DGI Adventure – 11-24-2015 Payday!– HCP Inc. (HCP) & Fastenal Company (FAST)

Today was a double dipper. HCP and FAST paid out their quarterly
dividends.

FAST paid a total of $11.20 on the 40
shares I bought
last month. Woo hoo! The current stock price is doing well
compared to my entry point, but if it drops between now and next quarter’s
ex-dividend date, I’ll consider adding more because it remains to appear
undervalued
.

HCP paid a total of $45.16 from the 79.9317 shares my wife
and I own. Woo hoo! This is kind of an odd position in our investable assets. I
don’t say it’s an odd position because it’s not a good stock. It’s a great
stock; there are only 4 REITs that have managed to make the Dividend Champions
portion of David Fish’s Champions,
Contenders and Challengers
list, and HCP is one of those 4.

No it’s odd because of the way I first discovered HCP, and
because the nearly 80 shares are all split up in different accounts. We own
26.6757 shares in our taxable account, my wife has 18.256 shares in her ROTH
and I own the other 35 in my ROTH. All three positions are currently showing
imaginary paper losses of varying amounts. I thought about averaging down with
my final 2015 ROTH purchase, but I chose to diversify a bit into OHI, which had
a slightly higher current yield.

I first invested in HCP in March of 2014, long before I had
even really heard of dividend growth investing. At the time I had subscribed to
a crackpot newsletter that purported to have a “secret stock calendar” that had
statistically analyzed the seasonality of all the major sectors. They had added
a layer of complexity: in addition to the seasonality “secret” they also used “fundamental
analysis” to identify high quality companies along with “technical analysis”
(Elliot Wave Theory) and “sentiment analysis” to identify optimum entry/exit
points . The “fundamental analysis” was actually pretty solid, and was right in
line with Graham/Buffet/et. al value investing principles. The rest of it was
total bullshit. Not to say that there isn’t seasonality to the stock market, or
that wave theory has absolutely no place in analyzing charts…this guy just didn’t
have the right seasonal calendar and I don’t think he was very good at the
whole chart thing.

Supposedly the calendar was a slightly optimized version of
some secret seasonality pattern that Merril Lynch had discovered back in the 60’s
but never published because it would undermine the Church of Buy and Hold and
no one would leave their assets under Merril Lynch’s management if they knew
the “secret”. It had been passed around among Wall Street insiders for years,
all of whom became fantastically wealthy thanks to it. This whacko had somehow
gotten a copy of it, and then applied advanced statistical regression theory to
optimize the original calendar. I have a friend who has a PhD in biostatisctics
and runs statistical regression analysis all the time. We back-tested the supposed
calendar, and the hypothetical returns claimed by the newsletter weren’t right.

As for the wave analysis, let’s just say they recommended Deutsche
Bank (DB) at $50/share, the Brent Crude Oil ETF (BNO) in the mid $40’s, the
Physical Platinum ETF (PPLT) in the $140’s and Freeport McMoRan (FCX) in the
$30’s based on their cutting edge combination of EWT and momentum indicators. 

Fortunately I didn’t buy any of their recommendations, but I
was kind of into the calendar thing for a while before my buddy and I
back-tested it. I would look at the top holdings in the sector ETFs of the
supposedly “seasonally” strong sectors, and look for value companies. Real Estate’s
window was allegedly the end of March through the end of May, and HCP popped up
on my radar in March of 2014. I bought 26 shares and have been enjoying the
dividend ever since. I was pleased to subsequently discover HCP’s Champion standing
in the dividend growth investing universe, and both my wife and I bought more
in our ROTHs later down the road.

Hopefully it’s obvious, but I don’t subscribe to that stock
picking service any more. I’ll admit I was skeptical, but not skeptical enough
to keep my $100. I kept the subscription passed the money-back date, so I that
money is lost forever to the Charlatans of the Innerwebs. I chalk the 100 bucks
I spent up to the cost of learning 2 valuable lessons:

1)     
Don’t believe crackpot internet stock picking
services who charge you $100 anything for investment “secrets”.

2)     
Even if you think someone else has a good idea, you
ought to do your own research. If you’re going to spend that much of your time
on it anyway, you might just want to save the subscription fees.

Makes for an interesting story though doesn’t it?

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