"Redneck Motor Homes" - if only they paid dividends
As I was editing the notorious 101 Centavos Dividend Portfolio that is featured on this site, it occurred to me that some of the dividend picks shared certain characteristics that would not be out of place wherever banjos are playing and teeth are few and far between.
What do rednecks call duct tape? Chrome.
Lot of blog posts in the personal finance arena devoted to retirement. Have your house paid off, do whatever you want, when you want it, with good friends and quality time. Well, if you think about it, there’s plenty of rednecks how have that kind of lifestyle right now. Now, they may not have much in the way of material goods (call them minimalists), but they sure can go fishin’ when everybody else is commuting. They have developed sources of reliable passive income. Sure, it’s in the way of food stamps and welfare assistance, but they sure don’t have to expend a lot of effort for it.
Vast swaths of the country are painted red(neck). It just could be, that’s about as reliable a consumer constituency as you could hope to find. Hell, we could be ridin’ a gravy train on biscuit wheels.
Armadillo… it’s the other ‘possum meat. Only on the half shell.
The portfolio, as it now stands, has more than a couple of companies that cater to this consumer group. Take a gander at this:
eligibility for the Redneck Portfolio
Beer, cigarettes, pork rinds and trailer parks. Seems like a natural fit to me. Yeee-ha!
Famous redneck last words: “Hey y’all, watch this!”
So what other companies could be a good inclusion in this profitable niche?
Guns.
Can’t hardly find a redneck that’s not well armed. Trouble is, many well-known names are either foreign companies or privately owned, or if publicly traded, don’t really offer a good dividend.
Case in point is Ruger, officially known as Sturm, Ruger & Company (NYSE: RGR). Good profitable company, with high ROA and ROE rates than are purtier’n a speckled pup (as the saying goes). The company just churns good and dependable products. Their recently introduced lines of compact pistols and revolvers designed for concealed carry has been hugely popular and profitable. The endlessly customizable Model 10/22 rifle has almost a cult following. And their .38 and .357 revolvers have a well-deserved reputation for being indestructible.
But they’ve only recently (and spottily) started paying a dividend, and at a skimpy 1.18% yield, not exactly a barn-burner. Also, as you can see from the five-year chart below, their stock price has gone ballistic (hah! pun entirely intended) in the last year from below $20 to over $40 a share. Don’t feel much like chasing trends.
Sturm, Ruger & Company
Perhaps a better candidate for dividend investing would be Olin Corporation (NYSE: OLN). They’re the outfit that bought out the ammunition side of Winchester. Most of their business, about 65%, is dedicated to the commodity chemical sector, producing Chlor Alkali products like bleach and caustic soda. The rest is ammo. The dividend yield is a not bad $0.20 a share or 3.62% per annum. Good Steady Eddie company (low P/E), been around forever, and paying divvies since the late 80′s. Good profit and ROI numbers, and a not too outrageous price-to-book.
I have some minor doubts about OLN‘s enjoyed synergy between the two business groups. Sort of like making lawn chairs and steel beams, or pretzels and fighter jets. But only it’s a minor concern. Nothing like compared to doggies like Smith and Wesson. What a turd of a stock. The management must be as useful as chickenshit on a pump handle. Shameful way to screw up a great brand.
What do a divorce in Arkansas, a tornado in Kansas and a hurricane in Florida have in common? Someone’s fixin’ to lose ‘em a house trailer.
So what other companies could be candidates?
Illinois Tool Works (ITW – 2.79% yield) - Bubba’s gotta work somewhere…
Molson Coors Brewing Company (TAP – 2.91% yield) – When the Bud runs out, Coors is a good second choice. Molson, on the other hand, only for the fancy folks in the double-wides (err, sorry, manufactured homes). Or Canadians.
So, dear readers, what do you think about this portfolio concept? Nuttier’n than a tree full of squirrels, or smarter than a barn full of owls?
Any ideas on which undervalued dividend-paying stock could be a good fit for this under-served consumer segment? I’m open to suggestions.
When a barn fills up with owls, generally how many owls will be in there? I always pictures them as solitary hunters.
I’m down with the concept… if others are ignoring this corner of the market, you can lead the redneck investing revolution!
PK recently posted..How Did Mitt Romney Get a $20.7 Million IRA?
Hmm, I’ve heard both, a tree full of owls, and a barn full of owls. But you’re right, owls aren’t known to be too chummy.
The words ‘redneck’ and ‘revolution’ together in one sentence is scary enough. Think of the squadrons of armed pickup trucks.
To me, Ruger just seems like a company to trust on instinct. I love my Ruger P95 and I know most Ruger owners feel the same way about their products.
My dad worked for Olin for 20 years in the original East Alton facility, and retired when Global Brass came in and bought up what they could get. East Alton is definitely urban redneck central.
I haven’t been following them much since he retired.
John | Married (with Debt) recently posted..Talk About Money: How to Do It the Right Way
You’re right, John – Ruger has built up very good brand loyalty, though their chairman ruffled a few feathers in the 90′s with his comments on rifle magazines. I’ve decided to put in on my watch list in case the market swings down a little.
Wow, that’s a big increase on Sturm, Ruger & Company. A 100% return in a year is awesome. I wish the dividend were better though That’s a very interesting picture at the top: very creative
Roshawn @ Watson Inc recently posted..Do You Have The Courage To Be Wealthy?
Isn’t that travel trailer pretty wild? Whoever built it must have driven in the last rusty nail, stepped back, and thought something like “Damn, that looks good”.
Funny post. I’m not sure if I’ll be picking stocks by their redneck factor though.
Andy Hough recently posted..Credit Card Cash Back Strategies
Hi Andy – just a fun experiment. If there was a company that sold collard greens and boiled peanuts and paid a dividend, they’d be on the list.
I think it’s a pretty good concept, actually – note how low the RGR price got in 08 – it could have partly been the recession, but could have also been because people were afraid of guns getting taken away.
Also, i believe the saying is “holy my beer and watch this”
Jeff @ Sustainable Life Blog recently posted..The Easy Workout
Hi Jeff – ‘Hold my beer and watch this!’ I think is for weddings.
Entertaining as always, my friend. I’m not sure I’m qualified to comment on the financials, but I enjoyed the post and the jokes nonetheless.
Jeffrey recently posted..37 Must-Read Posts for Tax Savings
Hi Jeffrey – thanks for dropping by and for the kind words.
You captured it, my friend, so well. Redneck might be called happy people. As I always believe it, if you are happy in a barn, or a trailer, or in a tent and don’t need anything else, you’ve achieved your destination.
Aloysa @ My Broken Coin recently posted..Why TV Female Characters Never Rocked Until Now
Aloysa, I think you just ran through some available choices of redneck shelter.
But yes, if you can be content in a tent, there’s not a whole lot you need.
Oooo what about a nascar company like DVD? I don’t know anything about them though or nascar for that matter lol
Evan recently posted..You Have Absolutely No Patriotic Duty To Pay High Taxes
Fits all the criteria, except dividends. Good pick, though.
Wow, Ruger is doing pretty well. I don’t know anything about redneck and it’s probably not a good idea for me to jump in now.
retirebyforty recently posted..HARP 2.0 Is Not Working For Us
Great concept & fun post! Can we include Walmart? I’m hoping the whole country doesn’t end up spending mainly on beer and guns. It could get doggone dangerous. Yaheah? Jimbob grab me a nothahun.
Maggie@SquarePennies recently posted..What Does Sustainability Mean in Personal Finance?
Right on the money, Maggie!! How could we forget Wal-Mart?! You can get both beer *and* guns at Wally World.
Add in a 2.38 dividend, low beta and P/E, and we’ve got a winner.
lol, awesome article 101!
Say, that second picture looks like my neighbor’s house… HEY!… (lol).
Those pictures are awesome!
MR recently posted..Are You A Money Hoarder?
Wow, you got a high-rise in your neighborhood?
I guess rednecks puts gas in the truuuck, so all that oil and gas goes with the theme…(+ there’s the gas-guzzling Nascar factor)…
I would be quite concerned with the concentration in energy stock, though. If the economy struggles, less gas gets consumed (think industrial production, mining, interstate trucking etc)…(Betting on “war with Iran” factor, perhaps?)
Also, 3 of 17 stocks in the Brazilian Real (a relatively volatile currency), could hurt if the exchange rate goes the wrong way and the risk of government intervention (Petrobras is majority state-owned company) is also possible. The price of the stock dropped precipitously last year because of state intervention. (disclosure: I am actually a shareholder myself)
Very entertaining post! Reminds me a little bit of the “fridge and medicine cabinet” stocks that Cramer always talks about…
Kevin Mzansi recently posted..This year, Unleash your Dragon….
Hi Kevin, thanks for stopping by… I didn’t watch Jim Cramer myself, but I don’t disagree with food being a good investment (ya gotta eat!).
I like oil and gas. Go with what you know.
Wow, I bet you won’t find that investing strategy anywhere else. You need to copyright that and write a book. Great post!
Good idea, Jason. “Invest Like A Redneck” could be a catchy title.
I agree with Aloysa. If you have found happiness and contentment in your current situation that is what matters. Who cares what anyone else says and thinks. They aren’t in control of how you feel and what leaves you satisfied.
Hi Miss T – I’m happy most of the time, but then again, I’m only an apprentice redneck.
Great post! I love the redneck picks they are sooo true, I know I live in PA
though I must admit I know nothing about picking stocks.
Hi Suzanne, I occasionally write about stocks, although in no way shape or form or fashion is that a recommendation to do anything except read the blog every day.
Thanks for dropping in…
I’m interested in the low beta on RGR, while pretty consistent EPS and a slowed revenue growth rate. Interesting. TAP has a fantastic dividend. ITW I made a killing on back in the day…can’t remember now why I sold. My pic for today: TAP.
Two questions:
1) Do you laugh to yourself the whole time you write this $#!?
2) Did you ask permission to photograph my high rise?
AverageJoe recently posted..I’m Not an Expert on Everything
TAP it is then. Cheers!
I got that picture the good old-fashioned way: I cut and pasted.
What about International Speedway Corp (ISCA) owner of NASCAR, or Gaylord Entertainment (GET) owner of the The Grand Ol’ Opry?
The Biz of Life recently posted..Quote the of Day: Mitch Daniels
Fantastically appropriate choices, Biz. Regrettably, they don’t pay dividends.
That redneck house looks a little bit like a Tumbleweed! (but I won’t mention this to Jay Shafer who’s built a whole company on this premise!) Very entertaining post on stocks.
Little House recently posted..Stash Some Cash with Mind Bending Tricks
I was thinking that you might like the photo when I put it up!
Have you ever lived in a trailer? I’ve had the misfortune…very bad memories from my childhood.
As someone who’s trying to break free from the redneck lifestyle of so many of my relatives- I am both offended & amused by this post.
I just like the feeling I get knowing, because of me, there are at least four full sets of teeth (my wife, kids & myself) at every family reunion!
I find it ironic that people are thought less of for having less money and living in a trailer – BUT, people who have more money buy (travel) trailers to spend their recreation time in on the weekends!
Matt recently posted..How to Raise a Millionaire on Rambling Road
LOL!! Dave, rest assured the intent was to amuse, not to offend.
Yes, I’ve lived in a trailer, but that was overseas and in different circumstances. I’ve even worked for a company that made trailers, um sorry, manufactured homes.
I’m not sure if it pays a dividend, but Aldi is very popular around here for low cost groceries. I’d think it would be a good buy. What about clothes and shoes, or an outlet for lower cost shoes like Payless? As much as people may not want to spend much on those things they do need to buy them, and not always at a resale place. One final thought: auto part stores. Rednecks need to change the oil and buy Bondo to keep their car together, right?
Linda recently posted..Look, I’m writing!
Not sure if this fits the stereotype entirely, but what about Harley Davidson? Not saying that all rednecks ride Harley’s, but many Harley riders resemble rednecks. Years ago I followed the stock of the company. Last I knew they operated on a debt-free basis. Not sure if their stock pays good dividends though. Could be worth checking in to for this niche portfolio of yours.
Matt recently posted..Don’t Be Stupid! Get the 15-Year Mortgage
Harley Davidson is a great stock, with a great brand and a built-in following. There’s been some great suggestions so far, and although not all of them pay a dividend, a new approach may be warranted in building a portfolio for flyover country.