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cpa28761

cpa28761
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  • 7 Companies That Pay Dividends but Are Burdened With High Debt [View article]
    Thanks for your response. I find that judgments differing from my own help me to focus. Let's look at some peers.

    Annualized Yield:
    CLX 3.20%
    KMB 4.36%
    PG 3.18%
    CL 3.02%

    KMB has a 40% better yield than CLX, which is why I hold it in addition to PG.

    Debt/Equity (most recent quarter):

    CLX 1958%
    KMB 92%
    PG 50%
    CL 123%

    I can live with any of the latter three. I cannot believe that CLX management is smarter than the three others.

    Payout Ratio (TTM):
    CLX 95%
    KMB 59%
    PG 49%
    CL 46%

    At a 95% payout, I see danger lurking. A case could be made that CLX's dividend growth rate is twice that of KMB, but not when the current payout is 95.02% of income.

    Business models should be compared too. KMB is a one-trick pony. But they have ridden a 1918 technological marvel (celucotton) into a stable of brands that have become synonymous with the products they represent worldwide. Clorox is primarily one of those companies that is a repository for brands the major players have written off starting with its spin-off from PG. They sure didn't pull the wool over UL's eyes when they bought Burt's Bees.
    Mar 20, 2011. 09:57 PM | 1 Like Like |Link to Comment
  • 7 Companies That Pay Dividends but Are Burdened With High Debt [View article]
    We will have to agree to disagree. I cannot see a dividend growth investment without giving consideration to three criteria.

    (1) Yield and growth rate
    (2) Underlying financial strength
    (3) Business model

    There are so many consumer staples companies, in personal care and household products, that pass all three of these tests that I cannot see looking to companies like CLX that pass only the first screen.

    Long: KMB, PG
    Mar 20, 2011. 02:23 PM | 1 Like Like |Link to Comment
  • 7 Companies That Pay Dividends but Are Burdened With High Debt [View article]
    OK, now let's apply the same arithmetic to a peer, CL. I own neither CLX nor CL. Colgate's free cash flow after dividends is about $1.4 Billion (CFFO 3,211 mm less Cap ex 658mm less Divs 1,142mm). Their long-term debt is about $2.8 Billion. Therefore, Colgate could pay off their debt in two years. Does this explain why one might see a weak balance sheet for CLX? Many things could go wrong in 7 years. Where is CLX's margin for error to a conservative income-oriented investor.
    Mar 20, 2011. 01:18 PM | 1 Like Like |Link to Comment
  • 7 Companies That Pay Dividends but Are Burdened With High Debt [View article]
    Having retired last year from over forty years in accounting and finance, I found your answer so far removed from my frame of reference that I did not know how to respond. Then I read your profile (yes, I am remiss in not posting one) and I understand where you're coming from. You're betting totally on the come. CLX's equity is immaterial insofar its worth in paying down debt. It's all about a hunch based on your perception of the collective wisdom of the market. My opinion: They're not necessarily that smart!
    Mar 19, 2011. 09:31 PM | 1 Like Like |Link to Comment
  • 7 Companies That Pay Dividends but Are Burdened With High Debt [View article]
    gjg, I see their last y/e balance sheet with total liabilities of $4.465 Billion and equity of $0.083 Billion. Latest interim quarter shows total liabilities of $4.034 and equity of $0.124 Billion. The latest interim quarterly cash flow shows debt and stock issuances of twice their dividend. This is not healthy by any stretch of anyone's imagination. Look at any peer. Do you see such leverage in any company?

    Can you show some simple numbers to illustrate that they can retire their debt in less than eight years while maintaining their dividend?
    Mar 19, 2011. 05:15 PM | Likes Like |Link to Comment
  • 7 Companies That Pay Dividends but Are Burdened With High Debt [View article]
    Would you please explain how market capitalization can be used to pay trade creditors or to meet debt maturities?
    Mar 19, 2011. 02:49 PM | Likes Like |Link to Comment
  • 8 Safe Dividend Stocks With Excellent Growth Rates [View article]
    compuirv, you are absolutely correct. I hold MLP's in my portfolio for current income. I do not evaluate them vis a vis common stocks because such a comparison is apples and oranges.

    Long: ETP, NS, PAA
    Mar 19, 2011. 08:52 AM | 3 Likes Like |Link to Comment
  • 7 Companies That Pay Dividends but Are Burdened With High Debt [View article]
    I am surprised that neither CLX nor PBI made this list.
    Mar 19, 2011. 08:45 AM | Likes Like |Link to Comment
  • Procter & Gamble: In-Depth Analysis for the December 2010 Quarter [View article]
    "The stock is growing as noted via dividends and aggressive stock buy back."

    "One bright spot is free cash flow which is very positive. "

    I am not trying to use your words out of context. My main reason for holding PG and many other issues is their dividend and dividend growth potential. I am not expecting traditional growth from PG. However, their dividend track record, since the 19th century is a vehicle to fund retirement.

    Insofar as growth goes, I look to the examples of NOK, MSFT, and CSCO. All were amazing growth vehicles. But that was once upon a time. PG was there before those guys and now that they are mature companies, they are poor competitors to PG as dividend stocks.
    Mar 18, 2011. 07:11 PM | Likes Like |Link to Comment
  • The Top 20 Most Undervalued Dividend Champions [View article]
    Rich, I agree. I don't need the lists. I have multiple screens available to me from my accounts at Fidelity and Merrill Lynch. The Fidelity screens have predefined parameters that can be modified, added to, or replaced. To your point, there are screens available on some public sites as well.

    However, the best thing people said about me during my forty plus years in finance was that my strength is that I see beyond the numbers. On one hand, I like UTX even though it "fails" my minimum yield parameter. On the other hand, I eschew some perennial favorites on SA such as CLX and PBI.

    Sheldon
    Mar 18, 2011. 12:59 PM | 2 Likes Like |Link to Comment
  • Is Savings Rate More Important Than Returns? [View article]
    Rich, thanks for your confirmation. I'm new to retirement having left the workforce only last July.

    Sheldon

    PS, I still plan to post a profile when I get to it.
    Mar 18, 2011. 12:48 PM | Likes Like |Link to Comment
  • 10 Companies Expected to Increase Dividends in April [View article]
    Robert, for what it's worth, Democrat Mario Cuomo stated that Ronald Reagan taught us peace thru strength. Ronald Reagan asked if there was ever a war because the United States was too strong. I ask if there was ever a war where the "bad guys" didn't start with better fighter aircraft than the USA.

    Getting back to investing, Merrill Lynch just upgraded LMT on prospects of increased dividends and share buy backs.

    Long: LMT
    Mar 18, 2011. 12:43 PM | 2 Likes Like |Link to Comment
  • The Top 20 Most Undervalued Dividend Champions [View article]
    Rich, I find the lists to be starting points for discussion. It is thru the exchange of ideas, from knowledgeable investors, the real analysis can be found.
    Mar 18, 2011. 10:15 AM | 1 Like Like |Link to Comment
  • Is Savings Rate More Important Than Returns? [View article]
    Rich, what you state is awfully close to those who would advocate less than 4% in withdrawals to "bullet proof" one's portfolio. I take a different tack. Structure a portfolio to yield more than 4% by mixing in higher yielding stocks, preferred stocks, MLP's, and bonds. Use dividend growth stocks as the inflation hedge combined with the savings from yield in excess of 4%. Admittedly, it's getting harder to get yield from bonds as I face maturities and calls.

    Where I agree with you is that the general rule seems to be start with 4% of one's initial portfolio and adjust the amount for inflation. My take is that the 4% (percentage) is fixed and the annual withdrawal is adjusted by portfolio performance. For example, if one starts with $1.5 Million, he may withdraw $60,000. If his portfolio increases to $1.6 Million, he may withdraw $64,000. If things do not go well and his portfolio balance falls to $1.3 Million, he should adjust his life style to $52,000. Hopefully, my hypothetical retiree investor has not structures his life style spending to have less than the flexibility to make these adjustments.
    Mar 18, 2011. 10:11 AM | Likes Like |Link to Comment
  • The Top 20 Most Undervalued Dividend Champions [View article]
    Martin, would you please define "safe"? Is there safety in an investment with a fixed yield that is below the inflation rate? Even capital preservation has a cost.
    Mar 17, 2011. 08:31 AM | 1 Like Like |Link to Comment
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