Dividend Growth Investor

Good Debt Coverage for Sustainable Dividends

LTW,

Did you actually read the article?

Here are some highlights for you:

Some investors typically focus on debt to total assets to gain a perspective on the amount of the leverage the company has. While this method is widely accepted by some investors, I believe that it has some shortcomings, which might prevent investors from seeing the bigger picture. Most importantly comparing debt to total assets does not tell whether a company could service its debt obligations or not.


Dividend investors should generally look for a higher coverage ratio of interest payments. A lower coverage indicates that a decline in earnings could generally make it difficult for the company to service its debt, which could not only jeopardize its dividend payments but also could lead to bankruptcy down the road.


On Oct 14 09:27 PM long term wag holder wrote:

> I don'tunderstand this article. I understand a lot about debt, but
> the numbers in this chart are not explained very well

These 47 S&P 500 Dividend Aristocrats Are Good Investment Opportunities

THofler,

Most Aristocrats would generate very good inflation adjusted streams of dividend income. For example some investors who purchased JNJ, PG, MCD, MO 15-20 years ago are now generating double digit yields on cost. MLPs are great for now, but what happens if the US government decides to abolish the MLP structure ( just like the canadian government decided to abolish the income tax structure iby 2011)? chances are yields on MLPs would drop..

In addition to that, when interest rates start increasing,MLPs might be affected negatively in the process.


On Jul 15 11:40 PM THofler wrote:

> I happily own 4 of the above, as well as a few Master Limited Partnerships.
> The more I learn about the MLPs the more I wonder why I should own
> anything else? They are tax advantaged & pay high distribution
> yields. Check out the info at the web site below, especially the
> presentations and publications page,
>
> naptp.org
>
> Why own the aristocrats? For diversification, of course, since MLPs
> are entirely in the energy space.
>
> I also like most any foreign high dividend stock with a good future.
> Since the dollar has recovered some of its value in the FX markets
> in recent months, now is a good time to move some of one's portfolio
> out of the dollar and into these foreign stocks ahead of the next
> dollar decline. I like the Euro integrated oils (BP, E, TOT) and
> recently picked up some of the Brazilian utility CPFL Energia (seekingalpha.com/symbo...).

These 47 S&P 500 Dividend Aristocrats Are Good Investment Opportunities

Avy,

There are several companies on your " list", which have cut dividends in 2009 several months ago.Ganett (GCI) and Legg Mason (LM) are such examples.

Rohm and Haas(ROH) which is also on your list, has been bought out by Dow Chemical several months ago as well.

Check these articles below for an up-to date list of the dividend aristocrats to avoid in 2009:

www.dividendgrowthinve...

www.dividendgrowthinve...

Best Regards,

Dividend Growth Investor

22 Companies with Dividends on Death Row

Alan,

How many of the companies that you have cited in your list have increased dividends for more than 10 years? How many have increased their dividends for more than 25 years?
Are dividends from all industries at risk, or are the cuts concentrated mainly in one/two sectors?

Are the companies about to cut having wide moats and strong brands, or are they cyclical or discretionary item?

My take:

www.dividendgrowthinve...

Dividend Aristocrats Handily Outperforming Main Indexes in 2008

Great resource David!
It's great to see that dividends are cushioning the losses for investors this year. To everyone else who believes that this is a short term phenomenon, please check this link out:

dividendgrowth.blogspo...

The 20 Highest Yielding Dividend Aristocrats

Stewie,

It seems to me like you are still overanalysing what I have said and putting words in my mouth without fully understanding what I am talking about. I don't think I have mislead any investors in anything. I simply showed a list of stocks. What you are asking me to do, is put 1000 disclaimers covering 1000's of possible scenarios for a post that has less than 500 words. I think that at the end of the day, you need to have a little bit of common sense when interpreting information that you read.

Example - I never mentioned that I owned KEY or FITB. I also never specifically recommended buying any of the stocks in the list.
Yet I was asked how this worked out for me ( pretty well actually). I did give Stewie partial credit for finding out that TRADING bonds could give someone capital gains/losses. Yet he still didn't understand that I am referring to long-term investing, as opposed to short-term trading. etc..

In your rebuttal on capital gains on bonds, you mentioned ABS and MBS. I am not going however to falsely assume that you own them, simply because you mentioned them. Or should I?
How have those investments performed for you Stewie? I hope you haven't lost any money on them.

By the way Stewie, I am willing to reimburse you for the losses that you have suffered in the stocks in the list above from the profits that I earned from publishing this article. Please send me scanned copies with your actual trading transactions history in the abovementioned stocks from June 12, 2008. If they are also legally verified, I would be even happier. My e-mail is dividendgrowthinvestor at gmail dot com.

This is the last message that I am going to write on this particular message board. Unfortunately It is not cost effective for me to answer to every single confrontation. I realize that different people are going to have different opinions on everything. If you have 10 investors, you will definitely have more than 10 likely investment predictions. That's what makes the market tick on daily basis.

Good Luck to everyone!

D.S.

PS I always found ihttp://investopedia.com helpful in finding what different abreviations such as DPR ( Dividend Payout Ratio) mean.

The 20 Highest Yielding Dividend Aristocrats

Actually you are partially correct that bonds/fixed income could provide you with capital gains. The size of the bond market versus the stock market is irrelevant. However, longer-term passive bond investors ( people holding till maturity) do not really get much in capital gains.

The 20 Highest Yielding Dividend Aristocrats

Stewie,

I know what I am talking about. Good luck in your investments. I hope that you are better at investing than reading or spelling.

PS. I check my disclosure.

The 20 Highest Yielding Dividend Aristocrats

I want to ask all the critics above: Which part of "This portfolio is just for illustrative purposes only, however" didn't you understand?

It's really easy to criticise and to put words in one's mouth especially when you are anonymous.

I challenge you ( Stewie and MajorG) to publish any article using your real name on the internet or in a newspaper. Something constructive and brilliant.

By the way Stewie, try telling your clients that you are going to invest in bonds for the capital gains, and they will look at you as if you are coming from the woords.

Oh yeah MajorG, i didn't know that CPA's ONLY check tax returns? In addition to challenging you to write an article on Seeking Alpha I also challenge you in finding a third grader who will write any article on stock investing on his/her own.

I do realize that this list is not a comprehensive list. It wasn't intended to be. It's just a starting point.
Investing is not a black and white process. What has worked in the past might not work in the future. What might work for me, might not work for everybody else. But if you pick enough bits and pieces, then you can construct a pretty good picture and then make your own decision.

If you have read any of my previous articles, you'd have seen that I don't like purchasing stocks with DPR which is too much above 50%.