Monthly Update: December 2013

Portfolio Activities
     $1300 deposits into investing account
     Bought 10 shares of RKT @ $98
     Bought 31 shares of TCPC @ $15.94
     Bought 23 shares of POT @ $32.96
     DRIP 0.0856 shares of KO

Portfolio Income
Dividends
     AFL: $2.15
     IBM: $1.90
     KO: $3.26 (DRIPed)
     MCD:  $2.23
     ARCP: $2.67
     PSEC: $7.50
     TCPC: $12.82
     COP: $2.51
     NDRO: $4.73
     BLV: $5.62
     JNK: $1.45
     PCY: $1.93
     Interest on Cash: $0.71
Rental Income
     Townhouse 1 $855

For the month I received $49.48. For the year I received $405.04 in payments which is by far my best year with this portfolio. I finished of 2013 with a lot of deposits. I kicked it up and this amount will be around my new standard for 2014. I am not sure if I can contribute that much in 2015 but I will keep at it as long as I can. For me to hit my $1,000 in dividends in one year goal I will need to more then double this year but I think I can do it.

January should be a great month for me. I got a slight raise at work and my company buys back vacation. They let us keep some but too much and they offer to buy it back at our normal wage. I plan to put that all into my investing.

I received my KO dividend as extra shares. This was purely by accident as Sharebuilder by default has DRIP turned on and I had forgotten to turn it off in time. I generally do not like to DRIP my dividends because your overvalued companies will be buying high vs just saving the dividends for whatever cheap undervalued stock you buy in the future.
I'm now reporting the interest from the cash position. Sharebuilder allows for you to choose savings account rates or money market rates. Its only getting me 1% or so but it is something.

My current renter's lease is up in February. It will be critical that they sign up if I'm to hit my 2014 goals. Each month I am vacant will lower $855 of income I have and a large part of my investing deposit counts on this. Without it I'll have to pay the mortgage out of pocket.


Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

The insanity of Apple (AAPL) investors

The Apple (AAPL) board of directors has released their opinions on shareholder initiatives and has advised to vote against Carl Icahn's proposal to increase the share repurchase plan. This has stirred up some heated debate as to what AAPL should do with their $140 billion they have sitting around. AAPL's main problem as a company is they make profit faster then they know what to do with it. Literally don't know what to do with it because Steve Jobs called Warren Buffett for advice. Not surprisingly, Warren told him to run the company well and then buy back shares if the company is undervalued.
Steve Jobs didn't do that and Tim Cook has been hesitant but finally starting.

Lets go over some of the counter arguments that I keep hearing...

AAPL needs the money to be competitive
Did AAPL need $140 billion to come up with the iPod that started their growth? AAPL needs to have money for R&D no doubt. But lets be honest, if all they are going to do is release an iPhone 6 next year do they really need that much money? Tim Cook recently said they have great products planned in 2014. We'll get a new iPad and a new iPhone with different sized screens. When they start innovating again then we might make the case for them needing money.

They need the money for mergers and acquisitions
Absolutely they do and they should set some aside for that. However they have enough cash to buy half of Microsoft (MSFT) or half of Google (GOOG). What exactly are they needing this much cash for? There is a concern here that if they have too much money they might make sloppy M&As vs having a smaller cash horde and having to really be sure its a good company they want to buy out.

You are just being greedy its not your money its AAPL's
This one really riles me up. It is my money because I am the freaking owner! Tim Cook and the board of directors work for me! I think a lot of investors fail to fully understand what it means to own stock. ALL of it is your money. Some needs to be set aside for taking care of employees who work for you. Some needs to be set aside to grow your business. Why exactly did AAPL go into business for if it isn't going to enjoy the bounty of its profits?

Speaking of business lets look at AAPL's situation on a personal level to illustrate how whacked out this is.
Over the past twelve months (not calendar year) AAPL did $170 billion in revenue. For years they had zero debt. They added some last year because its a share buyback trick, a very nice one at that, but that's a topic for another time. They essentially have no debt. Their cash from operations was $53 billion (31% of revenue).
Now lets say you are surfing the net and come across a blogger who is working on his or her business... their portfolio.
They have a day job to cover bills and to fund their portfolio and they make $40,000 a year.
They have paid off their debt. No car payment, no credit cards, not even a mortgage! (AAPL has much more assets then liabilities and they just built a brand new corporate HQ).
They have 30% of their revenue available to work with, $12,000 a year.
They then tell you they have $35,000 in cash that they don't want to invest with because its a rainy day fund.
What would you tell this person?
Going back to AAPL, I think they need to announce they are applying their entire $140 billion to share repurchases.

First off we already have a real world example as to what would happen... Seagate (STX). They announced in Q2 2012 that they would buyback shares going from 425 million shares down to 250 by end of 2014. That is 40% of the company. They were so undervalued that hardly anything else would have given them the same growth. Take a look at what their stock price did since that announcement. +120% vs S&P rising only +35%. Now not all of that came from the buyback but a company that can cash flow buying that much has a lot going for it.

Second off how did AAPL do in 2013? They have incredible financials and are rolling in cash their stock must have just shot up in price right? Nope, +5% when S&P did +29%. I think nobody wants to touch a company that makes tons of profit and doesn't do anything with it. There isn't much point. Essentially AAPL's 2013 return came in August when Carl Icahn started putting pressure for a bigger buyback. Its like the market screamed "FINALLY!"

To be fair, AAPL has announce a $60 billion plan which is probably the biggest in history. That's why I bought them. It should give some upward pressure. However I feel they could be doing a lot more and I hope they are easing into this and in the end will give the owners what is theirs.

Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

2013 in review: Dividend Growth Rate.

For the past several years the ongoing joke about your day job was "Hey I got a raise this year! I got to keep my job." The economy has been recovering but its been very slow and a good number of those jobs have been low paying. However that is the day job / salary world and I have talked in the past about how we choose where we want our income to come from. So did you get a raise this year?

Personally I got a 10.69% raise. Not from my day job that I unfortunately still need but I got the raise from my portfolio via dividends.
I took an average of what each position paid in 2012 vs what they paid in 2013. I prefer this method vs my actual income I receive because I have a lot of portfolio growth in the account from deposits. In fact I will more then double my portfolio income which is great but that doesn't measure how well my stock picking and portfolio management has been.
I had to estimate some of these as some didn't pay a full year of dividends in 2012 while others that were afraid of dividend taxes stole a 2013 payment for 2012. I tried to be as fair as possible in comparing 2012 vs 2013.
I did not own all of these through the entirety of 2012 and 2013. My analysis here is just in grading how well the managers of each company worked for me. As a shareholder, that is what I am paying them for...

Regular Corporations (i.e Dividend Growers)
AAPL: +15.1%
AFL: +5.7%
HAS: +11.1%
IBM: +11.7% (Boring old big blue. They aren't a flashy dotcom company or making the latest must have Christmas gadget. They were able to give double digit growth of the dividend. Never believe people that say you can't get good growth with the biggest and oldest companies).
KO: +7.7%
MCD: +5.2%
MDT: +7.7%
POT: +112.0% (Crazy growth. Next year it will not grow much as the fertilizer sector is having some price wars going on right now. However I do not expect a dividend cut).
RKT: +42.2%
SPLS: +9.1%
STX: +37.7% (STX is easily the current crown jewel in my portfolio. I am also sitting on a 109% cap gain return with them though I will go into that in another post. I expect at least a 20% dividend growth rate next year due to continued share buybacks).
WMT: +17.5%
I look to my corporations for the majority of my dividend growth each year. They have low yields now but with their high growth I will have a great yield on cost and outpace inflation. At the same time I have high yielding low growth assets with my BDCs, REITs, Energy, and Bonds. Their higher yields will give me income now to buy more of the high growth stock so I get the best of both worlds.
When I look at just these companies? They averaged 19.78%. I'm pretty sure that is a record for me and I am more than pleased with how they performed.

BDCs
PSEC: +10.0%
TCPC: +7.0%
My BDC portion of my portfolio has done the best income wise. I average double digit yields here and I am getting great growth. Both have positioned themselves to have floating rate loans so their existing loans will rise in payment in the future. I couldn't be happier income wise with them.

REITs
ARCP: +2.60%
OHI: +10.0%
I'm rather disappointed in ARCP. They went for quantity of growth vs quality of growth and their numbers show it. I'm strongly looking at rolling back over to O which has had a nice pullback.

Energy
COP: +2.2%
NDRO: -17.0%
WHZ: -15.9%
COP is now under review. I've been disappointed in their growth. However its my only energy corporation and I want to have stability in my energy part of my portfolio. Speaking of which...
NDRO's trust structure puts the cost of building wells onto the trust and this is taken out by withheld distributions. Two months were lower but future months will be higher with increased production.
I'm pretty disappointed with WHZ as the estimates of production and costs where very off from the reality of when they went public. However at this point I believe them to have stabilized.

Bonds
BLV: -23.7%
JNK: -10.2%
PCY: -12.6%
No surprises here that the bond ETFs dropped year over year. BLV did not have a December capital gains payout as bond prices have been dropping all year in anticipation of increased rates. As older bonds mature and new ones are brought in we have less interest payments. I believe this trend will reverse next year when rates start to rise and then the ETFs will cycle into newer higher rate bonds. I expect share price to drop though.

So for 2013 I have hit my goal... 8% dividend growth. I want at least double the rate of long term inflation so that I can comfortably outlive my portfolio over the decades I will need to count on it.

Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Updates and changes to my blog format

I've made a few updates to my spreadsheets and blog as a whole that I wanted to share...

Month of Raise column on the Watch List spreadsheet: I added a column to track which month of the year a stock will give their annual raise. Its numeric to save on space but corresponds to the month: 1 is January, 2 is February etc. For companies that give multiple raises a year or if they are not consistent then I just leave it blank. I've found keeping thins information in mind to be handy as companies can have slight gains when their dividend raise is announced.

Just found the width slider: After three years of this template I finally found the width option for the blog. I always thought it was too narrow and confining but couldn't see a way to change it. I had finally had enough and rolled up my sleeves and found it. It was under template -> customize -> template editor. Never let it be said that blogspot is user friendly. I've found many of their features rather... odd.

Debating switching over to WordPress: I've seen some nice blogs out there and they happen to not be on blogspot. Blogspot has served me well over the years but I'd like to do more that go beyond what I can do here with blogspot.  However I also know that I just did a blog revamp and you can't do too many of those. It may not be a big deal to others but I've found it a little intrusive to a reader's flow as they check up on their blog list.
If you use WordPress or have made the switch yourself let me know. I don't do this for income or ads so any loss of revenue from readership is a non-issue, but I'd like to hear anyone's thoughts on their experience of changing blogs and URLs.

Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

My 2014 Goals

It's the end of the year and people are winding down operations and "closing shop" till January. Finance wise, this is my favorite time of the year because it gives a good quiet time for reflection and review. What worked, what failed miserably, and where I need improvement. It's also time to make plans and assess what I can do next year. A lot of my fellow bloggers have already or are working on this and I enjoy reading about their plans. Here are mine...

Total Portfolio: $30,000. I hope to more than double my portfolio next year. For close to three years I've worked it up to $13,000 so this will be a tough one but one I think I can attain it. I've been working financially in other areas of my life and I think I am ready to kick this into overdrive. I'm quickly approaching 40 and in talking with others in their late 30s and early 40s... we are hitting a freak out moment of a ticking clock.
To accomplish this I will be changing my deposits to $300 a week. Quite the difference from when I started at $50 a week with this portfolio. That was intended to show people that little contributions can add up. However I do have to acknowledge my own mortality in that I am not in my 20s with all the time in the world anymore.

Total Dividends received: $1,000. Seeing as I should hit 2013 in the sub $400 dividend range, this one seems even harder. The problem is in idle cash and the delay of deposits later in the year not bringing in dividends for the full year. Cash position has a lot of benefits for a portfolio but generating income is not one of them.
To accomplish this goal I will be having a very nice January deposit wise. I received a yearly bonus at work and they are offering to buy back vacation over a certain limit. I have over 100 hours of vacation and get poked fun at by coworkers traveling to Mexico or an Alaskan cruise that I need to relax. I don't advocate depriving oneself entirely of pleasure when making financial sacrifices and you've got to enjoy life along the way towards retirement but personally, I find it very relaxing looking at the extra $3,000 in my portfolio that a week long cruise for two plus vacation time cashed in would give me.

Average Monthly Dividends: $100. I'd really like to be pulling in 3 digits of dividends constistently. I was talking with my girlfriend that when we hit that level its going to be a big economic mental shift for me. At that price we are getting a free dinner at a very nice restaurant each month. For the rest of our life. No deciding where we can't go based on our budget. The sacrifice over the years will start showing its rewards. At that point I can keep working and have extra luxuries in life.
Not that we will do that when the time comes because we are wanting that compounding to work for us. To have that option though in the back of our minds is a great place to be.

Revisit Lending Club. I was an active investor back in 2009 with Lending Club so I do have some experience with them. I put it on hold and focused on other things, there was the little issue that I still needed to get educated on finance and economics. I wasn't ready for Lending Club but I feel I am now.
One aspect I did love about it before was in helping people. The people who realize they screwed themselves with 25% credit cards now needing a 15% debt consolidation loan to get things going. I really enjoy helping others that are willing to help themselves with a little help. This is one aspect that stock investing doesn't give me.
To accomplish this goal I'll start off light. $25 a week and buy 1 note at a time. I'll get into my plans later if I do this. It's not a for sure thing as now that I have more experience I have multiple ways to make money. I will want some diversification with my income streams but not at the expense of that income being riskier and lower.

Continuing Education. As far as I feel I have come financial knowledge wise, I know that I have a ways to go. I want to put in as much time into myself as I do my portfolio. One idea is to review the Warren Buffett's yearly shareholder letters. There are other free copies out there going back to 1959. 71 letters total.  Maybe every other Wednesday will be "Warren Wednesday".
Bond knowledge is also something I want to improve on. As citizens we can buy actual US treasuries, not just bond etfs. This will allow us to get a consistant yield and return of capital vs the fluctuating yield and no guarantee of ETFs. Why would I want that? Well back in the 80s, 30 years bonds were double digit yields. Think about in 2010 getting 10% income while everyone is bitching about 1% bank CD rates and 3% bond etf rates.

I have big plans for 2014. Its going to be a break-thru year for me.

Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Are you getting your share of the pie?

This morning I couldn't have read a better example of why your average Jane needs to own assets and support herself and her family and get away from relying solely on a paycheck model.

MMM announced today that they are raising their dividend by 35% and having $17-$22 billion share repurchase program. That is equal to 25% of the entire company that they plan to buy back. I get into conversations and debates with some family and friends on what the government needs or doesn't need to do. They say that companies need tax cuts and incentives to create more jobs for people especially under the socialist job destroying President Obama (their words not mine).

Whether you believe government should or shouldn't help companies is not the point here. Nor am I giving a political view, this is an investing blog after all. Some companies and some sectors might need help but not an across the board law impacting all of.
Its not a matter of companies unable to create jobs, its that companies do not WANT to create jobs.

I think this is an important lesson from 2008. We were losing millions of jobs. I cannot recall any headlines in the news since then, that's 5 years, that they were hiring even tens of thousands back. I don't think they are coming back. Not with large corporations at least.

I read a lot of earning reports and there is one common theme I keep seeing time and again in 2013.
Record profits, record sized cash hordes, dividend raises and share buybacks. $415 billion of share buybacks. We have 136 million total non-farm payroll employees. Let's say $80,000 to hire someone with a $40,000 salary. I'm roughly estimating that it costs double for vacation, benefits, health care, pension or 401k matching.... that is 5.18 million good quality jobs with benefits that could have been created.
There is money practically being thrown at shareholders. Next to nothing for employees.
Again, right or wrong is another topic and we can debate philosophy and ethics another time. The fact remains there is money and profit available and some are getting it and some are not.
Are you in the employee category wondering when people are going to create better jobs for you?
Are you in the shareholder category getting yourself a piece of the economic pie?

Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Added to my TCP Capital (TCPC) position

On Friday I added to my position of TCPC. I got the additional shares @ $15.94 and its something I have been waiting for a couple months now. What was I waiting for? The next secondary public offering.

BDCs have a very straight forward business model. They sell shares of stock, take the money and give it out as loans, then pay out 90% of their taxable profit as a dividend to shareholders. That leaves very little left to grow the company with so they always do regular SPOs. Several times a year is fairly common or about as long as it takes for them to deploy the capital from the last SPO. The pricing of this one came out to be $16 so we had the expected drop from $16.50 down to under $16.
The size was 4.5 million more shares added to the share count.  Thats a hefty amount at more than a 10% increase. Everytime a company has an SPO there are always cries of dilution and existing shareholders being hurt. That is sometimes the case but with most BDCs its not. Its a great thing for existing shareholders and its been great for TCPC.  I originally bought TCPC back in Q1 of 2013. Lets see how they have done since I bought it.

Q1 2013 results: $14.7 NAV
Q2 2013 stock offering: 4.5m shares @ $15.63

Q2 2013 results: $14.94 NAV
Q3 2013 stock offering: 3.8m shares @ $15.76

Q3 2013 results: $15.06 NAV

Q4 2014 stock offering: 4.5m shares @ $16.00

TCPC is caught in a great cycle. They issue shares for more than the previous offering. They are then able to give out more loans then before which in turn makes the overall company more valuable and the share price rises. Rinse and repeat. Long term readers may recall that I was in Trinagle Capital (TCAP) back in 2012. The exact same thing happened with them. They eventually stalled out and was unable to maintain this cycle as their share price got to be nearly x1.9 over the NAV. TCPC is sitting at a much safer x1.03

Additionally TCPC has about $1.02 is undistributed taxable income.. thats 6.2% of TCPC's market cap. This is after they have two special dividends this year. I love owning companies whose biggest problem is that with a 8.76% yield they are having problems in paying me enough and have to pay more.

Now I am not saying this is a bottom and its going up. I don't try to call bottoms. I'll leave that to soothsayers and amatuers. Mathematically it was a no brainer to me as it was virtually the same price I bought in originally back in Q1. Except this time it has a big bonus pile of cash to pay me and its grown in value.

Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Company Review: Rock Tenn Company (RKT)

If you had told me I would be investing in a company that makes cardboard, manufactured in the U.S. and that also exports it to 3rd world countries I would have said you were insane. Until I found RKT...

ROCK TENN COMPANY (RKT)

Last Updated: Q3 2013

Fiscal Q4 2013

Description: Rock-Tenn Company (RockTenn) is a North America's integrated manufacturer of corrugated and consumer packaging. The Company operates locations in the United States, Canada, Mexico, Chile, Argentina, Puerto Rico and China. The Company operates in three segments: Corrugated Packaging, consisting of its containerboard mills and its corrugated converting operations; Consumer Packaging, consisting of its coated and uncoated paperboard mills, consumer packaging converting operations and merchandising display facilities, and Recycling, which consists of its recycled fiber brokerage and collection operations.

How do they make money: Selling paper based containers and packaging.

Key Brands: None

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Company Organization

Corrugated Packaging

91 plants in U.S.

Export Containerboard

Industry shipments of containerboard to export

Consumer Packaging

Merchandising Display Business

Export 1m tons. 66% to Central and South America.

Plans and Strategy

Coal -> Natural Gas conversion. The company is converting plants from coal to natural gas. Improving costs (and improving pollution). Spent $33m over 2.5 years and now saving $47m annually over 5 projects.

Larger more Efficient plants. RKT bought Smurfit-Stone. Closed down 20 total plants with a net loss of 8 plants.

Free cash flow: RKT makes a ton of free cash flow, far higher their their EPS due to depreciation and other accounting rules.

They want debt/ebitda to be below x2. End of 2013 it is x1.95

Share buybacks are important and have launched a 5m buyback plan (7% of the company). No timeline as to when it will be complete.

Dividend yield is targeted to S&P mid cap 400 index average. Odd that they would try to target yield vs a $ amount paid.

Fiscal 2014 free cash flow will be 12%-21% higher.

Risks

Pension: Rock Tenn has a pension plan. I am not opposed to a company pension but it does put pressure on management to properly fund it.

Mitigation: Last year the pension was underfunded by $1.5b. This year its only underfunded by $1b. Improvement was from increased discount rates and contributions. Will make $200m - $255m contributions until 2017. Then be fully funded and drop to $130m annually.

Manufacturing and Heavy Machinery: Packaging requires expensive mills that will need repair and maintenance. Manufacturing jobs in the U.S. will be hard to compete vs overseas.

Mitigation: RKT seems to control their inventory and production capacity well to be able to shut down plants for repairs without impacting company wide volume. They have projects to convert coal to nat gas burning as well as upgrading to modern tech (Mitsubishi flexo folder gluers) not because things break down and they try to get every last day of life from their plants but because of efficiency and cost savings. Their margins and productivity are rising.

Competitors

International Paper Company (IP)

Packaging Corp of America (PKG)

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Company Fundamentals

Company Stats	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013e	5y Avg	10y Avg
Share Price	$13.87	$13.98	$26.50	$32.72	$31.17	$42.69	$66.75	$61.86	$78.95	$96.20	$69.29	$46.47
EPS	0.88	0.45	0.75	2.16	2.83	6.15	5.24	5.41	4.54	7.09	5.686	3.55
EPS Growth	-	-48.86%	66.67%	188.00%	31.02%	117.31%	-14.80%	3.24%	-16.08%	56.17%	29.17%	42.52%
P/E	15.76	31.07	35.33	15.15	11.01	6.94	12.74	11.43	17.39	13.57	12.41	17.04
P/B	1.2	1.1	2	1.6	2.1	2.3	2	1.2	1.4	1.6	1.7	1.65

EPS can be sporadic and drop but the overall average is strong growth.

Current P/E is 9.67 vs twice that for its 10 year average gives strong margin of safety.

Dividend Stats	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013e	5y Avg	10y Avg
Dividend	$0.35	$0.36	$0.36	$0.40	$0.40	$0.45	$0.65	$0.80	$0.83	$1.18	$0.78	$0.58
Dividend Yield	2.52%	2.58%	1.36%	1.22%	1.28%	1.05%	0.97%	1.29%	1.05%	1.23%	1.12%	1.46%
Share buyback %	-	-2.78%	-2.70%	-5.13%	2.63%	-2.56%	0.00%	-23.56%	-29.17%	-1.37%	-11.33%	-7.18%
Div Growth	-	2.86%	0.00%	11.11%	0.00%	12.50%	44.44%	23.08%	3.75%	42.17%	25.19%	15.55%
EPS Payout Ratio	39.77%	80.00%	48.00%	18.52%	14.13%	-	12.40%	14.79%	18.28%	16.64%	15.53%	29.17%

They shifted one of their 2013 dividend payments to 2012 probably to avoid any possible tax increase. The numbers above have been adjusted to match if that did not take place for a more historic trend.

Share count has been increasing but they have been growing the company by a larger amount.

They yield does not traditionally get high however the dividend growth rate is very high.

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Earning Report Notes

Q3 2013 (F4 2013)

EPS $2.66 (+91% Y/Y) Higher pricing and higher productivity

Free Cash Flow: $3.78 (higher than EPS)

Margins: Corrugated 20%

Tax Rate: 30%

Debt: $1.48b (reduced by $176m in Q)

Debt/EBITDA: x1.95. Target is below x2 and they have been working on that since acquisitions completed.

Prices:  $50 - $54 / ton of containerboard

Pension payments and reducing debt.

Dropped productivity in Q to control inventory. Most of it was in September where they did improvements (repairs?)

2014 Estimates

$525m - $550m Capex

Pension: $1b underfunded. ($1.5b last year). Will make $239m in contributions. $200m - $255m contributions until 2017. Then be fully funded and drop to $130m.

Free cash flow estimate $12.50 - $13.50 / share (+12% to +21%)

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Company and Industry specific commonly used acronyms and terms

Boxboard: Pulp based packaging with layers of chemicals (smoothed coating?).

Containerboard: Cardboard but without the “W” accordion shaped center.

Corrugated: Traditional cardboard. Packaging with the “W” accordion shaped center.

Resources

Company Website: http://www.rocktenn.com/

Investor Relations: http://ir.rocktenn.com/

Morningstar: http://quotes.morningstar.com/stock/rkt/s?t=rkt

Transcripts: http://seekingalpha.com/symbol/rkt

Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.