greedcanbgood

First Quarter Dividend Statistics - What to Make of Them?

I hear you David and I do not necessarily disagree. I’m not sure I’d buy a bank today unless I felt VERY comfortable that it will be here 2 years from now. On the other hand, if I were a dividend investor I think that it is way too early to dump a bank stock simply because the dividends have been slashed – especially if I’m in it for the long haul. Besides, if I was prudent in the first place, I shouldn’t have a tone of banks in my portfolio to begin with.

Implicit in the dividend cuts (at least from the likes of Wells and USB) is the desire to get out from under the TARP debacle. US Bank especially has a Tier 1 capital ratio that is still best in class. I would be willing to bet that many of these banks will be able to raise additional capital that may dilute dividends in the short term but will result in ultimately healthy organizations that will, over time, begin increasing them.

The earlier posted relies on that dividend income to live on and in his case, you’re spot on. You said it yourself, “Nobody knows whether the general rule that "banks pay good dividends" is still true.” Much of the market today is being governed by uncertainty and until time lends clarity it’s too soon to start supposing whether or not that’s the case. =)

First Quarter Dividend Statistics - What to Make of Them?

Good article but I noticed a contradiction. On the one hand the author states (pertaining to financial stocks), “But no Sensible Dividend Investor should own those stocks.” And then goes on to say, “But dividend investing is a very long-term strategy whose success is measured over years and decades, not months or quarters.”

Look, if you need the income TODAY then the author might have a point, but if you are truly in it for the long-haul then it’s clear that financials will restore dividends to previous levels. If you think you’ll just buy then when this occurs, think again because prices will be MUCH higher than they are today. As long as you believe in the financial stocks you have and that the company will be around in the long-run you loose if you sell them now and then try to get back in later.