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Investments

(Not So) Light Reading

You see that gigantic stack of papers in the photo? That’s the latest SEC filings for BlueKnight Energy Partners, one of the dividend companies I’ve invested in.

That stack of papers is close to 300 pages of legalese, deliberately designed to be completely incomprehensible to the average person.

I have to don a business suit just to get the words to appear on the pages.

I’m kidding. But sometimes I wonder if it would help. As it is, I feel like I deserve a Dunce cap as I wade through this stuff and try to understand it.

A college education in law or finance would probably help but guess what? I don’t have either of those pretty feathers to stick in my cap…

…But that’s not going to stop me. I will read this stuff, and keep reading it, until the day the light begins to glow in my uneducated, poverty-riddled Hillbilly brain and I figure out what on God’s Green Earth they’re talking about.

Pieces of it I can understand already. This little company is designed to generate cash distributions for its stockholders in the Energy industry. It does stuff with asphalt and is a one-stop shop for oil well owners who want to transport their crude oil to refineries, regardless of how far away they are from the pipelines. BlueKnight sends in the tanker trucks, hauls it to their storage and pipeline areas, then works their particular magic with the stuff to send it down the line.

They also posted a major loss this past quarter and had their partner pull out of a pipeline project called the Cimarron Express. As a result, investors have fled from this company like rats from a sinking ship. At the close of day Friday that little company was trading for a measly $1.06 a share.

That price translates into a 32% dividend return, which is the reason I’ve spent the past few days wading through a stack of legalese that’s so obtuse a Geometry teacher couldn’t understand it.

I’ve got about $250 to invest this round. I’d initially planned to purchase more Valeritas shares but that dividend return is calling to me. They dropped their dividend rate a while back before the Cimarron Express was a thing. From what I can determine, they intend to keep their current distribution rate over the next year regardless. As a result, their dividend is relatively safe over the next year. Even the expert analysis my brokerage sends me agrees on that.

If I’m right, the reason that they posted a loss wasn’t that the company actually lost money but because they took what is known as a writedown on their assets that only made them look like they lost money. It’s a common trick businesspeople use to lower the taxes they pay. That was how they explained it in their conference call a few days ago; I just want to see it in writing before I put my money where my mouth is.

I may be crazy, but I’m not completely stupid. I don’t expect the price on this stock to go up much over the next year but at that price the dividend return would compensate for that.

It would also take me a tiny bit closer to achieving financial freedom.

For now I need a break. I’ve read this stuff until my eyes have glazed over so I’ve set it aside. I’m going to hang up this last load of laundry, soak in the tub for a bit, and call it a night.

Tomorrow marks the first official day of my management training. Next week will be filled with that and the mixed blessing of the kid arriving home from the Navy.

I’m dreading tomorrow. I’m going to miss my cashier’s smock.

Categories
Investments

Two Hours Closer to Freedom

Today was the day for my latest stock purchase. My transfers had arrived at my brokerage and I had a day off to savor the experience of growing a tiny bit closer to freedom. I targeted Blueknight Energy Partners (BKEP), a tiny company in the Energy Sector that I’d been eyeing for months. I’d researched them, noting several things I liked about the company as I waited for them to officially slice their dividend. I’ve learned my lesson about buying stock prior to a dividend cut so I held my hand and waited.

Sure enough, the stock price tanked when the cut was announced. I watched it, waiting for it to hit bottom so that I could calculate the new dividend yield based on the lower price. When I was satisfied with both the price and the yield I began purchasing shares in the company.

This month I managed to buy 54 more shares. At the new dividend rate I will receive 32 cents a share per year which works out to $17.28 in annual dividend income thanks to today’s purchase.

I’m over two hour’s wage closer to my goal.

In total I now own 138 shares of Blueknight. I’ve spent $388.04 on the investment, which includes my brokerage fees. This investment will provide $44.16 a year in dividends.

For the moment I’ve decided that I absolutely adore companies that decide to slash their dividends in order to pare down debt or to expand their businesses. Investors hate companies like this so they flee in droves, allowing cheapskates like myself to sweep in and purchase shares at bargain basement prices.

I have finally found my niche.

What risks are you taking in order to achieve your goals? Please share your stories in the comments below.