Wednesday, July 13, 2011

AUSE looks good to me

AUSE was yielding 6.07% yesterday. I bought a hundred shares.

WisdomTree is an ETF provider with a unique take on investing and two very big names attached to the WisdomTree approach: Jeremy Siegel, professor of finance at The Wharton School, and well respected investor Michael Steinhardt.

I'd love to report that WisdomTree has gone great guns since its inception a few years ago, but it hasn't. When times were really rough in the markets, they waffled a bit and fudged their financial algorithms. One WisdomTree ETF based on U.S. stocks saw its investment strategy modified to eliminate all investment in American banks.

Some, of course, see this as reasonable and comforting; The managers react to reality and do not doggedly hold to failing theories. Others see these moves as revealing weaknesses in the basic WisdomTree approach.

Me? I'm a little looser in my demands. WisdomTree strives to deliver solid, dividend-producing companies wrapped up in a nice, tidy ETF bundle. I won't live forever but while I'm alive I need cash flow and WisdomTree is one of the companies I have been turning to.

Lately, I have been hearing and reading good stuff about Australia. When the WisdomTree ETF AUSE dropped yesterday to just under $59, I bought a hundred shares. I need a minimun of four percent yield to live and I'm betting that AUSE will deliver this and more. At the moment, it yields 6.07 percent.

Be aware that AUSE has a number of risks attached, currency risk for one, and I'd do some Internet searches before following my lead. But I like it and if it drops substantially in the coming weeks, I'll average down. If it climbs in value, I'll just smile and cash my dividend.

Monday, July 4, 2011

Still holding DRW, still happy: 13.47% yield


This info was added Dec. 28, 2011. As of today it appears that DRW will miss paying its fourth quarter dividend. Ouch! The overall dividend yield for the year was more than 10 percent but still I was expecting about $400 come the end of December.

What happened? I found this explanation on the Net:

"DRW holds PFICs (Passive Foreign Investment Companies) in its portfolio. PFICs must mark to market each year (in Q4) and realize a gain or loss in those PFIC shares. PFIC loses are offset against PFIC gains, and then against portfolio income. The PFIC losses for DRW this year wiped out the gains and Q4 dividend income, therefore, no dividend distribution . . . "

I'm holding my position. I'm not overexposed and feel little concern. We'll wait to see what the yield is delivered at the end of the first quarter of 2012 and we'll hope the value of this ETF doesn't continue to lose ground. This missed dividend payment does add a whole new wrinkle to owning DRW.

As you know, I'm retired; I need income. One of my favorite ETFs is DRW (WisdomTree Global ex-US Real Estate Fund.)

Let me make one thing very clear: This is not a buy recommendation. I am not a financial adviser. I am just a retired fellow trying to make ends meet. My investment in DRW goes a long way to enabling me to pay my bills.

DRW is presently yielding about 13.47% according to the ScotiaBank. Nice. It is up about 22.73% in the past 12 months. Nice, again.

I worry about the fiasco in Greece and how it might impact on my investments should Greece implode, possibly taking some of the other PIGS (Portugal, Ireland, Greece and Spain, possibly Italy) with it.

There is nothing I can do about that whole problem. It may blow; It may not. (I've got a strong feeling that the situation in Greece is a long way from being solved.) I've got a chunk of my portfolio in cash in order to weather a financial storm. And if my investments like DRW continue to be cash cows, I can go a few years without dipping into my principal.

And if there is a second big dip? I'm going to get burned — badly. On the other hand, I've got stuff in my sights to buy and I've got the cash to do it. Buying on the big dips makes a lovely profit-filled purse out of a sow's ear.

I'm watching Emera as a possible stock to add to my dividend-rich portfolio and AUSE as a possible ETF to add. During this recent, and still continuing, pullback in the markets, I've switched about one percent of my holdings into the TD Monthly Income Fund. My goal is to have 15% of my portfolio eventually in the TD fund and possibly as much as a full percent in Emera and other one percent in AUSE.

Good luck and good investing.