Weekend Reading 1/14/2012

Here are a few solid reads for the weekend.

In addition, I’ve got a few portfolio notes for readers that follow some of my holdings:

Portfolio Updates
-Brookfield Infrastructure (BIP), which is one of my two largest holdings, has gone up in value to the point where the distribution yield is under 5%. This is a great business, but I wouldn’t personally buy more units unless the yield went back over 5.5% or so, either by means of a value correction or an increase in the distribution. I will be continuing to hold my position with no intention to sell at this valuation, however. Energy Transfer Equity (ETE) continues to look appealing for purchase.

-Exxon Mobil and Chevron are trading at really low earnings multiples. I think both of them are solid investments at the current time, but I’d advise caution against putting too much emphasis on these P/E ratios. Cyclical companies tend to have high P/E ratios during market bottoms (since investors know that the EPS will rebound), and tend to have low valuations during market peaks (since investors factor in a margin safety for EPS reduction, such as with lower oil prices or other variables). I’m comfortable with continuing to add to my positions, but I wouldn’t over-allocate my portfolio balance towards them based on their valuations.

-My medical stocks, in general, look reasonably attractively valued. Emerson, Procter and Gamble, Microsoft, and Chubb look fine to me as well.

-Coke, McDonald’s, and Smuckers look a little bit pricey. Not sell territory, but in my opinion not buy territory either. Smuckers has had a nearly 3-year rally, but still at a somewhat reasonable price in my view. Coke and McDonald’s are very large-moat businesses that can serve as core holdings, and are worth premium valuations, but I’d look to buy on dips only; a market correction could potentially provide some entry points.

-NPK has great quantitative aspects, but earnings were a bit lackluster this year and there’s not much of a moat to speak of, so the business is a bit volatile. I find the current valuation to be reasonably attractive for those that don’t mind holding some small caps. HCBK continues to trade at far below tangible book value, which either implies a good value or the possibility of continued balance sheet reduction. The income they’re bringing in covers the current dividend (and they technically cover the previous, larger dividend as well). I’ve been meaning to write an update on this one; the low interest rate environment and the involvement in Government-Sponsored Enterprises had more of an impact than I expected in 2011.

Articles
Now onto the articles:

My Dividend Retirement Plan
Dividend Growth Investor posted an excellent article on how dividend investing leads up to financial independence.

How To Review Your Portfolio
The Passive Income Earner goes over some tips on reviewing a portfolio. It’s a timely post for the beginning of the calendar year.

8 Stocks Enticing Investors With Higher Dividends
D4L continues to provide examples of dividend investment choices to look into.

Best Canadian Dividend Stocks for 2012
The Dividend Guy provided a large set of moderate and high yielding Canadian companies.

How To Save Money For Retirement If You Don’t Make Much Money
Financial Samurai, in his two most recent posts as of this writing, helps people to save more money in their 401(k) plans.

Ultimate Sustainable Dividend Portfolio
The Intelligent Speculator keeps track of a dividend portfolio to show returns, dividends, etc.

Modern Portfolio Theory
The Arbor Investment Planner Blog finished a series of articles on investment risk and returns.

How To File Your MLP K1 On Your Taxes
Six Figure Investor provides some information regarding taxation of MLPs, which tend to be a bit more complex than other investments in terms of personal taxation.