Updates
September 28, 2012: CTL preferred over WIN; interesting comments about FTR.
Original Post
I'm an eternal optimist when it comes to investing.
I remember my first introduction to the stock market back in the 1970's. I subscribed to the Wall Street Journal and followed the dividends. I was pretty naive then and I always wondered why people put money in a bank at 3% interest when they could get 6% interest in the market and some appreciation at the same time. I started my investing in the late 1970's, so I missed the 1973-1974 recession. But I didn't miss "black Friday," October, 1987. I didn't know about recessions, depressions, the business cycles, etc., then.
I had been told to look for shares that sold for about $6; had a 6% dividend, and a P/E of 6. If only.
I listened to the spiel of an individual trying to sell me a mutual fund. He was very, very nice, until I told him I did not want to buy until I did some of my own research. I was so naive I did not know the difference between a "load" and a "no-load" fund. Fortunately, I did not invest in his high-fee "load" fund.
I took the Forbes course to investing about that time.
I am not a trader. I am not agile enough, and certainly not smart enough.
I am an investor. I tend to "buy and accumulate" in the energy and telecommunication sectors.
I prefer companies who pay dividends.
In the past six months (maybe past year -- time goes by quickly when you get to my age), I started looking for higher-dividends, something I really had not done over the years. "They" say it's a fool's game to chase dividends. I wanted to raise cash to buy shares in Bakken companies. Interestingly enough, several of the companies appreciated nicely during the process. Some companies that I buy and sell after collecting the dividends have been EEP, CTL, WIN. (These are my exceptions to not trading; but I'm not trading for price appreciation but rather for dividends.)
I don't hold CTL any more but I see it is still paying 8.7% and selling for $34 (I was in and out in the $30 - $31 range, so I should have held longer, I suppose). I don't hold WIN any more either, and I see the dividend is up to 9.4% and selling for about $11. I was in and out in the $10 range; again, I could have held and done just fine.
A month or so ago, I diversified a bit out of energy, buying a financial stock, NLY, which pays 15.6%. I had no hopes of any appreciation, but it, too, has appreciated.
I see, today, that something called Compass Diversified (CODI) will continue to pay 10.4% with its next dividend. I do not hold CODI and do not play to buy any shares in CODI; I am happy with what I have.
For those interested, CODI seems to be a bit like Warren Buffett's Berkshire Hathaway. CODI invests in and acquires small to medium size companies in North America. It was founded in 2005.
If one is interested in American oil trusts, it's hard to ignore Whiting Trust (WHX), now paying 17.4%. I am frustrated with myself for not having bought that a couple years ago, accumulating, and just holding on. Besides the payout, there has been some nice appreciation.
I still hold EEP and am very happy with that one. At 3.5%, I don't hold ENB for its dividend but I replaced MDU with ENB (both with similar dividends and during the recession, ENB seems a bit more stable).
Even T (ATT) is paying almost 7% and for long-term investors, it may even be more based on original investments.
These are very conservative holdings, for the most part. They won't move like Apple or Google or some small start-ups but they keep me interested in the market. And, of course, this all ends next year when dividends are taxed at full rates. It's complicated but if dividends are again taxed at higher rates, it may make trusts (distributions, not dividends) more interesting.
This is simply reminiscing. I am not making any recommendations, but I had a few minutes free in the local coffee shop while traveling so thought I would jot down a few notes. It also forced me to look at how some of these companies are doing.
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