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Currently weighting U.S. telecoms and utilities at zero in his dividend stock portfolio, Pimco's...

  • Wednesday, October 17, 2012, 9:13 PM ET
    Currently weighting U.S. telecoms and utilities at zero in his dividend stock portfolio, Pimco's Brad Kinkelaar notes both sectors are trading at near off-the-chart premiums to their average relative multiple. Dividend investors would do better to look overseas, he says, where one can find companies that are growing, paying good dividends, and trading at better value. An excellent presentation.
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This news story has 7 comments:

  •  
    UL......Long.
    17 Oct 2012, 09:23 PM Reply Like
  •  
    I'm positive on DWX at this point, and certainly see lots of long term potential on this one. May be a bumpy ride, but I'm prepared for it!
    17 Oct 2012, 09:24 PM Reply Like
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    Some example companies if possible? Foreign can be dangerous - look at TEF, CELL, etc etc. Consolidation in telecom......

    I try DCIX and XIN currently as foreign dividend stocks.
    17 Oct 2012, 09:32 PM Reply Like
  •  
    Author makes a good point, and probably well worth some further research.
    17 Oct 2012, 09:54 PM Reply Like
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    Perhaps true of telecoms, but can't make a blanket statement like that for utilities. Currently, PPL trades at a multiple of 10 (and was 9 for long duration up until this past week) with a historical multiple of about 14 over the past 10 years.
    18 Oct 2012, 12:02 AM Reply Like
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    Sure, telecomms are "currently" trading at 79% premiums to their average multiples. That is exactly why they are most likely in the 8th decile Mr. Kinkelaar gave in his presentation. Pick where that will come up again on the next ten rolls. It's a skewed distribution of a probability mass function. I'm not questioning his abilities in descriptive statistics. He didn't come out of Northwestern without a first-class education. But people own U.S. blue-chips that pay good yields because they were purchased at much lower prices, making the effective yields much higher. That data is difficult to gather. I prefer to side with Mr. Borasky on his comments.
    18 Oct 2012, 12:51 AM Reply Like
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    I think you have to consider the massive market trends of mobility, streaming data and voice to recognize that Telecoms are going to 'earn' their premiums. Historical trading multiples aren't of much use when there is a big technology shift. AT&T and Verizon are the big winners here and pay big dividends.
    18 Oct 2012, 08:55 AM Reply Like
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