Thursday, April 19, 2012

Motley Fool Article on XIN Taken Down/Intel/New Exchange Traded Bonds/NYB/GOP: Trust Us-Our Tax Plan is Revenue Neutral

The GOP plans to cut the top tax rate to 25% for both individuals and corporations, claiming that they will target the elimination of other tax code provisions to make their generosity revenue neutral. Romney recently identified some provisions that he probably would eliminate--the wealthy's deductions for state income taxes and mortgage interest for second homes. As you would expect, the numbers do not add up to being anywhere close to revenue neutral, as pointed out by James Kwak in this article at The Baseline Scenario; Simon Johnson's column at the NYT; and in the The Atlantic magazine. An article by Jay Bookman in the AGC points out all of the tax credits, exclusions and deductions that would have to be cut to pay for the reduction in tax rates. Those items include the mortgage interest deduction, earned income tax credit, deduction for property taxes, accelerated depreciation, child credit, and many more.

None of those proposed deduction eliminations mentioned by Romney address, of course, the revenue lost from the reduction in the corporate tax rate. And, only the gullible believe that the GOP will cut corporate tax breaks to make up for the substantial revenue losses resulting from the reduction in the corporate tax rates proposed by that party.  It must also be remembered that the GOP tribe members believe that the Bush tax cuts actually increased federal revenue, notwithstanding all credible evidence to the contrary.  (The AtlanticTax Cuts Don't Boost Revenues - TIMECBO Data Show Tax Cuts Have Played Much Larger Role than Domestic Spending Increases in Fueling the Deficit — Center on Budget and Policy Priorities; page 5 Testimony of Mark Zandi .pdf; Figure 1 Center on Budget and Policy Priorities)

It is incomprehensible why anyone (other than TBs) believes, based on the historical record, that either the Democrats or the Republicans will do anything constructive to avert a financial meltdown that will eventually be caused by the federal government's debt. Again, I would simply highlight that the total debt of the U.S. was less than 1 trillion dollars when Ronald Reagan first became President. The U.S. debt was $907.2 billion in 1980. (Appendix in article at United States public debt). It is now $15.661+ Trillion. Debt to the Penny (Daily History Search Application).

Motley Fool took the article about Xinyuan Real Estate, which contained incorrect information about XIN's 4th quarter earnings, off its website yesterday. See Item # 4 in Yesterday's Post:  Motley Fool Article on Xinyuan Consequently, it is no longer available for viewing.  After increasing its annual dividend rate from 10 cents to 16 cents per ADS share, and changing the distribution from an annual to quarterly payments, Xinyuan Real Estate rose 14 cents in trading yesterday to close at $3.55.

SunOpta, a LT selection, recently crossed above its 50 day and 200 day SMAs. STKL Interactive Chart (item # 2 Bought 50 STKL at 5.25, see snapshots of prior realized gains in that post).

The shareholders of FirstMerit voted against that bank's executive compensation plan. WSJ I will be interested to see the First Niagara results.

1. New Exchange Traded Bonds: A number of companies have listed new exchange traded bonds this year. None of them are attractive to me at their current prices. I have them on my exchange traded bond monitor list just in case the prices dive for no good reason.  

Types of Exchange Traded Bonds Other Than Baby Bonds:

I hope this trend continues. Bonds should trade like stocks. All of the foregoing are traded on U.S. stock exchanges just like common stocks.  

A bond recently issued by Hercules Technology Growth Securities will likely start trading on the stock exchange around 4/30 under the symbol HTGZ. SEC Form 8-A I own the common shares HTGC which will voluntarily delist from the Nasdaq in order to join the NYSE. The Hercules senior bond has a 7% coupon and matures on 4/30/19. Filed Pursuant to Rule 497

2. Intel (own 273+ shares): A snapshot of my Intel share purchases can be found at  Intel. I quit using the dividend to purchase more shares after September 2011. All of those purchases were made with cash flow from dividends and interest payments. 

Intel reported first quarter adjusted net income of 56 cents per share on revenues of $12.9 billion. The consensus estimate was for 50 cents on $12.84 billion in sales. SEC Filed Press Release The GAAP number was 53 cents. The non-GAAP E.P.S. excludes the amortization of acquisition-related intangible assets and the related income tax effect. The company generated approximately $3 billion in cash from operations during the quarter and repurchased $1.5 billion in stock.

Intel shares declined 52 cents in trading yesterday to close at $27.94.

My total average cost per share is $17.82:

Unrealized Gain As of Yesterday's Close=+$2,768.02
Importantly, the dividend yield at a total cost of $17.82 is about 4.71%, based on the current quarterly dividend of 21 cents per share. Intel Corporation - Dividend Summary Since the cost per share remains constant with no additional purchases, the yield will continue to rise whenever Intel increases the rate.

Intel Quarterly Dividend Rates:
2003: 2 cents
2004: 4 cents
2005: 8 cents
2006: 10 cents
2007: 11.25 cents
2008: 12.75 cents for the 1st Quarter and then 14 cents
2009: 14 cents
2010: 15.75 cents
2011: 18.12 cents for the first two quarters and then 21 cents
2012: 21 cents for the first two quarters

Item # 6 Common Stock Dividend Growth Strategy

3. New York Community Bank (own 150 shares: Regional Bank Basket Strategy): New York Community Bancorp reported GAAP earnings per share of 27 cents for the 2012 first quarter, one cent better than the consensus estimate. The Board declared the regular 25 cent per share quarterly dividend.

As of 3/31/12, the net interest margin was 3.24%; the cash efficiency ratio was 39.94% and 41.39% using GAAP; the return on average tangible assets was 1.24%; the tangible equity to tangible assets ratio was 7.64%; NPLs to total loans stood at .85%; and the allowance for loan losses on non-covered loans to non-performing non-covered loans was 44.68%.

This report is discussed in this article at TheStreet.

New York Community Bancorp shares declined 32 cents in trading yesterday to close at $13.33. While it is questionable whether this bank can continue to pay a 25 cent share quarterly dividend unless earnings significantly improve (item # 2 NYB), the dividend yield at that rate is about 7.5% at a total cost of $13.33 per share.

Bought 50 NYB at $11.3 October 2009
Added 50 NYB at $11 October 2009
Added 50 NYB at $12.79 February 2012 (snapshot shows prior realized gain of $331.03 in this post)

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