Fresh New Dividends from Apple and Energy Transfer Partners

We got paid dividends this week:

Apple (AAPL) paid $6.65 on 05/15/2013 which I reinvested to buy 0.0155 shares @ $429.03.

Energy Transfer Partners (ETP) paid $10.31 which I reinvested to buy 0.2057 @ $50.12.

Slight update:

I'm slowly building our cash positions to get ready for a market pull back.  As you can see, the DOW has been up for a few weeks and I'm anticipating a pull back probably around summer time.  That is when I'll start buying more stocks.

I'm looking into getting more LULU (our position is up 50%), MDLZ and WM. 

I'll keep you posted.

Apple's Q2 Earnings

Info from CNBC.

Apple (AAPL) has been pummeled lately being down 47% from it's all-time high.  Stock price even went below for the first time since 2011.  With the lack of new product updates, production delays and rumored iOS software redesign, AAPL seemed to have lost it's mojo.  Analysts estimate that AAPL would still beat earnings but it's profit margins would be down year over year.

CEO Tim Cook said that the stock price decline has been very frustrating and that Apple does not control that; it controls product innovation.  That being said, new product releases are now expected towards the end of 2013.

It was not all bad news for the Cupertino company.  Apple sold 37.4 million iPhones in the quarter, compared with 35.1 million in the year-ago quarter. The tech company sold 19.5 million iPads versus 11.9 million a year earlier.  For most companies, those numbers would be awesome.

A little bit more good news for investors, AAPL's shares surged in after-hours trading (currently at $411.39) due to Apple's earnings numbers,  Apple's announcement of a dividend hike of 15% and increase of stock repurchase from $10 billion to $60 billion.  These moves should be enough to keep the stock price afloat while we patiently wait for the new hotness.

Long term, I'm still bullish with Apple and with numbers like these, how can I hate them Apples?

Updates From Previous Post: Mondelez, Altria and Kraft Dividends

First of all, an apology.  I thought Modelez (MDLZ) paid me $8.30 but actually, it was Altria (MO) paying me that dividend.  So here are the dividend payments from last week:

MDLZ paid us a dividend of $3.41 which we reinvested to buy 0.1116 shares @ $30.56.

KRFT  paid us a dividend of $1.98 which we reinvested to buy 0.0388 shares @ $51.03.

MO     paid us a dividend of $8.30 which we reinvested to buy 0.2339 shares @ $35.49.

I was probably tired last week and associated MO with MDLZ.  Oh well. :)

Mondelez (MDLZ) Dividend Payments, LULU Fires Chief Product Officer Over See-Thru Yoga Pants, Ron Johnson Out At JC Penny (JCP) and Has Apple Lost It's Groove?

Now that's weird.

 

Yesterday was dividend pay day for Mondelez (MDLZ).  We got paid $8.30.  Now remember from my previous post that I expected to be paid $3.41 for 26.2504 @ $0.13/share.  Either MDLZ increased their dividend payout (I estimated @ $0.3161/share) or for some reason, they thought we owned 63+ shares of MDLZ.  I know there's an error somewhere and I expect a correction soon. 

 

Now for some news and my opinions:

 

Lululemon has been on the news lately for having a product recall because their black Luon yoga pants appeared to be see-thru.  As you can imagine, female customers would be deeply affected by this product defect which resulted in the recall.

 

Aside from the embarrassingly bad press, future earnings of LULU are expected to drop to offset the estimated $67 million in lost revenue as the cost of the product recall. 

 

Another victim of this product snafu is LULU's Chief Product Officer Sheree Waterson.  LULU announced on April 3 that Ms. Waterson  would leave the company on April 15.  It was obvious that this was a move to help stem the drop of stock price and as the company's atonement for the product recall.  Quite frankly, I wouldn't require someone to lose their job over this and I highly appreciated LULU's quick and fast response towards the issue.  While most companies would spend months with smoke and mirrors denying any fault or even flaws with their product,  LULU faced this challenge head on.  Recalling 17% of your product was very expensive but the possible loss of trust from loyal customers was just too high of a price to risk by LULU.

 

Looking forward, I still think LULU would come back strong and there's always the possibility for a black Luon shortage which may cause a panic buy reaction from the customers (which may increase the price of merchandise - higher margins to offset the loss).  Also, customers may continue to stay loyal to LULU due to the company's fast and effective response and whatever fringe bad experiences that popped up on the internet are just outliers or isolated incidents.

 

If at all, the drop in price is a perfect buying opportunity.

 

In other news, JC Penny (JCP) fired CEO Ron Johnson after almost 2 years on the job.  Johnson oversaw a disastrous drop in earnings for JCP and the Board just had enough of it.  JCP then hired Johnson's predecessor Myron Ullman effective immediately. 

 

Who would have thought that Ron Johnson, the executive behind the highly successful (and profitable) Apple retail stores would fail horribly at JCP?

 

Well, it's easy to see now looking back.  One of the early interviews Mr. Johnson made with CBS Morning News, host Gayle King ask Ron if he was wearing a JC Penny outfit for the interview.  He answered and I quote: "No, it's not, but I will have one on the next time."  Oops.  Back then, it was easy to laugh this off and forget about it but now, I realized it was a big marketing disaster.  Can you imagine the late Steve Jobs being caught with an Android phone?  Even Bill Gates was famously quoted for never touching let alone, own an iPod, iPhone and an iPad.  Ron Johnson getting caught with his pants down figuratively was a sign of him being out of touch with JCP and it's costumers.   How would a CEO know what the customer would want or need if he himself was not a customer?  He ended the promos and coupons and even taken out customer favorite brands.  As a result, Mr. Johnson alienated his loyal customers for the gamble of gaining new "higher-end" customers.  Obviously, discounted jeans and shoes were a foreign language for Johnson who for the most part of the last decade sold premium computers, phones and music players. 

 

Would reinstalling Mr. Ullman be good for JCP? Only time will tell.

 

Finally, we go back to Apple.

 

In recent weeks, stock analysts such Jim Cramer and tech pundits like Leo Laporte have expressed their opinions about AAPL.  Mr. Cramer was not as bullish as he was before and may have implied that AAPL lost it's "cool factor".  As recently as last Sunday, This Week In Tech (TWiT)'s Leo Laporte pretty much waved the white flag for AAPL.  He said that the AAPL has ran out of innovation and that future product releases would pale in comparison to what the Cupertino-based company released in the past five years.  These opinions, for the untrained eye/ear, would seem the death of Apple and would probably push some investors to sell their shares of AAPL.  But then, I remembered a story from Jim Cramer's book Confessions of a Street Addict where Mr. Cramer's Hedge Fund was getting beat on Wall Street in 1998.  Cramer wrote in his book that there was a point during that time that he just gave up on the Market and even wrote an article for theStreet.com to SELL EVERYTHING.  He then said that was the cue for Mrs. Cramer to start buying for the fund which then saved the Hedge Fund and Jim Cramer himself.  Also, Leo Laporte admitted he was wrong about Apple in the late '90s when he pretty predicted the death of Apple.  This was before the then newly design iMac, the iPod and iPhone/iPad. So in short, I'm considering these recent statements by these two people I respect as a sign that AAPL is at (or near) it's bottom.  Plus, Warren Buffet always said: "I buy when people are fearful and I sell when people are happy/greedy." 

 

I believe AAPL still has a few products up it's sleeve.  Recent news about the iPhone 5s and iPhone 6 being designed by Jobs himself give me confidence and with iOS/Software under Jon Ive, I'm optimistic that AAPL would wow us within the next few months.  Also, let's not forget that AAPL still has that over $100 Billion in the bank.

 

Besides, it's nice that our portfolio is no longer dependant on AAPL's stock price to succeed.  And that my friend, is diversification.

Automatic Investment Plan Results, Sector Risks and Cash Reserves

This is an update of the Automatic Investment Plan I executed last week.

 

My $434 bought 14.4152 MDLZ shares @ $30.11/share.

 

We now own 26.2504 MDLZ shares.   I expect to be paid $3.412552 in dividends (@$0.13/share).

 

With our new MDLZ total, our top five holdings are as follows:

 

1. AAPL  17.91%

2. GLD    14.26%

3. MDLZ 14.05%

4. LULU  13.92%

5. MO      11.48%

 

With this update, our portfolio's sector exposure has changed.  Before, the Computer and Technology sector was the bulk of our sector exposure due to Apple's meteoric rise in value which concerned me especially during the months when Tech was hated in Wall Street.  It took some time (and Apple's decline) but we were able to balance out our sector risks.  So now, the Consumer Staples Sector (29.28%) took the lead from the Computer and Tech Sector (24.10%).  I am still not satisfied and I think I need to bump up the rest of my sector exposures (Business Services 8.36%, Oil & Energy 10.17% and Retail Stores 13.82%).  My goal is to put each sector at 20% value of our portfolio which would make our portfolio's exposure risk as divers as possible. 

 

Why am I so focused with sectors?  Because Sector performance/sentiment pretty much affects about 50% of each stock's performance.  Going back to my original concern,  the Tech sector was pretty much hated by Wall Street in the summer months of 2012.  My XLNX position pretty much suffered while Apple held on to it's values for as long as it could.  It can get frustrating seeing XLNX pretty lose value or at best, stay the same while my Consumer Staple stocks (MO, KRFT & MDLZ) have carried our portfolio during those tough months.  Knowing how this affects stock prices, I am convinced that diversifying our Sector risk would be good for our portfolio.

 

In other news, I need to rebuild our cash position.  I should see opportunities to do so in my next few paychecks.  Now the question would be whether or not to buy more XLNX with an upcoming Ex-Dividend Date of 05/13/2013 or get some more WM to bump up our Business Sector position. 

 

We'll see.  We have until May 9, 2013 to decide.

Getting Stuff For Free, Apple (AAPL) May Boost Dividend Yield, Waste Management (WM) Pays Dividends, Mondelez (MDLZ), Xilinx Inc (XLNX) and Kraft's (KRFT) Ex-Dividend Dates!

I got an email from my discount brokerage. 

They gave me a free credit to use their Automatic Investment Plan service for free!  That's $4 savings! 

You might ask: "So what?"

I say: "Awesome!" 

Here's why, that $4 I would have paid (as commission) to buy stock would just go into buying more shares of the company I want to buy.  And when I'm about to chase the dividend distribution, every share counts!

Here's what I did:

Mondelez International (MDLZ)'s ex-dividend date is 03/27/2013.  I also looked into Kraft (KFRT) and Xilinx Inc (XLNX) ex-dividend dates, 03/26/2013 & 05/13/2013 respectively.  As you can see, I'll miss KFRT's must own date by a day and XLNX is just too far off.  That is why, I'm going with MDLZ.  Granted, MDLZ's dividend is "just" $0.13/share which was down from $0.29 in September 2012 (which was paid before the Kraft/Mondelez transaction), I am bullish with MDLZ's future growth.   With the economy improving, consumers would be buying more snack foods and drinks.  Also, with Easter, Memorial Day and summer just around the corner, I expect a jump in sales for Cadbury chocolates, Nabisco and Oreo cookies and Tang beverages.

Anyways, here's a recap of my purchase:

I transferred $250 into our brokerage account (expected funding on 03/25/2013, Monday).

Along with my $184.50 cash position, I executed an Automatic Savings Plan transaction to buy $434 worth of MDLZ shares.

MDLZ is at $29.81 as of 03/22/2013 11:58 am ET

I estimate to buy 14.4666 shares of MDLZ at $30/share.

I would then own 26.3008 shares of MDLZ which will pay me $3.4191 in dividends.

As always, our dividend payments would be reinvested to buy more shares (0.1139 shares @ $30).

As you would observed, without the $4 discount, the dividend payments would have been swallowed by the fee. Also, I would only be able to buy $430 worth of shares which only buy me 14.3333 shares which will bring me to 26.1675 shares = $3.4017.  A net loss of $0.0174.  Yeah, it may be a small loss but the greater loss is in the future growth due to compound growth rate.  The more shares I own, the greater my dividend payments.

In other news, Waste Management just paid me some dividends. 

We got paid $4.40 in dividends which we reinvested to buy more shares (0.1162 shares @ $37.87).

Extra Credit:  I have read/heard speculation that Apple (AAPL) is "poised" to boost it's dividend payments by 56% (from $2.65/share to $4.14/share) for a 3.7% yield. As you can imagine, shares are up (currently at $459.37) since news of the hike got out.  Although it's a far cry from it's 52-week high of $705. 07, this recent bump may be what nervous shareholders need.  I believe that AAPL being below $500 is really cheap and that it's recent drop is a result of both self-inflicted wounds and external stabs to the company.  From the botched Apple Maps launch to the profit taking during the fiscal cliff, Apple's stock has seen a nose dive to $419 before stabilizing at the $420-$430 range.

In spite of Apple's iPhone 5 and iPad sales being through the roof, Wall Street's expectations are just too high for the Company to beat.  On top of that, Samsung's victories (court judgements and sales) did not help Apple's share price.  But last week, I saw a small glimmer of hope for Apple.  Samsung just launched their new flagship phone, the Galaxy S4 with hype that matched the iPhone but execution that fell flat on Samsung's face.  The whole presentation just showed how masterful Apple's product presentations are.  Samsung's "show" was generally panned by tech journalists and even mainstream media.  The phone however, is a different story.  It told me what I needed to know about Samsung's vision of their phone's future: more of the same.  Critics blasted Apple for the iPhone 5's lack of a differentiating features and design that Samsung seemed to outpace Apple in both fronts.  But with the Galaxy S4 looking and functioning almost the same as the Galaxy S3, I believe Samsung is now experiencing a lag in their "wow" factor. 

In my opinion, it would be tough for Samsung to be "innovative" without Apple to "copy" from. 

That's just my opinion so take it as it is.

So why is this good news for Apple?  Well first, current Galaxy S3 owners have not much of a reason to buy the new S4 which could be the opening for Apple to snatch some of the market share back from Samsung.  Currently iPhone 5s or iPhone 6 rumors have been leading towards a new phone design and with iOS 7 around the corner (WWDC is usually held in June), Apple fans will have a reason to hope.  News of the iWatch and iTV also help fuel speculation that Apple may be launching a new product market that would bring back the Apple cool factor that Steve Jobs used to bring.

So will 2013 bring Apple back on top?  Only time will tell.

Buying Altria (MO) For Dividends and Growth

I just executed a limit order for 8 shares of Altria (MO) at $34.15.

 

MO closed up at $34.24 yesterday.  The same day the DOW Jones closed at 14,253.77. This is the DOW Jones' new all-time high.

 

Therefore, I anticipated some profit taking so I predicted that MO would at least go down to $34.15 maybe even lower.  My gambit paid off and my limit order was completed earlier today.  I could have gone lower since MO went as low as $34.01 but I think my conservative bet was good enough.  I just want to almost guarantee that I would get those 8 shares of MO.  The main reason why is because we're approaching MO's Ex-Dividend date of March 13, 2013.  The next valid Automatic Investment Plan date is on Tuesday, March 12, 2013.  That is cutting it close since I have to buy the shares a day before the Ex-Dividend date in order to qualify for the dividend pay out.  I decided to execute it early just to make sure plus the trading fees are now $6.95 (down from $9.95) so the $3 difference would be paid for by the dividends.

 

So why Altria (MO)?  First, the dividend pay day is coming.  Second, MO's dividend pay outs increased from $0.41/share in July 2012 to $0.44/share from October 2012.  I love stocks of companies who increase their dividend payments because it tells me their earnings are doing well (after reviewing their financials of course) and they want to reward their investors with more cash. Finally, I am counting on Altria's growth prospects as the global economy improves.  As the global economy improves, MO's customers would be more willing to spend money to buy MO's E-Cigarettes, high-end cigars and wine products.  Even if MO's regular customers do not feel the improvement, they'll still continue buying Marlboro cigarettes (and other MO brands).  If there's one thing I've learned from my siblings (and Mad Men), cigarette smokers have brand loyalty. 

 

So that's pretty much my Altria thesis.  I'll buy more shares in the future and as long as smokers smoke, I'm bullish on Altria's growth prospects.