

norbertc
Contributor ○○

Re: Moats On Sale — Buying Low


@cliff wrote:

 

NOTE TO RYAN:  You’ve got a problem, pal.  I know the difference between the word ‘it’s’ and the word ‘its.’  In my penultimate sentence in my post above I use both of those words.  And trust me, I used them correctly.

Upon reading my own post (to make sure I had no typos) I note that your system has changed my its to it’s.  When I go back to edit I see my correct usage, yet when the correct version is then posted again, your system changes it to the incorrect word.

This is a major problem and I think you should get someone on the fix immediately.  This is even more of a problem than FD thinking everyone needs to invest the way he thinks they should invest, even though he doesn’t invest that way.


TEST

It's going to be a great 2020, though its path remains unknown.

It’s the other company I hold that shirks its responsibility to its owners by not sharing the profits.

N.

copie
Follower ○○○

Re: Moats On Sale — Buying Low

Cliff,

for what it is worth I have been doing large Roth conversions on MMM with a 3.5% yield in my income growth list of stocks. All so warming up to KMI again when it dips below $20 share with 5% dividend. I think it will go good with my OKE to pay my gas bill this winter! Good to see you checking in again. I think for rest of winter we need to get my good investor friend El. and others to get in another income verse total income discussions! :) 

Copie

0 Kudos
FD1001
Valued Contributor

Re: Moats On Sale — Buying Low


@cliff wrote:

 

Look, FD

This is the INCOME forum.  I know you like to troll around, but give us a break.  There are some, including me, who have a financial situation such that they are interested primarily in income.  Total return, part of which is speculative and unrealized, does not enter into my investing decisions.

You of all people should understand that there are those who have a different investing objective than total return.  So what if Google or XYZ has a greater total return than one of the wide moat stocks identified by Morningstar.

After all, YOU have an objective of minimizing standard deviation (I think you actually like to minimize the downside deviation but like to brag about the upside deviation when it occurs).  You have stated that you are terrified - TER-RI-FIED!! - of a 5% downdraft.  Okay, that’s your objective.  If you avoid that teensy 5% oops, then you’re a happy camper, right?  So it would seem to me that as long as you are camping happy, then you don’t much care if you don’t maximize total return.  Plus you’re not much of an equity guy, so right there you don’t have a chance of maximizing total return over the long haul.

Spare us the total return comparison of XYZ against one of these wide moat dividend payers.  It’s irrelevant to those who invest for income and some of us giggle when we get a chance to buy a solid company at a discount.

By the way, Alphabet irks me, also.  It’s the other company I hold that shirks it’s responsibility to its owners by not sharing the profits.  With what should partially be my money, they sometimes make crappy acquisitions and investments that make some doofus millennial a billionaire and come next year he’s just going to have to give 98% of it to the government.

 

NOTE TO RYAN:  You’ve got a problem, pal.  I know the difference between the word ‘it’s’ and the word ‘its.’  In my penultimate sentence in my post above I use both of those words.  And trust me, I used them correctly.

Upon reading my own post (to make sure I had no typos) I note that your system has changed my its to it’s.  When I go back to edit I see my correct usage, yet when the correct version is then posted again, your system changes it to the incorrect word.

This is a major problem and I think you should get someone on the fix immediately.  This is even more of a problem than FD thinking everyone needs to invest the way he thinks they should invest, even though he doesn’t invest that way.


wow, why are you discussing what I do?

"you’re not much of an equity guy"...mmm...do you realized that I used invested in stocks for years at 90+% and it only changed when I had enough..and I still may own 0-40% in stocks at any time.

Just because I don't like volatility doesn't mean I don't invest in stocks or I can't have an opinion.  I have said dozens hundreds of times that what I do has nothing to do about my generic opinions and nobody should invest as I do.

Wait, for 10 years retirees told me I don't have a clue about retirement because I didn't retire yet.  Then, I retired at the end of 2018 and...oops, everything I said prior to retirement was accurate. 

"Spare us the total return comparison of XYZ against one of these wide moat dividend payers.  It’s irrelevant to those who invest for income"

A pretty easy task to prove ADVDX vs SPY.  See 10 year performance + risk attributes(link)

PortfolioCAGRStdevBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
ADVDX7.20% 14.41%23.35%-15.65%-29.11% 0.520.77
SPY13.26% 12.49%32.31%-4.56%-16.23% 1.021.7

 

Higher income doesn't guarantee better results.  You should invest in the best stocks regardless and if you know how to select great higher income stocks you should be able to pick up great companies like the FAANG + MSFT

Google irritates you and MO,PM don't, pretty funny.

========================

arriba, how you are doing? have you learned how to post in a civil manner?  please keep following my posts :-)

========================

Cliff, my last post on this thread  ;-)  you may want to look at PCI (not another bond fund) at dist > 8% and a great performance.  I also think GE is a good buy for bottom fishers.

 

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cliff
Explorer ○○

Re: Moats On Sale — Buying Low

 

FD, this is just a guess, but I’m reasonably certain that there are scores of income-focused investors who applaud your promise - PROMISE - to not post on this thread EVER AGAIN.  What you consider a contribution has been noted and evaluated for what it really is and, as you now realize, there is no need for you to hang around.

 

norbertc
Contributor ○○

Re: Moats On Sale — Buying Low

@FD1001 

Look at this backtest, comparing VFINX (S&P 500) to SDY (S&P Dividend ETF) and VDIGX (Vanguard Dividend Growth).

Portfolio 1 = VFINX, Portfolio 2 = SDY, Portfolio 3 = VDIGX

ScreenHunter 704.png

-----

The dividend-focused funds have had higher total returns with lower volatility over the past 15 years; and I mention in passing the attractive cash income.

I suggest leaving ADVDX out of the discussion; that was just a gimmick by Alpine Funds. 

Vanguard's VDIGX is particularly good, with its low fees and solid dividend growth strategy.

N.

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ElLobo
Participant ○○○

Re: Moats On Sale — Buying Low


@norbertc wrote:

@FD1001 

Look at this backtest, comparing VFINX (S&P 500) to SDY (S&P Dividend ETF) and VDIGX (Vanguard Dividend Growth).

Portfolio 1 = VFINX, Portfolio 2 = SDY, Portfolio 3 = VDIGX

ScreenHunter 704.png

-----

The dividend-focused funds have had higher total returns with lower volatility over the past 15 years; and I mention in passing the attractive cash income.

I suggest leaving ADVDX out of the discussion; that was just a gimmick by Alpine Funds. 

Vanguard's VDIGX is particularly good, with its low fees and solid dividend growth strategy.

N.


Portfolio 1 = VDIGX, Portfolio 2 = PCI, Portfolio 3 = SDYL

PortfolioInitial BalanceFinal BalanceCAGRStdevCurrent YieldIncome ProducedBest YearWorst YearMax. DrawdownSharpe RatioSortino RatioUS Mkt Correlation
VDIGX$10,000$22,94913.10%9.85%1.68%$4,57224.92%0.18%-8.99%1.232.090.93
PCI$10,000$20,04510.85%9.65%8.35%$8,54628.41%-3.84%-14.07%1.051.90.52
SDYL$10,000$42,08623.73%21.90%5.18%$8,95046.74%-10.17%-17.06%1.061.810.92

 

Seems as if a 50/50 allocation to SDYL/PCI is the best of all worlds, regardless of whether you focus on TR or income! 8-)

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ElLobo
Participant ○○○

Re: Moats On Sale — Buying Low

"What’s the point of mentioning El Lobo when he hasn’t even commented on this topic yet? Stop stirring the pot"

Didn't see it until a few minutes ago.  Cliff cloaked it with his thread title.  Anyhow, I addressed Norbie's and FD's comments below.

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arriba
Participant ○○

Re: Moats On Sale — Buying Low


@FD1001 wrote:

arriba, how you are doing? have you learned how to post in a civil manner?  please keep following my posts :-)

========================

Ryan,

You even told FD on this very thread to "stop stirring the pot."

But he just can't stop.

There's an old saying in coaching, "You're either coaching it or allowing it."

arriba


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chang
Valued Contributor

Re: Moats On Sale — Buying Low

arriba: enough already.
0 Kudos
cliff
Explorer ○○

Re: Moats On Sale — Buying Low


@copie wrote:

Cliff,

for what it is worth I have been doing large Roth conversions on MMM with a 3.5% yield in my income growth list of stocks. All so warming up to KMI again when it dips below $20 share with 5% dividend. I think it will go good with my OKE to pay my gas bill this winter! Good to see you checking in again. I think for rest of winter we need to get my good investor friend El. and others to get in another income verse total income discussions! :) 

 

Some odds and ends (all jumbled together here to keep my post count down) . . . . . 

Copie, how ya doin’ as we approach Wild Turkey Day?  As a savvy income-focused investor, you know that putting new money in something should be a forward looking endeavor.  Kinder Morgan at around $20 is indeed about a 5% current yield.  But it’s highly likely that the 2020 dividend will be $1.25, giving us a 6.25% yield on today’s price.

chang, on another Morningstar screen I discovered an interesting data point.  Morningstar has a fair value uncertainty rating, which goes from very high to high to medium to low for stocks it covers.  On the list of five star, wide moat stocks selling at a significant discount to fair value, there are only two with a low rating, meaning Morningstar has the highest confidence in the precision of its fair value estimate.  Guess which those two are?  Yup, you are correct.  Enterprise Products and Philip Morris.

 

Finally, upon further review, I find I hold another company selling at a significant discount to fair value.  I didn’t pick it up earlier because it is only determined to be a narrow moat company.  Also, I bought after the ex-div date in August so my first reinvestment won’t be until this Friday.  It is Simon Property Group (SPG) selling around 80% of Morningstar fair value, about 22% below its 52 week high.  Yield = 5.7%.

 

chang
Valued Contributor

Re: Moats On Sale — Buying Low

Thanks for that info, Cliff.
0 Kudos
Kudzu
Explorer ○

Re: Moats On Sale — Buying Low

Good to see you Cliff. Have missed your comments.  

0 Kudos
copie
Follower ○○○

Re: Moats On Sale — Buying Low

Cliff,

I plan on smoking a turkey Wed. and deep frying one thur. Of course will have to have a Wild turkey drink with both of them, and then the ball games sat, seems like my time of year! :)

Just started to buying a small amount of PCI and UTG. Going to take awhile to see if I trust them. You know us old people takes a long time to make up our minds!

Hope you and your family have great holidays.

Copie

0 Kudos
cliff
Explorer ○○

Re: Moats On Sale — Buying Low


@Kudzu wrote:

Good to see you Cliff. Have missed your comments.  


 

Kudzu, it’s true I don’t post as much as I once did but there are two good reasons for that:

1) Right about the time that Morningstar schiff-canned the legacy forum, I realized that getting 295 yards off the tee didn’t mean much if I couldn’t sink a 2-foot putt.  So the last six months have been spent practicing 2-foot putts eight hours a day.

2) I also realized that, at best, I only have one thing to say per week that merits anyone paying attention to, so I thought I’d limit myself to one post per week.  With this post I’m 3 posts over budget since early May.  This means that I shouldn’t post again until late December when I will start a thread titled “Airing of Grievances” to help celebrate Festivus.

That original post will state my true feeling about the Morningstar algorithm lumping FD and yogi and chang in the same category.  

 

Copie, you do realize that those two thingees you’re buying are selling at a premium, right?  I could never get past that.

It’s like getting to checkout with two pounds of prime rib eye in your hand and the cashier says, “That will be $59.98, sir”

And you say, “I really want this rib eye badly.  Here’s $75.  Keep it all.”

Enjoy your turkey, copie, Wild and otherwise.

 

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