Investment BS Thread - Stocks/Futures/Mutual Funds/Bonds/Commodities/Options/ETFs/401ks/Etc

maybe i'm backwards.

Either way I'm planning on letting a Credit Union or Bank handle everything. I'm already approved and can qualify for a 3.5% interest rate so why not.

Credit Union will also make sure nothing funky is up with the deeds or property. I'll try to do an FHA loan to get a tad bit more just for repairs.

Not really wanting to borrow against the current residence.

 

Learned something new that I did not consider- did not realize the index funds were softer on dividends- softer then a mutual fund might be or over individual stock holdings? I have two strong anchor investments one is a S&P 500 and the other a Nasdaq index fund. I was looking at moving the Nasdaq into a split between a bond mutual fund and international index fund that ran off the Heng Sing, DAX or other... I am looking at trying to increase dividends and balancing out the risk buckets.

 

I was just talking about the S&P 500 index fund SPY, it actually pays 1.77% right now. That is way too low for my goals. Growth wise it may beat my holdings, but I don't like that payout ratio. The Nasdaq fund QQQ pays a dividend of 0.76%, and the Dow fund DIA pays 2.2%. Both too low for me as well.

There are obviously plenty of individual stocks that pay good dividends, but there are also ETFs that do as well. For example, HDV pays 3% and is an ETF. And SPYD pays 3.15%. I prefer to hold a bunch of individual stocks though because you end up with good monthly payments. With some of these high dividend ETFs, you'll be paid quarterly. I have 31 individual stocks right now and my monthly dividend payments are a little lopsided but not too bad.

Try Googling high dividend ETF, there are plenty out there.

 

Thanks for taking the time to put that down- I got a little homework to do. I own a SPDR ETF on the S&P500 but its a SDY not SPY so I am at 2.4% Have to pose the question to my broker why not recommended the SPYD.

 

I think 2.4% is decent but I prefer higher.

You have to remember that a lot of high dividend paying stocks probably aren’t the biggest growth stocks. It seems it’s usually one or the other, or somewhere in between with a low but growing dividend.

I’d suggest looking at O, MAIN, and maybe EPR. They all pay monthly and good dividends. Also solid companies. The share prices won’t skyrocket but you’ll get nice consistent income with moderate growth. I just love monthly paying companies.

 

look at all those red candles! $NIO

 

Haha that's pretty

 

NIO is a flyer for me, expecting a loss but hopefully the universe will screw up and it will hit big!

 

Y'all seen this stuff about "a world without buybacks"? Seems to be causing quite a buzz. I think we've touched on this before.

https://wolfstreet.com/2019/04/08/what-would-stocks-do-in-a-world-without-buybacks-goldman-asks/

 

The people making the arguments against buybacks have no idea what they're talking about. That's my take on it at least. Listen to their arguments. It's like listening to liberals talking about guns, just doesn't even make sense what they're saying.

 

But if the corps are not buying back their own shares, presumably they'd be using the now extra cash for paying more dividends or investing in future earnings?

 

Exactly. Buybacks are a form of returning money to shareholders. Not much different than the other two routes you mentioned. The arguments against it are that it's making the CEOs rich, which it might, but so would dividends and investments into the company.

 

so what's the argument for buybacks? I haven't heard much about them being considered "good".. but I'm open to hearing opposing viewpoints

 

That is my argument, it is the company returning money to shareholders. The company buys shares and retires them, making each shareholder's stake a little bit more (due to the lower outstanding share count).

I think certain companies can return money in better ways, such as investing the money into R&D to expand. However, there are plenty of companies who won't benefit from that (big Blue Chips), and either dividend increase or buybacks are the way to do it.

 

The article said AAPL was a big buyer, and sure enough they have quite a bit of Treasury stock. It's really probably a way of deferring taxes on dividends (instead of paying a div to be taxed, they make your shares worth more which is tax free until sale).

 

I would also add that it depends on the company and their situation whether buybacks are good or not.

For example, Apple has so much money that I think they invest in themselves as much as they want to. Then there's so much extra cash that they do buybacks. I think this is good as long as they're investing in themselves before they start the buybacks.

I don't think Lyft should be buying back stock. They need to focus on becoming a profitable company, and whatever free cash flow they have needs to go back into the company before they should think about buying back shares.

I think big companies like Ford, Johnson and Johnson, Proctor and Gamble, etc. should do as Apple is doing, invest in themselves, and then either buy back stock or increase the dividend with extra cash. Both serve the same purpose. Big companies don't need to dump all of their free cash flow back into growth though, I don't see companies like this growing at a fast rate anymore.

I am not for buybacks in all situations, only if it is the best way to the spend extra money. Sometimes it is (Apple), sometimes it's not (Lyft).

 

Apple has slowing market growth and they've pretty much reached the point of saturation. Much like the article I linked discussed, they likely do it to manipulate their earnings per share. Apple has become a monolith that is no longer capable of innovation, no idea what the next big thing should be. Instead just playing copycat with product innovation for the product lines they already have. It's a shame that Steve Jobs died, no matter how much of a dick he personally was. Tim Cook has bastardized Apple and turned into nothing more than an overpriced "dongle factory". The only thing keeping them afloat is their captive market and their ideologically driven loyalists.

Apple will quickly have the same fate as IBM and Xerox. Forever banished into irrelevancy by other companies that are capable of innovating.

/rant

 

Hey, I resemble that remark!!

 

Me too, ever since the days of the iPod, I have an iPhone 7 with no plans to replace (I will replace the battery when it needs it). And they wonder why their new phone sales have had their slowest growth ever. Maybe because they cling to this notion that moving buttons around, making it slimmer/larger/smaller/adding colors/repeating this formula ad nauseum somehow counts as "innovation".

Wonder how that IBM and Xerox stock has been the last 20 years? Probably not good. Once common household names and products, now any mention of these brands only conjures feelings of nostalgia.

 

I agree with most of this, but I don't see it as manipulating EPS. It does of course increase EPS, but it does so by retiring shares and lowering the share count. It may be manipulation but not in some evil way, more in an accounting way.