Friday, December 15, 2017

Dividends Make It Real

Dividends Make It Real

Sometimes it is easy to lose sight of what an "investment" is. I see people buying bitcoin, I see people buying artwork or even baseball cards.  I do not consider these investments.  To me an investment has to produce an income stream. Anything else is just speculation.

And if a company has an income stream, they can (1) reinvest $ in the company, (2) buy another company, (3) buy back stock or (4) pay dividends.  To me, getting paid dividends makes it real.  As I have retired, I have consciously built out my dividend portfolio. And all my MFI Formula stocks also pay a dividend.  You can see the impact in my dividend by quarter graph (Indexed to mask true values):

That is a nice pattern! It should continue to go up as I reinvest some of the dividends.  I think it will go up by 50% (in total) in 2018 as you can see I didn't really start building in earnest until 3rd and 4th quarters of 2017.

Funny Business

I read one of the funniest, most biting articles ever on Seeking Alpha yesterday by Keubiko.

I encourage everyone to read it.  It reviews some preferred stock with Impac that isn't so preferred.  Here is the "pitch":

"Now ignore what you think you know about preferred shares, and let me tell you about an opportunity to purchase an instrument that:

Pays no dividend whatsoever
Will never pay a dividend
Is not convertible into anything (of value or otherwise)
Accrues nothing on your behalf
I assure you this isn’t about Tesla. Let’s continue:

Pays you nothing if the company sells 100% of its assets
Pays you nothing if the company sells itself
Pays you nothing if the company merges with another firm
Will never be redeemed by the company
Gives you no say in company matters

Sounds great, right? If it does, perhaps I can also interest you in the upcoming ICO of KeubikoCoinTM that will have similar benefits."


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