The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 5 28 comments
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1. MARKET STATUS
Before ever considering investing in stocks, we must always first look at the overall market, since almost all stocks follow the major indices.
A. The Short Version
As anticipated in my last post, a bit of good news has brought a rally, though it has yet to really test significant resistance. The fundamental problems remain and there is no credible plan to fix them at this time. News driven and remains unpredictable.
Good news from China (more stimulus coming), Citibank (we don’t need help),GE (ditto), even some hope with credit as the three month LIBOR actually ticks down a bit. The sentiment indicators are very bearish, which is very bullish, since it means lots of buyers are waiting to dive in – as the past days have shown.
B. Ramifications for High Dividend Stock Investors
In sum, we’re still in a near term trading range, amidst a short term rally with the overall trend continuing down. Continue to invest only with funds allocated for longer term investment. What you buy now may well go lower. If the current rally gets the below Ultrashort ETFs down to our very conservative buy prices, consider allocating a portion of your portfolio to these short term bear market hedges.
1. Hedge a Bit With Ultrashorts?
The rally will need to continue before these hit support levels.
- UltraShort S&P 500 Proshares (SDS) – Buy under $75, Strong Buy under $65
- UltraShort Financials ProShares (SKF) -- Buy Under $141; Strong Buy below $125
- UltraShort QQQ ProShares (QID) – Buy Under $55, Strong Buy under $50
- UltraShort Real Estate ProShares (SRS) – Buy Under $58, Strong Buy under $48
- UltraShort Russell2000 ProShares (TWM) – Buy Under $75, Strong Buy under $65
2. Continue to Take Partial Positions at Our Recommended Strong Support Levels
Beyond the Ultrashort ETFs if you can earn reliable dividends from 8-12 percent or more while you wait for recovery, ongoing investment makes sense.
3. Use Sell Stops?
While our emphasis is buy and hold as long as the distribution is safe and fundamentals hold steady, some may want to limit their paper losses, especially if they may need the cash within the next year or so. Those in that position should consider using sell stops around 15% below the Strong Buy price as partial principle protection, though you risk getting knocked out of your positions, only to see them come back soon and possibly rise higher while you miss the dividend. It’s a judgment call.
Again, our focus is on getting high yields from healthy businesses whose price will recover while we earn outsized returns, and we don’t try to time the market much.
4. Inflation or Deflation, Quality High Yield Stocks Protect You
As noted in prior articles, it is by no means assured that in the near term the dollar will fade against other major currencies, nor that inflation will set in. Indeed, there is evidence for near term deflation.
The beauty of well selected high dividend stocks is that you’re at least partly protected in either scenario. If there’s inflation, their hard assets and/or pricing power helps preserve our purchasing power. If there’s deflation, we’re getting relatively steady cash.
2. WHAT MAKES A HIGH YIELD STOCK USD INFLATION RESISTANT?
Here in Part 5, we look in more detail at some of the top international stocks for providing both reliable high yields and U.S. Dollar hedge.
See Part 3 of this series for a more detailed explanation, but here’s a quick overview of the three key criteria for selecting stocks that provide both high yields and a hedge against a weakening U.S. Dollar.
Outstandingly Profitable Business with Dependable Revenues and Cash Flows
Based in Hard Assets or a Monopoly-Like Position in Vital Services that Allow It to Raise Prices to Pass on Rising Costs
There are a variety of such niches, but there are two basic types.
- The business owns, sells, or otherwise profits from tangible assets with strong intrinsic demand that allows enough pricing power for revenues to keep pace with or exceed inflation. This includes firms tied to energy, vital agricultural or industrial commodities, precious metals, water, etc. Most have come way down from a year ago, and, it’s a temporary condition to be exploited, not feared. The underlying long term demand for the above commodities is growing along with the populations and economies of China, India, and others.
- Alternatively, a provider of critical services that for some reason dominates its market, like a major well run utility or dominant communications company.
Non-USD Denominated: Shares and/or distributions are priced in another currency, ideally a commodity based currency like Canadian or Australian dollars, but any other major currency would provide some hedge. We can include here U.S. dollar denominated and U.S. firms that get the majority of their earnings in other currencies. Beware, however, the dollar could strengthen against your alternative currency. But if you’re already overloaded in USD, then some hedge in another currency makes sense, especially hard asset based currencies.
In short, we’re seeking stocks of strong companies that mostly earn and distribute a high dividend in a non-USD currency and have a dominant position in a market for an essential product or service.
3. INTERNATIONAL STOCKS PART 1
Perhaps the one distinct upside of a world-wide stock market collapse is that prices get so beaten down that the previously modest yields of many blue chip companies suddenly become high, as scared investors demand a higher risk premium. For the best of these, their price declines are not due to deteriorating fundamentals, but mostly due to hedge and mutual funds dumping shares to meet redemption and/or other requirements. The below list is not comprehensive, merely the stocks which I’ve found thus far. Suggestions for additional combination high dividend and U.S. dollar hedge stocks are welcomed.
All amounts quoted are in U.S. dollars unless otherwise noted. All stock symbols are New York Stock Exchange unless otherwise noted.
A. International
Because one of our criteria is that the stock price and distribution must be pegged to a non-USD currency, it's no surprise that most of the best USD hedge high yield are stocks based outside of the U.S.
1. Energy
The return of high oil and gas prices is a matter of when, not if. Some of the best income plays are in energy, and the stock prices and dividends of many have been beaten down along with oil and gas prices.
Big Integrated Oil: Yes, definite risk of further price and even dividend cuts while oil prices remain low. At the below recommended buy prices, most of that risk is priced in, and far outweighed by the rewards when energy prices resume their long term uptrends.
- BP, plc (BP): Buy below 40, Strong Buy Below 37. Unique as the only big integrated oil with a large, reasonably safe (barring further deterioration of energy prices). Currently around 40, its 8.7% yield is among the highest of the big oils.
- CNOOC Ltd. (CEO): Buy below 85, Strong Buy below 80. A subsidiary of China National Offshore Oil Company, CNOOC is a unique triple combination play on income, China and energy, so I’ll accept the lower dividend. The dividend is only around 5%, and even then only when price is around 87.
Volatile price can move very fast either way along with oil prices, and its yield is lower than we normally accept, so don’t chase this one much above $85. However, likely fast appreciation when oil prices recover makes this stock worthwhile as a combined income / growth play. I’d buy up to 95 if oil shows definitive signs of rising. The firm is aggressively expanding production. Just this week, CEO announced that oil and gas production at the OML 130 project in Nigeria was beginning ahead of schedule. The project is expected to produce 175,000 barrels of oil per day by this summer. CEO owns 45% of the project. - Eni SpA (E): Buy below 40, Strong Buy below 35. Yield 10%. This Italian integrated oil can profit on production (upstream) and the refining, marketing, and distribution (downstream) side. Expects to grow output around 3% per year, debt manageable. The past two dividends have been reduced, not uncommon given energy prices, though analyst opinion is very positive, with 2 recent upgrades.
2. Communications
Cellcom Israel Ltd. (CEL): Buy below 22, Strong Buy below 20. Yield 12%. Operating income up, profits up (32% despite slightly lower revenues), dividends up, free cash and domestic demand steady. Like other well run wireless operations, the firm is benefiting from growing sales of more advanced phones, which offer more services and revenue opportunities.
The Israeli economy is weakening along with the world, but its banking system is relatively healthy, and the likely new PM Netanyahu has a solid economic track record, as does Bank Head Stanley Fischer. CEL is not only healthy, but a rare quality income and diversification play into the Mideast’s most dynamic economy and only real democracy.
France Telecom (FTE): Buy under 14, Strong Buy under 12. Yield over 7%. Expanding into South American Internet market, payout ratio about 90%. Typically pays only one dividend per year, usually in the spring. The last one, in September was about half of the prior one, though at this level it appears safe.
Telefonica SA. (TEF): Buy under 52, Strong Buy under 48. Yield over 7%. Expanding into Czechoslovakia, still able to get credit as sign of financial strength
3. Utilities
Veolia Environmental SA (VE): Buy under 25, Strong Buy under 21. Yield 9%.
Veolia Environnement, together with its subsidiaries, provides environmental management services to public authorities, individuals, and industrial and commercial customers worldwide. It operates in four segments: Water, Environmental Services, Energy Services, and Transportation.
This French firm one is unique because it’s the only serious dividend in the high potential growth water sector. A dominant player in a hot sector, the price is beaten down with the market, which transforms its formerly modest yield into a generous one.
One of the largest integrated water infrastructure companies in the world, with solid financials, Veolia is a prime beneficiary of the increasing investment in water worldwide, including the U.S. Based in France, it earns profits all over the world. VE provides solutions to every water infrastructure issue, from supply to conservation to wastewater processing and recycling. A steadily rising but modest dividend, combined with a stock price that has fallen harder than the overall market (from around 90 to about 20), has transformed this formerly modest yield into a generous one close to 10%, based on last May’s 1.89 dividend (it only distributes once a year).
It’s the leading provider in the world in both the water/wastewater and public passenger transportation, and the second largest waste management firm.
Not surprisingly, revenues from commercial and industrial customers are down. Multiple profit warnings have hit the stock, and there are those questioning management’s ability to maintain profits and dividends in this down cycle. However, the dividend seems safe for the now, given
- Manageable debt levels
- No major near term debt repayments
- Healthy cash flow
Note that the company only pays one dividend per year, usually in mid May. This dividend has more than tripled over the past 5 years.
ENEL-SOCIETA PER AZI (ENLAY.PK): Buy under 5.50, Strong Buy under 4.50. Yield about 11%. An Italian utility with interests in Spain as well, Enel Spa is the short name for Ente Nazionale per l’energia Elettrica - Societa Per Azioni. Price has dropped over 50% over the past year, due mostly to euro weakness, debt used to buy the huge Spanish utility Edsa, and a dividend heavily cut. Thinly traded on the OTC market. Profits for 2008 were up 45%, debt is declining, and the firm as stated it will maintain its dividend in 2009.
4. Conclusion, Disclosure & More Info
In Part 1 we looked at the current market, and the case against the US Dollar.
In Part 2 we reviewed the current market, the case for the USD, and the key criteria that make a high dividend stock a USD hedge.
In Part 3 we briefly described the best sectors and listed specific recommendations that fit these criteria. Thus we saw a listing of the best high dividend stocks outside of the U.S.
In Part 4 we listed the best high yield dollar hedges among the U.S. stocks.
Here in Part 5, we went beyond a mere listing to describe in greater detail some of the best international high dividend dollar hedges.
The coming articles will continue to review our favorite international high yield dollar hedge stocks in greater detail.
Disclosure: I have positions in most of the above mentioned investments.
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This article has 28 comments:
The MMR PFD yields about 16% at present prices.
I own it, it is a cummulative, convertible PFD.
It's PRINCIPAL not PRINCIPLE
On Mar 16 10:01 AM From woods of western NC wrote:
> Note to author:
>
> It's PRINCIPAL not PRINCIPLE
On Mar 16 09:23 AM paultaut wrote:
> MMR co-chairman just picked up a 1/2 million shares of common.<br/>
>
> The MMR PFD yields about 16% at present prices.
>
> I own it, it is a cummulative, convertible PFD.
On Mar 16 10:31 AM User 59450 wrote:
> I appreciate your columns. Please give more info about the MMR convertible
> PFD. I couldn't find in on Yahoo.
Quantumonline.com is a fantastic source for preferreds and all other exchange traded debt stuff.
This series has been really usefull - the most directly useful I have seen.. Thankyou.
I second Boubou's mention of quantumonline as a valuable source. Likewise, there is a TSX site.
I don't know if MSN carries PFDs.
No special Place for PFDs, although Barron's has a section in it listing PFDs.
The only reason I know about it is because I still have 100 shares of the Common left from way back when...
MMR itself is a peculiar oil/gas play, Its building an LNG terminal on a owned island in the Gulf(formerly a salt excavation and fully permitted) and has the world's deepest well in play(32,000 feet going down another 2-3000ft) who knows whats down there, also in the Gulf.
I saw the opportunity, there are only 1,600,000 shares, be careful when buying.
But then there is the other aspect, Cummulative, arrearages stack up, this was a $35 stock, now around $4.
There are lots of oil/gas issues out there in the same situation. Convertible, translates into following the price of the common.
From my perspective, it was a choice between buying the common without the payout or the PFD with it. But, I have the added support of the Chairman of FCX who also likes it.
I added recently more FTE @22 (for the ADR). You recommend buying it @14/12, which I agree would be a great price, but the 52-week range is 21-36 and I'd be very surprised if it gets down to 14.
You recommend buying TEF @ 14/12, but its 52 week range is 47-93 (for the ADR). I have been looking to expand my holding in it, but frankly I think it is expensive. I would not buy more unless it dropped below $40.
Regarding BP, another issue that I have owned for years and added to recently, I am less confident than you about their dividend, and would not be too surprised if it were reduced if oil continues to slump for a while. I believe the stock price slump suggests that others have similar expectations.
Secondly, in the event of a recovery, which companies can we expect to grow faster, exploit opportunities, develop new revenue streams, and take market share? (a) companies that are flush with cash or (b) companies that have reduced their cash by paying dividends? More concerning are companies that are taking on high-interest debt while paying dividends. Many of these firms will emerge into the recovery short on cash and highly indebted. Their future growth, and their shareholders' stake in the recovery will be impaired.
This strategy is the equivalent of borrowing money from the bank at 8% to put into a savings account yielding 3% so that you can withdraw 5% of your money per year from that account! You don't have to hire a CPA to see the folly of that plan. Now examine your dividend stocks. What's the interest rate on their debt, and would investors get more value out of paying that debt off or receiving a partial liquidation of their cash assets (a dividend)? What opportunities are they missing out on by lowering their available cash?
Try this plan:
Take your social security for both you and your wife, add any retirement that you might have coming from your working years and your should be nearly up to half of your pre-retirement income. To maximize the benefit, work to full retirement (67) if possible.
All of us being investors in this forum, I will assume that everyone will have a nest egg to work with when we reach retirement age. Invest your nest egg in Hi Div stocks from all sources, and I don't mean the hi div's that the "advisers" talk about. You know, like 0.5% or maybe even 1.3% (those guys drive me nuts). Look in the industrial sectors, natural resources or utililties, something that pays more than the 4 - 5% recommended that you withdraw from your IRA each year. It isn't really very hard to get more than the 4 - 5% and this will filling the remainder of your required income for retirement. Check out Harry Domash's Dividend Detective website for a starter in your search for Hi Dividends.
Now, of course, this advise is for the working stiff, not the CEO's among us and certainly not the Madoff's of the world. Study hard and be careful. Happy and prosperous retirement.
And Norway offers some of the same superior country characteristics and "risk" (i.e. non-risk) offered by Canada and Australia; that is, a very well managed economy, a very democratic state, (Norway scored number one on the World Bank's Governance Index) no hanky-panky in the banking and housing sectors, currency reserves galore, and as a result a currency as solid as a rock and with good future prospects against many of the other world currencies now running their printing presses at full steam.
(Norwegians - to their credit- voted to stay out of the EU and of course also the Euro, though they have nearly all of the trading and other benefits)
In addition Norway is also very near an oil and gas hungry mainland Europe. Just as Canada is near an oil and gas hungry U.S.A. So nearby and safe markets are guaranteed "forever"
or at least until the gigantic sub-sea reservoirs run dry. (another 50 years or so at current production levels, not counting enhanced recovery)
And who would you think Europeans might consider a more reliable supplier for those lucrative long-term gas contracts, Norway... or Russia via the Ukraine?
Statoil is now trading at $17.35 (the ADR) so its yield is only 4.71% at the moment. I was lucky enough to catch it at 14 so my yield is closer to 7%. But even at $17/share it's still a bargain since its share price over the past three or four years has hovered around 30.
And of course just as soon as Oil goes back up to even only 70/ barrel (not to mention probably about 200 in five years) Statoil stock will go way up.
And I think much more rapidly and dramatically than that of some of the bigger oil companies which are dragged down by their sheer size and also continually have to go out to look for more oil in places where they have all sorts of country risk in their exploration and producing operations. (e.g. ENI, BP, Total and Shell)
For instance, would you rather go looking for more oil and gas in North Norway among reindeers and polar bears (salmon and cod to be more precise)....or among some of the really wild fauna (and I don't mean lions) in the Niger Delta?
Of course some of the Canadian energy trusts mentioned earlier by the author carry significantly bigger yields. But they are also much smaller operations and mainly in selected areas of Alberta. I think Statoil is a very good compromise between the huge oil majors and such smaller Canadian plays, which is why I decided to buy some.
Dividendgrowthinvestor - I am a big fan of your blog and from the list of ticker symbols you provided, I like PM more than MO due to less hostile legal climate abroad than in the US. Incidentally, PM, which operates outside of the US, is a good hedge against the falling dollar relative to other currencies.
I have enjoyed your articles but think that inflation may be more of a threat to certain MLPs like KMP and EPD that do not hold natural resources and don't directly benefit from rises in commodities.
I hold both, but am not sure that they are as good a hedge against inflation as they might initially seem. Aren't they limited in how much they can raise their rates?
Once inflation kicks in, the yields might look as enticing.
Sam
On Mar 16 11:33 AM Boubou wrote:
>
> Quantumonline.com is a fantastic source for preferreds and all other
> exchange traded debt stuff.
>
> This series has been really usefull - the most directly useful I
> have seen.. Thankyou.
On Mar 16 12:38 PM oilsands wrote:
> Thanks for the series.
>
> I second Boubou's mention of quantumonline as a valuable source.
> Likewise, there is a TSX site.
>
On Mar 23 12:03 PM SamuelB wrote:
> Cliff -
> I have enjoyed your articles but think that inflation may be more
> of a threat to certain MLPs like KMP and EPD that do not hold natural
> resources and don't directly benefit from rises in commodities.<br/>
>
> I hold both, but am not sure that they are as good a hedge against
> inflation as they might initially seem. Aren't they limited in how
> much they can raise their rates?
>
> Once inflation kicks in, the yields might look as enticing.
>
> Sam
>
1. the dividends themselves are not an inflation hedge per se, though obviously getting cash up front limits or eliminates the erosion of principle, which is what happens with growth stocks when their price appreciation doesn't keep pace with inflation and taxes (currently the state of almost the entire market).
2. I try to stick to companies that can grow AND pay dividends that actually leave you some income after inflation and taxes. The goal of any rational income investor in stocks is to avoid companies with unsustainable payout ratios or debt levels, and ideally get better appreciation prospects than with other fixed income instruments. As long as the dividend is high and sustainable, I'm less concerned about growth rates.
Even with great fundamentals, stock prices usually follow the market, thus growth stocks are ultimately a bet on the overall market. Not a bet I'd make in the near term, though one to consider for long term hold. However, there are enough growing companies that will pay me up front while I wait.
3. Nothing wrong with no dividend or low dividend growth stocks as long as you are able to wait and able to sell at the right time. Most people, however, are not good at timing markets, and better off with long term holding and getting steady income in the process.
4. Many mature businesses are not easily given to high growth rates, but do have steady revenue streams, and use this to attract investors via dividends. The growth model doesn't suit them, and at times shouldn't be tried. Remember all the utilities that got in trouble by straying from their core businesses in order to grow. Far better that essential service providers limit risk in order to continue providing that service. We may well see that happen with banking, which is too essential to allow management to risk financial health for higher growth.
I'm interested to hear your thoughts. Cliff
On Mar 17 10:44 AM Chris B wrote:
> I'm not sure why dividends should be considered an inflation or deflation
> hedge. After all, dividends are just a partial return of investors'
> capital. For every $1M a company pays in dividends, the assets claimed
> by shareholders decreases by $1M. You could acheive the same effect
> by periodically withdrawing small amounts of money from your own
> interest-bearing bank account. However, this action does nothing
> to hedge against inflation or deflation.
>
> Secondly, in the event of a recovery, which companies can we expect
> to grow faster, exploit opportunities, develop new revenue streams,
> and take market share? (a) companies that are flush with cash or
> (b) companies that have reduced their cash by paying dividends? More
> concerning are companies that are taking on high-interest debt while
> paying dividends. Many of these firms will emerge into the recovery
> short on cash and highly indebted. Their future growth, and their
> shareholders' stake in the recovery will be impaired.
>
> This strategy is the equivalent of borrowing money from the bank
> at 8% to put into a savings account yielding 3% so that you can withdraw
> 5% of your money per year from that account! You don't have to hire
> a CPA to see the folly of that plan. Now examine your dividend stocks.
> What's the interest rate on their debt, and would investors get more
> value out of paying that debt off or receiving a partial liquidation
> of their cash assets (a dividend)? What opportunities are they missing
> out on by lowering their available cash?
On Mar 17 11:47 AM JET1C wrote:
> I'm a little suprised that no one has mentioned Oil and Gas Trusts
> for income. My retirement plan has, for some years, been to invest
> in hi-yield issues and I have found that Trusts are an excellent
> source. Now that I have retired, my plan is working very well, even
> in this recession market time.
>
> Try this plan:
> Take your social security for both you and your wife, add any retirement
> that you might have coming from your working years and your should
> be nearly up to half of your pre-retirement income. To maximize the
> benefit, work to full retirement (67) if possible.
> All of us being investors in this forum, I will assume that everyone
> will have a nest egg to work with when we reach retirement age. Invest
> your nest egg in Hi Div stocks from all sources, and I don't mean
> the hi div's that the "advisers" talk about. You know, like 0.5%
> or maybe even 1.3% (those guys drive me nuts). Look in the industrial
> sectors, natural resources or utililties, something that pays more
> than the 4 - 5% recommended that you withdraw from your IRA each
> year. It isn't really very hard to get more than the 4 - 5% and this
> will filling the remainder of your required income for retirement.
> Check out Harry Domash's Dividend Detective website for a starter
> in your search for Hi Dividends.
> Now, of course, this advise is for the working stiff, not the CEO's
> among us and certainly not the Madoff's of the world. Study hard
> and be careful. Happy and prosperous retirement.
On Mar 17 12:58 PM max12345 wrote:
> Another great Oil play is the Norwegian State Oil company Statoil
> (seekingalpha.com/symbo...) It's a very well managed company
> (and I know also from direct experience because I worked in the oil
> sector in Norway for many years) and most of its very considerable
> oil and gas reserves are right off-shore Norway....though the company
> is also active internationally.
>
> And Norway offers some of the same superior country characteristics
> and "risk" (i.e. non-risk) offered by Canada and Australia; that
> is, a very well managed economy, a very democratic state, (Norway
> scored number one on the World Bank's Governance Index) no hanky-panky
> in the banking and housing sectors, currency reserves galore, and
> as a result a currency as solid as a rock and with good future prospects
> against many of the other world currencies now running their printing
> presses at full steam.
>
> (Norwegians - to their credit- voted to stay out of the EU and of
> course also the Euro, though they have nearly all of the trading
> and other benefits)
>
> In addition Norway is also very near an oil and gas hungry mainland
> Europe. Just as Canada is near an oil and gas hungry U.S.A. So nearby
> and safe markets are guaranteed "forever"
> or at least until the gigantic sub-sea reservoirs run dry. (another
> 50 years or so at current production levels, not counting enhanced
> recovery)
>
> And who would you think Europeans might consider a more reliable
> supplier for those lucrative long-term gas contracts, Norway... or
> Russia via the Ukraine?
>
> Statoil is now trading at $17.35 (the ADR) so its yield is only 4.71%
> at the moment. I was lucky enough to catch it at 14 so my yield is
> closer to 7%. But even at $17/share it's still a bargain since its
> share price over the past three or four years has hovered around
> 30.
>
> And of course just as soon as Oil goes back up to even only 70/ barrel
> (not to mention probably about 200 in five years) Statoil stock will
> go way up.
>
> And I think much more rapidly and dramatically than that of some
> of the bigger oil companies which are dragged down by their sheer
> size and also continually have to go out to look for more oil in
> places where they have all sorts of country risk in their exploration
> and producing operations. (e.g. ENI, BP, Total and Shell)
>
> For instance, would you rather go looking for more oil and gas in
> North Norway among reindeers and polar bears (salmon and cod to be
> more precise)....or among some of the really wild fauna (and I don't
> mean lions) in the Niger Delta?
>
> Of course some of the Canadian energy trusts mentioned earlier by
> the author carry significantly bigger yields. But they are also much
> smaller operations and mainly in selected areas of Alberta. I think
> Statoil is a very good compromise between the huge oil majors and
> such smaller Canadian plays, which is why I decided to buy some.
>
>
On Mar 21 06:20 PM docmike wrote:
> ChrisB - dividends paid in foreign currency then converted into USD
> seem like a decent hedge for a fall of the dollar against those currencies.
> Additionally, earnings of companies that sell commodities are protected
> against inflation since their product will command a higher price,
> so stocks of these companies also seem a good hedge against inflation.
>
>
> Dividendgrowthinvestor - I am a big fan of your blog and from the
> list of ticker symbols you provided, I like PM more than MO due to
> less hostile legal climate abroad than in the US. Incidentally, PM,
> which operates outside of the US, is a good hedge against the falling
> dollar relative to other currencies.
On Mar 17 09:09 AM prudentinvestor wrote:
> Cliff, I am confused by the prices you quoted as entry points for
> FTE and TEF, as they are inconsistent with the prices of their ADR's.
> I've owned both for many years due to their excellent dividends.
>
>
> I added recently more FTE @22 (for the ADR). You recommend buying
> it @14/12, which I agree would be a great price, but the 52-week
> range is 21-36 and I'd be very surprised if it gets down to 14.<br/>
>
> You recommend buying TEF @ 14/12, but its 52 week range is 47-93
> (for the ADR). I have been looking to expand my holding in it, but
> frankly I think it is expensive. I would not buy more unless it dropped
> below $40.
>
> Regarding BP, another issue that I have owned for years and added
> to recently, I am less confident than you about their dividend, and
> would not be too surprised if it were reduced if oil continues to
> slump for a while. I believe the stock price slump suggests that
> others have similar expectations.
What's certain, though, is that you've got their dividend policy wrong. Their September payout of 0.60 euro is a result of them deciding to *add* to the frequency of their payout, not a dividend cut of more than half as you said. Their June '08 payout based on '07 performance was 1.30 euro and the 0.60 euro September payout was based on first-half '08 performance. For the June '09 payout, they've already announced an increase to 1.40 euro based on '08 performance and will later decided what to do with the September '09 payout based on first-half '09 performance. If they maintain it at 0.60 euro, that's an annual total of 2 euro and representative of a 12.25% yield based on the Friday closing price of 16.32 euro.
Please visit www.francetelecom.com/... to read their policy.
Secondly, I like CEL as well (bought 5000 shares at 21.25). Excellent economics, good dividend, excellent cashflow. A very good investment with a good benefit/risk ratio.
By the way, I do like the MRLPs as well. These include the pipelines and ARLP as well. I think coal will be a long term winner. Its economics will overcome the global warming hype.