As opposed to the large number of penny mining stocks that we have in our portfolios, one aspect of our portfolio where we’re not that diversified are dividend-paying equities.
- EV Energy Partners (EVEP)
- Golden Enterprises (GLDC)
- Hugoton Royalty Trust (HGT)
- Monmouth Real Estate Investment Corp (MNR)
- Pengrowth Energy Trust (PGH)
- Prospect Capital (PSEC)
- Teekay Tankers LTD (TNK)
- Vector Group (VGR)
A snapshot from Yahoo shows the dividends, recent price and P/E and P/B ratios.
I’m reasonable happy with the stability, prospects and dividend yields of the whole group.
A very recent addition is Golden Enterprises, the parent company of Golden Flake Snack Foods. Readers living in the southern United States will no doubt be familiar with these packaged potato chips and onion rings, as they are retailed in states like Mississippi, Louisiana, Tennessee, etc. The company makes mostly stuff that’s delicious and terribly bad for your health.
At the same time, it’s a small old-line company started in a basement by two guys in Birmingham, Alabama. It’s a got a great back story, and here’s part of it:
Then, there was the “Golden Flake Girl”, Helen Friedman, an early employee who was to play a pivotal role in the expansion of Magic City Food Products. Friedman became an owner when she and her mother bought out co-founder Mose Lischkoff. Then in 1928, Helen married Lischkoff’s partner, Frank Mosher. While the marriage did not last, Helen’s association with Magic City Food Products was to endure, because upon her divorce from Mosher, she received the entire company in the property settlement. Under Helen Friedman’s dynamic leadership, Magic City Food Products reached sales of nearly one million dollars – making it an attractive acquisition for the Bashinsky family, who bought the company in 1946.
( read the rest of it here )
I’ve been watching this stock for about a year and a half, and it’s been trundling along $2.50 to $3.50 a share, and paying a reasonable 3% to 4% yield. Low beta (0.52), low institutional ownership (14%), low stock float (12M). I decided to end the courtship, as it were, and consummate with a small position of 1000 shares in our 401K account.
In recounting the trade over dinner, Mrs. 101 had a Jay Leno-esque reaction. “Great, they make potato chips. As if we don’t have enough lard-butts in this country”. So we invested in a company that is indirectly contributing to childhood obesity.
But we also have stock with Vector Group, who is involved in tobacco through its subsidiary Liggett Group. Vector is a solid buy, having metronomically paid cash and stock dividends for years and years.
From a libertarian perspective, I’m only mildly conflicted n these two investments. Cigarette smoking or over-consumption of fatty snack foods are not very good for your health, and I certainly would not advocate either one. But neither are BASE jumping, driving fast bikes, and a raft of other hazardous activities.
I also would not buy stock in ADM or Monsanto, who I think are sowing some dubious seed (sorry!) with massive monoculture and genetically modified foods and livestock.
Before I twist myself into a convoluted pretzel of rationalization, what’s the real difference here? I guess it comes down to personal choice. We do have a choice to smoke or not to smoke. We have a choice to lard up our diet with onion rings and potato chips. But we individually can’t do a whole heck of a lot about GM corn with fish genes escaping out into the biosphere, or GM salmon breeding with other wild salmon, and having heaven knows what kind of a future environmental impact.
So I guess I’ll reserve the right to not buy any Monsanto stock (screw ‘em!), and to occasionally enjoy a delicious bag of potato chips.
Photo Credit: Lyfetime
I’m a big fan of dividend stocks, as about 40-50% of the total gains from equities during various time periods come from dividends themselves. So under-rated when Apple and Google dominate the headlines. Their time will pass and dividend stocks will once again be viewed as a top investment.
Darwin’s Money recently posted..Efficient-Market Hypothesis – Are You a Believer
Hi Darwin, I half hope that dividend payers stay under-valued and under the radar.
I haven’t heard of most of these stocks, which must mean they are really under the radar.
The Biz of Life recently posted..What is the Return on Your Social Security Investment
that’s a really nice spread that you have there! BTW, it’s really interesting to read the libertarian perspective on “sinful” investments.
Roshawn @ Watson Inc recently posted..Is a 15-year Mortgage For Everyone
101c I’m glad someone shares my opinion on vice stocks! I own MO, but wouldn’t want to touch Monsanto for the very same reasons you have.
I still keep an eye on PGH, haven’t taken the plunge yet.
MoneyCone recently posted..Happiness Is Never Having To Pay An ATM Fee!
PGH has good numbers, and I like that it’s now fully converted to a dividend paying corporation. If we have another market downturn, it may take a nosedive down in share price — which I’ll take as a good opportunity to load up on some more shares.
Yeah, I’d like dividend stocks to remain unloved for the next 20 years or so myself.
The Lost Goat recently posted..Scottrade and Bank of America Wouldnt Give Me My Money! Grrrr!
LG, whenever we see any coverage of dividend paying stocks in the major financial media, it’s always the same names, McDonald’s, Walmart, Abbott, etc.
Those are some pretty nice yields on those stocks!
Personally, I refuse to invest in any tobacco-related companies, no matter what the yield of possible ‘value’. I hate tobacco and I cannot support such an industry. However, I just watched my dad die a horrible death from emphysema last February, and I don’t think I will ever get over it.
(I don’t judge those that do invest, just fyi…)
Everyday Tips recently posted..10 Home Renovation Tips – Learn From Our Experience
Kris, fully respect a choice not to support the tobacco industry. That’s why I wrote the post, wanted to get some opinions across the board.
( by the way, I messed up on the reply too, but I get to edit!)
darn it, I wish I proof read before I hit ‘reply’. I meant “yield “OR” possible value…
Everyday Tips recently posted..10 Home Renovation Tips – Learn From Our Experience
My husband’s grandparents used to work at the phone company and they bought quite a bit of bell stock throughout the years. Anyway, they both lived to be in their late 90′s and they were making $800/month on dividends alone from their phone stock. This was a real life saver for them.
When I start investing outside of my 401K again (my retirement plan is one of those age based things), I’m going to take dividends into account and maybe cash them out instead of reinvesting them so that I can see and feel the effects of owning such stocks.
FGA, I’ve heard of people that retired on Walmart stock, by cashing out some of their positions, and living partly on the divided from the rest. Amazing. I wonder what the Walmart of 30 years from now will be.
On our dividends, they’re all being reinvested for now.
101 Centavos recently posted..Food Riots and China’s 12th Five Year Plan
Nice portfolio 101, PGH is the one I know and I like it as they are operating in the Swan Hills area.
I wouldn’t worry too much about ethical investing, to each his definition as it’s a world of relativism out there.
BeatingTheIndex recently posted..2010 Canadian Oil & Gas Top Performers
Hi Mich,
I’m only *mildly* conflicted. And those potato chips really are pretty good.
Very impressive list! I share 1 on your list: “EVEP”, and it’s been phenonimal for me! Too bad I only have $1000 in it (lol).
I’ll have to research the rest on your list, so of which I’ve never seen before…
Money Reasons recently posted..Buying Dividend Stocks For Christmas Expenses
MR,
EVEP was actually one of my mistakes, or lessons learned. I first saw it featured on Modern Graham.com, and bought it in 2009 at around 28 or 27. It climbed nicely to around 35.
I then happened to see in recommended in a financial newsletter I subscribed to, but at a very low entry price of $24. I forget the exact reason for this low valuation, probably because leprechauns and unicorns were spotted in Central Park. Anyways, I sold it for a nice profit, and then regretted it, since it never dropped below 32. I bought back in at 36, having missed out on two quarters of dividends, plus having to have paid trading commissions. Not a terribly expensive lesson, but a humbling one.
Big fan of the PGH holding. I don’t know the others quite as well.
You’re right, now it’s fully converted to a dividend paying corporation, if there is another market downturn, time to take the plunge
Anything on your more immediate purchase horizon?
Cheers,
Mark
My Own Advisor recently posted..Organized cashflow with dividends
Mark, I don’t have any dividend stocks on the buy list, although I’m looking around. I have a long wish list of penny mining stocks, but they’re all outside the buy range at the moment. North American Gem is coming close. I’m going to post a snapshot of my watch list in the next few days.
So far most of our investments are in mutual fund. We have a handful of individual stock but nothing as impressive as yours. I am going to research these right now. You keep writing
that will make my job easier…
This might be a stupid question. How do you find these companies? I mean I have gone about researching and trying to see if they are under valued etc. But if I have not even heard of them, I don’t know where to look. Any magazine recommendation? newsletter? FWIW, I just subscribed to AAII yesterday. Don’t know if I’ll get anything out of it, I wanted to learn more than anything. Is that a good one?
Suba @ Wealth Informatics recently posted..Vanguard vs Fidelity – Which is better
Hi Suba,
Glad you liked the post. Keep the feedback coming, and I’ll keep writing more.
Monmouth, Pengrowth and Hugoton I got from Fred Carach’s book. EV Energy Partners and Teekay Tankers came from some reading on Modern Graham. Links to those are the “Resources” category of the blog – I just tried to insert some links in this comment, and WordPress is not cooperating (curses!). Vector Group, Golden Enterprises and Prospect Capital came from running selection screens on Scottrade and Google Finance. Google has this cool feature that finds and suggests “like” companies similar to the one you’re looking at, and lists their yield and other fundamental indicators that you can customize. Try going into Google finance and punching up EVEP, and see what pops up.
I’m subscribed right now to Northern Miner and a couple of newsletters from Casey Research — although I’m having second thoughts about Casey Research. They came out with a couple of recommendations long after I’d already bought them, one of which was in fact EV Energy Partners. The other was Toqueville Gold Fund. The gold and silver stock picks in their are all miners that I already know about, so I may not be getting my value for money. I do like their “big picture macro analysis, but apart from staying well informed, I don’t know how much real value that delivers. I like their free daily email newsletters. So, i can’t really recommend them for a subscription.
I’m sorry, but I don’t know what AAII is, is that a newsletter?
Yes AAII is “The American Association of Individual Investors”. They recommend dividend stock in their newsletter. I still have not figured out how to use it properly
but apparently it is good.
Suba @ Wealth Informatics recently posted..Income Tax Return Refund Status
[...] 101 Centavos: Dividend Stocks [...]
Monmouth Real Estate seems interesting but I think it is dangerous that they depend too much on one customer, even if the one customer seems solid:
“As of September 30, 2010, the Company had approximately 6,971,000 square feet of property, of which approximately 3,393,000 square feet, or approximately 49%, was leased to Federal Express Corporation (FDX) and subsidiaries ”
the cynical investor recently posted..Facebook or the Writing is on the Wall
Hello CI, thanks for stopping by.
No doubt, the company is overweighted in FedEx, but its lease renewal rate is high, and their other customers, except for Caterpillar, are blue chip and into primary need industries (food and drink).
By the way, did I mention that none of the companies listed in the post are meant to be investment recommendations?