If called away Friday my total return will be about 14% in less than 2 months. If not called I'll sell more call options Monday.
On 11/20/13, GMCR announced a regular quarterly cash dividend of $0.25 per share, payable on 2/14/14 to shareholders, with an ex-dividend date of 1/15/14.
I'm short the January 77.5 call options that expire Friday in my IRA and my shares were not called away for the dividend which I find interesting. I just earned an extra 1/3 of 1% in only three days in my IRA because my shares weren't called early.
Assuming the stock is called away Friday I'll use the cash to buy more of __________-stay tuned.
Their cost of capital is low due to good credit and low interest rates, therefor they're able to issue debt that's half what they'd pay out in the form of a dividend. Their dividend payout ratio is over 60% yet they buy back an equal amount of their own shares each year using free cash flow and the issuance of some of that low cost debt. So they in effect, return 120% to their shareholders every year. It's the ultimate cash cow.
PM sells cigs overseas where standards of living are improving so long-term, their sales should also grow. Last year sales were hurt by higher excise taxes on cigs and a strong dollar which also hurt the stock price but also compressed the P/E. If the P/E continues to drop then their share repurchase plan can only be helped.
The P/E is still historically high but 5 year treasuries are also at historic lows so it's all relative.
Current dividend- 3.76 (4.60%)--I believe it should grow at close to 10% per year. If I'm early to the party I'll just settle for the dividend and hope it continues to grow, eventually the stock price will light up and I'll be ahead on both sides.
My biggest concern is not the rising value of the dollar. but rather. other countries following our lead and try and sue PM out of existence or perhaps, effectively nationalize indirectly. through the use of higher and higher excise taxes.
With five year treasuries yielding 1.65% and the S&P 500-- 2% and trading at 15 times earnings, 2014 should be another decent year for the stock market.
My crystal ball says the S&P 500 will be up 9.5% with dividends included compared to BRK doing 14.44% for 2014.
My 2014 stock pick of the year is PM which currently trades at 82.45 and yields 4.6% and should see the dividend raised to 5% next September.
Wishing you all a prosperous new year.
It's invested in two Franklin funds-with 60% being in bonds and the balance in a stock fund.
The account I manage for her was up 16.5% but it was hurt last year from covered call writing. According to Schwab-her 5 year return was up 14% per year-that's from 01/01/2009-12/31/2013. The S&P 500 did 17.93% for the same period. This account is almost to the point where it generates enough dividend and interest income for her to live on. All she needs to do is purchase a few more high yielding convertible preferred stocks that are also federally tax free, with any proceeds from stock trades and she's there.
Currently her full service brokerage account provides her with 75% of her cash needs and should last another 7-9 years before it's depleted. The account I run for her is now over three times larger than that account and only provides her with 25% of her living needs. So it also generate lot's of free cash flow without selling any stocks.
I'm a little more liberal with my IRAs because there're no tax concerns. The stock could still drop back under 45 by Friday so I may not have to worry about reinvesting the cash.
I can always buy it back or sell puts against it using the cash I receive from the sell but with PM currently trading near 82 I've got to buy more.
But in taxable accounts with respect to WFC-just hold on and enjoy the ride and in IRAs look to occasionally trade around the position hopefully buying low and selling high but always adding to the original share count.
Thank you Charles Schwab-because they handle the dividend reinvestment free of charge.
PM now makes up 14.32% of the assets in this account.
On 11/20/13, GMCR announced a regular quarterly cash dividend of $0.25 per share, payable on 2/14/14 to shareholders, with an ex-dividend date of 1/15/14
Could effect the option owners.
BRK is still my largest position and in my opinion it's a hold.
Both PM and BRK should see their earnings double in the next 7-9 years but PM will do it while paying out 65% of its earnings every year in the form of a dividend-that's a huge difference when you consider that PM's dividend currently yields about 4.5% and will also double along with earnings.
I own all three but PM and LO are my two largest by far.
PM pays $6 billion in dividends and also buys back $6 billion of their own shares each year. If the stock continues to fall they'll just buy back a larger percentage of their own shares. So I'll just keep adding to it as it falls.
Note: I'm also short 82.5 put options in my IRA so I may be buying more next week.
She upped her current position of PM by 5% which is also what the stock is already down year to date.
It's still her 2nd largest position: #1- BRK 15%, #2- PM 14%, #3- LO 8%, #4-JPM 5.7% (*short 57.5 call options that are in the money), #5 and #6- IBM and WFC both 5%, #7 and #8- AIG and MSFT both are 4.4%, #9-USB-3.8% and #10-COP 3.5% and also #11-KO 3.1% which could take JPM's place in February.
Grandma likes her dividends because in her case they're federally tax free.
"My" Projected Dividend verses 5 year treasury yield for the next three years:
2014- Div $4, 5yt yield-2%
2015- Div- 4.3, 5yt yield-2.5%
2016-Div- 4.7, 5yt yield- 3%
It the stock were to drop to 75 the yield would rise to 5.3% for this year-I don't think that's likely but let's hope you're right because their share repurchase program would become much more efficient which would cause me to up my future dividend projection estimates.