Seeking Alpha

F.A.S.T. Graphs

 
View as an RSS Feed
View F.A.S.T. Graphs' Comments BY TICKER:
Latest  |  Highest rated
  • F.A.S.T. Fundamentals On CSX Corp. [View article]
    snoopy, thanks for your comment. We would generally characterize CSX, as we often do, as "worthy of further research." That is, from a quick glance (one article) it appears to be a reasonable investment option but we would always advocate completing one's own due diligence. F.A.S.T. Graphs is a "tool to think with" and not an absolute.

    With regard to dividend growth, we were merely pointing out that railroads often have large and reoccurring capital expenses. As such, despite the payout ratio being on the lower end of the spectrum, you might not expect much payout expansion. Instead, dividend growth in line with earnings growth over the long-term may be a prudent expectation.
    Jun 26 10:27 AM | Likes Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    Robert, thanks for your follow up message.

    Here's all we're suggesting: using a 7% expected compound growth rate is not the same as requiring a minimum 7% increase. As such, for a long-term investor not living off the income, when making a rational forecast one need not limit themselves in such a way. Thus the fact that only 3 companies raised their payouts by at least 7% for at last 22 years isn't necessarily telling. The important part is whether or not it's reasonable to make an assumption about average compound growth.
    Jun 19 01:16 PM | Likes Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    Robert, thanks for your comment and resource. We agree with your underlying message: sustained growth is difficult to both achieve and predict. Most to this point, 2 of the 3 companies you site - WMT & PG - "only" increased their payouts by 2.128% and 6.999% this year, potentially dropping them out of future contention in this category (depending on how you tally the increases).

    However, we would like to make an important note. Raising the dividend by at least 7% a year is a more stringent qualification than increasing a company's payout by a 7% compound rate. In the latter the increases could jump around quite a bit (5%, 18.2%, 4.8%, 20%, etc.) and still meet the end income mark. It is true that the compound increase will be lower than the average increase. Yet keep in mind that many would much prefer a long-term compound growth rate of say 8% over constant 7% increases, even if that means having a few payout increases below an arbitrary threshold.
    Jun 19 12:27 PM | 2 Likes Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    woodworker, thanks for your comment.

    Your emphasis on inflation is important. However, keep in mind that initial payout has a large impact as well. For instance, you could have a 0.5% yield that trounces inflation every year but would still lose out on an income basis to something like T. Obviously KO / PG and those types of companies have higher payouts, but the concept still holds. Its important to underscore that while you might expect KO to beat T on a nominal basis in 20-30 years this is in no way guaranteed.

    With respect to "anemic" growth, we tend to agree - T has been increasing its payout by just a penny per quarter for the last 6 years and thus the rate of growth is continuing to slow. Yet again, this is less worrisome with a 5%+ yield as it would be with say a 2 or 3% yield. High yield can make up for low growth.

    In regards to the business model, this is certainly a legitimate concern and should always be well monitored. No matter how high the yield, you want sustainability. Thanks for reading!
    Jun 19 09:55 AM | 2 Likes Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    king, thanks for your comment. If history is any guide, your stability idea is effectively on par. Thanks for reading!
    Jun 19 09:23 AM | Likes Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    Aaron, thanks for your message and kind words.

    However, keep in mind that the statement you referred to is simply indicating possible math and not an absolute. Said differently, anything could happen in the future. While its possible that KO and PG provide more nominal income in 22 years, this is in no way guaranteed. Moreover, even if this comes to fruition, it still might be the case that T provides more income via the early reinvestment of larger payouts. Our advice is to simply do the math, come to it with rational (if not understated) expectations and determine a path going forward. As you note, it doesn't have to be an "either or" game. Many investors are perfectly happy by owning a combination of varying yield and expected growth securities.
    Jun 19 09:18 AM | 1 Like Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    Mike, thanks for a good comment. We believe your approach is quite reasonable. Why choose when you own them all?
    Jun 19 09:15 AM | 1 Like Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    romilar, thank you for your very kind comment. There's plenty of words to go around :) We could ask for no greater compliment. Thanks for reading!
    Jun 19 09:14 AM | 1 Like Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    whereis, thanks for your comment. The short answers to your questions are: no, no and yes. More specifically, the difference in SG&A appears to be mostly derived from actuarial charges. On a forward looking basis analysts are expecting net income in the $14 billion range with shares outstanding hovering around 5.3 billion. That equates to earnings in the $2.60 - $2.70 range, plus a little bit of growth moving forward. In other words, we believe the estimates provided in the article above are reasonable approximations. Obviously this could change quickly, but presently we find the expectations sensible based on the knowledge on hand.
    Jun 19 09:12 AM | 1 Like Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    cem1976, thanks for your comment. While we agree that T is a reasonable place to begin one's due diligence, keep in mind that everyone has different objectives and goals. For instance, if you are looking to invest in a taxable account, for a long-term horizon and is weary of the tax effect, companies that pay lower or no dividends could be more attractive to you.
    Jun 19 09:03 AM | 2 Likes Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    crazty4tennis, thanks for your message and kind words. We agree - the graphs truly illuminate the story. Thanks for reading!
    Jun 19 09:01 AM | Likes Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    harris, thank you for reading and your kind words.
    Jun 19 09:00 AM | Likes Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    nikeherc, thanks for your message. We agree, the thesis for the industry is apparent and expect AT&T to continue to deliver. However, also keep in mind that this doesn't automatically translate to increased business for T. The company still has to go out and earn it.
    Jun 19 08:59 AM | 2 Likes Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    mjb0909, thanks for your comment. Your first and third points (higher yield and ability to grow) carry weight. However, keep in mind that the dividend certainly isn't as safe. Despite T having not only paid but also increased its payout for 30 straight years, you must always keep in mind that it is possible the dividend will be frozen, cut or suspended.
    Jun 19 08:57 AM | 2 Likes Like |Link to Comment
  • AT&T: Compelling Even Without Growth [View article]
    motto, thanks for your comment. As indicated in the disclosure section, we are long T. Good luck to you as well!
    Jun 19 08:55 AM | 4 Likes Like |Link to Comment
COMMENTS STATS
198 Comments
202 Likes