John D. Thomason's  Instablog

John D. Thomason
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I am a retired (as of September 2001) IT manager. While I have always followed the markets, during my IT career my market research time was limited. Upon retiring, I have focused full-time on the markets and my own market education and growth. I have evolved my investment/trading strategy over... More
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  • Dividend Stocks: Which Way To Go - Blue Chips Or High Yield? Translated For Football Fans 0 comments
    Jan 29, 2012 9:40 AM

    I have recently had an article published with the title as shown above, excluding the "Translated For Football Fans" portion. The gist of the article is a comparison of investment results for the past five years between several well-known "blue chips" vs. several notable "high-yield" stocks, in an attempt to answer the question.

    The paragraph below is from an excised portion of the original article, when I decided to drop the football analogy approach to the article. However, for the amusement of Seeking Alpha readers that are also football fans, I have resurrected the analogy, comparing large cap, blue chip dividend stocks to high yield stocks, such as Mortgage REITs or Business Development Companies - BDCs, as if they were football teams:

    With the NFL playoffs just concluded, and the Super Bowl approaching, I can more easily visualize the contrasts between these two stock types by comparing them to two types of football teams. The high yield stocks are like teams with prolific, high-scoring offenses. They score early and often, with their high dividends. But, unfortunately, they can be severely lacking when it comes to defense. On the other hand, the mega-cap blue chips aren't flashy - their approach to offense is more akin to football teams that mainly run the ball, i.e., "three yards and a cloud of dust" per play, with their steady, but not munificent, dividends. But they have solid, nearly impregnable defenses, with multiple revenue streams, access to capital, geographic dispersion, and on and on.

    The article goes on to compare five years of dividend history for the selected stocks representative of the two major categories, and presents some conclusions, with plenty of caveats.

    Just thought I'd share this via an Instablog posting as my contribution to the build-up to the Super Bowl!

    Disclosure: I am long PG, JNJ, CNSL, NLY, ARCC.

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