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Value of Dividends – A commentary on Article by Krishna Kant of ET Bureau

TIP Guy 22 July 2009 commentary 3 Comments

On this blog, I continue discussing about my thoughts about dividend investing using value approach. My interest in dividend investing is driven by my objective of generating increasing cash flow (coupled with long term capital appreciation).

Recently, there was a very good article in the context of disinvestment of PSUs. The author, Krishna Kant, presented a very good perspective about significance of dividends from PSUs and its implications on government’s fiscal needs. I am discussing few take ways from that article:

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GE Shipping: Stock Analysis for Long Term Investment

TIP Guy 20 July 2009 analysis 4 Comments

The Great Eastern Shipping Company Limited (GESHIP) through its subsidiaries, engages in the shipping business in India. The company’s shipping business involves in the transportation of crude oil, petroleum products, gas, and dry bulk commodities. It operates with a fleet of 31 tankers. Most recently, it divested the exploration and offshore services business. My objective in this analysis to see if GESHIP is a good fit for my long term portfolio


Trend Analysis

The whole reason for any business to exist is to generate sales revenue and make more profits. At a minimum, the parameters listed below should have continuously increasing trends. All the data below is based on last 8 years i.e. from 2000 to 2008.

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Carnival of Indian Stocks – July 15, 2009

TIP Guy 16 July 2009 carnival 1 Comment

Welcome to Carnival of Indian Stocks. It is likely that readers may find posts that are not representative of the Indian Equity Markets. However, the concepts presented by authors can very well be applicable to Indian Investors.

This edition of the carnival includes 12 articles for fellow bloggers.

While you are here on my blog, I encourage you to read few posts to get a feel of India’s Investing scene. For your ease of navigation, the popular posts are listed on side bar on left hand side. I am sure you will enjoy reading!

Stock Analysis

puneetkapoor2000@gmail.com presents ANNUAL REPORT UPDATE : ADOR WELDING posted at KuberKhana -Indian Stock Fundamental Analysis, saying, “A Ben Grahamian analysis of a company.”

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Introducing TIPBlog.in

TIP Guy 11 July 2009 admin 12 Comments

picture1Today, I am pleased to announce that “The Income Portfolio” blog has moved to a new domain. When I started this blog in February 2009, I did not think about the importance of simplicity of blog domain. I went along with the topic and hence picked the domain name as www.theincomeportfolio.com. Since then I have received few sporadic messages highlighting the fact that it is very descriptive, long, and needs effort to type blog address. Normally, I would not make a change until I receive overwhelming feedback (or critics?). But then I decided to do a little experiment.

I picked three domain names and asked my dad, mom, wife, sister, brother, and three friends to vote on which is easiest (and simpler) to identify and type. The choices I gave them were (1) theincomeportfolio.com; (2) TIPBlog.in; and (3) NewCash.in. To my surprise, TIPBlog.in received 7 votes, NewCash.in received one vote, and theincomeportfolio.com received zero vote. That made me think there is some merit behind the feedback I received on my blog. So I decided to make a change to TIPBlog.in

I have selected tick mark as logo for this blog. Tick mark signifies correct. Even to make a tick mark, one needs bring it down first, and then go up. The tick mark logo and color combination demonstrates that in short term it may appear that dividend and value investing is negative (in red), but in long term it is always up (in green).

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Differentiating Asset Allocation and Diversification

TIP Guy 11 July 2009 asset allocation, process, risk management No Comments

portfolio-makeupAny investor investing for long term (i.e 10+ years) must use the principles of asset allocation and diversification in their portfolio management process. These are two aspects that help investors to manage risk of investments. This has been said many times, presented many times, and we individual investors still continue to make mistakes. On a personal front I have been guilty of it in recent past. Both asset allocation and diversification are two different aspects and hence they have different objectives. The primary reason individual investors get exposed to downside risk is because many are unable to differentiate between these two aspects.

Asset allocation is a strategy of allocating capital to different types of assets which are either non-correlated or at least have low correlation. The notion here is that, over time, the volatility in returns will smooth out if they have low correlations. The different types of assets that I am discussing here include, cash, government bonds, corporation bonds, common stocks, preferred stocks, real estate, private equity, natural resources, commodities, partnerships, etc.

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Corporate Dividends in Emerging Markets – Some Thoughts

TIP Guy 6 July 2009 dividends, opinion 7 Comments

The creation of Pan Asia Dividend Aristocrat index by S&P is a realization that Asian economy (specifically emerging markets) will continue to grow. This is a step in right direction to recognize managements who are prudent in their cash management over a longer term of 10 years and more.

The newly created S&P Pan Asia Dividend Aristocrats consists of 31 corporations. Of these 31 corporations, only five companies are from emerging markets of China, Taiwan, and India. Many readers will view this lack of dividend growth in emerging markets (including India) as shot in the arm saying dividends does not provide significant return. My viewpoint is different. The chart, I presented earlier shows that dividends provide approximately one third of the total returns over 10+ years.

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S&P Pan Asia Dividend Aristocrats

TIP Guy 5 July 2009 commentary, education No Comments

Standard & Poor’s is a US based provider of financial market intelligence which includes ratings, investment research, risk evaluation and data, and various types of indices. Among multiple different indices with different focus areas, one index is the dividend aristocrat index.

The Dividend Aristocrats is an index which consists of S&P500 companies that have been raising dividends continuously for 25 years or more. That is, every year, the dividend per share keeps on increasing. If any company that reduces or cuts the dividend in any given year, it is removed from the index. Now this is the characteristics that can be viewed in multiple ways, but TIPBlog is about Indian investments. Therefore, I will not go into detailed discussion. But it gives the context for this posts further discussion.

In markets of Asia or other parts of the world, it has been difficult to find a single company that has consistently raised their dividends year after year. Outside United States, there has been lack of consistency in the way the corporate’s managed dividend strategy, or the way the government policies taxed dividends to companies and common shareholders.

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