bar1080
7 years ago
Just ran the numbers with that calculator on my three Dow component stocks over a ten year period.
- Travelers Insurance: $33,747
- MMM: $40,435
- Boeing: $53,618
SPY: $24,139 (The Dow 30 index)
ARR: $12,178 (to keep things honest for IHUB)
Bizarre how some players argue that ultra high yield stocks like ARR are great investments.
bar1080
7 years ago
I almost wore out that calculator when I found it recently. Its results are sometimes surprising, and perhaps misleading, especially where a stock was unusually low (or high) exactly ten years ago. But I love how it figures-in splits and reinvested dividends, and comes up with the ten year performance based on a $10,000 investment. Ten years is about my investing horizon.
My activity on the ARR board proved to be remarkably beneficial to me. Like you, I decided that "market rate div payers" were the way to go, and that anything paying in the double digits was a sucker bet.
One of my sensible div payers was a little 100 year old airplane startup called Boeing. Paid a solid 3% with a bit of room for appreciation.
BA was the #1 Dow 30 stock in 2017 and it's going up faster than ever in '18.
Only problem is it sells for $335 a share and all IHUBner know that only pennies rise much. LOLOLOLOLOL! BTW, did you notice that the Dow beat the S&P in '17. That was mainly because of BA's heavy weighting in the Dow. 2017 was a fantastic year for my kind of buy/hold blue chips.
Porgie Tirebiter
7 years ago
Very interesting calculator. Back when we were all arguing about ARR being a wise investment or not I remember coming across a white paper where the author was making a case for high yield being a value trap. His math was so compelling it convinced me at that time.
Just for a lark, I took that calculator and plugged in the top 5 yielding stocks on the Dow 30 (VZ, PFE, IBM, XOM, and MRK). They produced an average annualized performance of 6% which is not terribly shabby. Or maybe it is considering the bull market of the last ten years?
Then I plugged in the bottom 5 Dow yields (AXP, UNH, NKE, GS, and V). They produced an average annualized performance of 14.4%.
Dividend growth with a low yield. That's the secret sauce. And it's just about the opposite of the recipe most REITs seem to follow.
bar1080
8 years ago
mREITs are really hard to understand with all the leverage and forces that affect them. We all know how successful the smartest economists have been in predicting interest rates. How can anyone also predict the yield curve, credit quality, governmental action, market fads and prepayment trends?
There are some brainy analysts on SA who specialize in mREITs and spew out brilliant sounding articles. But in the end their success seems pretty random to me. Same thing with other "alphabet stocks" (BDCs, REITs).
I've gotten interested in BDCs lately and they may be even more inscrutable, although without the high leverage.
Two certainties about these: Given a high enough yield, IHUBers will flock. And one can expect meltdowns in each category every decade or two. I too thought about buying ARR three years ago... and came to my senses!