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cliff
Explorer ○○

Vector (VGR): Nothing is Forever

On the old forum we had some fun kicking VGR in the teeth and calling it all kinds of nasty names.  And the company just kept paying out $1.60 a year in cash and giving us a 105 for 100 stock split every year.  BruceM sold out about 6 years ago and the damned thing STILL kept kicking out cash

But it was inevitable that Bruce would one day be right. That day may be upon us soon.

Every quarterly earnings call for as long as I can remember had the CEO say this at the end . . . . . . “The company once again reaffirms that its cash dividend policy remains the same.”

BUT a couple of days ago the CEO ended the Q2 call with this . . . . . . “The Board of Directors will continue to evaluate its dividend policy on a quarterly basis”

I have owned VGR for just shy of 15 years and it has been one of my best holdings. My investment has been returned many times over and my original investment has a ZERO cost basis.  I have additional shares with a cost basis of $2.0031.  Everything else was sold today.

I feel like my dog died.

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44 Replies
KathieL
Explorer ○○○

Re: Vector (VGR): Nothing is Forever

My condolences, Cliff.

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stormy
Follower ○○○

Re: Vector (VGR): Nothing is Forever

Oh say it ain't so. But you are most certainly right. Can't wait to hear what you do with the funds.

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helmut
Explorer ○○○

Re: Vector (VGR): Nothing is Forever

Cliff,

I'm just sorry it took your dog dying to get you back on-line to this forum.  Cliff, you remind me of what my Father use to tell me, "you will run out of money long before you run out of good deals".  Knowing you,  you are already on the hunt for the next VGR.

helmut

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chang
Valued Contributor

Re: Vector (VGR): Nothing is Forever

Thoughts and prayers.
ElLobo
Participant ○○○

Re: Vector (VGR): Nothing is Forever

Twill be interesting to see ifn they do the 5% stock divey this year!  I, also, am interested in what you do with your VGR proceeds.  My guess is that this caught you by surprise.  A quick glance at their financials looked like they were doing OK.

Previously, I thought VGR would be ripe for a buyout, maybehaps by Buffett and Berkshire Home Services.  I'm thinking they might forgo the 5% stock divey this year but announce an increase in the cash, from 40 cents to 42 cents.

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cliff
Explorer ○○

Re: Vector (VGR): Nothing is Forever

I may have made a mistake selling some VGR the other day. The efficient market plunged 3.05% today and super-yielding VGR just slipped an infinitesimal 1.13%.

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ArtieNJ
Follower ○○○

Re: Vector (VGR): Nothing is Forever

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Highlighted
cliff
Explorer ○○

Re: Vector (VGR): Nothing is Forever

It appears that the day oF reckoning for Vector Group (VGR), predicted by many for 15 years that I’m aware of, will not happen this month.  VGR just declared its customary $.40 quarterly dividend plus its  customary 5% annual stock dividend.

That will dial up about an 8.4% return over just the next couple of weeks for current holders.

I may have to buy back those shares I sold.  I can use the cash dividend to get a new dog.

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Graust
Explorer ○○

VGR halves it’s dividend for 1Q2020 to $.20

Aaaaaand, go!

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chang
Valued Contributor

Re: VGR halves it’s dividend for 1Q2020 to $.20

-25% in the pre-market. Ouch.
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ElLobo
Participant ○○○

Re: VGR halves it’s dividend for 1Q2020 to $.20


@chang wrote:
-25% in the pre-market. Ouch.

link

Will pay $0.40 in December, cut to $0.20 next year, no more 5% yearly stock divey.  No longer a Divey Aristrocrat.

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cliff
Explorer ○○

Re: VGR halves it’s dividend for 1Q2020 to $.20

 

Y’all can’t say you weren’t warned.  The August statement in their earnings call was the equivalent of a catcher whispering to a batter, “About 82 mph, belt high, outside corner, let ‘er rip.”

This may change the results of a calculation I perform occasionally - determining my yield on cost for this sucker.  Instead of dividing $1.60 by zero, I’ll need to try dividing $.80 by zero.  Every time I’ve done this in the past, my calculator blats an ugly noise and flashes a message that says, “Don’t Be Stupid.”

 

Off (this) Topic . . . . . . 

chang, on the subject of Morningstar’s classifications, I address you here because I don’t want to run up my post count, which obviously has something to do with moving people along their scale.

I’m afraid if I post too much I will be moved from Explorer to Participant.  I want to stay an Explorer; it has a nice swashbuckling, adventurous sort of connotation to it.  While Participant sounds sort of . . . . . meh. Like you’re a skinny, ugly kid that shows up at the ball field and expects a trophy for just being there.

Screw that.  I’m going to write Ryan and ask for an exemption.  If the algorithm ever gets me to the tipping point where I’m about to be that skinny, ugly guy, a Participant, I’m asking Ryan if he will do an override and just call me Explorer Emeritus.  It’ll be up to him if there is a Valued Explorer Emeritus designation beyond that.

 

 

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norbertc
Contributor ○○

Re: VGR halves it’s dividend for 1Q2020 to $.20

This is the saddest thread I've ever read.

Hopefully Ryan will be sympathetic to your concerns.  I never did understand why "Explorer" is considered to be a lower rank than "Participant" or "Contributor".  I feel like I'm regressing.  However, there are many things I do not understand.

Like "Pyramid Up", for example.  How could anyone thinks that buying a second bucket at a higher price automatically prevents price declines and significant losses going forward?  Or, why did Sue turn me down when I asked her to go the the Junior Prom in 1967?  These questions have haunted me for years.

ElLobo
Participant ○○○

Re: VGR halves it’s dividend for 1Q2020 to $.20

Cliff,

Seems as if VGR is a compelling buy now, for all who have been afraid to buy into it.  It closed yesterday at $12.33 which, at a $1.60 divey, was a 13% yield.  In addition to the 50%+ divey cut, it also announced earnings, with surprises.  Link

Today, it's trading at $10.75 which, at the new divey, is a 7.4% solid long time divey paying stock, about the same as MO!  Who wouldn't want to own either sin stock? I might even buy it and hold in a taxable account, using margin to get back up to that 15% yield!  8-))

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BruceM
Participant ○○○

Re: Vector (VGR): Nothing is Forever

Chuck

"Twill be interesting to see ifn they do the 5% stock divey this year!"

From the press release yesterday....

Vector Group also announced that its Board of Directors has decided to reduce the Company’s quarterly cash dividend to $0.20 per share, effective the first quarter of 2020, and that the Company will no longer pay an annual stock dividend. The amount of the quarterly cash dividend and the payment of any annual stock dividend are subject to the Board’s regular evaluation of the Company’s dividend policy and capital allocation strategy. A quarterly cash dividend remains an important component of the Company’s capital allocation strategy.

The Company’s Board of Directors regularly evaluates the Company’s dividend policy as well as the Company’s capital allocation strategy. As part of this evaluation, the Company’s Board has determined that reducing the quarterly cash dividend and discontinuing the annual stock dividend is in the best interest of the Company and its stockholders. The reduced dividend will strengthen the Company’s balance sheet and help it maintain its liquidity, while it meets its obligations and continues to invest in its businesses to drive long-term stockholder returns.

As I said from my first CF analysis of this stock, its not a question of IF but of WHEN. For some, the CF reality of VGR was not unlike spinning the cylinder of a 10 shooter and continuing each quarter to put it to their head, pull the trigger, hear a 'click' and assume that because it didn't go off that quarter, they're in good shape and have made the right decision. In the meantime, my money is with boring names like KMB, MCD, O and WEC and other such dividend payers where CFs are positive and the growing dividend is well covered and barring some unknown cataclysm, there is virtually no chance the dividend will be cut or eliminated, I'll collect these dividends and continue to let the pistol roulette investors enjoy their style of investing.

No individual or personal attacks here.....just an explanation of a difference in how income stocks can be interpreted and used.

BruceM

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Intruder
Participant ○○○

Re: VGR halves it’s dividend for 1Q2020 to $.20


@ElLobo wrote:

Cliff,

Seems as if VGR is a compelling buy now, for all who have been afraid to buy into it.  It closed yesterday at $12.33 which, at a $1.60 divey, was a 13% yield.  In addition to the 50%+ divey cut, it also announced earnings, with surprises.  Link

Today, it's trading at $10.75 which, at the new divey, is a 7.4% solid long time divey paying stock, about the same as MO!  Who wouldn't want to own either sin stock? I might even buy it and hold in a taxable account, using margin to get back up to that 15% yield!  8-))


Reasons not to own either stock is increased gov regulation of vaping products, lawsuits from those injured by vaping and decline in smokers which will drive stock price down. I sold all of my smoke stocks last year and used the funds to increased investments in T and VZ early this year. There is more upside in T which will increase its 5.3% dividend later this month and announce stock buyback plan. At one point VZ with 4% dividend was best performing SP 500 stock in 2019.

 

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ElLobo
Participant ○○○

Re: VGR halves it’s dividend for 1Q2020 to $.20

MO, paying 7.4%, is a 49 year divey aristrocrat with a 10 year divey growth rate of 9.6%.  It's expected return, going forward, is 17%.

T, paying 5.3%, is a 35 year divey aristrocrat, with a 10 year divey growth rate of 2.3%.  It's expected return, going forward, is 7.6%, or about the same as MO's current yield.

I'd prefer a 7.4% bird in the hand to a 7.6% bird in the bush!  Either MO or VGR, after today's cut!  Nevertheless, all three should support a real, inflation adjusted rate of withdrawal during retirement of at least 4%!!!   8-)


@Intruder wrote:

@ElLobo wrote:

Cliff,

Seems as if VGR is a compelling buy now, for all who have been afraid to buy into it.  It closed yesterday at $12.33 which, at a $1.60 divey, was a 13% yield.  In addition to the 50%+ divey cut, it also announced earnings, with surprises.  Link

Today, it's trading at $10.75 which, at the new divey, is a 7.4% solid long time divey paying stock, about the same as MO!  Who wouldn't want to own either sin stock? I might even buy it and hold in a taxable account, using margin to get back up to that 15% yield!  8-))


Reasons not to own either stock is increased gov regulation of vaping products, lawsuits from those injured by vaping and decline in smokers which will drive stock price down. I sold all of my smoke stocks last year and used the funds to increased investments in T and VZ early this year. There is more upside in T which will increase its dividend later this month and announce stock buyback plan. At one point VZ was best performing SP 500 stock in 2019.

 


 

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Intruder
Participant ○○○

Re: VGR halves it’s dividend for 1Q2020 to $.20


@ElLobo wrote:

MO, paying 7.4%, is a 49 year divey aristrocrat with a 10 year divey growth rate of 9.6%.  It's expected return, going forward, is 17%.

T, paying 5.3%, is a 35 year divey aristrocrat, with a 10 year divey growth rate of 2.3%.  It's expected return, going forward, is 7.6%, or about the same as MO's current yield.

I'd prefer a 7.4% bird in the hand to a 7.6% bird in the bush!  Either MO or VGR, after today's cut!


@Intruder wrote:

@ElLobo wrote:

Cliff,

Seems as if VGR is a compelling buy now, for all who have been afraid to buy into it.  It closed yesterday at $12.33 which, at a $1.60 divey, was a 13% yield.  In addition to the 50%+ divey cut, it also announced earnings, with surprises.  Link

Today, it's trading at $10.75 which, at the new divey, is a 7.4% solid long time divey paying stock, about the same as MO!  Who wouldn't want to own either sin stock? I might even buy it and hold in a taxable account, using margin to get back up to that 15% yield!  8-))


Reasons not to own either stock is increased gov regulation of vaping products, lawsuits from those injured by vaping and decline in smokers which will drive stock price down. I sold all of my smoke stocks last year and used the funds to increased investments in T and VZ early this year. There is more upside in T which will increase its dividend later this month and announce stock buyback plan. At one point VZ was best performing SP 500 stock in 2019.

 


 


I don’t believe in the optimism for MO because it will be weighed down by its investment in Juul which will continue to be written off and take MO down with it. I don’t need to invest in stocks with poor outlooks just to get an above average dividend over the short term. If I want to buy a risky stock which has better future prospects and high dividend yield I can increase my stake in RDSB with a 6.2% qualified dividend.

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ElLobo
Participant ○○○

Re: VGR halves it’s dividend for 1Q2020 to $.20

"I don’t believe in the optimism for MO because it will be weighed down by its investment in Juul which will continue to be written off and take MO down with it. I don’t need to invest in stocks with poor outlooks just to get an above average dividend over the short term. If I want to buy a risky stock which has better future prospects and high dividend yield I can increase my stake in RDSB with a 6.2% qualified dividend."

That's what Bruce was saying about VGR 6 years ago!  Since then, Cliff has booked $9.60 per share in distributions, not counting his reinvestment of distributions OR his annual 5% stock dividend that VGR paid.  At today's $11/share VGR share price, VGR is a penny stock, as far as Cliff is concerened!

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