OK, My Turn

[Dividend Watcher]

Well, I've neglected updating this thread for a while. Shame on me. Thought I'd dust it off and see where we're at.

In our last episode, I started a position in Ensco, plc (ESV) in my wife's portfolio. Well, that was perfect timing. We've now ridden it down to a 20% loss. Earnings went kaput but if you dig a little deeper into the 10Q, the reason EPS went negative was a very large impairment charge, a non-cash transaction, because of their older rigs and loss of use & revenue due to the slowdown in drilling across the industry. Revenue was still up a little and they paid down some long-term debt. Once we get a little bigger pile of cash, we'll probably add a second tranch and average down. I believe that the company is conservatively managed and using their cash wisely in upgrading the fleet. If the bottom of the market falls out, then we'll use the cash to build JNJ and PG to full positions.

In August, I started a small position in BHP Billiton (BBL) in my portfolio. This after a little burp when they announced the divestiture of a small part of their business. From what I can tell, it would only affect about 5% or 6% of revenues and they said it wasn't very profitable so maybe it was a wise decision. In the meantime, the bottom has fallen out of the iron ore market and with it, the price of all the ore producers. So once again, I've ridden another one down. BBL is large enough and has enough revenue streams from different raw materials that I think they'll weather the cycle although dividend growth may slow.

So, if you're thinking of shorting or selling anything, check with me first and see what I'm planning on buying so you can be on the opposite side of the trade.

In August, I also added a second tranch of AVA. a 4% yield with a little growth seems like a good idea. I think their Alaskan ute recently purchased has some potential for streamlining and boosting efficiency. I like their current fuel mix (mostly renewable energy) for the electricity supply. They also put in rate requests at all their subsidiaries, IIRC.

Today I finally sold LO when it got above $60. I was tired of waiting for the price to get closer to the buyout price with all the delays by regulators. There may not be another dividend after the latest depending on how it all turns out so I took the 44% gain over 18 months. I wasn't interested in getting some RAI shares in exchange. PM or MO are targets for a portion of the proceeds along with adding to some of the smaller holdings but right now I'm not excited about the prices or yields of any of them. I'll just watch & hold for a little bit. I'm also doing some research on a couple companies I'm thinking of adding to my target list -- Ingredion (INGR) and Tupperware (TUP). They're not priced with enough margin of safety for me right now but may be in the future. Any thoughts on those?

I guess that pretty much wraps up all the happenings in this week's program. Stay tuned for further excitement on the "Dividend Watcher Comedy of Errors Hour".