Any Stockpickers out there?

Thanks for your input!

My only company in my stock picking portfolio offering stock dividends is IMB (Imperial Brands). I like stock dividends as they are corporate actions. If you choose the stock dividend instead of a payout, you basically purchase more shares without any transaction costs. And you get to choose: if the company becomes overvalued, you can switch to cash payout (and buy other undervalued companies instead).

I wish more companies would offer stock dividends.

RIO looks interesting … stellar credit rating for one thing, great looking dividend yield as of now.

I’ve looked at RIO a couple of times, but both their EPS as well as their operating cash flow (OCF) is too volatile for my stomach. I guess you currently get compensated with a nice almost 10% dividend for that. :slight_smile:
The other thing I don’t like (as someone who increasingly relies on steady passive income) is their unsteady dividend track record. I prefer companies who have raised their dividend for a decade, the longer the better (no hard rule, but a guiding principle).
Currently, RIO looks undervalued, but given their negative growth over the next couple of years, I don’t expect their stock price to move much - even if they return to their historically normal multiple of about 9 x OCF, their price would stay mostly flat two years out.
Of course, Mr. Market will ignore this. In fact, you should consider my back-of-the-napkin analysis as a counter-indicator: Mr. Market will now send stock price for RIO into overvaluation territory, at least for a while. :wink:

If I had to pick a high yield company today, I would probably take EPD. EPD (yielding 7%) has steadily increased their dividend for over 20 years, is undervalued and grows at a steady nice positive rate.
I wish I hadn’t ignored them in 2020 when they were really cheap and yielded probably more than 15% - the entire oil story at the time was a little different than it is today…

Good luck with your satellite strategy!

To be succesful in stock picking I believe you need to be an expert in business picking. Which means you need to know the industry very, very well, to know the companies in the industry, the competion, the capital alocation, the strategy of the company, execution, management and also standard valuation technics and non standard. Also a good vision of the future market for that insustry helps a lot. Also fundamentals help a lot. I almost never look at technicals. But it is a lot of work. And this means you can only do this for max 10 companies, and you should be confortable with the risk. If you plan to invest in 100 companies, i think you would gain the avarage, so better stick with the index.


Just be aware that Rio Tinto (as well as any other mining company) are most often only profitable as long as they do not have to clean up their mess behind. There is a regulation risk which is hanging over each mine and which is hard to predict.


Unfortunately, you are not wrong. The environmental impact of the mines can not be denied. However, today (to the best of my knowledge) there is no clean way of extracting minerals from the ground. I personally prefer to have mining companies which have to report their practices in reports and allow at least some inside. The alternative would be illegal mining or state owned companies which do not need to be transparent.

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Thanks @Your_Full_Name for your feedback. To be honest I have chosen RIO after some classes in the university of my major in resource management. The main reason is that RIO has the former De Bore incorporated which is leading the diamonds business. As there are increasing demands for diamonds for industry applications. Only afterwards I understood the stock dividend etc. It’s not a technical analysis but I liked the idea of having the diamond business covered even if I would assume that the overall impact to the revenues are neglectable.
Thanks for sharing the EPD stock, beside the interesting points including stock dividend etc. I do not really like Gas and Oil stocks. While I know that we need Oil and Gas also in the future for several things beside fuel and heating I strongly hope that we will reduce the use of Oil and Gas significantly and way more than for minerals as covered by RIO.
However, I will start reading about EPD thanks for the tip.