Could someone pls tell me the tax rate an US investor faces when he receives dividends from MO and from PM. I think US investors always pay the same tax rate and PM being an 80/20 company gives US investors NO advantage. Is it 15% flat or is it also linked to your other income ? And is it that if you hold the stock in your retirement account then you can use the dividend for more purchases and Zero dividend income tax applies? Looking forward to your responses.
Thanks so much for mentioning this, Yebrevo. I live in Asia and don't not know much about US gov's. tax plans. But it affects me as I hold US stocks and there is no tax treaty between the US and where I live. So it's 30% for me with the exception of dividends paid by "80/20 companies", such as PM, see my article.
First Solar: Buy When Blood's In The Street And Fade Everything Else [View article]
why I agree with part of your headline "Buy When Blood's In The Street" I doubt whether I should sell the winners just to generate cash. I would rather sell the losers at a reasonable loss and stick with the winners such as PM, which you list here, and which is a high paying dividend stocks. So PM's stock price does not really pertain me. Moreover, I hope you can agree that it is impossible to time the market. Market timing is even more difficult with PM's stock, as the company constantly has buybacks, the budget for 2012 is six billion, basically no matter what price.
Philip Morris Is Overbought - Wait For A Pullback [View article]
as I said in my article, all sources I have reviewed for 2011 mention approx. 2.4 trilion, e.g. The Economist, CNTC itself (!) and PM in its CAGNY presentation, being little high with 2.5 trillion.
If you mention numbers from other sources, name us the documents, not only "Goldman Sachs", that's too vague. The documents I refer to you will find at the end of my article.
And I doubt GS knows the market better than China Nationa Tobacco Corporation
But you have made a good point, PM mentions China and indicates good prospects in the long term ( see CAGNYpresentation ). That is quite bold. Unless long term means in 20 years from now.
Anyway, back to the topic, pullback has not happened, perhaps PM is buying back its stock.
Recent Performance Review for 6 Dividend-Paying Cigarette Producers [View article]
Zvi - I appreciate your hard work but personally I feel it might be better to take PM's first trading day 3/31/2008 as starting point, and to include dividends. You will find that PM is up 87% and MO up 61% since, as of last Friday's closing date. KO and Nestle a meager 25%. The latter two I might diworsefy into, just in case. Long PM. MO
Philip Morris Is Overbought - Wait For A Pullback [View article]
ha, first you say 1.5 trillion then generously add 0.2 to make it 1.7 trillion, yet you don't even cite a single source where you got your numbers from. What's more, your tell me my numbers are incorrect, I guess you refer to my instablog.
What are your numbers based on ? Is there any research behind ? You don't elaborate on that.....
PLease read through industry journals or look at PM's CAGNY 2012 presentation. Even with your 1.7 trillion guess you still missed the correct number by several hundred billion cigs.
But I appreciate that we have arrived at the same conclusion, PMI needs way more time in China. Personally, I think the 5-10 years you mention are way too optimistic. I tend to look at other markets and draw analogies from it.
Philip Morris Is Overbought - Wait For A Pullback [View article]
I am sorry, I am not talking about "initial cost" for any particular project. instead, I am talking about the cost of capital, i.e. how much do they have to pay for each $$ they borrow. both debt bonds and stocks circulating in the stock market cost them money
Philip Morris Is Overbought - Wait For A Pullback [View article]
"Historical and current PE:"
keep in mind that PM faced a higher capital cost in 2008. Recently, the FED "guaranteed" that the low interest environment will last until 2013. That means PM can issue debt bonds with relatively low interested yields and keep buying back stocks with the proceeds. ( In addition to the monster cash from its operations )
Thus reducing capital cost ( as yield on debt bonds is lower than dividend payments ) and at the same time increasing EPS ( as the amount of shares issued shrinks ). Now if EPS rises but PM's stock price remains constant, PE sinks. Consequently, if PE remains at the current level, stock price rises.
In short, what PM does is a partly debt financed EPS increase scheme that has a positive effect on the stock price.
Look into PM's CAGNY 2012 presentation for few more details on capital cost. Also feel free to look up one of my earlier comments on this.
Accumulating Dividend Stocks Is A Long-Term Process [View article]
Thanks for writing this article, you bring up a very important topic.
"...they figured that the stock has increased too fast, and thus waited for a dip before adding to their positions. "
I almost made the same mistake when waiting for a buying opportunity to increase my PM holdings. I was hoping PM would see $60 again.
Fortunately, I had read the book "Only The Paranoid Survive" by Andrew Grove, in which he stresses the importance of not being emotionally invested in the past. So I bought at $68 two dividend quarters ago because PM was trading under the value I had assigned,i.e. 4% net dividend return = $75.50 for my tax set-up.
Philip Morris Continues To Burn Hot [View article]
I am sorry, but all you say here about China and PMI's prospects in China is inaccurate and it proves that you have absolutely no clue about the Chinese cigarette market.
btw, if you would like to know where fake Marlboro come from, click here : http://bit.ly/yykrOL
Transnational Tobacco Companies (TTCs) In China [View instapost]
Thanks so much to all of you for your positive feedback !
Although we can't invest in CNTC, I think CNTC still does any investor in foreign cigarette stocks a big favour as they increase consumption. Apart from the expensive premium brands which make nice gifts, cigarettes in China are dirt cheap and a basic consumer staple. I am sure TTCs will benefit from that some day in future.
When Can You Retire On Dividends? [View article]
I think US investors always pay the same tax rate and PM being an 80/20 company gives US investors NO advantage.
Is it 15% flat or is it also linked to your other income ?
And is it that if you hold the stock in your retirement account then you can use the dividend for more purchases and Zero dividend income tax applies? Looking forward to your responses.
When Can You Retire On Dividends? [View article]
I live in Asia and don't not know much about US gov's. tax plans.
But it affects me as I hold US stocks and there is no tax treaty between the US and where I live. So it's 30% for me with the exception of dividends paid by "80/20 companies", such as PM,
see my article.
First Solar: Buy When Blood's In The Street And Fade Everything Else [View article]
the winners such as PM, which you list here, and which is a high paying dividend stocks. So PM's stock price does not really pertain me.
Moreover, I hope you can agree that it is impossible to time the market. Market timing is even more difficult with PM's stock, as the company constantly has buybacks, the budget for 2012 is six billion, basically no matter what price.
When Can You Retire On Dividends? [View article]
your personal set-up, e.g. residency, tax liability, nationality,
all these factors have an impact on your after tax dividend income.
btw, During the Great Depression dividend income tax rose significantly whereas tax on company's profits did not.
I would introduce a buffer, a margin of error, in my calculation
Intel's Growth Won't Stop Here [View article]
Philip Morris Is Overbought - Wait For A Pullback [View article]
If you mention numbers from other sources, name us the documents, not only "Goldman Sachs", that's too vague.
The documents I refer to you will find at the end of my article.
And I doubt GS knows the market better than China Nationa Tobacco Corporation
But you have made a good point, PM mentions China and indicates good prospects in the long term ( see CAGNYpresentation ).
That is quite bold. Unless long term means in 20 years from now.
Anyway, back to the topic, pullback has not happened, perhaps PM is buying back its stock.
Recent Performance Review for 6 Dividend-Paying Cigarette Producers [View article]
You will find that PM is up 87% and MO up 61% since, as of last Friday's closing date. KO and Nestle a meager 25%. The latter two I might diworsefy into, just in case. Long PM. MO
Philip Morris Is Overbought - Wait For A Pullback [View article]
What's more, your tell me my numbers are incorrect, I guess you refer to my instablog.
What are your numbers based on ?
Is there any research behind ?
You don't elaborate on that.....
PLease read through industry journals or look at PM's CAGNY 2012 presentation.
Even with your 1.7 trillion guess you still missed the correct number by several hundred billion cigs.
But I appreciate that we have arrived at the same conclusion, PMI needs way more time in China. Personally, I think the 5-10 years you mention are way too optimistic. I tend to look at other markets and draw analogies from it.
Philip Morris Is Overbought - Wait For A Pullback [View article]
Feel free to read my instablog on China, then forget about PM in China.
Philip Morris Is Overbought - Wait For A Pullback [View article]
both debt bonds and stocks circulating in the stock market cost them money
Philip Morris Is Overbought - Wait For A Pullback [View article]
keep in mind that PM faced a higher capital cost in 2008.
Recently, the FED "guaranteed" that the low interest environment will last until 2013.
That means PM can issue debt bonds with relatively low interested yields and keep buying back stocks with the proceeds.
( In addition to the monster cash from its operations )
Thus reducing capital cost ( as yield on debt bonds is lower than dividend payments ) and at the same time increasing EPS ( as the amount of shares issued shrinks ).
Now if EPS rises but PM's stock price remains constant, PE sinks.
Consequently, if PE remains at the current level, stock price rises.
In short, what PM does is a partly debt financed EPS increase scheme that has a positive effect on the stock price.
Look into PM's CAGNY 2012 presentation for few more details on capital cost. Also feel free to look up one of my earlier comments on this.
Accumulating Dividend Stocks Is A Long-Term Process [View article]
Accumulating Dividend Stocks Is A Long-Term Process [View article]
"...they figured that the stock has increased too fast, and thus waited for a dip before adding to their positions. "
I almost made the same mistake when waiting for a buying opportunity to increase my PM holdings.
I was hoping PM would see $60 again.
Fortunately, I had read the book "Only The Paranoid Survive"
by Andrew Grove, in which he stresses the importance of not being emotionally invested in the past.
So I bought at $68 two dividend quarters ago because PM was trading under the value I had assigned,i.e. 4% net dividend return = $75.50 for my tax set-up.
Philip Morris Continues To Burn Hot [View article]
btw, if you would like to know where fake Marlboro come from, click here : http://bit.ly/yykrOL
Transnational Tobacco Companies (TTCs) In China [View instapost]
Although we can't invest in CNTC, I think CNTC still does any investor in foreign cigarette stocks a big favour as they increase consumption.
Apart from the expensive premium brands which make nice gifts, cigarettes in China are dirt cheap and a basic consumer staple.
I am sure TTCs will benefit from that some day in future.