Stock Of The Month: DOM

As previously mentioned and bought in 2010, 2008, and 2007 - what can I say, DOM is my go-to dividend stock, and the chartist in me says it's easy to know when to buy.



Dominion Resources Black Warrior Trust (DOM)

Positives:
7% dividend yield.
As a trust, has a 100% payout ratio and is a pure dividend stock.

Negatives:
Little to no opportunity for capital gains.


Here's my current portfolio. As always, I believe in all of these stocks - until I sell them.

Apple (AAPL) 11.87%
Southern Copper (SCCO) 8.04%
Baidu (BIDU) 7.37%
Dominion Resources Black Warrior Trust (DOM) 6.96%
Google (GOOG) 5.79%
Annaly Capital Management (NLY) 5.44%
Ace Limited (ACE) 4.50%
Apache (APA) 4.40%
Hugoton Royalty Trust (HGT) 3.77%
BP Prudhoe Bay Royalty Trust (BPT) 3.67%
Blackstone (BX) 3.32%
Cherokee (CHKE) 3.28%
Intuitive Surgical (ISRG) 3.27%
American Software (AMSWA) 3.23%
Prospect Capital (PSEC) 2.98%
The Distressed (C, ERTS, ESI, JSDA, LZB, MMI, MSI, NPD, PCS, RVR, SKX, STEC, WFC) 2.85%
DuPont (DD) 2.66%
Intel (INTC) 2.59%
Vodafone (VOD) 2.59%
Frontline (FRO) 2.36%
McDonald's (MCD) 2.32%
BreitBurn Energy Partners (BBEP) 2.24%
Nokia (NOK) 2.02%
F5 Networks (FFIV) 1.87%

Stocks Of The Month: NLY, ISRG

I was able to choose two stocks this month, because one that I had owned has some potentially serious issues. The cliffsnotes story on Great Northern Iron (GNI) is that it is a trust which will dissolve in 2015, and the sum of its projected dividend payments and final payout per share, from the present until that time, is significantly less than the current price of the stock. This is openly disclosed in the trust's 10-K filings, and the increasing knowledge of its circumstances has resulted in some recent large losses. I don't feel too terribly bad for owning the stock, as I sold for a slight capital gain and collected a few dividends along the way. But I do have to double-guess myself when I can wonder aloud why it was behaving strangely.

This month's stocks are ones I already own, and wanted to add more...one a dividend stock, and one a growth stock...

Annaly Capital Management (NLY)

Positives:

Huge profit and operating margins (86% and 88% respectively).

+11% spread between ROE and ROA.

Positive operating cash flow ($11B).

Trailing P/E of 8, forward P/E of 7.

Whopping 14.4% dividend yield.

Negatives:

Huge debt ($67B)...of course, debt is their business.

Low insider holding (0.44%).

Intuitive Surgical (ISRG)

Positives:

Super-cool surgical robots.

Solid revenue (21%) and earnings (56%) growth.

No debt.

Positive cash flow.

Negatives:

Low insider ownership (1.2%).

Here's my current portfolio. As always, I believe in all of these stocks - until I sell them.

Apple (AAPL) 11.71%

Southern Copper (SCCO) 8.58%

Baidu (BIDU) 7.85%

Google (GOOG) 6.39%

Dominion Resources Black Warrior Trust (DOM) 5.62%

Annaly Capital Management (NLY) 5.37%

Ace Limited (ACE) 4.52%

Apache (APA) 4.26%

Hugoton Royalty Trust (HGT) 3.87%

BP Prudhoe Bay Royalty Trust (BPT) 3.80%

Intuitive Surgical (ISRG) 3.44%

Blackstone (BX) 3.33%

Cherokee (CHKE) 3.18%

American Software (AMSWA) 3.18%

Prospect Capital (PSEC) 2.91%

The Distressed (C, ERTS, ESI, JSDA, LZB, MMI, MSI, NPD, PCS, RVR, SKX, STEC, WFC) 2.85%

Vodafone (VOD) 2.70%

DuPont (DD) 2.64%

Frontline (FRO) 2.60%

McDonald's (MCD) 2.31%

Intel (INTC) 2.26%

BreitBurn Energy Partners (BBEP) 2.26%

Nokia (NOK) 1.94%

F5 Networks (FFIV) 1.84%

Sold F and CREE

In a running experiment of when and how to sell non-dividend stocks, I've sold two in the last two days, via automated processes: Ford (F) and Cree (CREE), due to both having broken long(er)-term chart trendlines. I am not a chartist - I believe in company fundamentals above all - but there is something appealing about setting a selling point and sticking to it, especially for investments that have no value beyond their trading price.

Here are the charts/trends in detail. First, Ford:

This is an ideal chart, lower-left to upper-right. Ford had plenty of room to run above the trend in 2011, but it is now a $50+ billion company by market cap, which seems like a fair evaluation to me. Hindsight being 20/20, I should have taken all the money I could get my hands on in February 2009 and invested it all in Ford. It's one of my best stock picks ever with a return of 653%.

A not-so-great stock pick was Cree:



The third time was the charm for falling through the floor at $48. There was also a clear floor/ceiling at $60, which of course would have been a better exit point when it crashed through in January 2011. Cree returned -28% from where it was bought in June 2010.

The proceeds from these sales will be used to buy more Baidu (BIDU).