Download Letter - The Oxford Club

The
Letter
Creating income for today, wealth for tomorrow |
Issue 36, march 2016
The Stock So Nice, We’ll Buy It Twice
by Marc Lichtenfeld, Chief Income Strategist, The Oxford Club
Dear Member,
Sometimes in life you get a second chance. And you don’t even have to have screwed it up the first time.
In college, my wife and I dated for three years. It was the best time of my life. After we graduated, I
moved to New York and she moved to California. Life took us in different directions, so we went our
separate ways.
Then, nearly three years later, she called me unexpectedly at 3 a.m. Yada yada yada, we’ve now been
married for 20 years.
It happens in the business world too. I’ve seen quite a few people leave my company,
realize that we’re the ones with the green grass and come back. Often, they come
back quickly.
And in the stock market, many of us have bought and sold shares of the same
company more than once. Sometimes it’s a stock with a trading pattern we’re
familiar with. Other times it’s an investment that we shouldn’t have sold in the first
place or that is simply offering us an opportunity to get back in at a better price.
MARC LICHTENFELD
“Reunited and it feels so good
Reunited ’cause we understood
There’s one perfect fit
And, sugar, this one is it
We both are so excited
’Cause we’re reunited, hey, hey”
– Peaches & Herb
The latter is what we’re doing today.
Like in my relationship with my then-girlfriend and now-wife, we’re going back to
what worked well before. And if the stock turns out anywhere near as well as my marriage has, you’ll be extremely happy.
When I first launched The Oxford Income Letter, I recommended – as I often do – a contrarian stock. This was a
company whose products were considered dinosaurs. Wall Street hated it, and no one really paid attention to it. In
September of last year, we sold it for a 40% gain after the company agreed to be acquired.
But like that unexpected late-night phone call I received many years ago, recent events have opened the door to a
reunion. After we sold it from our portfolio, the acquisition collapsed and so did the stock price...
Healthy Projections
PG 4
The Hard
Questions
PG 6
Oxford Income
Mailbag
PG 8
March Madness
PG 11
MARC’S DIRECTIVE ON DIVIDENDS
And we now have the chance to buy it 23% lower than where
we sold it and collect a 5% annual dividend yield.
are wrong. And they have been for years.
Meredith’s Readership
The company we’re getting back into is Meredith Corp.
(NYSE: MDP).
■ = Mobile ■ = Online ■ = Print
Audience (in Millions)
In September, Meredith announced it would be acquired
by Media General (NYSE: MEG) for $51.53 per share.
200
175
But in January, Media General agreed to be acquired by
Nexstar Broadcasting Group (Nasdaq: NXST). That left
Meredith without a dance partner, but Media General at
least gave Meredith cab fare home – that is, a $60 million
breakup fee.
150
125
100
75
So Meredith will continue to operate its magazines and
online properties geared toward women, as well as its 17
local television stations.
2009
Never Assume
2010
2011
2012
2013
2014
2015
50
Source: Meredith Corp.
Its magazines and digital content should be the envy of
the publishing world. With household-name publications,
like Family Circle, Better Homes and Gardens, and Parents,
as well as popular online sites, like MarthaStewart.com,
RachelRayMag.com and AllRecipes.com (the recipe site
with the most traffic on the Web), Meredith’s brands reach
100 million women per month and 60% of millennial
women.
Perfect Time to Go Local
Meredith owns 17 TV stations in fast-growing markets,
including My5 in Saginaw, Michigan, Fox 12 in Portland,
Oregon, and CBS46 in Atlanta, Georgia.
Business is strong in TV, in part because of political
advertising. It’s been said no candidate ever lost an
election because they were on TV, but they have lost
because they weren’t.
In addition to its vast publishing offerings, the company
licenses its brands on more than 3,000 products.
And this year, TV ad spending is off the charts:
The company is an expert on data and helps its advertisers
improve their marketing with properly targeted messages
that increase their results.
Meredith has an advantage over many of its competitors:
Because it has such a wide reach, Meredith’s data is its own.
It doesn’t have to go out and purchase data on customers.
In other words, Meredith knows its audience and therefore
can be a more effective partner with advertisers.
There’s an assumption on Wall Street that because
Meredith is a magazine publisher, its business is going the
way of the typewriter, the pager and the VCR...
•
In 2012, presidential candidates spent $2 million
in New Hampshire leading up to the primary.
This year, they spent $100 million.
•
One mayoral candidate in Baltimore has already
spent $600,000.
•
And 10 days before the South Carolina primary,
Republican candidates had already tripled the
amount spent on TV advertising in the Palmetto
State in all of 2012.
But as you can see from the chart below, even though
Meredith is growing its online presence, it is increasing the
number of subscriptions to its printed products.
But it’s not all political dollars. Meredith’s local media
business generated 10% revenue growth in the second
quarter – not including political advertising – and set a
new company record at $104 million.
So all those analysts who think its print business is dying
So it’s not just Ted Cruz and Hillary Clinton who are
2
MARC’S DIRECTIVE ON DIVIDENDS
Spending Shift: Total Political Ad Dollars in Each Election Year
■ = Broadcast TV ■ = Cable ■ = Digital
Billions
$6
$5
$4
$3
$2
$1
$0
2008
2012
2016E
Source: Borrell Associates, The Wall Street Journal
buying ad space on local TV; it’s Bob’s Discount Mattresses,
the local Chevy dealer, and personal injury lawyers Dewey
Cheatham & Howe.
the payout ratio. It means that for every dollar in free cash
flow, the company paid out just $0.50 in dividends.
I like to see a payout ratio of 75% or lower. So that 50%
level means the company has plenty of room to raise the
dividend, even if cash flow doesn’t grow like it’s expected to.
Three Years Later, Wall Street Still
Hates It
As a result, I believe Meredith can easily hike its dividend
by double digits for the foreseeable future.
When I first recommended the stock in 2013, Wall Street
hated it. And yet, after the company has done nothing
but perform, receive a 12% premium takeover offer and
continue to raise its dividend, the lunkhead sell-side
analysts still haven’t learned their lesson.
It just raised its dividend last month to $1.98 annually,
which equals a 5% yield.
Meredith has paid a dividend for 69 consecutive years, and
the latest increase was its 23rd straight annual boost.
Only one out of seven analysts rates the stock a “Buy.” That
gives us opportunities for price increases on future upgrades.
Based on my assumptions for dividend growth and
share price growth (which are based on the historical
broad market average), in 10 years, without dividends
reinvested, the yield on original cost will be 15.1%.
It’s hard to imagine why they don’t like it.
Earnings per share is expected to grow more than 16% in
fiscal 2016 (ending in June). And free cash flow is forecast
to grow an average of 20.6% per year over the next two
years.
If dividends are reinvested, the yield will be 26.8% and
investors will have earned a 14.3% annual total return,
turning $10,000 into $37,906.
A Perfect Fit for 10-11-12
Action to Take: If you haven’t already, buy Meredith Corp.
(NYSE: MDP) at the market and add it to the Instant
Income Portfolio and Compound Income Portfolio. Place
a 25% trailing stop on the position in the Instant Income
Portfolio. We will not use a trailing stop in the Compound
Income Portfolio. ■
All that cash flow means Meredith will have no problem
whatsoever paying and raising its dividend.
In 2015, the payout ratio was 50.3%. That’s based on free
cash flow, which is the most conservative way to calculate
3
STEVE’S INCOME INSIGHTS
Balancing the Quantity and Quality of Your
Retirement Years
by Steve McDonald, Bond Strategist, The Oxford Club
M
y genetic makeup is one of my greatest fears.
Well, for 30-plus years, anyway.
No, there aren’t any dreaded diseases in my family.
In fact, back in the early ‘90s, I joked with my internist
that, except for my great-uncle Joe – who was hit by a train
– no one in my family dies.
But the part that has never made sense
to me has been how one rule can work
not only for every possible health and
life expectancy scenario, but also for
the unforgiving and unpredictable
nature of inflation and the markets.
I wasn’t kidding! I was well into my 40s and only my
98-year-old grandmother had passed, back in 1983.
STEVE MCDONALD
So does the 4% rule always work?
In fact, every one of my mother’s and father’s siblings –
there were 11 – lived into their late 80s and 90s.
A Problem With the 4% Rule?
And believe me: These were not health nuts; rather, they
were smokers, drinkers and red meat lovers, all! Most never
went to a doctor.
Well, Fidelity recently released a study that says it doesn’t.
There have to be adjustments to it, and, not surprisingly,
the adjustments include expected survival age, how much
assurance you want that you won’t run out of money and,
of course, risk tolerance. And Fidelity actually quantified
each of those adjustments.
I have made matters even worse. I get regular checkups,
exercise and watch my diet – a little, nothing too crazy. I’m
not obsessed, but I do pay some attention to my health.
My life expectancy has to be well into the 90s.
So why, you ask, is knowing my genetic makeup and
following my relatives to a very late grave my greatest fear?
First, here’s where the 4% rule came from. If you withdrew
4%, according to Fidelity’s numbers, you would get 32
years from your money.
Life Expectancy, Savings and the
4% Rule
But, if you retire later, at age 70, the Fidelity numbers
indicate you could withdraw 4.6% and still safely get 25
years of withdrawals.
I spend every day of my life reading and writing about how
much it will cost to live into my 90s. Believe me, unless
you do a lot of things right, it is not a pretty picture.
That gets you to age 95, and 0.6% is $3,000 more per year
on a $500,000 portfolio, plus you’ll get a lot more from
Social Security by retiring at 70.
Which brings me to the “4% rule,” the widely accepted
way to not wake up broke in your 80s.
Sounds pretty good, right? Well, here come the curves.
What if 4% or 4.6% isn’t enough cash to pay your bills?
What if health issues run you dry? And, maybe most
important, this model assumes a very high percentage of
your money is in the stock market. That can be real trouble.
The rule is simple: You may withdraw up to 4% of the
value of your assets (savings, cash and investments) each
year. Further, increase that amount (not the percentage)
by the inflation rate every year, beginning in year two and
continuing until your death.
As you’ll see, the more you have in stocks, the less
predictable your return and the more likely it is you’ll run
out of money.
If you do that, you should not run out of money during
your lifetime.
4
STEVE’S INCOME INSIGHTS
The chart below shows various withdrawal rates and the
expected success rates for each: 99%, 90% and 50%.
The next chart says it all about the life expectancy variable.
Early Retirement Limits
Withdrawal Power
Balancing Risk and Savings
Maximum Sustainable Withdrawal Rate
■ = Conservative ■ = Balanced ■ = Growth
5.0%
Withdrawal Rate
6%
4.5%
4%
4.0%
2%
25 Years
0%
30 Years
35 Years
3.5%
Planning Horizon
Successful in 99% Successful in 90% Successful in 50%
of Simulations
of Simulations
of Simulations
(Success rate is a measure of making it through retirement
without running out of money.)
This isn’t brain surgery; the earlier you retire, the lower
the income from your investments has to be and the lower
your Social Security benefits will be.
The most attractive to me is the 90% success rate – the
middle bar graph – with a balanced portfolio: 50% stocks,
40% bonds and 10% cash.
One of the best recommendations from Fidelity’s study was
to try to pay your essential expenses from your guaranteed
sources of income: pension, annuity and Social Security.
It gives me more than a 4% withdrawal rate and enough
stock to allow for some growth, as well as a very high
success rate and “sleep factor.”
That way, the amount you withdraw from your holdings is
discretionary and can fluctuate as needs arise or, hopefully,
don’t arise.
The most aggressive holdings and highest withdrawals with
the 50% success rate – the last grouping – give me the creeps.
This portfolio is 70% stocks, 25% bonds and 5% cash.
But you won’t be hanging on the market’s whims for your
survival.
Make Your Money Last:
A Minimalist’s Guide
Yes, it has the highest withdrawal rate (6%), but a 50%
success rate looks like a greater chance of waking up broke
in my 80s.
Here are the minimum steps you must take when looking
at how long your money can last:
The lowest-risk portfolio, with the 99% success ratio, is
20% stocks, 50% bonds and 30% cash. That looks like
life on a tight budget and too little growth to keep me safe.
1. Create a realistic estimate about how long you
expect to live. Add five years just to be safe.
2. Decide on how much risk you can tolerate. This
past January should serve as a good baseline for
that “swag.”
But, as almost all retirement scenarios do, it comes down
to when you retire and how long you expect to live.
For planning purposes, for me anyway, it only makes sense
to shoot for the stars on life expectancy.
3. Choose investments that fit your honest
evaluation of your risk tolerance. Most investors
shoot for the stars or are too safe, and both will
cost you dearly going forward.
continued on Page 10
Because if you end up living longer than you expect, all
your other planning will be negated.
5
IN FOCUS
The Important Conversation You Need to Have
And It Has Nothing to Do With Money
by Marc Lichtenfeld, Chief Income Strategist, The Oxford Club
M
y buddy Rich had just arrived at the hospital. He
had come straight from the airport where he’d flown
cross-country after getting a call from his father. His mom,
who had been battling stage 4 lung cancer for nearly a year,
was in the intensive care unit. She was not doing well.
The previous year had been filled with ups and downs, as
is the case for most late-stage cancer patients. But lately,
there were many more bad days than good. Her quality of
life had deteriorated badly over the past couple of weeks,
and he was prepared for the worst.
But when he got to her room, what he found was even
beyond what he’d expected. His mother’s kidneys were
failing, so the doctors had put her on dialysis.
•
Nearly one-third of terminally ill patients with
insurance used up all of their savings to cover
uninsured medical costs.
•
Up to 30% of Medicare costs are spent on
patients in the last year of their lives.
•
In 2008, Medicare spent $55 billion on hospitals’
and doctors’ bills for patients in their final two
months of life.
•
40% of Medicare costs cover patients in their last
month.
How many unnecessary tests, procedures and medications
are given to patients who barely benefit from them or don’t
benefit at all?
To Rich, this was worse than “the worst.” Even with fully
functioning kidneys, she likely had only a few weeks left –
weeks she’d spend mostly lying in bed, doped up with pain
medicine, and enduring all of the problems that accompany
end-stage cancer and drugs. Yet the doctors were insistent
on “saving her life” by putting her on dialysis.
Of course, end-of-life care is far from just a financial
decision. We all know people who fought for every last
minute on Earth that they could. And there’s nothing
wrong with that. The instinct to survive is strong.
But for some, they reach a point where the fight is over.
Or they don’t even know they’re in a fight because they are
either unconscious or have severe dementia.
Rich was pretty sure this was not what his mother would
have wanted. The intrusive and expensive treatments
were drawing out the inevitable. His mother wasn’t even
conscious to voice her opinion.
It’s not pleasant to think about and is even less appealing
to talk about with loved ones, but it’s important to discuss
with them what you want in the event that you are unable
to make decisions for yourself.
Sadly, this is the case for many people with terminal
illnesses. Patients with severe dementia are also routinely
given life-prolonging treatments when these may not be
what they would have wanted.
For example, some people have a “do not resuscitate” order.
You can even get a wristband that instructs paramedics not
to perform CPR or use a defibrillator.
In the book Knocking on Heaven’s Door, Katy Butler
describes the tremendous toll an implanted pacemaker
had on her father, who was already disabled by strokes
and dementia. The complications had dire consequences
for the family as well. It was an emotional and financial
drain. And sadly, her father was just one of many who have
gotten caught up in the system of saving lives at all costs.
Obviously, if you have a tee time tomorrow, tickets for the
theater next week and plans to fly to see the grandchildren
over the summer, you’re probably willing to put up with a
bit of chest pounding and electric shock to give you a few
more years should your heart stop beating.
But imagine you don’t recognize your children anymore
and need help with all of your basic life functions.
And those end-of-life costs total up to big bucks:
6
IN FOCUS
Do you want the paramedics to do everything they can to
save you? That’s a choice only you can make now, and you
should talk about it with your spouse or loved ones who
may have to make that call on your behalf.
patient and their family who want to refuse care. The drug
and medical device companies push their products so their
revenues go up. Hospitals have an incentive to provide every
service possible so they can bill the insurance companies.
And, again, doctors are worried about being sued.
Keep in mind, doctors will often perform every trick in the
book to keep you alive. Some do it because they believe it’s
their duty to do so. Others so they won’t get sued. They
may even override some of the family’s decisions.
It sometimes requires a strong person to reject the pressure
to take invasive, painful and costly measures that will
extend life but do nothing to improve the quality of life.
But knowing the desires of the patient and having them
explicitly written out in a legal document signed by a
physician will make facing that pressure much easier. It
will also make it more likely that the patient will have a
more comfortable experience when the time comes, versus
being stuck in an ICU, hooked up to lots of machines.
That’s why it’s so important to have your wishes written in
a legal document. One well-known legal document is an
advanced directive, or living will. But there’s a better one
you can use to increase the chances that your requests will
be granted.
Ensure You Get What You Want
Many people fear that scenario more than death itself. A
bit of a depressing topic, I know. But you want to have
those conversations now rather than make decisions under
severe stress.
The most comprehensive document you can get is called
a Physician Orders for Life-Sustaining Treatment. This
document is signed by a physician as well as the patient.
It gets very specific and covers respirators, feeding tubes,
antibiotics, etc. You can also check a box that says you
should be given comfort measures only.
I’m planning on sitting down with my parents in a couple
of weeks to go over every scenario we can think of so I can
be sure that I am carrying out their wishes. Hopefully this
is something we won’t have to deal with for another decade
or so, if ever. But I want to be prepared. They have done
so much for me in my life; I want to be sure I’m honoring
and helping them if they can no longer help themselves.
There is a national organization that can help you
gather information and resources. Its website is here:
www.polst.org.
You also want to get a “durable power of attorney for
healthcare,” also known as a medical guardianship or
healthcare proxy. This will allow a designated person to
make healthcare choices for you.
If they want to fight up until the last minute, then I’m
going to be there fighting with them. But if not, I’m going
to make sure they’re as comfortable as I can make them,
no matter what a hospital administrator or a doctor – who
doesn’t even know my mom or dad – says. ■
The healthcare system can be stacked against a suffering
A Special Invitation From Marc Lichtenfeld…
As I’m sure you’ve heard by now, The Oxford Club is hosting its 18th Annual Investment U Conference this coming April 13-16
at the luxurious Park Hyatt Aviara in Carlsbad, California.
Personally, I couldn’t be more excited. That’s because there’s a very good chance that this year’s event could help you unlock
massive profits in 2016 and beyond. In fact, just last year, attendees had the chance to score double- and triple-digit gains on
55 of the recommendations made – in about six months.
Today, I’d like to offer you a front-row seat to this event so you can personally be there when more than two dozen world-class
investment experts reveal their latest recommendations for the first time. For more details on what the other speakers and I will
be discussing, simply go here now.
7
The
MAILBAG
We believe it’s good to share questions and clarifications on dividend-investment strategies with all our subscribers.
Keep in mind, Marc can answer your general strategy and service questions, but he cannot give personalized advice.
As always, feel free to send us emails at [email protected].
I received several questions about my decision to sell
the Seagate Technology (Nasdaq: STX) position from our
Compound Income Portfolio.
If you will not be putting more money into the portfolio, then
you may want to start off with a more diverse portfolio. If
you’ll be making regular contributions, you may decide to
start with just a few and add more later.
Simply put, I lost confidence in the company’s ability to
perform. It happened rather quickly. In the company’s
earnings release, it was apparent to me that the demand for
hard drives was way lower than I expected...
But I definitely suggest having a diversified portfolio that
isn’t concentrated in just a small number of stocks. Having
just a few stocks isn’t a big deal if you’ll be adding more
later on, but you definitely don’t want to leave your portfolio
in that situation for very long.
For the second quarter, cash flow from operations and free
cash flow were down from the same periods in 2015 and
2014.
Q: I am taking early retirement this year at 59 and plan to
live off my dividends until I start collecting Social Security.
I have several questions about what types of accounts I
should keep some positions in:
Numbers from one quarter do not make me bail on a stock,
but the fact that I was already beginning to question
whether the company would be able to generate enough cash
flow over the long term didn’t help.
1. Taxable account
It seems your Instant Income Portfolio would be the
best short-term choice, but your average yield at
4.8% is lower than the forward 12-month dividend
yield of 5.56% I currently have. It seems a combination of Instant and High Yield is the better choice?
When I recommend a stock that is a turnaround story, I see
the light at the end of the tunnel. In Seagate’s case, that
light quickly dimmed, and I wasn’t sure I’d see it again.
Q: The Compound Income Portfolio has a large number of
stocks comprising the portfolio. If someone had $10K (for
example) as an initial investment, is it better to take a
larger holding of a subset of the portfolio or to buy only a
few shares of the entire portfolio?
2. IRA/401(k)
I’ll keep this until I need to start withdrawing in
five to 10 years. This seems best-suited for the
Compound and/or High Yield, since it is a high
dollar value. Is it?
– David
3. Roth
Since it is such a low dollar value ($12K), I’m not
sure what to do with this one.
Marc responds:
That will depend on your trading costs and if you are going to
be putting more funds into the account. For example, someone
who uses an online broker that charges $10 per transaction
may decide to start with more stocks than someone who pays
$100 per transaction with a full-service broker.
Nothing I have fits the 10-year minimum recommendation I think I took away from using the Compound Income
Portfolio. It does have a great yield and growth, but seems
to then “conflict” with Instant in yield and growth. There
8
MAILBAG
seems to be much overlap, thus a little confusion in my
choosing.
recommendations in my own.
I really appreciate the information you share on taxes, and
I found the October issue and this February’s very helpful.
I just read in the January Oxford Income newsletter about
using trailing stops only in the Instant and High Yield, and
not in the Compound... due probably to the 10-plus year
time frame of compounding.
However, I think it would be awesome if there were a way
for you to distinguish where to have them invested on
your portfolio update page at the back of the newsletter.
Maybe you star them or bold them, but having some way
of showing the ones that should be kept tax-deferred vs.
taxable would be great.
Lastly, are the trailing stops considered a way of diversifying the portfolio?
– Craig
Thanks so much for all your insight.
Marc responds:
– Justin
As you’re probably aware, I can’t give personal advice.
What I can tell you is this: The Instant Income Portfolio
is for investors who need the dividend income today. The
Compound Income Portfolio is for investors who can reinvest
the dividends for at least five years, though 10 is optimal.
The Retirement Catch-Up/High Yield can be used for either.
Marc responds:
I guess great minds really do think alike. We were in the
process of getting this idea set up when your email came in.
Starting with this month’s issue, we’ll have a column in the
portfolio that suggests which account type is optimal for
each particular stock.
It should be noted that the Retirement Catch-Up/High Yield
Portfolio has higher risk than the other two.
Regarding your current yield of 5.56%, I have no idea of the
risk associated with that portfolio, how diversified it is or if
your dividends are growing, so I can’t comment.
Of course, it will vary depending on your personal situation.
For example, this month’s recommendation of Meredith may
be suggested to be put in a tax-free account so that you
don’t pay taxes on the dividend. But if you have already
maxed out your contributions to your IRA or 401(k), you’ll
have to put it in a taxable account.
I’m not clear what you mean when you say that the Instant
Income Portfolio “conflicts” with the Compound Income
Portfolio. Both portfolios adhere to my 10-11-12 System.
The Instant Income Portfolio is designed to generate 11%
yields within 10 years. The Compound Income Portfolio is
expected to achieve 12% average annual total returns within
10 years.
It’s still suitable for a taxable account, but the tax efficiency
is maximized in an IRA or other retirement account.
Q: If you’re past retirement age, isn’t it too late to consider
reinvesting dividends?
The trailing stops are not meant to diversify the portfolio,
but to ensure that small losses don’t become big ones. In
the Compound Income Portfolio, we are willing to let a stock
go lower than our traditional 25% stop because as long as
we remain confident that the company can continue to grow
its dividend and we have a long time horizon, the lower stock
price means we get to buy a lot more stock with our reinvested dividends.
– Patti M.
Marc responds:
Not at all. It depends on your individual needs. If you require
the income that the dividends produce, then you’re right: You
would not reinvest the dividends.
I hope that’s helpful.
But if you don’t need the income for five years or more, reinvesting the dividends is the best way I know to grow a nest
egg so that it will spin off more income when you need it. ■
Q: Good afternoon. As a Chairman’s Circle Member, I must
say, I love your income portfolios and have many of your
9
PORTFOLIO REVIEW
The Oxford Income Letter: PORTFOLIO REVIEW
By Marc Lichtenfeld, Chief Income Strategist, The Oxford Club, with Patrick Little, Managing Editor, The Oxford Income Letter
I
t’s March. The madness is upon us.
Those who read the February 25 Oxford Income Weekly
know that Crown Castle CEO Ben Moreland is retiring
soon and that Jay Brown will be taking over on June 1.
Brown is a veteran of the company, and Moreland will stay
on as executive vice chairman for the foreseeable future.
If you’re a fan of college hoops, you know the
pressure is on for each team to come up with plays that
will get them the win. Many times, a coach’s best bet is to
give the ball to the “hot hand” – that player on the floor
who’s in the zone, who doesn’t seem able to miss no matter
what happens...
In other words, the transition will be seamless, and Crown
Castle’s hand should continue to be hot.
Mergers and Acquisitions Ahead?
Right now, on our team of all-stars, Crown Castle
International (NYSE: CCI) is the hot hand. Because
lately, it doesn’t seem like the company can miss.
These days, it seems like major mergers and acquisitions
are hardly newsworthy. In 2015, they happened so
regularly – especially in healthcare – that many investors
likely stopped taking notice.
Since we added the cellphone tower real estate investment
trust in November of last year, the company’s shares have
gone up 10%. The company raised the dividend 8%, so
shareholders now get quarterly payouts of $0.885 per
share.
AbbVie Inc. (NYSE: ABBV), a member of our
Compound and Instant Income portfolios, recently
acquired Pharmacyclics, a one-drug company whose
success was the envy of the industry (as readers of
January’s issue will remember).
In early February, Forbes called Crown Castle and Digital
Realty Trust (NYSE: DLR) – another of our positions –
two REITs “to buy and hold forever.”
Now it looks like AbbVie is close to forming a cancer
treatment partnership with Boehringer Ingelheim, a
German-based pharmaceutical company that specializes
in treatments for lung cancer patients. Boehringer also
happens to be one of the 20 leading pharma companies
in the world.
Still need more signs of a hot hand? How about the fact
that Crown Castle can serve the same product to multiple
customers at once? In other words, the company can book
a cellphone tower for a second or third customer (think
Verizon, AT&T or T-Mobile) and not have to worry about
additional infrastructure or operating costs. Few other
businesses can boast the same sort of opportunity. Imagine
if a carmaker could sell the same car to two customers.
The deal is not yet final, but I will be sure to keep you
informed of any major developments and how they may
affect our position. ■
Balancing the Quantity... continued from Page 5
4. Choose the withdrawal rate that will give
you a success rate that lets you sleep at night.
Spending 25 or 30 years lying awake at night
worrying about money is not living. Not to
me, anyway.
the risk of that happening.
As an aside, I lost the last of my father’s family in
2015. She was 94, a smoker all her life, and she loved
beer, chocolate and Texas wieners from the Green
Ridge Lunch.
The possibility of being broke in our 80s is a very
scary thought. Make the right calls now to minimize
I wonder if Fidelity has a 40-year scenario for me... ■
10
PORTFOLIOS
The Compound Income Portfolio
Dividend reinvestment for tomorrow.
Company/Ticker
Avg. Yield on Rec. Price: 5.0% Projected Annual Dividend Growth: 9.2%
Avg. Yield on Curr. Price: 5.8% Dividends Raised Annually for an Avg. of 10.0 Years
Rec
Date
Rec
Price
Current
Price
Current
Yield
Rating
Trailing
Stop
Total Gains
Suggested
Account Type*
AbbVie (NYSE: ABBV)
Jan-2016
$57.21
$54.61
4.2%
Buy
None
-3.5%
Tax-deferred
AT&T (NYSE: T)
Feb-2014
$32.08
$36.95
5.2%
Buy
None
28.2%
Tax-deferred
BCE Inc. (NYSE: BCE)
Nov-2013
$43.66
$43.12
4.6%
Buy
None
11.7%
Taxable
Brookfield Infrastructure Partners
(NYSE: BIP) MLP
Apr-2013
$37.80
$37.65
6.1%
Buy
None
13.8%
Taxable
Chevron (NYSE: CVX)
Nov-2014
$117.87
$83.44
5.1%
Buy
None
-25.1%
Tax-deferred
Covanta (NYSE: CVA)
Aug-2014
$20.65
$13.93
7.2%
Hold
None
-27.2%
Tax-deferred
Darden Restaurants (NYSE: DRI)
Aug-2013
$49.05
$63.88
3.1%
Buy
None
43.5%
Tax-deferred
Digital Realty Trust (NYSE: DLR) REIT
Jan-2014
$49.47
$79.07
4.5%
Buy
None
77.3%
Tax-deferred
Eaton Corp. (NYSE: ETN)
Oct-2015
$51.40
$56.71
4.0%
Buy
None
11.4%
Taxable
Four Corners Property Trust
(NYSE: FCPT)#
Nov-2015
-
$16.41
4.9%
Hold
None
-
Tax-deferred
Mattel Inc. (Nasdaq: MAT)
Jul-2014
$39.56
$32.52
4.7%
Buy
None
-10.7%
Tax-deferred
Meredith Corp. (NYSE: MDP)
Feb-2016
$43.27
$43.49
4.6%
Buy
None
0.5%
Tax-deferred
Northwest Bancshares (Nasdaq: NWBI)
Jul-2015
$12.73
$12.59
4.8%
Buy
None
2.3%
Tax-deferred
Omega Healthcare Investors
(NYSE: OHI) REIT
Sep-2013
$28.37
$32.06
7.1%
Buy
None
31.3%
Tax-deferred
Raytheon Co. (NYSE: RTN)
May-2013
$61.66
$123.85
2.2%
Hold
None
113.6%
Tax-deferred
STAG Industrial Inc. (NYSE: STAG) REIT
May-2015
$21.66
$17.56
7.9%
Buy
None
-14.3%
Taxable
Texas Instruments (Nasdaq: TXN)
Apr-2013
$34.15
$53.02
2.9%
Buy
None
68.5%
Tax-deferred
The GEO Group (NYSE: GEO) REIT
Mar-2015
$43.52
$29.04
9.0%
Buy
None
-27.7%
Tax-deferred
Tupperware Brands Corp. (NYSE: TUP)
Feb-2015
$71.42
$48.65
5.4%
Sell
None
-28.5%
Tax-deferred
Williams Partners L.P. (NYSE: WPZ) MLP
Apr-2013
$59.15
$19.72
17.2%
Buy
None
-58.9%
Taxable
W.P. Carey (NYSE: WPC) REIT
May-2014
$61.89
$56.69
6.8%
Buy
None
1.6%
Tax-deferred
11
Avg. Yield on Rec. Price: 4.8% Projected Annual Dividend Growth: 11.0% Avg.
Avg. Yield on Curr. Price: 4.6% Dividends Raised Annually for an Avg. of 12.5 Years
The Instant Income Portfolio
Income for today.
Company/Ticker
Rec
Date
Rec
Price
Current
Price
Dividends
Collected
Current
Yield
Rating
Trailing
Stop
Total
Gains
Suggested
Account Type*
AbbVie (NYSE: ABBV)
Jan-2016
$57.21
$54.61
$0.57
4.2%
Buy
$44.12
-3.5%
Tax-deferred
Digital Realty Trust (NYSE: DLR) REIT
Jan-2014
$49.47
$79.07
$6.72
4.5%
Buy
$61.39
73.4%
Tax-deferred
2016
$43.27
$43.49
$0.50
4.6%
Buy
$32.92
1.7%
Tax-deferred
Nippon Telegraph and Telephone Corp.
(NYSE: NTT) ADR
Apr-2013
$21.59
$42.71
$2.38
1.8%
Hold
$33.79
108.9%
Taxable
Raytheon Co. (NYSE: RTN)
May-2013
$61.66
$123.85
$6.08
2.2%
Hold
$96.18
110.7%
Tax-deferred
STAG Industrial Inc. (NYSE: STAG) REIT
May-2015
$21.66
$15.57
$1.03
7.9%
Sell
$15.66
-23.4%
Taxable
W.P. Carey (NYSE: WPC) REIT
May-2014
$61.89
$56.69
$6.62
6.8%
Buy
$51.84
2.3%
Tax-deferred
Meredith Corp. (NYSE: MDP)
The Retirement Catch-Up/High Yield Portfolio
Emphasis on current high yields.
Company/Ticker
Avg. Yield on Rec. Price: 8.7% Avg. Yield on Curr. Price: 9.0%
Rec
Date
Rec
Price
Current
Price
Dividends
Collected
Current
Yield
Rating
Trailing
Stop
Total
Gains
Suggested
Account Type*
Crown Castle International (NYSE: CCI)
Sep-2015
$80.80
$86.50
$1.71
4.1%
Buy
$66.00
9.2%
Tax-deferred
Eaton Vance Tax-Managed Global Diversified Equity Income Fund (NYSE: EXG)
Oct-2013
$9.56
$8.13
$2.36
12.0%
Buy
$7.01
9.7%
Taxable
Ferrellgas (NYSE: FGP)
Feb-2016
$15.16
$18.54
$0.00
11.1%
Buy
$13.99
22.3%
Taxable
National General Holdings Corp. 7.5%
Preferred Series B (Nasdaq: NGHCO)
Jun-2015
$25.04
$25.13
$1.50
7.5%
Buy
$19.20
6.4%
Tax-deferred
New Media Investment Group
(NYSE: NEWM)
Nov-2015
$17.10
$14.82
$0.33
8.5%
Sell
$14.98
-11.4%
Tax-deferred
New Mountain Finance Corp.
(NYSE: NMFC)
Jun-2014
$14.46
$12.48
$2.50
10.9%
Buy
$10.67
3.6%
Tax-deferred
Prices as of 2/29/2016. Trailing stops are adjusted to reflect dividends collected. # Spinoff from Darden Resturants † Prices adjusted for stock split. ADR – American Depositary Receipt.
MLP – Master Limited Partnership. REIT – Real Estate Investment Trust. mREIT – Mortgage Real Estate Investment Trust.
*We created the “Suggested Account Type” column in the spirit of The Oxford Club’s fourth Pillar of Wealth – to cut expenses and stiff-arm the taxman. This column denotes the suggested account type in which to hold each
position for tax purposes. Please note, stocks that are suggested for tax-deferred accounts may go into taxable accounts if necessary. Stocks suggested for taxable accounts should generally not be put in tax-deferred accounts.
Everyone’s situation varies, so please consult your tax professional or financial advisor before you invest.
The Oxford Club LLC provides its Members with unique opportunities to build and protect wealth globally, under all market
conditions. We believe the advice presented to Members in our published resources and at our seminars is the best and
most useful to global investors today. The recommendations and analysis presented is for the exclusive use of subscribers.
Subscribers should be aware that investment markets have inherent risks and there can be no guarantee of future profits.
Likewise, past performance does not secure future results. Recommendations are subject to change at any time, so
subscribers are encouraged to make regular use of our website, www.oxfordclub.com.
© 2016, The Oxford Club LLC | 105 W. Monument St., Baltimore, MD 21201 | 855.837.7115
Chief Income Strategist
Publisher
Bond Strategist
Editorial Director
Managing Editor
Assistant Editorial Director
Marc Lichtenfeld
Julia Guth
Steve McDonald
Andrew Snyder
Patrick Little
Amanda Heckman
Assistant Editor
Event Director
Director of Research
Senior Graphic Designer
Graphic Designer
Anne Mathews
Steven King
Chris Matthai
Alison Kassimir
Chelsea Centineo
Protected by copyright laws of the United States and international treaties. This newsletter may only be used persuant to the subscription agreement and any reproduction, copying or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express
written permission of The Oxford Club LLC. Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. You and your family are entitled to review and act on any recommendations made in this document. The Oxford Club expressly forbids its writers from
having a financial interest in any security they recommend to their readers. All Oxford Club employees and agents must wait 24 hours after an Internet publication and 72 hours after a publication is mailed before taking action on an initial recommendation. The Oxford Club does not act as an investment advisor, or advocate the purchase or sale of any security or investment. Investments recommended in this newsletter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.
Basic subscriptions costs for The Oxford Income Letter are $129. Subscription includes membership to The Oxford Club. The newsletter is published monthly by The Oxford Club LLC, 105 W. Monument Street, Baltimore, MD 21201. Non-U.S. dues are higher and vary from country to country.
Send address changes to The Oxford Income Letter, 105 W. Monument Street, Baltimore, MD 21201. For questions regarding the status of your membership, call Member Services at 855.837.7115 or 443.353.4058. Our website is: www.oxfordclub.com