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Solving an “Extreme Dividends” Teaser — Can you get a 100% yield on your savings?

Releasing a Friday File teaser solution from November -- what are Lichtenfeld's Extreme Dividends?

By Travis Johnson, Stock Gumshoe, January 14, 2019


This teaser solution was originally published in a Friday File for the Irregulars on November 30. The same ad is still circulating and several new folks have asked about it, so I’m releasing it for all to read today.

What follows has not been updated since the end of November, and the ad is also unchanged, but I’ve added a brief note about the three stocks to the bottom by way of a minor update. Enjoy!

Marc Lichtenfeld is pitching his Oxford Income Letter ($79/yr) with an ad about “Extreme Dividends” — and with everyone feeling a little shaky after a couple tumultuous months in the market, dividends and “money in your hand” offer some solace, so maybe some of his ideas will strike your fancy.

The basic spiel is wildly exaggerated, like many income investment newsletters — he talks up the idea of investing in the stock and “soon” having your investment repaid by huge dividends, getting to the point where your quarterly dividend is as large as the amount you originally invested (“EXTREME DIVIDENDS! The Only Way to Earn More Than 100% Income on Your Money Every Year… for Life…”)

That kind of recurring gain is possible, of course, if you find a company that’s on a strong “dividend growth trajectory” and has staying power, particularly if you find it when it’s not yet beloved (or even trusted), but it typically takes good stock selection and lots of patience — usually for decades.

And “possible” is not anywhere near the same as “likely” — there’s a reason why the folks who squirreled away a little bit of a dividend-paying stock, let the dividends compound, and waited 30 or 50 years to become multimillionaires are great stories, it’s because that doesn’t usually happen. Compounding dividends and long-term patience have indeed built some fortunes, but they don’t usually do so on the back of just a single purchase at just the right time — they do so on the back of continuing, disciplined regular investment in strong and steady stocks that most of us would typically think of as “blue chips,” at least in retrospect.

Here’s a bit of the hype that gets your attention:

“I’m going to teach you the only proven way I know you could generate 100% income yields on your savings every year… for life.

“This means that a $1,000 investment would PAY you $1,000 or more every single year….

“And in the best cases, you can even make much more than that – up to 10 times your original investment paid directly to you.

“Again, that’s every year.

“And it doesn’t require any leverage, options or any gimmicks.”

No, but it does require good fortune (or good luck, if you prefer), and usually a lot more TIME than is implied. You’re not likely going to get 100% income yields “every year” — but perhaps, if it works out well, you’ll start to get something like 100% income yields on your initial investment starting 10, 20 or 40 years from now. There are a few rare examples of that happening faster, from turnarounds or surprise growth, but there are a lot more examples of it not happening at all — and, of course, a newsletter ad copywriter can come up with a historical chart or example of anything… the number of odd windfalls that have happened in the market over the past 100 years is amazing, particularly if you don’t compare it to the number of surprise stock price collapses.

So… do we think Lichtenfeld has found some great “Extreme Dividends” for us? He hints at three that are his favorite “extreme dividends,” after going through a basic checklist of what he looks for

Before we start, here’s an example from the several he cites of these “extreme dividends” in the past: PetMed Express (PETS)

“Lichtenfeld describes PETS by saying that “its Extreme Dividend rose SO HIGH, SO FAST, that again, over time, a $5,000 investment started paying $13,332.

“That’s more than double your initial investment, paid back to you every year.”

That’s technically true, but that’s a pretty spectacular case — mostly because PetMed Express was a horrible company 15 years ago and became a pretty decent one more recently. You could have bought shares in 2000 or so for less than 50 cents, when the company was under all kinds of investigations and was facing huge liabilities and all dot-com stocks were crashing, and then a few years later it began to stabilize in the mid-2000s, and even started to pay a dividend in 2010. They raised the dividend pretty quickly, and the annual dividend is now 97 cents/share (for the trailing four quarters), so yes, if you bought at the bottom, 18 years ago, you could be receiving an annual dividend that is larger than your initial investment… though you would have had to sit through a lot of pain along the way, including a 50% drop in the share price this year.

If you want to have a relentless focus on dividend growth, particularly among small and more fragile companies for whom investor sentiment can shift wildly, that can work really well if you’re patient and can handle the volatility and the work of really monitoring those investments… make sure you understand the company well and are very confident that the dividend will continue and grow, sometimes you’ll need that dividend to provide solace during a bad patch. And, of course, diversify and don’t count on just one investment to build your portfolio.

So with those caveats, what are our secret stocks? Here are the clues for the first one:

“Extreme Dividend Company No. 1: The Real Estate Juggernaut

“The first company I’m targeting is a very young real estate company.
It was founded in May 2014 in Columbus, Ohio….

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“… it’s made a name for itself by buying up those run-down malls that every city has… and then turning them into those luxury malls that are jam-packed with people.”

A year or two ago buying mall REITs in the age of Amazon would have seemed super-contrarian, and it’s still an iffy proposition, particularly as we watch Sears stores close and wait for the next big retailer to succumb, but sentiment about retail has certainly improved a bit this year with the strong employment numbers and good consumer confidence (though we got the first dip in that measure recently).

More from the ad:

“Consumer confidence is the highest it’s been in almost two decades.

“And this company’s business is exploding.

“In the past year, it tripled net income from $67 million to $197 million.”

What else do we worry about with real estate companies? How about debt? Lichtenfeld comments on that:

“Analysts show that ‘debt has been massively reduced’ …

“The company has a huge war chest, with $500 million in liquidity. (Which also means it has PLENTY of cash to increase that dividend.)

“And yet, the stock is incredibly cheap, at just over $6.”

Then he makes some pretty impressive projections:

“As I said, right now it trades for just over $6.

“But at its current growth rate, and under its excellent management, net income should hit $1.3 billion in the next three years.

“At its current dividend payout ratio, that means the dividend should be $6.59 per year.

“And I expect it will only continue growing from there.

“On a $5,000 investment today, I estimate you could be collecting $5,237 in three years – and probably a lot more each year going forward.”

This, sez the Thinkolator, is Washington Prime (WPG), which was created when Simon Property spun out some of its malls and that spun-out firm merged with Glimcher Realty Trust. They own 106 “core assets” that are mostly town center malls and enclosed shopping centers, and the operations have been relatively stable over the past four years — they are profitable and seem to be doing OK at keeping occupancy up. Like most mall operators, they’re focusing on bringing in tenants to replace the old traditional “anchor” department stores, including more big box stores and “lifestyle” companies… whatever that means (often it means “lower rents,” I bet). And they’re focusing on that “town center” idea of creating a lot of mixed-use space, including medical facilities and hotels and office space around more traditional mall-type retail areas.

They do note that they will go from having more than 200 department store tenants in 2015 to probably having under 100 over the next year or two, mostly because of Sears and Bon-Ton closing all their stores, but also with closures from JCPenney, Macy’s, Dillards and others…. but they do say the impact is not as big as you might think. Here’s a little extract from their presentation to the NAREIT conference a few weeks ago:

“Revenue derived from Sears as of September 30, 2018, equates to a paltry 0.8% of total annualized minimum rent for the total portfolio. The actual impact of a Sears or Bon-Ton Stores closing is a far cry from the Draconian scenario of punditry. Further, these locations were generally unproductive and resulted in detrimentally
impacting adjacent space.”

I’d say losing half of your tenants in a large category is fairly “draconian” over a few years, though, yes, it’s also important to note that this isn’t a new thing — other department stores have died in the past, and this was clearly telegraphed and those stores haven’t done well or drawn in new customers for a long time, so maybe just cleaning house and getting a bowling alley or climbing gym is better for the rest of the mall even if the rents will never be as big as the “anchor” rents used to be ten or 20 years ago.

You can review their presentation here if you’re curious — they are being strategic, they do have plenty of “liquidity” (though that includes lines of credit, mostly, not just cash), and they do have a good credit rating so they can probably keep borrowing money and refinancing their debt as it comes due (there are no big scary maturities coming up imminently that I can see).

And, yes, they do pay a $1 a share dividend… and the stock is down to $6 a share… so the yield is ENORMOUS at 16%. They have never really grown the dividend, and I don’t see how they have the wherewithal to start now — they are really working on strategic initiatives to keep revenue stable and remain profitable, I don’t see a lot of “growth” in their plans. The last slide of the presentation just says “GRIND IT OUT,” and that kind of looks like what they’re doing.

So yes, this is a high yield REIT that owns mostly mall-type properties, some more attractive than others… and they are in the midst of a lot of work to refresh those properties and replace Sears and other faltering large tenants. I don’t know enough about them to judge whether or not they’ll be successful, but they do have a decent chance. The risk is probably on the debt side, since their stock price is so low and the dividend so high that issuing new equity to fund their growth and strategic initiatives would be hugely expensive… assuming they don’t cut the dividend (selling new stock now would “cost” 16% a year in dividend payments, a lot more than debt would cost… though with debt at three times equity now, I’m not sure how much more borrowing they can do).

And that’s about all I know about this one — make sure to understand it very well if you do buy, a contrarian can make a lot of money buying “left for dead” companies… but only if they don’t actually die. The 16% dividend yield is a signal that investors think they’ll either run into balance sheet trouble or cut the dividend… and they could be wrong, this could be a great buying opportunity as the company stabilizes their weaker properties over the next few years, but I’d guess there’s nobody out there, with the possible exception of Marc Lichtenfeld, who is convinced they’ll be able to somehow increase their revenue by 200% or 300% over the next few years (the revenue has been in steady decline recently, down about 20% since 2015… that doesn’t mean it will keep declining, but just “flattening out” would be a pretty substantial accomplishment by management at this point). This is still a REIT, they still grow only by building or buying properties, both of which cost money (which means borrowing more money, or selling more shares), or by raising rents, and it seems to me there are no mega rent increases in the offing for these kinds of properties. I can see the argument that this is “undervalued” by some metrics, but I don’t see what’s likely to make it stop being undervalued in short order.

“Extreme Dividend Stock No. 2: The Unexpected Tech Giant

“The second stock I’m looking at is a very cool tech stock.

“It also trades for just over $6.

“And just as we want, it only recently started paying a dividend….

“It’s one of those internet music companies like Pandora and Spotify, except for one MAJOR difference.

“Because of the way its business is set up, while Spotify pays 70% royalties to rights holders, this company only has to pay 15.5%.”

OK, so that’s interesting… what else?

“… while Spotify is losing millions, this company is making a fortune.

“Yes, in its first year, it lost money.

“But by the second year, it made $43 million.

“And now?

“It’s bringing in $648 million and counting.”

Other clues?

“… it has a free cash flow of $1.89 billion. But it pays only 17.5% of that toward the dividend.

“I could see that growing to 60% easily, which means the dividend would almost quadruple.”

And Lichtenfeld says it…

“… just set a new revenue record and added 300 thousand new subscribers in the latest quarter.”

We’re told that the company has 35 million subscribers, which is about half as many as Spotify… and that Lichtenfeld sees the dividend going to “as much as $10 per share” in the next three years, which, obviously, would be an “extreme dividend” if you paid only $6 a share.

So who is it? This, sez the Thinkolator, is the satellite radio operator Sirius XM Holdings (SXM)… which is, I suppose, a music streaming service (particularly since they’re buying Pandora) — though it also has those big, capital-intensive satellites that they rely on to serve their core customers, those who get the service in their cars (which also effectively limits their service area to North America).

And yes, they have been mostly profitable since the 2008 merger of Sirius and XM, their first profitable year was 2010 and they did make $43 million then, rising to $648 million in 2017. On a trailing basis it’s now even better than that, with net income over the past four quarters of $887 million.

I’m a Sirius XM subscriber and like the service, though I don’t know that it will remain relevant beyond the next five years or so — it seems likely that continual improvements to wireless internet will probably bring a lot more competition their way in connected cars, much like streaming threatens cable subscriptions. Maybe they’ll evolve to provide more services (they do already, though it’s a small part of the business), or maybe customers will be so delighted in the service or so committed to their unique content that they’ll keep it and stay loyal even when Pandora and Spotify and YouTube and whatever else are all available on live stream in their cars, too. It’s hard to guess at what folks will be willing to pay for “better music” in the future, but car audio is certainly more competitive with ubiquitous wireless broadband than it was when satellite was really the only option beyond AM and FM.

So I don’t know what the future holds. Analysts are forecasting steady but not dramatic revenue growth, going from $5.75 billion this year to $6.4 billion in 2020, with earnings going from 26 cents to 31 cents. That’s pretty good for a $6 company, and they did just start to pay a dividend and have been growing that dividend.

The current yield is not big, they are paying out 1.21 cents per quarter, so that’s about a 0.75% yield… but they have signaled an intention to raise it steadily, the past two years have seen exactly 10% annual dividend hikes. If they keep up that pace, the dividend would rise to a yield on cost of about 1.25% in five years… so if you want an “extreme dividend” it would have to come not from the steady growth that they’ve signaled so far, but from something much more dramatic. They are in the process of buying Pandora (P) in an all-stock transaction, so that might be the shakeup they need to restart growth, and it will probably provide more revenue growth… though I don’t know what their strategy is as they take on Spotify, which really seems to have captured the attention in this space.

I’ll pass on this one, but it is always interesting to keep an eye on — if only because John Malone is the controlling shareholder, and other big-name folks (including Buffett’s Berkshire Hathaway) have held the stock in the past, and it has shown some clear improvement over the past couple years. You can also get indirect exposure to Sirius via Malone’s Liberty tracking stocks (Liberty SiriusXM Group, LSXMK or LSXMA), though those don’t pay a dividend.

And one more…

“Extreme Dividend Stock No. 3: The Shipping Superstar

“It trades right now for just over $1.50….

“The dividend only has to reach $3 per share to hand you 200% income every year. But I think it could go even bigger, to $5 per share.

“Here’s why…

“Revenue is positively exploding.

“It’s gone up by 625%.”

We’re told that revenue is “around $222 million” … and, well, that’s about it for clues. Who are we looking at here? This pretty well has to be Navios Maritime Partners (NMM), a MLP (master limited partnership, as opposed to a corporation — meaning you get paid “distributions” instead of “dividends,” and have a K-1 partnership form to file as part of your taxes). Navios is managed by Navios Maritime (NM), its general partner, and owns 40 vessels (various sizes of dry bulk carriers, plus five container ships) as well as a 36% ownership in Navios Maritime Containers (likely to go public soon at NMCI), which owns 26 container ships.

All of the Navios companies have been in pretty steady decline for a couple years now, and NMM is no different… partly because the business has been weaker than they might have expected five years ago, but also partly because they have issued so many new shares. Their revenue has doubled since the financial crisis, but their revenue per share has fallen by 2/3.

And yes, that $1.50 per share price has become even a bit more stale now, it has dipped to $1.20… and has remained low enough for long enough that they’re no longer in compliance with NY Stock Exchange standards, so they’re proposing a 10:1 share consolidation (or “reverse split,” if you insist) that will be voted on at their annual meeting in a few weeks. Investors tend to hate those “reverse splits,” probably mostly because that kind of desperate share consolidation can mark just the beginning of a precipitous decline — though it’s not always the “kiss of death,” and in financial terms it really doesn’t mean anything… you have 1000 shares at $1.20 today, if they approve the split you’ll have 100 shares at $12. All else being equal.

Navios Maritime has never really been profitable, but that’s not terribly unusual for MLPs — a lot of what they distribute to shareholders (sorry, “unitholders”) is not really from “net income” but is instead from net cash flow. These kinds of capital-intensive assets (ships, in their case) bring huge depreciation charges, and instead of reinvesting that depreciation into refurbishing or replacing the fleet they use a lot of it rewarding their shareholders — and if things go really well, perhaps the vessel will maintain a “real” value that is far above its depreciated value on the balance sheet, though it’s easier to have confidence in that with a pipeline than it is with a ship.

So Navios comes in as another “catch a falling knife” stock, though they do look a bit more stable and rationally financed than some of the shipping companies I’ve looked at over the years, with the balance sheet further improved by the sale of a couple container ships just this quarter, and they have a solid backlog of contracted lease revenue. They’re also distributing some of their Navios Maritime Containers holdings to shareholders to provide a bit more liquidity for that company when it goes public, which is expected to be soon (if you buy today you won’t get those NMCI shares, the record date has passed, though it won’t be a huge amount regardless).

Navios does not seem to be in crisis just yet, from what I read in their most recently quarterly presentation. Their big debt maturity doesn’t come until 2020 and there aren’t massive draws on their cash coming as far as I can tell unless they place some new ship orders, so the big determinant of their future will probably be some combination of interest rates, global trade flow, and shipping rates — and since trade flow and interest rates are also reflected in shipping rates to some degree, probably the baseline Baltic Dry Index price for dry bulk shipping is the most important number to keep an eye on. The BDI is pretty volatile, it has had a couple years of decent recovery from the 2016 lows but is also 20% above this year’s lows and almost 30% below its highs right now. Global trade war and any kind of “China slowdown” are both not so good for container ships and dry bulk shippers, so I’d expect more volatility unless you’re pretty sure you know where our leaders are taking us these days.

Navios is currently paying a nominal distribution to unitholders, at an annualized pace of eight cents per year — that still registers as a meaningful yield since the price has fallen so far, that would be a 6.6% distribution yield if they keep it up, but I wouldn’t count on it as a definite. They stopped paying a distribution at all for a couple years… but, if you’re looking for optimism, they do have a history of much higher dividends during the good years, the annual payouts ranged from $1.54 to $1.77 for their best years from 2009-2015. They had about half as many shares back then, but even so, if the business returns to those cash flow levels on the back of much improved shipping rates, which are possible but certainly not assured, then it is possible that you could end up with an “Extreme Dividend” in the future that pays out a much higher dividend. Just be prepared, as always, for the fact that you’re betting on something that not many other folks have the stomach to bet on right now… which usually means that both the risk and the reward could be very large. I don’t have a problem with that, but it’s not necessarily the volatility that folks who are attracted to “income stocks” are looking for.

So there you have it, three relatively unloved stocks that have the potential to pay pretty decent dividends — I’m not impressed with the growth potential of any of them, but Washington Prime (WPG) probably has a better than 50/50 chance of maintaining its high dividend, which provides a huge yield right now of 16%, and Sirius XM (SXM) might be able to restructure into something more exciting once they acquire Pandora (or have a messy merger and fail, of course), and they are steadily growing the dividend and could theoretically grow it faster, though I don’t think they will do so dramatically. Navios Maritime Partners (NMM) is trying to stop its freefall by emphasizing their balance sheet strength, and has the most wildly explosive yield potential if their sector does improve, but they’ll probably also rely heavily on outside factors (global trade sentiment, dry bulk shipping rates) to get any kind of sentiment shift that changes investors minds.

I’m not buying any of these today, and none of them are on a real sentiment upswing of the type that makes buying feel good, but they’re all rational ideas if you can handle the clear risks to each (falling mall traffic, falling auto sales, falling shipping rates, respectively… and rising interest rates are of some risk to all three).

–1/14/19 update–

Six weeks later, the market has been through a lot of upheaval and these stocks have been a little bit more volatile than the market — this is what they’ve looked like compared to the S&P (in green):

WPG Total Return Price Chart

WPG Total Return Price data by YCharts

During this very brief time period, Sirius XM has done slightly better than the market… helped by some recent analyst optimism about Pandora and a “beat” for subscriber growth in 2018. Navios hit new lows into the end of the year but bounced back pretty sharply in the past few weeks (with the market) as value investors got interested, perhaps because of their decent cash flow prospects in 2019… and the $50 million buyback announced last week is still small, but this is a microcap comany at $190 million so it could make a difference.

Washington Prime is the weak link recently, mostly because it has been caught up in the Sears story as that got a lot more press, with some up and down moves as Sears’ imminent bankruptcy was announced and then some mild hope stirred with Eddie Lampert’s plan to “rescue” the company… and it got the ultimate vote of “no confidence” came with the Goldman Sachs downgrade of WPG to “sell” on December 18, which came with a cut in the price target to $4.30.

I still don’t own any of these, and they all face substantial risks, but the price has gotten a little better for all of them, and the dividends are not yet changed… WPG will likely report in the third week of February, NMM likely in the first week of February, and SIRI at the end of January. If you’ve got any thoughts on these folks or their prospects for the year to come, please let them fly with a comment below. Thanks for reading!

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charlie1030
Member
January 14, 2019 1:40 pm

In general I have had a significant amount of success following recommendations by Marc. I have purchased 500 shares of each of these and have no complaints with their performance.

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steveflick
January 14, 2019 1:59 pm
Reply to  charlie1030

That’s good, but in spite of the huge dividend from WPG REIT, I will stay with the Thinkolator and say no to these 3 recommendations. Thanks for the update Mr. Gumshoe.
I am enjoying the dividend and gain in IIPR, a cannabis REIT that SG has written about many times.

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Diane Lindner
Diane Lindner
January 14, 2019 2:29 pm

Those are surprising recommendations from Lichtenfeld, given that NONE of them are on his current recommended list! I’ve had reasonable success with the Oxford Income Letter, but I’ve been investing and re-investing in dividends for a number of years now. Most of his recommendations are far more reasonable. Happy to do some sharing, if that’s appropriate on this site!

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Julie Ash
Guest
Julie Ash
October 9, 2020 10:38 pm
Reply to  Diane Lindner

Diane Lindner, please do share the more reasonable recommendations in Oxford Income Letter. THANKS!

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easymoney
Member
easymoney
January 14, 2019 4:25 pm

How about PDRx Pharmaceuticals? For the year 2018 they paid $3.06 in dividends. In 2017 they paid $.30 a share. At the time the stock was trading @ $6.00 per share for both years.

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dr dolittle
dr dolittle
January 14, 2019 4:47 pm

Anyone have any thoughts on this; would it be a good idea to buy Pandora knowing that Sirius is going to buy Pandora?

Thanks Steve

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Paul
Irregular
Paul
January 15, 2019 4:04 am
Reply to  dr dolittle

If you buy Pandora, the merger will fall through, dropping the share price. If you don’t buy Pandora the merger will go through no problem.

I’m having a lot of fun with NXP Semiconductor falling back to a very old/lower share price after the merger with Qualcomm fell through. If I could get a time machine and “unbuy” NXPI, then the merger would have gone through no problem. Einstein covered this in his general relativity theory.

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roddog
Member
roddog
January 14, 2019 7:13 pm

$HCC is a name that I am looking/hoping will be issuing another special dividend soon. They have had a couple I think that was substantial. The sector is met coal which I seem to be the only person alive bullish this sector.

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gunsmoke
Irregular
gunsmoke
January 15, 2019 7:45 am
Reply to  roddog

While the daily chart of $HCC isn’t really impressive I’ve noticed that the longterm chart shows its undergoing an accumulation phase. This company has a large institutional ownership which can make the stock go up quickly if they so desire. Or it can drop quickly too. If you’re a long term holder I think this would do well. My two cents. -gil

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mike bissell
Member
mike bissell
January 15, 2019 3:49 pm

What about Mengle 5 top “buy out” picks? Please

Nancy
Member
Nancy
January 14, 2019 7:45 pm

Wow sounds like a scheme to me! Will not use the. “P.” word! But one can not make aggressive payouts of any kind without strong inbound cash! Looks like re-cyling assets!
✔️Find your honest cash to pay dividends HERE! from crazy demographic driven I-net pricing to brick and mortar-delivery to your own home, in your own car, by “ordering “ in line not on-line!!

We can see a new “cash reclamation” project in what looks like an on-line marketing himmick over-computerized pricing gimmick! It means they are out there until items are marketed to death! It is a form of new (non-Tax loss) no warehouse real-time, direct-inventory response order fulfillment! ! Tightly controlled inventory cost accounted aggressiveness!
It’s in disgruntle-ment with that set up that tree may be some “Found Money!” Never bought in line items? But then yo, sell them off! It must be an issue somewhere in many companies in many industries. Could yield found money to be able to pay out true new reclaimed cash “dividends!” It results in a true win win but at the same time is sensible, conservative tightening up on to compensate for routine business costs, or losses! That assures possible gain by careful stewardship it could work to -clue through to a new business idea! Just reverse the old process a servicing account to scoop up and reclaim any kind of I-net unsold merchandise left unsold (because of the vicissitudes of that inventory sensitive pricing system I use now)! Then contract with certain industries to re-market items in brick and motar settings! A win win for accounting; find new income in what can become off-price business to business selling/purchasing to create a new source of money to be made!

As a former grad student & medium high end retail clerk; but most of all a shopper of years experience at deep discounted, off-priced medium high end stores! I am tall and this was drawn to a stores offering concentrations of un-purchased items in odd sizes, but first rate “quality in these merchandise dumping grounds /locations! Then in those days one could still deal in goods at brick and mortar store locations where nice store high quality leftovers were traditionally dumped-cents on the dollar!
That quality merchandise supply source has for 10 years been peeling away in layers, until now almost dried up!
Why?
Their own “food chain” of what they received from theurdcvorivders sold, has gone somewhere more rewarding than the Internet!
No more is it common to find “nicer” companies “dumping” nice stuff at what are basement prices! From a budjness model standpoint that used to be acceptable! There was the built in recognition, that “if it did not sell it meant a fate of almost no full-price reward,”
And relief from pricing losses was partially adjusted for by but offered no new cash intake, calculated by some sort of accounting adjustment as in a tax write off!

So to my chagrin!
The change in retailing started a few years ago when a few chains of low-price, cents on the dollar, sellers, the bargain sellers, started to fade away because those others supplying to them that nice merchandise which had never sold in the original retail setting was dumped into my favorite shops at cents on the dollar). It could have just been excessive order volume on filled deliveries! But they’d losses served me well to create those low priced, later tax written-off inventory overruns of deluxe things, that I bought!

Seemingly; this phenomenon has stopped due to a changed glue if products process! It was computerized and like magic “my gain” from that kind of dhopping was easily absorbed and empowered by the Internet!

In inverse dynamic there are also fewer and fewer brick and motar stores, and that causes another source of change…the stoppage of their usual seasonal avalanches-in which it was always thought it was more costly to hold onto the merchandise than to mivevitcst a loss price! ! Then those onetime a few cents on the dollar retsikerd faced a merchandise sourcing problem! They started to have to contract back to sknevofvthise highef end merchandise “cents on the dollar” manufacturers to keep similarly labeled brands in their stores! The catchy designer names got leased back successfully for a time can those priducts with the familiar labels kept flowing!

A quality nerd this shopper knew there was a “specifications l” change!! Almost in-house they had been able to switch to have them made for a lesser price and quality as the old “cents-on the dollar dumped” merchandise! Actually to keep “making it” in business as their usual merchandising sourcing price and shape of the business was changing to some customers, but surely under “Their Feet,” they had just survived by contracting to have their own “made ‘abroad’ knock-off “products described by terms such as “‘William Klein-II”! These were made as new products to be sold as if they had the same origination as the “cents on the dollar” authentic designer name prior products! In other words the real authentic old-style,”nice stuff” was floating upwards from the quality scarcity-pricing pressure to find a new higher priced sales outlet…the INTERNET!
This is the newest re-tread of old retailing effortlessly into I-Net retailing, and masses of data points are all crunched based on filtering purchasing, pricing criteria filtered by data analysis of customer purchasing, location, and statistically, demographically super-alysed to assure max profits?
It looks like it is algorithmically driven retailing, based on the new new mass numerical data capacities of ordinary sales companies (this is not the high science of medical research lab data) having recently improved refinement of their ability to collect and crunch huge piles of data on everything they need to have to not miss opportunistic profit windows !
How can one tell a company has in the opinion of a boomer, “gone rogue algorithmically”?
Look for the finger prints of old-style “supply and demand but applied immediately to inventory online, and tyecrewuired customer “clicks”to find onrme’s color or size, onlyvti gind huge price gals based on that size it color factor! All these do is fit the desiresbility factor/s a prospective purchasers wants with the availability of the item there it in a seller’s more remote network, sorted algorithmicalky ti set the price based on either demographic induces or known prior in-house demand fir size and colot, thus settings the prior and size color influence the minute by minute price determination!
If one sees a shoe for sale by a new product (not used merchandise) merchandise retailer online and wants to buy it! Great!

But, then finds out that the advertised, -as if universally pertinent price to all color and sizes obevgets frustrated!! If the advertised low opportunity price pertains to sizes and colors that are unpopular for that companies’-patterned buying customer demographic for that kind of product, then IT should be a negative turning off otherwise buying customers!

Often a once common but now not common shoe size (note the mass manufacturers have not adapted to loss of a preponderant once common size) more likely left-over in the size 8.5 M-it is listed an appealing price of $39.99! But once one starts size “clicking” the same shoe by the same seller, but in the scarcer size (or color) and used to be commonly dumped (color/or) size , a 12N reveals is its $100.+ its true price is $139. ! That sizing cynicism gas been picked up with the shopping price bloating shopping +$100. difference for a one time bargain hunter shopper!?

Then one knows one is surely witnessing the new process resulting from a new world of totally computerized marketing high-doors adaptation, i.e. keep putting the unsold shoes out there until they’re sold at full price with no loss!

In the old days in real time, not in cyber space, this wasn’t doable! In reality a “shop worn,” item assured third level re-marketing-outvtge back foot in a bin!!That was another one of those old traditional merchandise graveyards, a part of of tiered selling, then next step wash donation to charity stores! !

To this onetime “super shopper” of the past this is confounding! No more fun of the hunt ! Inventory sensitive real-time pricing get combined into one step! The fell swoop assures earnings power to the sellers who will re-display merchandise to millions not scores locally until the item gets a full price! A new meaning to hold it there is a full priced buyer; until there is no loss ! The new warehouse-inventory based retailing-wholesaling cuts out the fun shopping at “bargain land”!

There are really no “bargain lands” left!

Except maybe in buying from those selling slightly worn used item who are huge on -line sellers of old and new fresh merchandise (starts with an “E”) collection of small businesses who are sellers of never worn, but previously owned old nice stock though older still almost identically nice, but was once privately purchased and owned merchandise! That source of merchandise is not bottomless also so it is also fading as this bargain-hunter’s fall back position!

As far as this seasoned home sewer, family supply-Sargent, “merchandise mavin” can see, there is no turn back to the old process, but in reverse ! That is to say brick and mortar stores could be found a tertiary business pun from the move to the creation of the retail internet! A solid business would be picking up to re-market failed once internet marketed, un-sold items!

That could be a new selling market going unharnessed; the never sold items still reflective of the old “no-sale” problem result despite exposure to millions at one time! That million watching optimism reigns still despite millions of on-line tire-kickers who balk at $139. for the same shoe but in a perfectly fitting 12N!

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Paul
Irregular
Paul
January 15, 2019 4:12 am
Reply to  Nancy

Was that post above written by AI? It’s not quite English, and well beneath the standards for clarity and understandability of a decent grad school. It could get a B+ at a 3rd or 4th rate grad school, but if you asked the thesis advisor what it meant, he would only be able to hem and haw and mutter.

Michael
Member
Michael
January 14, 2019 8:25 pm

When I started, all the stock I bought was via the oxford club suggestions in Dec. of 2016. They all tanked and then the oxford club said they predicted that would happen. I asked them why they made those stupid stock recommendations when they supposedly knew they would drop down over 25% right away. They responded by saying they were sorry I wasn’t pleased with the way my portfolio was doing. I responded by stating the fact that they were all their suggestions so it was actually their portfolio. They never responded back. I would never trust anything Lichtenfeld has to say.

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1yioi87
1yioi87
January 14, 2019 8:27 pm

New to this site.
What do you think about. https://moneymorning.com/2018/12/19/toms-alpha-9-fast-profits-trade-recommendation/ Received an email pitch for this yesterday.

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Paul
Irregular
Paul
January 15, 2019 4:15 am
Reply to  1yioi87

Based on the source, I wouldn’t bother. This place is a much better place to pay a fee and take their advice. I will probably subscribe once one of my two subscriptions to other places expires.

Tony Polony
Member
Tony Polony
January 15, 2019 12:51 am

As far as me is concerned, any thing smelling at Oxford Club, I say NO THANKS, allthough Marc Lichtenfeld isn´t as bad as Dr. Kent Moors advises.

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gunsmoke
Irregular
gunsmoke
January 15, 2019 7:28 am

This is in response to the reco NMM. From a technical side it has had a good rebound for about 6 days but is now rolling over. I see it returning to the 0.80 value (or lower) in the near term. Once it touches near that point it could shoot up but it may have to wait awhile to do so depending on market conditions. -gil

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tampabob
Member
tampabob
January 15, 2019 1:47 pm

With regard to WPG, EPS is 39 cents/ shares but they payout a $1.00 dividend. How long can that last?

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tampabob
Member
tampabob
January 15, 2019 3:44 pm

Thanks for your reply Travis. I wasn’t aware of FFO vs. EPS.

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Investor Clouseau
Investor Clouseau
January 15, 2019 7:18 pm

I love that you check back on these things and update periodically, it allows me to keep my inner hype-man in check and know that I’m making good non-decisions.

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portpals
Guest
portpals
January 17, 2019 2:02 am

I had NMM a few years ago and was bathing in its high dividends, when it crashed from about $11 to its present value. The star of the company was supposed to be a pretty blonde Greek lady CEO wizard…DHUH!
John waters…houston, TX

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D Stone
D Stone
January 17, 2019 2:24 pm

In 2015, Navios Maritime Partners L.P. did not require a K-1 form:

http://navios-mlp.irwebpage.com/tax_treatment.html

“Navios Maritime Partners L.P. has elected to be treated as a ‘C’ Corporation for U.S. tax purposes (our investors receive a Form 1099-DIV and not a Schedule K-1).”

Has that changed?

goblue16
Irregular
January 17, 2019 8:22 pm

WPG on 1/15 was downgraded from a hold to a sell by Suntrust and it’s equity summary score on Fidelity is .4 out of 10 very bearish. It is yielding almost 19% though and looks very appealing. If Sears keeps many of their stores open, this stock will probably head up a little.

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amdeist1
Member
amdeist1
January 24, 2019 7:08 pm

I woulnd’t touch WPG because it is selling 14% higher than analysts 1 year projection. I also wouldn’t buy SIRI because its book value is -.31 and it has a current ratio of .18. I have bought NMM and made money. It is selling at a discount to its book value, and has great fundamentals. I sold it because there are many better stocks that are selling at discounts with better ratings. NMM has mixed ratings with Zacks and Columbine showing outperform, Morgan Stanley showing underperform and ValuEngine showing sell.

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caponsacchi
Member
caponsacchi
February 9, 2019 12:02 am

I go to Stock Gumshoe for one overriding reason: to “cut to the chase.” This is the first time (checking out the Motley Fool black box worht 23 X Netflix) that I’ve felt Gumshoe is not only as wordy, repetitious (and redundnat), time-consuming as the original “teaser” from Fool. In fact, it’s now apparent that Gumshoe is merely an accessory of Fool, working to pump the same stocks. Look, the info on Yahoo and Schwab is more than I have time to read-and it’s free! As a member of Motely Fool (which I rarely consult), I have no interest (or time or $) in subscribing to another service or publication.

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Edgar
Member
Edgar
July 16, 2020 2:32 am

Hi I just renew my subs to their Income Letter about 8 days ago and I was reading some of their “Perfect Penny Stocks ..from Pocket Change to MILLIONS ” the First thing I notice was that that that Letter HAS NO DATE . . . and Yes one of them is the satellite radio and the other two are YES BULK TANKER Shipping businesses all under $ 6.00 and said he has perfected a way to find ” micro caps ” system value , cheap companies with most of them paying some Dividends … it looks to me he might subscribe to a service of finding good value micro caps . . and pretty much always the same OPTIMISTIC TUNE . . and I have been with this guy for years already and I find his advice on stocks decent some stocks he promotes are either too pricey over 300 bucks or low priced but most are from 20 to 150 bucks and it is up to you to chose which one to buy and which ones NOT to buy sometime s he recommends a stock and in a few months he says SELL it at a Market price ..need to move on to our next ones . so I might buy maybe one third of his recommendations or less I like my stocks that pay Divies Not to expensive and all that I own under 50 bucks . . and Thank You again Travis for your pretty good Percolator that hits the nail all the time
Today is July 15 2020
23:30

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eb0079
July 16, 2020 3:35 am
Reply to  Edgar

Have you seen the July’s news letter ? You should have a look @ Broadcom (Nasdaq: AVGO)

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Julie Ash
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Julie Ash
October 9, 2020 11:01 pm
Reply to  Edgar

Can you please share one of Income Letter Extreme Dividend picks? Thanks.

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Grace
Member
Grace
August 20, 2020 3:09 pm

I just got a subscription of The Oxford Income Letter. I just started to invest in dividend stocks and hope the OIL helps and guides me. Is anyone have lifetime membership? Is it worth?

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reality bytez
Member
reality bytez
April 4, 2021 12:39 pm

update 4/4/2021:

wpg: share price has fallen 56% in the past year to $2.46. the most recent reported earnings per share is a loss of $4.95/share. the company no longer pays a dividend, so that huge 16% yield has evaporated.

siri: share price is $6.27, which is a tiny bit higher than what it was selling for back when this was being teased. the annual dividend is $0.0586 per share (a yield of just under 1% if you had bought it at $6/share back when this was being teased.

nmm: they did end up doing a reverse stock split of 1:15 in may of 2019, resulting in a share price of about $13.37. the share price dropped as low as $4.41 in the covid crash, but has rebounded strongly to a current price of $23.52/sh. the company still reports negative earnings per share. the annual dividend has grown to $0.20 (a yield of 1.49% if you had bought the stock for $13.37 back in may of 2019).

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Last edited 2 years ago by realitybytez

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