ARCP has been a thorn on my side..
- ARCP is still lingering through its accounting and management problems.
- They cut the dividend and I have no clue when it will be coming back.
I also have to consider........
Will interest rate increases affect this company in the short term.
Some people might say if ARCP keeps selling off, scoop up some more shares.
I say there may be no quick fix and it could take a while for them to get their books in order.
So the question I ask everyone is should I Hold, Sell, or Buy in this situation. What would you do?
It's a tough choice, DM. Personally, I'd sell a position if the fundamentals have changed, the dividend was unpredictably cut, or if it wasn't letting me sleep well at night. Sounds like all the above apply to you in this position. I wish you didn't have to make such a hard decision, but I'll be supporting you either way :)
ReplyDeleteRyan,
DeleteIt seems like the fundamentals have changed and they are not really letting the investors know what is going on. I am hoping the dividend would return within the next couple of months. I am thinking by April, but we will see. You do make a great point though. It seems like I am sitting on dead money with them at this point.
DM,
ReplyDeleteI sold mine the same day the news of funky accounting was announced back in October. I've seen REITs go sour in the past, and it isn't pretty. That said, ARCP is hanging in there, even though it cut the div.
To help with your decision, I'd ask yourself this question. Are you confident about the future of ARCP compared to consistent dividend paying stocks like JNJ, MMM, KO, CVX or any other DG stock on your buy list? ARCP is now a capital appreciation play, not a dividend investment.
Holders are hoping things get better and the dividend returns soon. You need to decide if hope is a good strategy.
-RBD
RBD,
DeleteI know many investors sold their position in ARCP which wasn't a bad idea because you can use that money for a better investment. You are right about them hanging in but I would rather put my money into KO or JNJ at this time. I was thinking of holding to see what happens with the dividend but still no news on that. Hope may not be a good strategy at this time. I like to see progress and steady growth. The dividend is certainly a bonus but ARCP is not meeting all the requirements for a company in my portfolio.
I've been trying to decide the same thing. I still feel like they can/will make a come back but the time horizon could be far out. Shares didn't really sell off on the dividend cut news but one thing to keep in mind is that they also said the dividend will be in line with peers once it's reinstated, assuming it is. So that puts it at a 4-6% area most likely which would be a big cut from before. I guess the questions we both have to answer are 1. is the lower dividend going to be adequate 2. how long until the dividend is reinstated 3. are they still a long term holding? I'm trying to sort this out for myself. Part of me wants to hang on because I think there is a lot more upside to downside assuming there isn't a major accounting scandal. They still have a huge collection of properties that can/should perform well.
ReplyDeletemeant to add "under new management" at the end.
DeletePIP,
DeleteWe are among the few investors in the dividend community who have held ARCP for now. I know some a couple of people who bought more shares with the price decline which could turn out to be a solid investment if ARCP gets their act together. I would be happy to see the dividend come back in that 4-6% range. It's certainly better than nothing. They could be a long term holding but I am unsure of when the dust will settle with the whole accounting scandal. After that I will be worried if that will happen again. You make a good point about them have a nice collection of properties. That is one of the reasons I have held out this long.
Personally I would sell ARCP and move on, especially you don't know when they'll start paying dividend again. The only reason of buying ARCP would be that big dividend yield.
ReplyDeleteTawcan,
DeleteI know many dividend investors would sell ARCP at this time. I would like to use the money for another company like a KO or NKE. I am confident in those companies and I can rely on the growth and dividend. One of the reasons I bought them was that dividend which was rather enticing. But not anymore..
I have been on the same boat for a while now. The stock did rebound off the lows and has been stable for the last few weeks. Of course, there is no news of when or if the dividend will be reinstated. The stock has been sitting like dead money...no dividends and no capital appreciation as well (after the 30% drop already encountered). So there is an opportunity cost for each month that goes by where ARCP is held. In spite of realizing all this, I am still not selling.... I need to decide soon.
ReplyDeleteDGJ,
DeleteI feel like everyone is starting to jump ship, but the ones who stay may be rewarded in the long term. I have thought of buying more shares if they were to get their act together. I would definitely not buy right now. I would have to see them reinstate the dividend and provide investor trust for at least a year or two. In the meantime there are other REITS that look like a great opportunity to buy right now like HCP. So my biggest concern now is why am I keeping dead money in ARCP when I can be putting it into a reliable company like HCP that offers a nice dividend. I am certainly going to sleep on this one. Thanks for stopping by and I appreciate your input.
DM,
ReplyDeleteI just recently sold my shares and have a limit order for JNJ at 99.5. Here's my thinking on ARCP.
1) ARCP just renewed their dividends...for class F preferred shares at .139 per month. No word on common shares
http://finance.yahoo.com/news/american-realty-capital-properties-announces-191400634.html
2) ARCP is suffering from shorts. Today over 10 million shares were traded with a normal volume of 14 million in the past 3 months.
http://finance.yahoo.com/q?d=t&s=ARCP
3) Let's say theoretically ARCP resumes dividends for common shares. Interest hikes or the threats of interest hikes will destroy the stock.
Look at all the reits when Yellen threatened to increase interest rates earlier in the year. O, the great reit fell by 3-5%. What do you think will happen to ARCP who suffers from shorts and speculators?
I say toss out ARCP for now. Wait for the dividends to be reinstated and wait for the interest rate fear.
BDI,
DeleteYou have made some solid points and my biggest concern is #3. If interest hikes destroy the stock I might feel stuck to hold. If I sell now then I would only realize a $155 loss. I should have sold before tax season in order to tax loss harvest but I was in the middle of transitioning into a new job. Thanks for stopping by!
DM,
ReplyDeleteI hold a decent number of ARCP shares and continue to hold them for now. The only reason I haven't sold yet is I feel like there's a run over $10 a share on the way once some news comes out and I'd be selling myself short here. Nothing is screaming "buy" to me elsewhere that I would want to sell immediately to get those funds.
That said, I don't view ARCP as a long-term core dividend investment at this point. There's now a black mark that will be difficult to mentally erase and I can surely find something more stable elsewhere. I'll have my finger on the trigger over the course of this year even if they reinstate a shrunken dividend in the next few months.
Best,
DWC
DWC,
DeletePart of the reason I haven't sold yet is because I am unsure of what else I can use the funds for. I have been storing cash in a savings collecting a paltry 1.05% APY. There are a few companies on my watch list like KO, MCD, WMT and JNJ. These companies are not huge bargains right now, but I they certainly give me peace of mind when investing my money.
I'm unsure of what to do as well. Selling when it's in the red makes me want to bang my head against the wall. At the same time, it's doing nothing; even if it just sat in a money market account, at least it would be making something (a penny saved and all). Probably going to hold it a little longer though, hoping it'll go up a bit, but likely I'll end up selling it.
ReplyDeleteTLI
TLI,
DeleteI am in that same boat where I should just put the money into my savings account earning 1.05% APY. At least I would be collecting a monthly return for my money. I noted above that I should have sold in 2014 and I could have used it to tax harvest the loss. I will certainly be writing a post with the outcome of my decision to hold, buy, or sell.
DM,
ReplyDeleteI sold a while ago. It's really a personal call whether or not to sell, just like whether or not to buy. But I just couldn't hold after fraud at the top level of management. I figured the dividend would be changed and it was temporarily eliminated just after selling.
I'm a long term investor and this is a rather speculative play right now. Just not for me.
Either way, be comfortable with your decision and don't doubt yourself.
Good luck.
Best regards!
Mantra,
DeleteI feel like that the community is divided in whether to sell, hold, or buy. It's probably something like 55% Sell, 40% Hold, and 5% Buy. I am leaning towards selling as well because I want to use that money for an investment that will be providing growth and a dividend. Right now ARCP is dead money and I might as well have the money under my mattress at this point. Thank you for your comment and professional opinion.
You bought it for the dividend, it no longer has a dividend. Sell: nuff said.
ReplyDeleteAnonymous,
DeleteThat is a great point. This was the reason I sold SNE a few months ago. I ended up putting the money into great companies like, KO, PEP, KRFT, and DPS. Unfortunately I would have made a solid gain if I would have kept SNE. This is going to be a future post I will be working on.
Dividend cut = selling to me! You could take this money and invest it in a better company instead of losing months of nice dividends. I understand the other strategies, but I prefer seeing a dividend cut like a new opportunity to find better! ;-)
ReplyDelete