Stable Vix Pattern (Bullish):
Links to SeekingAlpha Instablog, Articles and Comments:
South Gent's Instablog | Seeking Alpha
South Gent's Articles | Seeking Alpha
South Gent's Comments | Seeking Alpha
South Gent's Instablog | Seeking Alpha
South Gent's Articles | Seeking Alpha
South Gent's Comments | Seeking Alpha
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Recent Developments: While many may be pleased by the upward jaunt in U.S. stocks, with no correction since the 2011 summer, this kind of enthusiasm for any risk asset give the OG the shakes.
S & P 500 Closes:
October 3, 2011: 1,099.23 Historical Prices | S&P 500
April 28, 2015: 2,114.76
However, notwithstanding that emotional predicament, I recognize a powerful bull when I see one. I have noted frequently over the past year or so that I will require two pre-conditions before significantly reducing my stock allocation:
1. Trigger Even in my Vix Asset Allocation Model: The last one occurred in August 2007: Stocks, Bonds & Politics: VIX Chart from 2007: Alerts and Triggers Major Disruption of Cyclical Stable Bull VIX Pattern
AND
2. A 5% decline below the 200 day SMA line for the S & P 500.
The Case-Schiller index for the 10-City Composite Index increased by 4.8% Y-O-Y and 4.3% for the 20-City Composite. The largest 1 year positive change was Denver at 10%.
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General Electric: I quit reinvesting the dividend several years ago. My last discussion about GE was made in a SA article when I bought just 30 shares in an IRA: Bought General Electric In Roth IRA At $23.86 - General Electric Company (NYSE:GE) | Seeking Alpha
Taxable Account GE Dividend:
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Zurich Insurance Dividend:
I received my annual distribution from the Swiss company Zurich Insurance last week.
No Swiss withholding tax was paid since the dividend was not sourced from earnings but from capital surplus. The dividend is consequently treated as a return of capital that is not currently taxed by the U.S. but lowers my cost basis by an equivalent amount. That has been the case since I bought 100 shares at $24.72 (2/4/12)(symbol later changed to ZURVY from ZFSVY at the time of purchase)
I have now received 4 annual distributions. Given the ROC dividend classification, my cost basis is now slightly over $17.
The $2 fee is paid to the ADR custodian.
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Roche Dividend:
Dividend Amount: $50.19
Tax: $7.53
Tax Rate: 15%
Switzerland 's Tax Treaty with the U.S. (15% Tax Rate in Article 10)
Brokers had until 3/19/15 to file the necessary documentation asserting treaty rates for their customers. The ex dividend date was 3/6/15. Roche DTCC Notice
That needs to be contrasted with what the Swedes are doing to U.S. citizens, as noted below, effectively undermining Sweden's Tax Treaty with the U.S.
***************************************
Swedbank Annual Distribution Received Minus 30%:
Swedbank joined the list of Swedish companies who have withheld a 30% in contravention of Article 10 of the Alleged Tax Treaty Between Sweden and the United States. Sweden's Alleged Tax Treaty with the U.S.
I will receive on or about 5/1/16 the annual dividend Svenska Cellulosa AB ADS (SVCBY). Once I see the withholding rate for that one, I intend to publish an Instablog discussing the Swedish Problem. The origin of the Swedish Problem is disclosed in the DTCC notice for Swedbank's 2014 dividend: Swedbank The broker has to compile and file in Sweden the necessary documents asserting the applicable treaty rate by 5 P.M. after the ex-dividend date. The broker can not start compiling that information until it knows the identity of customers who owned the stock on the ex-dividend data. This is basically a way for Sweden to collect more revenues from U.S. citizens.
I will not buy more shares of any Swedish company where I am denied treaty benefits. I will look for an opportunity to sell the existing 50 share positions in both Swedbank and Svenska Handelsbanken.
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1. Sold 100 ARCC at $17.195 (see Disclaimer):
Snapshot of Trade:
Snapshot of Profit: For an externally managed BDC, any share profit will do.
Bought 50 ARCC At $15.41-A Typical Small Lot Purchase Of An Externally Managed BDC Stock - South Gent | Seeking Alpha (10/19/14 Post); Item # 3 Bought: 50 of the BDC ARCC at $16.17 (1/21/11 Post)
Total Return Calculations: I used a website to calculate total return numbers without reinvestment of the dividends:
The lot purchased in October 2014 had an annualized total return of 33/82% and a total return of 17.79%:
The 50 shares lot bought in 2011 had an annualized total return of 11.36% and a total return of 58.05%.
Sourced: Profit Snapshot on Trade Date Plugged into DRIP Returns Calculator | Dividend Channel.
Prior Trades: I have managed to realized my primary objective for BDCs, with one minor trade exception, when trading ARCC. I have harvested a total return in excess of the dividend yield.
The share profit on this last transaction was the largest. The total return from the prior transaction originated by the dividend payments which were not diminished through profitable share sales.
Sold 100 ARCC at $17.54-IRAs in Two 50 Share Lots (9/13/12 Post)-Item # 4 Added 50 ARCC at $16.9-Regular IRA (5/21/11 Post) and Item # 3 Bought 50 ARCC at $16.89 (12/3/2010 Post)
Item # 3 Sold 100 ARCC Roth IRA at $17.05 (2/25/15 Post)(profit Snapshot: $17.05 +$157 in dividends)
In that last post, I made the following comment:
"I have decided to gradually eliminate BDCs from my IRAs, now viewing their many disadvantages to be inconsistent with the capital preservation emphasis in those accounts.
My tipping point was reached when both FSC and PSEC slashed their dividends and continued to report significant declines in their respective net asset value per share as the external managers feasted on more income for themselves. These two BDCs and several others exist to enrich the external managers. Their relatively high dividend yields are the honey to attract individual investors, desperate for yield, to buy shares, a necessary precondition to the wealth generation for the external managers. Many of those mom and pop investors fail to notice that assets are being incinerated over time that results in a lower share price gradually working its way to zero."
Security Description: Ares Capital Corp. (ARCC) is one of the oldest and largest Business Development Corporations.
A BDC is a pass through entity, like a REIT, where taxes are avoided at the corporate level for income distributed to shareholders.
BDCs make investments throughout the capital structure mostly to private companies. Most of the investments are generally loans that are either first and second lien loans similar to the bank loans that are bought by funds specializing in that area including mutual funds, closed end investment companies and ETFs.
A question to ask and answer for oneself is why are these privates companies dealing with BDCs rather than a consortium of banks. The BDC may have pieces of some bank originated loans, while others are generated internally or acquired through participations in other BDC originated loans either initially or in the secondary market.
One important characteristic found in many of these junk loans is an increase in the coupon tied to a short term rate, mostly the 3 month Libor which is currently near zero. Most of the loans of recent origin have a Libor floor that must be exceeded before the coupon can be increased through that floating rate mechanism. A typical floor would be in the 1% to 1.5% range. Consequently, short term rates would be rising for awhile before the borrower suffers an increase in the coupon.
BDC's loans would generally fall into my junk categories of high risk and extreme high risk which are reflected in the interest rates paid by the borrowers. A measure of common sense needs to be exercised when looking at a description of those investments. What does a 14% secured loan tell you about credit risk, particularly in today's low interest rate environment when a 10 year treasury yields less than 2% and most investment grade bonds maturing in ten years or less are likely to produce negative real rates of return before taxes.
Rationale: I have turned even more negative than usual to externally managed BDCs.
I view that business structure as inherently flawed. For the most part, I have nothing positive to say about the competence level of managers running most externally managed BDCs and a few internally managed ones.
The externally managed BDCs exist to enrich their external managers. Sooner or later, many individual investors will reach that conclusion or at least the ones who are actually paying attention to dividend cuts, destruction of net asset value per share, stock offerings below net asset value, historical total return performance that can be fairly characterized as PATHETIC IMO, and incentive and base fees paid in large quantities to produce all or most of the foregoing.
The high dividend yields are simply the honey used to lure investors into buying shares, a necessary prerequisite to outlandish fee generation for performance ranging from mediocre (rare) to net asset value destruction and poor total return performance. (more common)
ARCC is probably the best externally managed BDC. The returns from this BDC are far better than from other ones that were in existence prior to 2008 as shown below. The past may not be prologue however.
All BDCs are suffering from yield compression now. ARCC's weighted average yield on income producing investments has declined every year since 2010.
The economy has been generally favorable since the recent Near Depression measured by job and GDP growth. A recession will happen and loans losses will accelerate raising the specter of dividend cuts and many externally managed ones have already cut their dividends in an expansion. PSEC's last cut took the monthly rate below where it was in 2005 (the 2005 4th quarter rate was $.28, and the monthly rate after the last slash is currently $.08333 or $.24999 per quarter)
I achieve a decent total return, as noted in the snapshots above.
I also succeeded in selling the shares at above the net asset value per share which is becoming an increasingly rare possibility for externally managed BDCs
The last reported ARCC net asset value per share was $16.82, up from $16.46 as of 12/31/13: SEC Filed Press Release
I have noted in the past, IMO, that ARCC is probably the best of the externally managed BDCs given its track record that includes importantly the Near Depression period.
The following total returns were calculated starting on 1/3/2005 through 4/24/15:
Total Annualized
ARCC: 13.04%
PSEC: 5.35%
AINV: 3.07%
GLAD: -.03%
ACAS: -6.21
TICC: 3.69%
In that grouping, the only one working IMO is ARCC. I would view the rest as ranging from failures to mild disasters.
Some brain dead index ETFs have outperformed the Masters of the Universe by not being as brilliant as those Masters claim to be.
SPY: 7.98% SPDR S&P 500 ETF
IWM: 8.85% iShares Russell 2000 ETF
TLT: 7.9% iShares 20+ Year Treasury Bond ETF
IYY: 8.39% IYY iShares Dow Jones U.S. ETF
VTI: 8.34% Vanguard Total Stock Market ETF
XLP: 11.13% Select Sector SPDR-Consumer Staples
XLV: 11.41% Select Sector SPDR-Health Care Fund
VNQ: 7.96% Vanguard REIT ETF
Sourced: Dividends
After preparing that list, I looked at some regular "C" corporations that pay dividends though at a lower yield than the BDCs. I typed whatever symbol that popped into my head:
Annualized Total Returns:
MMM: 9.26%
UTX: 10.91%
PEP: 8.46%
GIS: 10.73%
NVS: 11.45%
MRK: 11.67%
JNJ: 7.42%
BA: 13.31%
MSFT: 8.39%
AAPL: 36.93%
UNP: 23.64%
Then, I wanted to see how some REITs did during that period. REITs are also bought by individual investors for their dividends and are pass through entities like BDCs.
O: 13.74%
SLG: 11.32%
AVB: 13.61%
ESS: 15.75%
OHI: 20.53%
VTR: 15.71%
EPR: 10.49%
DLR: 21.69%
HCP: 10.84%
HIW: 11.83%
EQR: 13.84%
While conditions change, I am not hopeful that externally managed BDCs will produce acceptable total returns, with limited exceptions, and their performance will get worse when the next recession hits.
Most of the currently traded BDCs have not yet been tested by a Near Depression. I doubt that any of them will do better than the ones that existed prior to 2007.
Future Buys: I will wait until I see a market price at least 5% and preferably over 10% below the last reported net asset value before considering a repurchase.
I am also going to downsize the small positions in the taxable account when I can sell shares profitably.
I just averaged down yesterday on one of them with a 100 PSEC share purchase that will hopefully give me a better opportunity to escape with a share profit. I am not going to discuss that trade here, since I start to become ill when thinking about the managers of that company and what they have done to earn their compensation. (See my PSEC comments to this Seeking Alpha article.)
I reduced my average cost to $8.82 per share.
PSEC went ex dividend for its monthly distribution the day after my purchase. Prospect Capital Corporation I suspect that dividend reinvestment will lower the average cost per share some. So I would just be waiting for a small pop before saying adieu (so few have been paid so much for so little, disgusting is way too kind of a description)
2. Bought 100 Canadian Utilities at C$40 (CU:CA) (Canadian Dollar (CAD) Income Strategy)(see disclaimer):
Snapshot of Trade:
The ordinary shares can be purchased using USD on the pink sheet exchange. However, volume is very light. Canadian Utilities Ltd. (CDUAF) Only 976 shares traded on 4/23 versus almost 110,000 in Toronto.
On the day of my purchase, the ordinary shares priced in USD rose 1.38% to close at $32.97.
The CAD priced ordinary shares traded in Toronto closed down .1%. CU.TO Historical Prices
And what does that tell you about the exchange rates that day. Was the Canadian dollar moving up or down in value against the USD?
CAD/USD Interactive Chart
I took a snapshot of the currency values before a placed the trade, but deleted it. I took the following snapshot later on 4/23:
The conversion value is really important when I am buying the ADR or ordinary shares using USDs. I do not view it as important when I am using what I view as a permanent CAD position to fund a purchase in Toronto. The relevance exist only when I sell the security and the broker uses the conversion values from CADs into USDs (both purchase and sell) to calculate the profit reportable to the IRS.
I decided to use my CAD stash to buy the ordinary shares in Canada preferring to draw down my CADs rather than USDs at that moment in time. I am earning zilch on both cash amounts unless one is inclined to call a Fidelity MM rate of .01% a return and I would just as soon earn zero which is what my idle CADs throw off.
Prior Trades: None. First Purchase.
Company Description: I would describe Canadian Utilities as a diversified electric utility company with significant energy infrastructure assets.
Sourced: Investor Quickfacts
MW stands for "Megawatts", which is defined as 1 million watts or 1,000 kilowatts and is generally enough electricity to power about 600 homes.
KMS stands for Kilometers. (86,000 KMS of power lines equals 53,437.92+ Miles)
PJ = Petajoule (46 PJ=423215224.42992 hundred cubic feet of natural gas)
The company operates through a number of subsidiaries in Canada, Australia and Mexico:
ATCO power's businesses includes the supply of electricity from natural gas, coal-fired and hydroelectric generating facilities located in Western Canada and Ontario. About 80% of the generating capacity is located in Alberta. A map of those facilities can be found in the 2014 Annual Report (page 30)
ATCO electric owns and operates electrical transmission and distribution facilities in Alberta. ATCO Pipelines operates about 4,000 KM of natural gas pipelines in Alberta.
Both of those operations have a significant exposure to an economy that is significantly dependent on oil exploration and production. There was as of 12/31/14 about 11,000 KM of transmission lines and 69,000 KM of distribution lines. Transmission lines are those large and tall structures that carry electricity at high voltages over long distances (see pictures at page 13) They are expensive too build. Power is supplied to about 224,000 customers in 245 communities.
The significant exposure to Alberta can have benefits and risks. It would be better to have that exposure through Canadian Utilities that has a diverse customer base rather than a leveraged oil sands energy company.
ATCO Australia owns 299MW of generating capacity and has 13,700 KM of natural gas distribution pipelines serving 700,000 customers.
Sourced: Corporate Structure, 2014 Annual Report and Management Discussion 2014 Annual.pdf
Company Page for Shareholders: Investors
Company Website: Welcome to Canadian Utilities Limited
Investor Returns
The ordinary shares closed at C$40.62 last Friday. At that price and as of 4/26/15, Bloomberg shows the TTM P/E at 18.0785 and a P/E of 17.6916 based on estimated 2015 earnings. The five year dividend growth rate is shown at 8.87%. The dividend yield was then 2.91% based on a quarterly dividend of C$.295.
The company's debt is rated "A" by DBRS and S & P. Credit Ratings
Dividend History: The dividend growth has been good over the years. Before taxes and inflation, money will double in about 8.16 years at 8.87%: Estimate Compound Interest
40 Years of Growth:
Dividends & Share Splits
I will receive the dividend payment's in CADs. As a U.S. taxpayer, however, I have to report to the IRS in USDs and consequently I will not be taxed on the CAD amount of the dividend but its value in USDs. I will receive the CAD dividend payment after a 15% withholding tax. I am a very long term holder of CADs so I do not mind paying less tax due attributable to a decline in the CAD's value.
An owner of the USD priced ordinary shares will receive payment in U.S. dollars after conversion at the then existing exchange rate and also after a 15% withholding tax.
The owner of that security in effect receives a dividend cut when the CAD loses value and a dividend raise when the CAD rises in value using the exchange rate in existence at the time of purchase.
A far more important impact on the USD priced shares is their share value. A 20% decline in the CAD/USD from 1 to .8 will decrease the USD priced shares by 20% compared to the ordinary shares priced in CADs. A rise from .8 to 1 will cause a 25% outperformance in the USD priced shares.
Online Calculator: Percentage Increase or Decrease
The CAD/USD (1 CAD= ) was at 1.05 in July 2011, hit 1.02 in September 2012; .99 in May 2013; and declined to .78 in mid-March 2015 before rallying some. That is a bad result for an owner of a USD priced Canadian security.
The .78 rate was near a ten year low for the CAD/USD: CAD/USD Interactive Chart
Chart: I took a snapshot of a two year chart comparing the performance of the ordinary shares priced in CADs (traded in Toronto) and the ordinary shares priced in USDs (traded on the U.S. pink sheet exchange). The disparity is caused by the decline in the CAD's value against the USD.
Based on what I just said, the reader has to already know the answer to this question. Did the CAD priced shares outperform the same ordinary shares priced in USDs over the past two years?
Two Year Comparative Chart: CAD Priced CU:CA vs. USD Price CDUAF
For a new buyer of the USD priced shares last Friday, the last date shown in the chart, the only certainty is that such a CDUAF buyer missed the adverse impact on price cause by the CAD's decline that is reflected in the preceding chart. The investor assumes the risk of a further decline and is likewise exposed to the potential benefit flowing from the CAD gaining strength after the purchase. Simply put, a return to parity (1CAD=$1) would cause the USD priced shares to close at $40.62 (rather than $33.33 as of 4/25/15), assuming that the CAD priced shares were then at last Friday's closing price of C$40.62. That currency gain resulting from a future hypothetical would be 21.87% with the Toronto shares remaining at the very same price.
2014 vs. 2013 Financials: E.P.S. increased 20% Y-O-Y. Dividends per share rose 10.31%.
Sourced from 2014 Annual Report .pdf
The foregoing includes some extraordinary items as shown below.
Rationale: I am going to keep this section really simple.
For a utility, the earnings and dividend growth rates have been excellent. I would emphasize the past tense used in the prior sentence.
My Canadian Dollar stash earns zero until I invest it. Being a turtle, I am only gradually putting to work CADs raised in a bout of profit taking during 2014.
The five year chart looks good to me: CU Stock Chart
Risks: I recently discussed interest rate risk as applied to utilities in this SA article: A Word Of Caution About New Purchases In The Utility Sector | Seeking Alpha
I am mindful of those risks when I elected to limit my exposure to 100 shares.
The yield based on my cost is not viewed favorably and could be looked upon with more disfavor during an interest rate spike.
The CU E.P.S. and dividend growth is better than the 2.3% earnings growth rate shown for U.S. utilities owned by the Vanguard-Utilities ETF.
I would emphasize once again the currency risk for investors who are not long term owners of Canadian Dollars.
I would note the tax risk and potential benefits, particularly for an investor like myself who is trying to increase my CAD stash over time through trading profits and dividends. I purchased CU with CADs and will receive CADs when I sell the position. My profit or loss from selling those shares will not determined based on my CAD profit or loss.
Both the purchase and sell are converted into USDs for tax reporting purposes. When the CAD falls in value after my purchase, and I have a profit realized in CADs, the profit in USDs will be lower and possibly even wiped out for tax reporting purposes.
The example that I give to highlight this tax issue is my sell of 300 ARTIS that generated a C$367 profit but only a $6+ reportable profit. The reverse can happen where the CAD gains in value after my purchase. A lower profit adjustment was made in connection with selling my Healthlease units only because I held them for a short period when the CAD was declining against the U.S.D.
Stocks, Bonds & Politics: SOLD: 300 HLP-UN:CA at C$14.17 and 300 AX-UN:CA at C$15.71 (9/26/14)(Healthlease CAD profit at C$1,244.35 vs. USD Profit of $1,123.65)
I am fine with that result. Another possibility is that my USD profit will higher than my CAD profit due to the CAD rising in value after purchase. That may be more of a risk now with the CAD rising after plummeting in value.
It is important to simply be aware of these kind of tax issues. The tax result for buying the ordinary shares priced in USDs and in CADs is basically the same for a U.S. taxpayer before taking into account differences in commission costs and currency exchange fees. If I had bought the Artis ordinary shares price in USDs rather than the ordinary shares priced in CADs, I would have had the same USD profit before those two expenses.
The usual assortment of risks incident to operations are summarized starting at page 38.
Future Buys and Sells: I am not likely to buy more. I do not have a sell target price. One purpose of the Canadian Dollar strategy is simply to generate income paid in Canadian dollars that can be aggravated with the payments made by other securities, including Canadian REITs that pay monthly, that increase my CAD position for diversification purposes. I prefer increasing the CAD stash through trading profits and income rather than converting more USDs to CADs and incurring a 1% fee.
3. Bank Earnings: I am not going to discuss bank earnings in any detail unless I am buying or selling a position. I will simply provide snapshots of what I view as core metrics and an editorial opinion on certain aspects of each report.
I also look at other numbers that will not be reflected in the snapshot, including loan and deposit growth.
A. American National (AMNB): Actual $.40 vs. $.4 estimate (3 analysts)
American National Bankshares Inc. Reports First Quarter 2015 Earnings
AMNB was a recent tepid and at best marginal buy: Bought: 50 EROL at $24.45 and 50 AMNB at $22.07 (4/23/15). I am hoping for an average annual total return of about 8% with one-half provided by the dividend, assuming no dividend increases.
B. Merchant's Bankshares (MBVT): Actual $.53 vs. Estimate $.52
NPL ratio remains the lowest in my basket. The coverage ratio is the highest. MBVT is probably my most conservative bank.
Merchants Bancshares Eyes Growth Opportunity Through Agreement To Acquire Nuvo Bank & Trust Company (April 27, 2015)
MBVT is currently paying a quarterly dividend of $.28 per share.
Nuvo is a privately owned state chartered bank based in Springfield, Mass. NOVO's shareholders can choose to receive $7.15 per share or .2416 MBVT shares "subject to the total consideration being comprised of approximately 75% stock and 25% stock". The $7.15 cash price is about 133% of NUVO's tangible book (which is fine) and "51.9 times NUVO's last twelve month's earnings" (say what?)
MBVT's branches are located in Vermont. It is the "largest Vermont-based" bank with 32 branches statewide. The NUVO acquisition will be the first banking office in Mass. Branch Listing | Locations
I currently own 50 share bought at $26.25.
In 2011, I sold a 50 share MBVT lot for a $160.1 profit (profit snapshot in the preceding linked post and in the Regional Bank Gateway Post)
SOLD 50 MBVT at $26.5
C. NBT Bancorp (NBTB): Actual $.41 vs. $.42 estimate
E.P.S. is stagnant. NIM is stable Y- O-Y. NIM compression is a prevalent and meaningful problem for banks. Return on tangible equity remains good. The charge-off ratio is near the current national average. The coverage ratio is good. The capital ratios are okay. I am not impressed by this report.
NBT Bancorp Inc. Announces Net Income of $18.2 Million for the First Quarter of 2015; Announces 5% Dividend Increase
The quarterly dividend was raised the quarterly rate to $.22 per share from $.21. My total cost per share is currently $22.95, and I am not reinvesting the dividend. Item # 2 Bought: 50 NBTB at $22.76 (2/17/14 Post)
This dividend increase raises my yield to 3.87%.
Link to March 2015 Article about NBTB, published at Seeking Alpha, and written by Dallas Salazar.
D. First Merit (FMER): Actual $.33 vs. $.33 estimate
Efficiency ratio is okay. The charge off, coverage and NPA ratios are good. E.P.S. was increased to $.33 from $.31 in the 2014 first quarter. NIM plummeted Y-O-Y, probably due to lower accretion from acquired loans as those balances decrease. I discuss that issue in a recent SA article dealing with Trustmark: Regional Bank Basket Strategy: Bought Back Trustmark At $22.25 - Trustmark Corporation (NASDAQ:TRMK) | Seeking Alpha
FirstMerit Reports First Quarter 2015 EPS of $0.33 Per Share
After selling my 100 highest cost shares, I currently own 141+ at an average cost per share of $14.52: Item # 2 Bought 30 FMER at $11.35 (August 2011); Item # 2 Added 50 FMER at $15.2 (September 2012); Item # 3 Added 50 FMER at $15.09 (February 13, 2013 Post) The foregoing purchases account for 130 of the 141+ shares with shares purchased with dividends accounting for the remainder.
E. United Bankshares (UBSI): Actual $.5 vs. $.49 Estimate
United Bankshares, Inc. Announces Increase in Earnings | Business Wire
Based on my dividend yield of 7.66%, UBSI is become a bond like income generator. I would not buy shares at the current price.
The bank did not cut its dividend during the last banking debacle but the rate of dividend growth is really slow and is not increased every year. United Bankshares, Inc. (UBSI) Dividend History
My dividend yield is not high based on dividend increases. The rate was $.29 in 2009 and is now $.32. My yield is due far more to buying at $16.56 and then just holding onto those shares bought at a favorable price. The dividend yield at the time of the November 2009 purchase was around 7%.
I bought this 50 share lot on 11/17/09:
The total return without dividends reinvested is 166.11% or an average annual return of 19.71%. With dividends reinvested, the total return would be 189.78% through last Monday's close.
Dividend Channel
The difference in those two numbers could narrow based on the return generated by a cash dividend. Keeping the cash in a money market fund since November 2009, which would have earned at most a few pennies, would simply mean that the differentials shown above would be very close to the actual differences between reinvesting the UBSI dividend or receiving the dividend in cash and leaving those funds in a .01% MM account.
Update For Regional Bank Basket Strategy As Of 4/20/15 | Seeking Alpha
Recent Developments: While many may be pleased by the upward jaunt in U.S. stocks, with no correction since the 2011 summer, this kind of enthusiasm for any risk asset give the OG the shakes.
S & P 500 Closes:
October 3, 2011: 1,099.23 Historical Prices | S&P 500
April 28, 2015: 2,114.76
However, notwithstanding that emotional predicament, I recognize a powerful bull when I see one. I have noted frequently over the past year or so that I will require two pre-conditions before significantly reducing my stock allocation:
1. Trigger Even in my Vix Asset Allocation Model: The last one occurred in August 2007: Stocks, Bonds & Politics: VIX Chart from 2007: Alerts and Triggers Major Disruption of Cyclical Stable Bull VIX Pattern
AND
2. A 5% decline below the 200 day SMA line for the S & P 500.
The Case-Schiller index for the 10-City Composite Index increased by 4.8% Y-O-Y and 4.3% for the 20-City Composite. The largest 1 year positive change was Denver at 10%.
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General Electric: I quit reinvesting the dividend several years ago. My last discussion about GE was made in a SA article when I bought just 30 shares in an IRA: Bought General Electric In Roth IRA At $23.86 - General Electric Company (NYSE:GE) | Seeking Alpha
Taxable Account GE Dividend:
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Zurich Insurance Dividend:
I received my annual distribution from the Swiss company Zurich Insurance last week.
No Swiss withholding tax was paid since the dividend was not sourced from earnings but from capital surplus. The dividend is consequently treated as a return of capital that is not currently taxed by the U.S. but lowers my cost basis by an equivalent amount. That has been the case since I bought 100 shares at $24.72 (2/4/12)(symbol later changed to ZURVY from ZFSVY at the time of purchase)
I have now received 4 annual distributions. Given the ROC dividend classification, my cost basis is now slightly over $17.
The $2 fee is paid to the ADR custodian.
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Roche Dividend:
Dividend Amount: $50.19
Tax: $7.53
Tax Rate: 15%
Switzerland 's Tax Treaty with the U.S. (15% Tax Rate in Article 10)
Brokers had until 3/19/15 to file the necessary documentation asserting treaty rates for their customers. The ex dividend date was 3/6/15. Roche DTCC Notice
That needs to be contrasted with what the Swedes are doing to U.S. citizens, as noted below, effectively undermining Sweden's Tax Treaty with the U.S.
***************************************
Swedbank Annual Distribution Received Minus 30%:
Swedbank joined the list of Swedish companies who have withheld a 30% in contravention of Article 10 of the Alleged Tax Treaty Between Sweden and the United States. Sweden's Alleged Tax Treaty with the U.S.
I will receive on or about 5/1/16 the annual dividend Svenska Cellulosa AB ADS (SVCBY). Once I see the withholding rate for that one, I intend to publish an Instablog discussing the Swedish Problem. The origin of the Swedish Problem is disclosed in the DTCC notice for Swedbank's 2014 dividend: Swedbank The broker has to compile and file in Sweden the necessary documents asserting the applicable treaty rate by 5 P.M. after the ex-dividend date. The broker can not start compiling that information until it knows the identity of customers who owned the stock on the ex-dividend data. This is basically a way for Sweden to collect more revenues from U.S. citizens.
I will not buy more shares of any Swedish company where I am denied treaty benefits. I will look for an opportunity to sell the existing 50 share positions in both Swedbank and Svenska Handelsbanken.
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1. Sold 100 ARCC at $17.195 (see Disclaimer):
Snapshot of Trade:
Snapshot of Profit: For an externally managed BDC, any share profit will do.
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| 2015 ARCC 100 Shares +$116.36 |
Bought 50 ARCC At $15.41-A Typical Small Lot Purchase Of An Externally Managed BDC Stock - South Gent | Seeking Alpha (10/19/14 Post); Item # 3 Bought: 50 of the BDC ARCC at $16.17 (1/21/11 Post)
Total Return Calculations: I used a website to calculate total return numbers without reinvestment of the dividends:
The lot purchased in October 2014 had an annualized total return of 33/82% and a total return of 17.79%:
The 50 shares lot bought in 2011 had an annualized total return of 11.36% and a total return of 58.05%.
Sourced: Profit Snapshot on Trade Date Plugged into DRIP Returns Calculator | Dividend Channel.
Prior Trades: I have managed to realized my primary objective for BDCs, with one minor trade exception, when trading ARCC. I have harvested a total return in excess of the dividend yield.
The share profit on this last transaction was the largest. The total return from the prior transaction originated by the dividend payments which were not diminished through profitable share sales.
Sold 100 ARCC at $17.54-IRAs in Two 50 Share Lots (9/13/12 Post)-Item # 4 Added 50 ARCC at $16.9-Regular IRA (5/21/11 Post) and Item # 3 Bought 50 ARCC at $16.89 (12/3/2010 Post)
Item # 3 Sold 100 ARCC Roth IRA at $17.05 (2/25/15 Post)(profit Snapshot: $17.05 +$157 in dividends)
In that last post, I made the following comment:
"I have decided to gradually eliminate BDCs from my IRAs, now viewing their many disadvantages to be inconsistent with the capital preservation emphasis in those accounts.
My tipping point was reached when both FSC and PSEC slashed their dividends and continued to report significant declines in their respective net asset value per share as the external managers feasted on more income for themselves. These two BDCs and several others exist to enrich the external managers. Their relatively high dividend yields are the honey to attract individual investors, desperate for yield, to buy shares, a necessary precondition to the wealth generation for the external managers. Many of those mom and pop investors fail to notice that assets are being incinerated over time that results in a lower share price gradually working its way to zero."
Security Description: Ares Capital Corp. (ARCC) is one of the oldest and largest Business Development Corporations.
A BDC is a pass through entity, like a REIT, where taxes are avoided at the corporate level for income distributed to shareholders.
BDCs make investments throughout the capital structure mostly to private companies. Most of the investments are generally loans that are either first and second lien loans similar to the bank loans that are bought by funds specializing in that area including mutual funds, closed end investment companies and ETFs.
A question to ask and answer for oneself is why are these privates companies dealing with BDCs rather than a consortium of banks. The BDC may have pieces of some bank originated loans, while others are generated internally or acquired through participations in other BDC originated loans either initially or in the secondary market.
One important characteristic found in many of these junk loans is an increase in the coupon tied to a short term rate, mostly the 3 month Libor which is currently near zero. Most of the loans of recent origin have a Libor floor that must be exceeded before the coupon can be increased through that floating rate mechanism. A typical floor would be in the 1% to 1.5% range. Consequently, short term rates would be rising for awhile before the borrower suffers an increase in the coupon.
BDC's loans would generally fall into my junk categories of high risk and extreme high risk which are reflected in the interest rates paid by the borrowers. A measure of common sense needs to be exercised when looking at a description of those investments. What does a 14% secured loan tell you about credit risk, particularly in today's low interest rate environment when a 10 year treasury yields less than 2% and most investment grade bonds maturing in ten years or less are likely to produce negative real rates of return before taxes.
Rationale: I have turned even more negative than usual to externally managed BDCs.
I view that business structure as inherently flawed. For the most part, I have nothing positive to say about the competence level of managers running most externally managed BDCs and a few internally managed ones.
The externally managed BDCs exist to enrich their external managers. Sooner or later, many individual investors will reach that conclusion or at least the ones who are actually paying attention to dividend cuts, destruction of net asset value per share, stock offerings below net asset value, historical total return performance that can be fairly characterized as PATHETIC IMO, and incentive and base fees paid in large quantities to produce all or most of the foregoing.
The high dividend yields are simply the honey used to lure investors into buying shares, a necessary prerequisite to outlandish fee generation for performance ranging from mediocre (rare) to net asset value destruction and poor total return performance. (more common)
ARCC is probably the best externally managed BDC. The returns from this BDC are far better than from other ones that were in existence prior to 2008 as shown below. The past may not be prologue however.
All BDCs are suffering from yield compression now. ARCC's weighted average yield on income producing investments has declined every year since 2010.
The economy has been generally favorable since the recent Near Depression measured by job and GDP growth. A recession will happen and loans losses will accelerate raising the specter of dividend cuts and many externally managed ones have already cut their dividends in an expansion. PSEC's last cut took the monthly rate below where it was in 2005 (the 2005 4th quarter rate was $.28, and the monthly rate after the last slash is currently $.08333 or $.24999 per quarter)
I achieve a decent total return, as noted in the snapshots above.
I also succeeded in selling the shares at above the net asset value per share which is becoming an increasingly rare possibility for externally managed BDCs
The last reported ARCC net asset value per share was $16.82, up from $16.46 as of 12/31/13: SEC Filed Press Release
I have noted in the past, IMO, that ARCC is probably the best of the externally managed BDCs given its track record that includes importantly the Near Depression period.
The following total returns were calculated starting on 1/3/2005 through 4/24/15:
Total Annualized
ARCC: 13.04%
PSEC: 5.35%
AINV: 3.07%
GLAD: -.03%
ACAS: -6.21
TICC: 3.69%
In that grouping, the only one working IMO is ARCC. I would view the rest as ranging from failures to mild disasters.
Some brain dead index ETFs have outperformed the Masters of the Universe by not being as brilliant as those Masters claim to be.
SPY: 7.98% SPDR S&P 500 ETF
IWM: 8.85% iShares Russell 2000 ETF
TLT: 7.9% iShares 20+ Year Treasury Bond ETF
IYY: 8.39% IYY iShares Dow Jones U.S. ETF
VTI: 8.34% Vanguard Total Stock Market ETF
XLP: 11.13% Select Sector SPDR-Consumer Staples
XLV: 11.41% Select Sector SPDR-Health Care Fund
VNQ: 7.96% Vanguard REIT ETF
Sourced: Dividends
After preparing that list, I looked at some regular "C" corporations that pay dividends though at a lower yield than the BDCs. I typed whatever symbol that popped into my head:
Annualized Total Returns:
MMM: 9.26%
UTX: 10.91%
PEP: 8.46%
GIS: 10.73%
NVS: 11.45%
MRK: 11.67%
JNJ: 7.42%
BA: 13.31%
MSFT: 8.39%
AAPL: 36.93%
UNP: 23.64%
Then, I wanted to see how some REITs did during that period. REITs are also bought by individual investors for their dividends and are pass through entities like BDCs.
O: 13.74%
SLG: 11.32%
AVB: 13.61%
ESS: 15.75%
OHI: 20.53%
VTR: 15.71%
EPR: 10.49%
DLR: 21.69%
HCP: 10.84%
HIW: 11.83%
EQR: 13.84%
While conditions change, I am not hopeful that externally managed BDCs will produce acceptable total returns, with limited exceptions, and their performance will get worse when the next recession hits.
Most of the currently traded BDCs have not yet been tested by a Near Depression. I doubt that any of them will do better than the ones that existed prior to 2007.
Future Buys: I will wait until I see a market price at least 5% and preferably over 10% below the last reported net asset value before considering a repurchase.
I am also going to downsize the small positions in the taxable account when I can sell shares profitably.
I just averaged down yesterday on one of them with a 100 PSEC share purchase that will hopefully give me a better opportunity to escape with a share profit. I am not going to discuss that trade here, since I start to become ill when thinking about the managers of that company and what they have done to earn their compensation. (See my PSEC comments to this Seeking Alpha article.)
I reduced my average cost to $8.82 per share.
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| PSEC 230+ Shares/Ave. Cost Per Share: $8.82 |
PSEC went ex dividend for its monthly distribution the day after my purchase. Prospect Capital Corporation I suspect that dividend reinvestment will lower the average cost per share some. So I would just be waiting for a small pop before saying adieu (so few have been paid so much for so little, disgusting is way too kind of a description)
Snapshot of Trade:
The ordinary shares can be purchased using USD on the pink sheet exchange. However, volume is very light. Canadian Utilities Ltd. (CDUAF) Only 976 shares traded on 4/23 versus almost 110,000 in Toronto.
On the day of my purchase, the ordinary shares priced in USD rose 1.38% to close at $32.97.
The CAD priced ordinary shares traded in Toronto closed down .1%. CU.TO Historical Prices
And what does that tell you about the exchange rates that day. Was the Canadian dollar moving up or down in value against the USD?
CAD/USD Interactive Chart
I took a snapshot of the currency values before a placed the trade, but deleted it. I took the following snapshot later on 4/23:
The conversion value is really important when I am buying the ADR or ordinary shares using USDs. I do not view it as important when I am using what I view as a permanent CAD position to fund a purchase in Toronto. The relevance exist only when I sell the security and the broker uses the conversion values from CADs into USDs (both purchase and sell) to calculate the profit reportable to the IRS.
I decided to use my CAD stash to buy the ordinary shares in Canada preferring to draw down my CADs rather than USDs at that moment in time. I am earning zilch on both cash amounts unless one is inclined to call a Fidelity MM rate of .01% a return and I would just as soon earn zero which is what my idle CADs throw off.
Prior Trades: None. First Purchase.
Company Description: I would describe Canadian Utilities as a diversified electric utility company with significant energy infrastructure assets.
Sourced: Investor Quickfacts
MW stands for "Megawatts", which is defined as 1 million watts or 1,000 kilowatts and is generally enough electricity to power about 600 homes.
KMS stands for Kilometers. (86,000 KMS of power lines equals 53,437.92+ Miles)
PJ = Petajoule (46 PJ=423215224.42992 hundred cubic feet of natural gas)
The company operates through a number of subsidiaries in Canada, Australia and Mexico:
ATCO power's businesses includes the supply of electricity from natural gas, coal-fired and hydroelectric generating facilities located in Western Canada and Ontario. About 80% of the generating capacity is located in Alberta. A map of those facilities can be found in the 2014 Annual Report (page 30)
ATCO electric owns and operates electrical transmission and distribution facilities in Alberta. ATCO Pipelines operates about 4,000 KM of natural gas pipelines in Alberta.
Both of those operations have a significant exposure to an economy that is significantly dependent on oil exploration and production. There was as of 12/31/14 about 11,000 KM of transmission lines and 69,000 KM of distribution lines. Transmission lines are those large and tall structures that carry electricity at high voltages over long distances (see pictures at page 13) They are expensive too build. Power is supplied to about 224,000 customers in 245 communities.
The significant exposure to Alberta can have benefits and risks. It would be better to have that exposure through Canadian Utilities that has a diverse customer base rather than a leveraged oil sands energy company.
ATCO Australia owns 299MW of generating capacity and has 13,700 KM of natural gas distribution pipelines serving 700,000 customers.
Sourced: Corporate Structure, 2014 Annual Report and Management Discussion 2014 Annual.pdf
Company Page for Shareholders: Investors
Company Website: Welcome to Canadian Utilities Limited
Investor Returns
The ordinary shares closed at C$40.62 last Friday. At that price and as of 4/26/15, Bloomberg shows the TTM P/E at 18.0785 and a P/E of 17.6916 based on estimated 2015 earnings. The five year dividend growth rate is shown at 8.87%. The dividend yield was then 2.91% based on a quarterly dividend of C$.295.
The company's debt is rated "A" by DBRS and S & P. Credit Ratings
Dividend History: The dividend growth has been good over the years. Before taxes and inflation, money will double in about 8.16 years at 8.87%: Estimate Compound Interest
40 Years of Growth:
I will receive the dividend payment's in CADs. As a U.S. taxpayer, however, I have to report to the IRS in USDs and consequently I will not be taxed on the CAD amount of the dividend but its value in USDs. I will receive the CAD dividend payment after a 15% withholding tax. I am a very long term holder of CADs so I do not mind paying less tax due attributable to a decline in the CAD's value.
An owner of the USD priced ordinary shares will receive payment in U.S. dollars after conversion at the then existing exchange rate and also after a 15% withholding tax.
The owner of that security in effect receives a dividend cut when the CAD loses value and a dividend raise when the CAD rises in value using the exchange rate in existence at the time of purchase.
A far more important impact on the USD priced shares is their share value. A 20% decline in the CAD/USD from 1 to .8 will decrease the USD priced shares by 20% compared to the ordinary shares priced in CADs. A rise from .8 to 1 will cause a 25% outperformance in the USD priced shares.
Online Calculator: Percentage Increase or Decrease
The CAD/USD (1 CAD= ) was at 1.05 in July 2011, hit 1.02 in September 2012; .99 in May 2013; and declined to .78 in mid-March 2015 before rallying some. That is a bad result for an owner of a USD priced Canadian security.
The .78 rate was near a ten year low for the CAD/USD: CAD/USD Interactive Chart
Chart: I took a snapshot of a two year chart comparing the performance of the ordinary shares priced in CADs (traded in Toronto) and the ordinary shares priced in USDs (traded on the U.S. pink sheet exchange). The disparity is caused by the decline in the CAD's value against the USD.
Based on what I just said, the reader has to already know the answer to this question. Did the CAD priced shares outperform the same ordinary shares priced in USDs over the past two years?
Two Year Comparative Chart: CAD Priced CU:CA vs. USD Price CDUAF
For a new buyer of the USD priced shares last Friday, the last date shown in the chart, the only certainty is that such a CDUAF buyer missed the adverse impact on price cause by the CAD's decline that is reflected in the preceding chart. The investor assumes the risk of a further decline and is likewise exposed to the potential benefit flowing from the CAD gaining strength after the purchase. Simply put, a return to parity (1CAD=$1) would cause the USD priced shares to close at $40.62 (rather than $33.33 as of 4/25/15), assuming that the CAD priced shares were then at last Friday's closing price of C$40.62. That currency gain resulting from a future hypothetical would be 21.87% with the Toronto shares remaining at the very same price.
2014 vs. 2013 Financials: E.P.S. increased 20% Y-O-Y. Dividends per share rose 10.31%.
Sourced from 2014 Annual Report .pdf
The foregoing includes some extraordinary items as shown below.
Rationale: I am going to keep this section really simple.
For a utility, the earnings and dividend growth rates have been excellent. I would emphasize the past tense used in the prior sentence.
My Canadian Dollar stash earns zero until I invest it. Being a turtle, I am only gradually putting to work CADs raised in a bout of profit taking during 2014.
The five year chart looks good to me: CU Stock Chart
Risks: I recently discussed interest rate risk as applied to utilities in this SA article: A Word Of Caution About New Purchases In The Utility Sector | Seeking Alpha
I am mindful of those risks when I elected to limit my exposure to 100 shares.
The yield based on my cost is not viewed favorably and could be looked upon with more disfavor during an interest rate spike.
The CU E.P.S. and dividend growth is better than the 2.3% earnings growth rate shown for U.S. utilities owned by the Vanguard-Utilities ETF.
I would emphasize once again the currency risk for investors who are not long term owners of Canadian Dollars.
I would note the tax risk and potential benefits, particularly for an investor like myself who is trying to increase my CAD stash over time through trading profits and dividends. I purchased CU with CADs and will receive CADs when I sell the position. My profit or loss from selling those shares will not determined based on my CAD profit or loss.
Both the purchase and sell are converted into USDs for tax reporting purposes. When the CAD falls in value after my purchase, and I have a profit realized in CADs, the profit in USDs will be lower and possibly even wiped out for tax reporting purposes.
The example that I give to highlight this tax issue is my sell of 300 ARTIS that generated a C$367 profit but only a $6+ reportable profit. The reverse can happen where the CAD gains in value after my purchase. A lower profit adjustment was made in connection with selling my Healthlease units only because I held them for a short period when the CAD was declining against the U.S.D.
Stocks, Bonds & Politics: SOLD: 300 HLP-UN:CA at C$14.17 and 300 AX-UN:CA at C$15.71 (9/26/14)(Healthlease CAD profit at C$1,244.35 vs. USD Profit of $1,123.65)
I am fine with that result. Another possibility is that my USD profit will higher than my CAD profit due to the CAD rising in value after purchase. That may be more of a risk now with the CAD rising after plummeting in value.
It is important to simply be aware of these kind of tax issues. The tax result for buying the ordinary shares priced in USDs and in CADs is basically the same for a U.S. taxpayer before taking into account differences in commission costs and currency exchange fees. If I had bought the Artis ordinary shares price in USDs rather than the ordinary shares priced in CADs, I would have had the same USD profit before those two expenses.
The usual assortment of risks incident to operations are summarized starting at page 38.
Future Buys and Sells: I am not likely to buy more. I do not have a sell target price. One purpose of the Canadian Dollar strategy is simply to generate income paid in Canadian dollars that can be aggravated with the payments made by other securities, including Canadian REITs that pay monthly, that increase my CAD position for diversification purposes. I prefer increasing the CAD stash through trading profits and income rather than converting more USDs to CADs and incurring a 1% fee.
3. Bank Earnings: I am not going to discuss bank earnings in any detail unless I am buying or selling a position. I will simply provide snapshots of what I view as core metrics and an editorial opinion on certain aspects of each report.
I also look at other numbers that will not be reflected in the snapshot, including loan and deposit growth.
A. American National (AMNB): Actual $.40 vs. $.4 estimate (3 analysts)
American National Bankshares Inc. Reports First Quarter 2015 Earnings
AMNB was a recent tepid and at best marginal buy: Bought: 50 EROL at $24.45 and 50 AMNB at $22.07 (4/23/15). I am hoping for an average annual total return of about 8% with one-half provided by the dividend, assuming no dividend increases.
B. Merchant's Bankshares (MBVT): Actual $.53 vs. Estimate $.52
NPL ratio remains the lowest in my basket. The coverage ratio is the highest. MBVT is probably my most conservative bank.
Merchants Bancshares Eyes Growth Opportunity Through Agreement To Acquire Nuvo Bank & Trust Company (April 27, 2015)
MBVT is currently paying a quarterly dividend of $.28 per share.
Nuvo is a privately owned state chartered bank based in Springfield, Mass. NOVO's shareholders can choose to receive $7.15 per share or .2416 MBVT shares "subject to the total consideration being comprised of approximately 75% stock and 25% stock". The $7.15 cash price is about 133% of NUVO's tangible book (which is fine) and "51.9 times NUVO's last twelve month's earnings" (say what?)
MBVT's branches are located in Vermont. It is the "largest Vermont-based" bank with 32 branches statewide. The NUVO acquisition will be the first banking office in Mass. Branch Listing | Locations
I currently own 50 share bought at $26.25.
In 2011, I sold a 50 share MBVT lot for a $160.1 profit (profit snapshot in the preceding linked post and in the Regional Bank Gateway Post)
SOLD 50 MBVT at $26.5
C. NBT Bancorp (NBTB): Actual $.41 vs. $.42 estimate
E.P.S. is stagnant. NIM is stable Y- O-Y. NIM compression is a prevalent and meaningful problem for banks. Return on tangible equity remains good. The charge-off ratio is near the current national average. The coverage ratio is good. The capital ratios are okay. I am not impressed by this report.
NBT Bancorp Inc. Announces Net Income of $18.2 Million for the First Quarter of 2015; Announces 5% Dividend Increase
The quarterly dividend was raised the quarterly rate to $.22 per share from $.21. My total cost per share is currently $22.95, and I am not reinvesting the dividend. Item # 2 Bought: 50 NBTB at $22.76 (2/17/14 Post)
This dividend increase raises my yield to 3.87%.
Link to March 2015 Article about NBTB, published at Seeking Alpha, and written by Dallas Salazar.
D. First Merit (FMER): Actual $.33 vs. $.33 estimate
Efficiency ratio is okay. The charge off, coverage and NPA ratios are good. E.P.S. was increased to $.33 from $.31 in the 2014 first quarter. NIM plummeted Y-O-Y, probably due to lower accretion from acquired loans as those balances decrease. I discuss that issue in a recent SA article dealing with Trustmark: Regional Bank Basket Strategy: Bought Back Trustmark At $22.25 - Trustmark Corporation (NASDAQ:TRMK) | Seeking Alpha
FirstMerit Reports First Quarter 2015 EPS of $0.33 Per Share
After selling my 100 highest cost shares, I currently own 141+ at an average cost per share of $14.52: Item # 2 Bought 30 FMER at $11.35 (August 2011); Item # 2 Added 50 FMER at $15.2 (September 2012); Item # 3 Added 50 FMER at $15.09 (February 13, 2013 Post) The foregoing purchases account for 130 of the 141+ shares with shares purchased with dividends accounting for the remainder.
E. United Bankshares (UBSI): Actual $.5 vs. $.49 Estimate
United Bankshares, Inc. Announces Increase in Earnings | Business Wire
Based on my dividend yield of 7.66%, UBSI is become a bond like income generator. I would not buy shares at the current price.
The bank did not cut its dividend during the last banking debacle but the rate of dividend growth is really slow and is not increased every year. United Bankshares, Inc. (UBSI) Dividend History
My dividend yield is not high based on dividend increases. The rate was $.29 in 2009 and is now $.32. My yield is due far more to buying at $16.56 and then just holding onto those shares bought at a favorable price. The dividend yield at the time of the November 2009 purchase was around 7%.
I bought this 50 share lot on 11/17/09:
The total return without dividends reinvested is 166.11% or an average annual return of 19.71%. With dividends reinvested, the total return would be 189.78% through last Monday's close.
Dividend Channel
The difference in those two numbers could narrow based on the return generated by a cash dividend. Keeping the cash in a money market fund since November 2009, which would have earned at most a few pennies, would simply mean that the differentials shown above would be very close to the actual differences between reinvesting the UBSI dividend or receiving the dividend in cash and leaving those funds in a .01% MM account.
Update For Regional Bank Basket Strategy As Of 4/20/15 | Seeking Alpha
