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Dividend Stock of the Week [QCOM]

Before market open on Monday, August 22, 2022, Computer Services Inc [CSVI] announced that it entered into a definitive agreement to be acquired by a couple of private investment firms, Centerbridge Partners, L.P. and Bridgeport Partners. The merger is expected to complete in the fourth quarter of this year and shareholders will receive $58.00 per share of CSVI. CSVI is the only Dividend King representing the Information Technology sector. I won’t lie, CSVI was a serious consideration as to why I thought building out this Portfolio for the Ages consisting of Dividend Kings was possible. In June, the market was significantly down for the year, and there were several Dividend Kings that were underpriced. CSVI was one of them, as evidenced by the acquisition price of $58.00 being 53% higher than the previous closing price of $37.88.

I chose not to launch the portfolio with an immediate acquisition of 10-12 stocks. Instead, I advocated a one stock per week approach because one never knows how the market will behave. Of course, the market reversed and for the first six weeks of the second half of the year, the portfolio snagged Kings as they were rising in price but not before they hit their estimated fair values. CSVI had actually drifted slightly lower. The rest is history. I missed the opportunity. And not just this time, but quite possibly forever. Not only are they priced just shy of their merger-defined fair value of $58.001, when the merger completes, CSVI will cease being publicly traded and a Dividend King will be lost forever.

I’ve spent the following days searching for a suitable replacement from the Information Technology sector.

That search is over. Tuesday morning, Qualcomm Inc [QCOM] joins the portfolio.

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Labor Day Sale

I’m going to take advantage of the Labor Day Sale prices that materialized on Friday. Check this space later this weekend to find out which company it will be. I can tell you one thing, there is a 50% chance Tuesday morning’s purchase for the Portfolio for the Ages won’t be a Dividend King!

The First Dividend

Today, the portfolio received $7.74 in cash, courtesy of the Black Hills Corporation [BKH]. Like a proud shopkeeper who frames the bill from his first sale, I feel like a post commemorating the event is in order.

There will be at least a couple of posts in the near future, about how to best reinvest dividends and the benefits of receiving dividends during bear markets and economic recessions.

Black Hills just paid its quarterly dividend of $0.595 per share for the fourth time. That means, we can expect their next quarterly dividend to be even more. I’m looking forward to it.

Panettone

Panettone – Wikipedia

I am sure you’ve seen these in your local grocery store. It’s an Italian sweet bread. Quite often you’ll see towers of Panettone boxes during the holidays. In the states, I tend to see Bauducco brand panettone, either the mini boxes or the full-size boxes, in classic and chocolate chip flavors. In a few different grocery stores in Sicily, I recall seeing perhaps a dozen brands and an even greater variety of flavors. But they were only available around Christmas if memory serves me. In the states, I’m seeing a small offering year-round now.

Recently, a friend gave me a panettone because she had been given one by a person who didn’t know she avoids gluten. The 26.2 oz. Bauducco Classic Panettone. That’s your big boy.

And thus began my mission.

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Dividend King of the Week [MO]

This week’s pick is one of twelve Dividend Kings from the Consumer Staples sector. But of those twelve, only one other is trading below fair value and that’s Target [TGT]. As much as I love Target, especially at their current price, I am going with one that pays a massive 8.2% yield, highest amongst all Dividend Kings. In fact, on August 25, 2022, they announced their 57th dividend increase in the last 53 years. We want to remain defensive in this market, and this stock’s earnings were unphased in our last two recessions, climbing steadily year after year.

Monday morning, Altria Group Inc [MO] joins the Dividend King portfolio.

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Bear Market Rally

There has been a lot of debate over the past few weeks. Investing experts have been taking sides, are we in a bear market rally or have we already found a market bottom and begun a new bull run? The answer is in. We enjoyed a rally within a bear market, and it’s over. That’s right, I’m calling it. Just as there are corrections within a longer running bull market, there are rallies within bear markets. In my post on August 9, 2022, entitled “Yield Curve Inversion”, I put forth my own opinion – that we were already in a recession. This afternoon reinforced that notion.

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On Beta (Part 3 of 3)

After presenting five different methods for calculating beta in Excel, I used examples to demonstrate why beta should not be used to set expectations about future return. There are several reasons for this:

  1. Beta isn’t even reliable for estimating the historical returns on which it is based.
  2. Beta is a point estimate summarizing a multitude of data points.
  3. A stock’s beta will change in the future.
  4. Using beta for stock projections, relies first on a prediction of the market’s return – a futile task.
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Regicide [CSVI]

This past weekend I narrowed my choice for this week’s acquisition to two companies. National Fuel Gas Company [NFG] and Computer Services Inc. [CSVI]. The deciding factor turned out to be that NFG had been rising in price this year and CSVI had been struggling. I assumed CSVI would be either the same price next week or perhaps even lower. So, I decided to add NFG to the portfolio and add CSVI later.

NFG dropped about a dollar by close of today. CSVI went up 50%.

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