01/30/11 Update

01/30/11

Past Week’s Activity

This was a busier than usual week for me in the market.  I was able to bank some profits in the dividend portion of the portfolio and also  established a couple of new positions.

The Dow Jones Industrial Average flirted with the 12,000 level earlier in the week, with generally good earnings reports from a few companies contributing to the rise.  I  believe that President Obama’s State of The Union address was viewed positively for business, as he mentioned a plan to decrease corporate tax rates.  Late in the week, however, there were a couple of earnings disappointments which contributed to the decline that was primarily caused by the uncertainty due to the political unrest in Egypt, Tunisia and Yemen.  This caused a  fairly broad selloff on Friday.  Uncertainty over just about anything in the world  can initiate or contribute to these types of declines in markets, and the broad based political situations that are evolving can cause emotional responses that feed upon themselves as markets decline.  Depending on the nature of the crisis, however, one must be alert for opportunities that can arise.  The declines typically result in  an overreaction, and they tend to be are short lived.  Temporary reductions in prices can be viewed as buying opportunities for some stocks.  That said, if the problems in the Middle East get worse, things could get worse if the flow of oil is seriously jeopardized.  If this occurs, I would expect some select oil company and oil services stocks to rise.  Also, if the uncertainty increases, it is likely that demand for gold will increase, since this is the traditional “safe haven”.  Gold prices have risen to all time highs in the past 12 months, but have come down slightly from these highs.  I am not making any recommendations about specific purchases.   Above all else, I hope for peaceful resolutions to the problems in these countries.  It appears that the people in some Middle East countries are seeking fundamental political reforms and demanding improvements that will lead to a better standard of living and democracy.

OK, back to a more “On Topic” discussion:

During the past week, the ex-dividend date for The Royal Bank of Canada passed, and since the stock price was already higher than where it was purchased, I sold it, in compliance with the rules I try to follow under this strategy.  This is another rare and isolated example of being able to sell a stock profitably shortly after securing the dividend.  It provides for an immediate redeployment of the funds for one or more of the next dividend candidate stocks on the watch list.

Although the price continued to move up slightly, time was running out as the ex-dividend date loomed, and I purchased a small position in Paychex (PAYX).  As mentioned last week, I think this company has good business prospects as the economy recovers.  That optimism, coupled with the dividend makes this a good candidate in my opinion.   Time will tell if my instincts are correct about the further appreciation of Paychex.  As you can see in the chart below, it moved lower between the time I purchased it and the end of the week.  I think that this was partially attributable to the ex-dividend date passing, and also in part due to the weakness in the overall stock market on Friday.

You will note a new candidate on the purchased list this week.  It is DuPont (DD), which I have purchased and sold in the past successfully.

It did not appear on the watch list last week, as the share price was above $50.   I generally limit candidates for consideration to a share price of under $50.  DuPont, however, dipped below the $50 threshold mid-week, and I started watching it closely.  I picked up an initial position on Friday, just over $50.  If it falls further, I will be likely to add to my position to reduce the average purchase price while the ex-dividend date approaches.

I was also able to sell the combined position of AT&T and Verizon at a net profit on 1/26.  AT&T reported earnings on 1/27, to a  mixed interpretation by analysts, but a decided drop in the stock.  On the surface they appeared to beat the consensus view for earnings, but it was due to the way that some accounting was done.  Also, there were a few items contained in the earnings report that drove the stock down.  For example, the number of new subscribers on AT&T’s wireless network was lower than expected, which is not a good “leading indicator” for revenue in this category in future quarters.  As the earnings date approached, I wanted to sell it if possible, as I am aware that price fluctuations can and do occur coincident with these announcements.  I was able to sell AT&T and Verizon within an hour of each other on 1/26 at a net profit between the 2 stocks.  This frees up some funds for other opportunities, including Bell Canada Enterprises, which treated me very well last quarter.

Closed positions this past week

Here is a summary of the sales of stocks that I have been holding to capture the dividends:

Stock Symbol	Company Name	Average Purchase Price	Average Sale Price	Dividend Captured Per Share
T and VZ	AT&T and Verizon *	$31.10	$31.26	$0.4300 (T) $0.4875(VZ)
RY	Royal Bank of Canada	$52.17	$53.46	$0.5000

• AT&T and Verizon were treated as one combined transaction.  Twice as many shares of AT&T were purchased as Verizon.  In retrospect, this was a bad decision.  When AT&T was sold, it was at a net loss, but the shares of Verizon were sold at a gain that more than outweighed the loss on AT&T.  Dividends have been captured on both companies, and are due to be paid in on 1/31 and 2/1.
• I will consider both companies next quarter, and continue to monitor news and share prices between now and then.

Current Holdings

Stock Symbol	Company Name	Breakeven Share Price	Current Share Price (01/29)	Dividend Captured
HNZ	Heinz	$50.36	$47.62	$0.4500
PCG	Pacific Gas & Elec.	$48.22	$46.24	$0.4550
SO	Southern Company	$37.97	$37.77	$0.4550
PAYX	Paychex	$33.2659	$31.69	$0.3100*
DD	DuPont	$50.1659	$50.29	$0.4100*

* Ex-dividend date has not yet passed

All of the above except DuPont are below where I purchased them.  There is no company specific news that would lead me to believe that any of these were mistakes, so I will continue to hold them.  Heinz’ next ex-dividend date is 3/20, so I may double my small position on this stock to decrease the average purchase price since it is almost $3 below where I first purchased it. 

On the Horizon

Stock Symbol	Company Name	Closing Price 01/22	Dividend Expected	Ex- Dividend Date
DUK	Duke Energy	$18.16	$0.25	02/09/11
LLY	Eli Lilly	$34.76	$0.48	02/11/11
BCE	Bell Canada Enterprises	$35.62	$0.455	03/13/11est
CNP	CenterPoint Energy	$16.03	$0.1975	02/16/11

With the sale of Royal Bank of Canada, AT&T and Verizon, coupled with a few recent dividends deposited, funds are available for making new purchases, and I am waiting for the right opportunities with the above stocks.  Patience, patience, patience.  There are still a few days to purchase DUK or LLY, and over a month remaining for BCE.  I tired to buy BCE on Friday, but the stock did not decline to my limit price.  Maybe it will execute on Monday.  DUK has been strong recently.  I suspect that the investing community is optimistic about its prospects with its recent acquisition.  I will continue to watch and wait for a decline over the next few days.  If it doesn’t happen, more opportunities will replace it.

I added CenterPoint Energy to the list this week, and will begin to watch this company as a possible candidate.  CenterPoint is another utility company, based in Houston, TX.  CNP has been a fairly stale stock with little price fluctuation, yet generally increasing.  The company announced a slight increase in its quarterly dividend late in January, from $0.1950 to $0.1975 per share.  As the economy recovers, the company could benefit from increased demand from businesses and consumers.  It is the general predictability, historical low volatility, and conservative management that makes this attractive to me.  Oh, and the annual yield translates to about 4.8%.

I’ve added charts for both CenterPoint and Duke Energy below.  Note the similarities:  They are both are below their respective 52 week high prices, but have been trending upward.  As they do so, their stock prices are well above their 200 day moving averages.  Each has a 50 day moving average that is above the 200 day average, and the price itself is above the 50 day average in both cases.  It also appears to me that the 50 day moving average is about to rise.  I see these as generally positive indicators.  Each person considering purchasing either of these stocks should do their own research before making their own decisions.

This may provide an opportunity that is similar to what I did with AT&T and Verizon.  The main difference is that DUK and CNP do not compete for the same customer base.  I may purchase shares in both companies, and treat the transactions like 1 aggregate purchase, so that when the weighted average of the price appreciation in the stocks is above the purchase price, I would sell, after capturing both dividends. 

Closing Comments

Last week I purposely avoided posting the update on Facebook, just to see how many incremental visits I would get without doing so.  It was around 10.  This tells me that there are probably 5 or so “loyal followers” who don’t need to be prompted externally to read my blog regularly at this point.  That’s fine.  My real motivations for creating and maintaining this blog are:

1. It forces me to document my decisions and results in writing – this truly makes me think things through more thoroughly
2. I really want to develop a network of people I can communicate with about investments.  Based on the emails I’ve received, this is beginning to occur.

Comments and questions are always appreciated.

Here comes the disclaimer again:  Remember that I am not a licensed investment professional, and that what is contained in this blog should not be interpreted as investment advice.  It is only a strategy that I am employing personally in an attempt to capture short term dividends on selected stocks.  This blog is simply an attempt to provide dialogue and discussion about this strategy.  Each person’s investment goals and objectives are different, and before making any investment decision, each person should do his or her own research.

Finally, if you enjoy reading this, and if know anyone who might also enjoy this weekly discussion, please feel free to copy and paste the URL for this site and forward it to them in email.

Until next week. . .

Ken

1/ 23 Update

01/23/11

Another week has passed, and it is time for the weekly update from the frozen foothills of the Adirondack Mountains.  We continue to experience an “old fashioned” winter here in the northeast – we’ve had 2 measureable snowfalls in the past week (my definition of  “measureable” is that I needed to use my snowblower to clear the driveway), and presently there is about a 3 foot ground cover in the Saratoga area.   After a couple of strange winters with little snow and abnormally warm temperatures, it is somewhat refreshing to see this.  It also bodes well for the local water supply in the spring and summer,  and it has been a boon for the ski industry nearby.  The temperature dipped below zero last night, and it is headed even lower tonight. 

Past Week’s Activity

Over the past week, dividends arrived as expected on 2 stocks whose ex-dividend dates passed recently:

Bell Canada Enterprises paid $0.455 per share on 1/15.  Interestingly with this one, because of the exchange rate between the Canadian $ and the US $, the actual payment per share ended up as $0.4617. 

Cincinnati Financial paid $0.40 per share on 1/17.

I was unable to sell any of the stocks I am currently holding, and did not see any compelling reasons to purchase any of those I am watching just yet, so this was another quiet week.  Heinz did move up from its closing price of $48.63 last week, but it remains below the average purchase price. All of the other stocks being held declined slightly from their closes of last week, but none dropped significantly enough to raise any real concern.  My weighted average price for AT&T and Verizon is still under water, so I continue to hold both.

Current Holdings

Stock Symbol	Company Name	Breakeven Share Price	Current Share Price (01/22)	Dividend Captured
HNZ	Heinz	$50.36	$49.20	$0.4500
PCG	Pacific Gas & Elec.	$48.22	$46.94	$0.4550
T	AT&T	$29.24	$28.33	$0.4300
VZ	Verizon	$34.84	$34.95	$0.4875
SO	Southern Company	$37.97	$38.25	$0.4550*
RY	Royal Bank of Canada	$52.17	$54.27	$0.5000 *

* Ex-dividend date has not yet passed

On the Horizon

Stock Symbol	Company Name	Closing Price 01/22	Dividend Expected	Ex- Dividend Date
DUK	Duke Energy	$18.16	$0.25	02/09/11
LLY	Eli Lilly	$34.76	$0.48	02/11/11
PAYX	Paychex	$32.60	$0.31	01/28/11
BCE	Bell Canada Enterprises	$35.62	$0.455	03/13/11est

No changes from last week.  My funds are somewhat limited presently as I am waiting for some of the currently held stocks to cross above the point where I purchased them.  That said, I may purchase a small position in PAYX early this week.  PAYX has been rising steadily over the past year.  It is diversifying into new areas, such as 401k management, and I think its prospects appear bright as the economy continues to recover. 

Stocks Eliminated From Consideration

Last week I mentioned that I might discuss why I don’t pursue some stocks that pay high yielding dividends.

The selection of a stock is based on several factors.  I  start my process each week by using a filtering tool that is included in the website provided by the brokerage company where I make my trades.  This  enables me to set up as many preset “screens” as I’d like to have, based on a variety of criteria.  I begin by finding companies that have an annual yield that is greater than 3%, and that have an ex-dividend date within the next 60 days.  Depending on how many companies are shown at that point, I use additional criteria, such as price per share.  I tend to select companies whose shares trade for less than $50.  The reason for this is simple:  Risk can be spread over more companies if several are purchased.  Capital is limited, and if high priced stocks are chosen, they will require a higher percentage of funds available.  Since there are usually 30 to 50 stocks initially on the list, limiting the candidates to those that are trading under $50 is not an impediment to finding high quality candidates.  I then begin to examine as many as I can.  As the weeks pass, I learn about quite a few companies, and am developing a list of possible “repeat purchases” from quarter to quarter.  That sad, I do look at each stock individually, even if I have purchased it before, to assure that it has a profile that I consider attractive.  I look for steady sales growth, steady to growing gross margins over time, and steady to increasing net profits.  I also examine how many analysts are following the company, and what the trend is in terms of "buy" recommendations.  Depending on what stocks I presently own, I add others, trying not to put too much money into any single vertical market.  As a general rule, I like companies that are the following fields: utilities, telecommunications, pharmaceuticals, some financial institutions, some manufacturing and some that sell consumer goods.  The utility and telecommunications companies in particular tend to be fairly predictable in terms of revenue and earnings, and they also tend to trade in a narrow range.  I look at the financial statements (mainly the quarterly and annual income statements and balance sheets) and also look for any news that might have an impact on the future prospects for the company or industry.  I examine a number of things, such as free cash flow, to get a sense as to whether the current dividend payment is sustainable over time.  When a company announces that it is reducing its dividend, the price of its stock usually declines.  If you had purchased that stock, you could be left holding shares of that company at a loss for a long time.  

The research can be a very time consuming process, but as I examine  each company, I take notes for future reference.  My goal in this process is to consciously try to find attributes that I don’t like about the company,  giving me a reason to cross it off the list for possible purchase before its approaching ex-dividend date.

Here are a couple of examples:

Pfizer (NYSE – Symbol PFE)

Pfizer is a well managed, leading Pharmaceutical company based in the US, that pays a dividend with an annual yield of about 4.3%.  I generally like large Pharmaceutical companies, and it is selling for a price per share that is well below my $50 maximum guideline, at just over $18.  

Here is what I don’t like about PFE:  The ex-dividend date is 02/02, which is one day after they announce their quarterly results 02/01.  The timing of the 2 events, in my opinon, introduces an unacceptable level of risk for this particular strategy.  In order to capture this company’s  dividend, shares need to be purchased ahead of both the earnings announcement and ex-dividend date.  Many institutions hold shares in this stock, and there are several analysts who research it and provide their opinions and estimates on a variety of metrics.  If the company’s results don’t measure up to the consensus view of analysts for things like quarterly revenues,  gross margins, net income, or any of a number of other factors that the company usually discusses on the conference call regarding the results such as the outlook for the coming year, the pipeline of new products, or even the results of a specific product that may be key to the company’s growth, a selloff in the stock can occur.  The result is usually a decline in the price of the stock.  By the way, I am not inferring that that is going to happen with Pfizer.  They may, in fact, report positive news, and the price os the stock may rise.  But since my goal with this strategy is to sell the stock at a slight profit shortly after the ex-dividend date passes, the timing of Pfizer’s quarterly earnings announcement and its ex-dividend date simply represent a potential for volatility that I choose not to accept.  There are other companies where the probability of an announcement that could affect the price of the stock is not as great.  If you read other blogs on dividend stocks, you will see that a lot of people like Pfizer. Again, don’t misunderstand or misinterpret the hypothetical scenario above: To be clear - Pfizer is a great and well run company.  I just don’t like it for this particular strategy due to the timing of its earnings announcement and its ex-dividend date.

Compare the timing on Pfizer to another large Pharmaceutical firm, Eli Lilly, that I am watching and considering purchasing.  Lilly will announce its quarterly results on 01/27, and it goes ex-dividend on 02/11.  The time between these events should allow for any short term volatility to settle from any positive or negative information contained in the company’s quarterly results.  By the way, Lilly has a forward annual dividend yield of about 5.6%, compared to Pfizer’s 4.3%, so the return is higher, with less inherent risk for price fluctuations occurring due to the timing of the quarterly results announcement compared to the ex-dividend date.

Here is another example that is perhaps a bit more straightforward:

Cedar Shopping Centers (CDR) appeared on my initial screen list this week.  Quite frankly, I had not heard of this company before, but the dividend shows an annual yield of over 6%.  I began to look into it, and found that it is a Real Estate Investment Trust that owns retail shopping space in several states, essentially making money by managing properties and collecting rents from retail tenants. 

So what’s not to like?

1. I first noticed that the price of the stock has declined by about 20% over the past year.  This led me to ask “Why?”  Upon further examination of the income statement, I learned that CDR has been unprofitable over the past 4 quarters.  Now, you might say “but the economy is recovering – this could be a bargain as the retail environment improves”.  Although this may be true, for this strategy I look for companies with growing sales and earnings, and generally flat to rising stock prices, so I crossed it off the list.

2. If the above isn’t enough of a reason, here is another – the average volume daily volume of shares traded is just over 200,000.  I prefer companies for this strategy that trade over 1,000,000 shares per day.  When it comes time to sell any stock, a higher average daily volume provides a better opportunity to sell than those with lower average volumes.  

My conclusion: Despite the attractive yield, I will not consider buying shares of CDR at this time.  I crossed it off the list for now, but will look at it in the future, since the yield is attractive.  If their business improves, I might consider it in the future.

That is it for this week.  Again, comments and questions are appreciated.  If you have any dividend stocks that you are considering, let me know, and I will provide my opinion on them.  Please remember that I am not a licensed investment professional, and that what is contained in this blog should not be interpreted as investment advice.  It is merely a strategy that I am employing personally in an attempt to capture short term dividends on selected stocks.  This blog is simply an attempt to provide dialogue and discussion about this strategy.  Each person’s investment goals and objectives are different, and before making any investment decision, each person should do his or her own research.

Next week I hope to have time to explore a strategy that I sometimes employ to protect profits on stocks, using Covered Call Options.  Between now and then I am considering this for one of the stocks I am holding, and will provide more detail next week.

The number of visits to this site continues to increase, and I noticed that someone in Germany has visited the blog.  Greetings, Matthew!  (I think).  Or perhaps it is my former colleague Rolf.

Please feel free to copy and paste the URL for this site and forward it to anyone you know who might enjoy reading it.

Ken

Weekly update 01/15/11

01/15/11

Greetings to all once again from the dead of winter.  We survived another assault from Mother Nature or Old Man Winter (take your pick of gender specific blame) this past week in the Northeast, with a total accumulation of about 18 inches of snow in the Albany area.  We refer to this as a "dusting" here.  Schools were closed for a day, but we are back to normal now, and our temperature this morning is a balmy -5 F.  It reminds me of Palm Beach, except there aren't any sand fleas.

Updates since last week:

The week started off as expected, with the dividend of $0.45 per share from Heinz arriving in my account on 1/10.  This is one company that I am holding that I haven’t mentioned in past weeks, other than its appearance on “Currently Holding” list.  I bought HNZ on 12/15 at $50.36, and quite frankly, it has not performed well since then. 

However, I don’t see any specific news that would have directly caused the decline in the price per share, so I will continue to hold it.  In fact, now that 4 weeks that have passed since the initial purchase, I may look to increase my position if the price continues to decline, and hold all of the shares at a lower average price until the next ex-dividend date, which will be 03/20/11.  The annual yield on the dividend is about 3.7%, which is respectable.  From what I see on Heinz’ income statement, annual sales, margins and net profits have been relatively flat over the past 3 years.  My belief about the price of the stock is that it is a normal fluctuation downward in an otherwise upward trend.  The strategy of doubling a position will reduce the average cost, making an exit easier to accomplish after the next ex-dividend date.

The expected dividend of of $0.455 per share for Pacific Gas & Electric (PGE) was paid on schedule on 1/15.  The share price is still about $1 below where I purchased it, but the shares continue to trade within what I consider a normal range.  I will continue to hold it until it moves to the point where I can sell it with a small profit, and if necessary, continue to hold it until the next ex-dividend date if it remains below my break even point.  Below is the one year chart for PCG.  One of the technical indicators I look for in this strategy is that of a steadily increasing 200 day moving average.  If the 200 day MA is increasing, this shows that despite daily fluctuations, the share price is generally rising.  (Note: I am trying to upload a png file here for the first time - I hope it works!)

  

This week also saw a rise in the price of Blackrock Kelso Corp (BKCC).  When the ex-dividend date passed on 12/10, the price per share dropped a bit, as expected.  It took a few weeks for it to recover, but it finally rebounded and I was able to close my position at  $11.73, versus my average purchase price of 11.62.  Coupled with the $0.32 dividend that arrived on 1/2/11, I can declare victory and move on, using the funds from the sale of the stock to another, to capture another upcoming dividend.  The annual dividend yield on this company is higher than what is typical on the stocks that I purchase under this strategy – this one has a whopping 11.9% annual yield, as the company returns a high percentage of their earnings to their shareholders.  This metric is called the “Payout Ratio”, and it describes the percentage of earnings that are paid out in a dividend.  The funds that are left are used for other purposes as the company funds its ongoing endeavors such as expansions, new market entries, etc.  Blackrock Kelso is a private equity firm that works with middle market companies.  This is somewhat riskier than they typical  investment I make in corporations that manufacture and distribute goods or that provide services, such as utilities.  The daily volume of shares traded is also somewhat lower than I normally look for when choosing a short term dividend play stock, but this had other attributes that I felt made the risk / reward worth it, and it worked out well, so I will keep BKCC on my list for another possible purchase next quarter.

Verizon announced their plans to market the Apple iPhone as was widely expected.  The entire telecommunications sector was not in favor this week, as concerns about price wars in mobile phones and the effect on margins for these companies continued.  Both AT&T and Verizon continued to trade in a narrow range, basically going neither up nor down significantly.   Selling Verizon would actually be a profitable trade at this point, but AT&T would not, and since I bought twice as many AT&T shares as Verizon, I will continue to hold both into next week, until I am at least at a breakeven position on the weighted average for the combined position.  I have no hesitation in continuing to hold both if necessary, as they each have a very nice annual yield.

Most of the other stocks owned moved very little this past week, with the exception of the Royal Bank of Canada (RY).  It has increased by more than $2 from the time I purchased it.  The ex-dividend date is 1/24.  I’d expect to see a decline of about $0.50 to account for the cash that will be committed to be paid to shareholders on 2/23, which is the dividend payment date.  Having the stock move up is the best of both worlds – price appreciation and a dividend!

Southern Company stock also moved up slightly and is now above the point where I purchased it.

I didn’t make any new purchases this week in the dividend strategy portion of my account, but with the funds from the sale of BKCC now available, I will continue to watch the market closely, to capitalize on short term selloffs of the companies I am watching that are approaching their ex-dividend dates.  It is sometimes better to wait and do nothing than to buy too soon, and wish that you had waited.  Patience is indeed a virtue when it comes to investment strategy.

Current Holdings

Below is the updated list of dividend stocks I am currently holding.  The only change from last week is the Blackrock is no longer there, since it was sold this past week.  Note that going forward I will show the Current Price in red if it is below where I purchased it, and in green if it is above the purchase price.

Stock Symbol	Company Name	Breakeven Share Price	Current Share Price (01/15)	Dividend Captured
HNZ	Heinz	$50.36	$48.63	$0.4500
PCG	Pacific Gas & Elec.	$48.22	$47.33	$0.4550
SO	Southern Company	$37.97	$38.50	$0.4550*
T	AT&T	$29.24	$28.43	$0.4300 *
VZ	Verizon	$34.84	$35.46	$0.4875 *
RY	Royal Bank of Canada	$52.17	$54.40	$0.5000 *

 * Ex-dividend date has not passed yet.

On the Horizon

There are a few companies that I will continue to watch over the next few weeks.  The first 3 were listed last week, and have each moved up slightly in the past 5 trading sessions.  There have not been dips in the price that were compelling enough to jump in, and there is still time between now and the ex-dividend date to make a purchase. 

Stock Symbol	Company Name	Closing Price 01/15	Dividend Expected	Ex- Dividend Date
DUK	Duke Energy	$17.92	$0.25	02/09/11
LLY	Eli Lilly	$34.91	$0.48	02/11/11
PAYX	Paychex	$32.35	$0.31	01/28/11
BCE	Bell Canada Enterprises	$35.76	$0.455	03/13/11est

Duke Energy had a significant announcement early in the week.  They are merging with another utility company, Progress Energy (PGN).  PGN  was one of the stocks I have followed for this strategy, but have not purchased in the past.  It has provided an annual dividend yield of over 5% itself.

I am not an expert on mergers and acquisitions, but from what I have read, the financial transaction to accomplish the merger appears to be reasonable for the shareholders of both companies.  Shareholders of PGN will receive 2.6125 shares of DUK, which represents slightly more than a 6% premium over the average recent price for PGN shares.  The combined company will serve over 7 million electric customers spread across 6 states.  The merger is expected to make a positive contribution to earnings in the first year. 

In situations like this, I think it is often good to “wait and see” what transpires.  I have seen well intended mergers and acquisitions fail miserably over the years, but in this case, I am comfortable with keeping DUK on my list of potential purchases, since both companies are in the same industry, and one of the primary benefits will be the ability to consolidate administrative operations between the 2 firms, squeeze out duplicate costs, and improve profitability.  Both firms were already profitable and well managed going into the merger, and my belief is that this will be good for the long term value of the combined entity, which, by the way, will retain the “Duke Energy” name.

Bell Canada Enterprises (BCE) earns a spot once again on my watch list, as I am looking out to mid-March at this point.  I did very well with BCE last quarter.  The price of the stock has moved up slightly since I sold it after last quarter’s dividend, and there don’t appear to be any dramatic changes that are likely to impact the company in the next couple of months, so will watch and wait, and hope to make an initial purchase if there is an opportunity with temporary weakness in the price per share.

My only possible hesitation in purchasing BCE again is that I already own both AT&T and Verizon, and adding BCE would put a lot of my dividend strategy investment dollars in one vertical – telecommunications.  I’ve discussed the wisdom of diversifying in a past blog, and this is something to consider.  Hopefully I will be able to exit T and VZ with a net profit before purchasing BCE.

Closing

Again, I appreciate seeing the statistics as the viewership of this blog continues to grow.  I’ve now had over 125 visits, and I noticed that India is now included – Hello to my former colleague , Nitin in Mumbai! (I think)

I am open to providing my thoughts on stocks that you might want me to evaluate for potential dividend captures.  Post a question on the blog, or send me an email (ken.hannan@gmail.com) if you’d like – I can include it with or without posting the source of the question.

Next week I will also try to include a discussion of some high dividend yielding companies that DON’T make it to my watch list, and why.

Have a great week.

Ken