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  • Dividend Increases: 6 More Companies Buck the Trend [View article]
    Asquared,

    You are correct.
    Jan 30, 2009. 04:30 AM | Likes Like |Link to Comment
  • Using Tax Loss Harvesting to Find Dividend Bargains [View article]
    Gina,

    I prefer investing in individual dividend stocks instead of purchasing dividend ETFs or mutual funds.

    www.dividendgrowthinve...

    Some investors feel better to take charge of their own financial future by buying stocks directly while others seek advice from a professional investment adviser. I am not an investment adviser so I cannot give you personalized advice. Even if I were, it would be difficult to answer your question without knowing the whole financial picture,affecting your life.

    Best Regards,

    Dividend Growth Investor
    Jan 29, 2009. 05:52 AM | 1 Like Like |Link to Comment
  • When to Sell Dividend Stocks [View article]
    Chris,

    1) I focus most of my attention on the Dividend Aristocrats, achievers and champions. I wouldn't say they are more risky than other stocks. I don't chase yield, I am mostly following a balanced yield/dividend growth approach. If the whole stock market falls by 40% in 2009 I would probably lose money as well however. I would never purchase a stock that hasn't had at least an uninterrupted ten years of consecutive dividend increases, although i am mostly interested in stocks that have raised payments for over 25 yrs. Thus i wouldn't have bought GM.

    2) I do own GE stock, but after they announced a dividend freeze I am not buying more stock there and buying other stocks with the dividends in receive. I wouldn't buy GS because it doesn't fit my entry criteria.

    3) When I posted a bearish article on BAC on seeking alpha in july saying that I don't think dividend is well covered, someone told me how foolish I was to be waiting for the payout ratio to decrease so that the div is well covered. They told me that I would be a buyer when BAC is back over 40. I don't really mind paying a higher price for a stock that could show some resilience in revenues/growth and dividends over time. I don't like cyclical stocks. I do realize that my strategy leads to a higher exposure to consumer names however.

    4) Not all companies cut their dividends in this tough environment. In fact most of the dividend aristocrats in 2008 either increased or maintained their payments in 2008. I am looking for rising dividend income. If a company has a strong business model which has enabled it to increase dividends for more than 10 or 25 consecutive years, then chances are it will keep raising them. I do try to be diversified accross sectors and dollar cost average however.

    5) Lehman was buying millions in stock in 2008 at an avg price of $40. The price was pretty low. I would much rather have the company send ME the cash than the company deciding it wants to do it for me ( buy back stock). I do like moderation however- XOM does both stock buybacks and dividend increases. Actually most companies "conserving cash" now are the ones which are too leveraged and without cutting their dividends they know they will go belly up. The dividend payment is not their main issue - it is reckless management that used a lot of leverage in order to get big quick and get a larger bonus.


    On Jan 06 02:03 PM Chris B wrote:

    > 1) What will you buy after you sell? Riskier companies? Companies
    > that have not yet announced dividend cuts, but soon will? Companies
    > that are financing their dividends with interest-bearing debt (like
    > GM did for years)? Companies that will be bankrupt in 6 months because
    > they are spending their last cash on dividends to the benefit of
    > insiders? Companies that are mostly interested in pumping up their
    > own stock price in the short term? Yield chasing could be dangerous
    > at a time like this. More responsible companies cut their dividends
    > in severe recessions.
    >
    > 2) Are you giving your money to GE or GS so they can pay Warren Buffet
    > 10% of it and give you back what is left? If a company you own has
    > a choice of borrowing $100M at 8-10% interest to pay a dividend or
    > cutting the dividend, which option would deliver more value to your
    > company? Can you earn 8-10% on your dividend with absolute certainty?
    > Again, GM paid a decade of dividends out of ever-mounting debt. Despite
    > those dividends, shareholders never did get their investment back
    > and never will.
    >
    > 3) Do you have a flip side to this strategy of buying companies you
    > suspect will soon raise their dividend? If not, you'll always be
    > buying and selling after the announcements, resulting in losses of
    > value. Companies won't restore their dividends until the recession
    > is well over. By then you'll be paying double the price for many
    > of them.
    >
    > 4) How can you be sure that the post-dividend-cut underperformance
    > of these companies was caused by the dividend cut and not by... I
    > don't know... the recession perhaps? Massive reductions in earnings?
    > Assets gone sour? Risk of bankruptcy? Which is the cause and which
    > is the effect?
    >
    > 5) What if the company altered its strategy and is using capital
    > for share buy-backs instead of dividends? This would be a smart move
    > right now, with so many solid companies out there priced with single-digit
    > PE's and below book value. Would you sell low when the company is
    > buying out its other owners at 5 year lows? The same argument could
    > be made for companies that are using their capital to buy underpriced
    > business assets such as ships, oil leases, real estate, transport
    > contracts, and competitors instead of sending out a dividend just
    > to pump up their stock price.
    >
    Jan 6, 2009. 10:09 PM | 1 Like Like |Link to Comment
  • When to Sell Dividend Stocks [View article]
    The problem with a dividend cut is that the current yield looks exceptionally good, but it is the yield on cost that is cut. For BAC if you bought it at 50 your yield on cost dropped from just over 5% to 2.5%. Once a company cut its dividend once, what stops it from cutting again? Some stocks like KEY or Citi cut their payment twice. Others completely eliminated it. The investors who held the stock after the cut were HOPING that the worst is over. In investing, the worst thing you could do is to hope - you have to decide your pain point and sell and have a clear mind.

    As for BAC or Citi, i would much rather sell ( I never owned any) after a dividend cut and end up with something left, instead of hoping it will go up someday or that I should invest in something that should be generating a 10% current dividend yield just to maintain my dividend income.

    Now if BAC and Citi were to resume increasing their dividends and I believed that there is a strong fundamental ability in their business models to support such a move, I would gladly buy back as soon as the stocks are not too expensive. If the dividend increases could be supported from the business, then I should be ok in the long run.

    I don't consider selling when there is a doubt that a dividend will be cut, because I doubt that anyone can predict what will happen with above average certainty.

    Jan 6, 2009. 01:25 PM | 1 Like Like |Link to Comment
  • Four Stocks for 2009 [View article]
    Thanks for the link to the Best High Yield Stocks for 2009!
    Jan 2, 2009. 12:34 PM | Likes Like |Link to Comment
  • Best High Yield Dividend Stocks for 2009 [View article]
    Bassetti,

    I have never seen any stock that is not risky. The riskiest stock of the four is Realty Income. KMP and ED are pretty much utility like investments, while PM should do fine in a crisis, as smokers find it tough to quit and the tough life makes more people smoke.
    Dec 30, 2008. 03:21 PM | 1 Like Like |Link to Comment
  • 4 Major Corporations Increasing Dividends [View article]
    50% or less payout ratio, or if over not too over its 10 year average

    3% dividend yield

    At least 5% dividend growth

    Consecutive increases for 25 years in a row ( or 10 years but that would be a reduced position most probably)

    On Dec 23 08:51 AM BlueOkie wrote:

    > What is your entry criteria?
    Dec 23, 2008. 06:20 PM | 1 Like Like |Link to Comment
  • Dividend Paying Stocks: You Only Have to Be Lucky Once [View article]
    Devin,

    That's a great original and thought provoking article. Without dividends, stock markets do look like a giant ponzi scheme, where the greater foll theory is in full effect. With dividends and reinvestment however, stock market look like a sound investing practice for long-term wealth accumulation.
    Dec 22, 2008. 07:19 PM | Likes Like |Link to Comment
  • High Yields with REITs and Junk Bond Funds [View article]
    I am fine with having an exposure to REITs. Do not count on REITs paying you a 20% yield however - most of them pay out all of their earnings plus depreciation expense as dividends.. So in order to grow they keep selling stock and bonds.. In the current credit market freeze.. Bonds are tougher to sell. Then they could sell stock, yielding 20%, which sounds like a very high cost of capital..
    Dec 22, 2008. 07:17 PM | 1 Like Like |Link to Comment
  • The Dogs of the Dow Can Keep You Out of the Doghouse [View article]
    Didn't Dogs of the Dow significantly underperform major indexes by 20% in 2008?

    The only period for which Dogs of the Dow made any more money than a simple buy and hold index funds strategy, was when the DOD strategy was being backtested.
    Dec 11, 2008. 01:57 PM | Likes Like |Link to Comment
  • Why Would Anyone Buy T-Bills at 0%? [View article]
    I wonder if there are alternatives to large companies to open hundreds of CD's in hundreds of Banks instead of purchasing 0% yielding products..
    Dec 11, 2008. 01:53 PM | 1 Like Like |Link to Comment
  • Five Solid Dividend Companies [View article]
    That's a very good article D4L. I need to look into TEG, I have ED as an alternative.
    Dec 11, 2008. 01:48 PM | Likes Like |Link to Comment
  • Altria: One of the Best Run Companies [View article]
    I own MO as I like the company and its ability to increase dividends and buy back stock consistently. The current MO however is different than the Altria that Siegel discusses, as it doesn't include international operations. However If you also own PM you should do just fine ( I own that one too)

    The high payout for MO is a warning sign.. The thing however is that the tobacco industry is in a decline and there should be little in capital investment for the future. Furthermore the company doesn't have a lot of options to reinvest in its business other than acquisitons..
    Dec 10, 2008. 10:55 AM | Likes Like |Link to Comment
  • Playing the Auto Bailout With Yields as High as 45% [View article]
    The securities do yield a lot.. But buying them just because they yield so much is not a reason to enter a position. I view them more as a long-term investment. In the worst possible situation you will get equity in the "new" GM and "new" Ford, and this equity will have much more appreciation potential than the current one.
    Dec 10, 2008. 10:46 AM | 1 Like Like |Link to Comment
  • My Take on Year End Investing [View article]
    The funds definitely make it easy for you during tax time, as they report it in a 1099, as opposed to K1.
    Dec 9, 2008. 02:38 PM | 2 Likes Like |Link to Comment
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