Follow the dividend investment decisions of a person who has no background in financial investment and wishes to take control of their financial future.

New Purchase MHLD - 26 Nov 2014 01:03

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Today I increased my position in Maiden Holdings (MHLD) with an additional 100 shares that should contribute $52 annually towards my 2015 dividends. MHLD while a small stock with a market cap of only $960M it continues to be a bright spot as a dividend growth stock that is undervalued.

What I really like about this company is their continued focus on growing earnings and being extremely shareholder friendly. MHLD is a re-insurer and what usually makes me nervous with insurance companies is their ability to execute risk management and how or where they keep their investments.

MHLD has been implementing a strategy to exit high risk segments and entering predictable and stable operating segments. This strategy has paid off over the last three years as we have seen earning grow from $0.39 per share in 2011 to $1.18 per share in 2013.

In regards to investments, it is fairly common for insurance companies to invest in fixed income and MHLD is no different. The concern here is when interest rates rise bond prices will fall creating a potential loss. Fortunately, for MHLD, most of their fixed income bonds have a maturity of less than 10 years and only 2.2% of their bonds have a maturity greater than 10 years so if rates do rise losses will be minimal.

Of course their strength in managing risk & investments is not the only reason I invested. We can't forget about their juicy 4% dividend. In fact, MHLD has been extremely shareholder friendly with dividend increases for a CAGR of 19% and its most recent increase was 18%.

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With an aggressive dividend growth rate I calculate a fair value range from $13.71 to $15.58 share price, with current share price as of 11/25/2014 of $13.18 per share it wasn't hard to see this was under my low end price target and a value buy I couldn't pass up. - Comments: 0

I was Afraid…Briefly :) - 01 Nov 2014 13:52

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October was one wild month for investors! And, for one very brief moment, fear crept into my mind that a crash could be happening. Of course the market did not crash and rallied back. When it was over there were a lot of Monday Morning Quarterbacks out there with the “you should have…” or “should not have…” or “I told you so…” articles, blogs or opinions.

This post is nothing like that. Instead it is a summary of what I did during that turbulent month.

Calming Down

Fear first crept into my mind after consecutive days of losses in early October. This was a pattern not consistent with the market of 2014 and I knew something was up. It was at this point fear found its way into my head wondering if I was watching the start of a correction or crash. My fears are well grounded; I have lived through three major market crashes and two real estate crashes. Yet unlike what I went through years ago I would not let fear paralyze me with inaction. I reminded myself that this time will be different! I am more educated on investing than I have ever been. I just needed to stay calm and have confidence in myself.

After coming home from work I poured myself a big cup of joe, hit the books and analyzed my dividend growth portfolio. I re-read every news release to make sure nothing snuck by me. I moved onto looking at the latest quarterly reports to make sure no new risks had set in. I read industry news to see if a sector (like financials) was driving markets lower. After looking at industry reports, news, earnings trends, balance sheets, etc… I came to a simple conclusion; the same strengths and risks existed. Nothing had changed that would affect my dividend growth, if anything I saw strengths for dividends to increase.

With fundamentals on solid ground I breathed a sigh of relief, if prices went down it would not change my dividend income and things would be ok.

And the Market Continued to Decline

After I calmed down I watched as my investments declined in daily 1% increments. As the decline neared its bottom, financial value indicators started lighting up on my radar screen. Suddenly there were opportunities to buy! Air Products (APD), Microsoft (MSFT), GE (GE), Analog Devices (ADI), Emerson Electric (EMR), Johnson & Johnson (JNJ), Smuckers (SJM), and Union Pacific (UNP) all looked attractive. I just needed some cash.

Unfortunately I did not have a significant amount of cash, I was fully invested. I started digging everywhere for free cash but at the end of the day it was nothing mentionable. I had to relegate myself to sitting on the sidelines watching.

Then Magic Happened

In the last week of October things started to change. Earning reports started flowing in from many of the major S&P 500 companies and most were beating expectations. The market began to rise.

As we continued on, the Fed announced what was expected; stoppage of QE stimulus and interest rates to remain low. The market kept rising.

Finally on Halloween, Japan announced its stimulus plan and the markets were inspired for one more day of gains. Like Magic the market recovered and was actually higher at the end of October than what it started. All the while I had to watch the opportunities slip away. As prices climbed most of the stocks on my radar started falling off again. In the end everything was blamed on an Ebola scare and conflict in the Middle East with the IS, for myself it was a mental test and I feel like I passed with flying colors. - Comments: 0


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