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cpa28761

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  • Dividend Matchup: McDonald's vs. Yum Brands [View article]
    OK, but then that higher YOC on YUM will have to overcome ten years of a higher dividends on MCD. Even then do you think it prudent to engage in a "superior strategy" when that superiority takes 10 or more years to come to fruition? Isn't that a risk (quantifiable or not) that should be factored into an investment decision?
    Jan 20 03:39 PM | 1 Like Like |Link to Comment
  • Sears Holdings: Outlook Declines for Operations, Improves for Shareholders [View article]
    jrabbit, exactly what is the plan or the catalyst to make SHLD a profitable business? Thus far you have offered nothing but blind faith in a superman.
    Jan 20 03:34 PM | Likes Like |Link to Comment
  • Dividend Matchup: McDonald's vs. Yum Brands [View article]
    Do you mean the then current yield? If so, how long would it take cumulative distributions on YUM to pass those of MCD?
    Jan 20 12:48 PM | Likes Like |Link to Comment
  • Dividend Matchup: McDonald's vs. Yum Brands [View article]
    I disagree. I give the edge to MCD on every point.

    Dividend yield 60% higher. Even if YUM increases its dividend at a faster pace, it will take several years for cumulative distribution to pass MCD's.

    Historic EPS and Cash Flow growth superior. Revenue growth over 5 years, about even. As far as YUM having superior PROJECTED growth goes, I'll believe it when I see it.

    Operating margins at MCD are nearly twice those of YUM.

    Return on Assets at MCD is 16.42%, besting YUM's 14.90%. Please don't compare returns on equity. YUM's is higher because (depending on the point you choose) it is three to four times as leveraged as MCD. In other words MCD's balance sheet is much stronger.

    MCD has twice the sales and four times the income per employee of YUM. MCD turns its inventory over twice as fast as YUM

    All of the above numbers come from that MCD is the far more efficient business model. Their revenues per store are much higher. Their overall volume is much higher. Couple higher volume and that they have one destination to promote, they can out advertise YUM by geometric proportions.

    Needless to say, long MCD.
    Jan 20 09:16 AM | 7 Likes Like |Link to Comment
  • Clorox: Why This Dividend Aristocrat Deserves More Respect [View article]
    David, you are quite correct. Borrowed funds are cheaper than investor funds. Borrowed funds generally have a finite cost. Investor funds, by definition are costlier than borrowed funds because investors EXPECT a higher rate of return than creditors.

    At the same time, to the corporate entity, borrowed funds are riskier than equity funds. Interest must be paid and maturities must be paid.

    All of this is well and fine in theory and in practice. Overshadowing everything is another factor: risk of ruin. Most of the holdings in my consumer non-durables have less debt than equity. Others have about the same. GIS is about 2.26X debt/equity. I can accept managements' capitalization policies in all of them. In the case of CLX, I see risk of ruin if a few things go wrong. I cite their last year-end debt/equity of 10.5X. At their latest interim quarter, it was 16.2X. That's beyond the pale in my frame of reference.
    Jan 19 04:59 PM | 2 Likes Like |Link to Comment
  • Clorox: Why This Dividend Aristocrat Deserves More Respect [View article]
    It seems to me that CLX must use much of the cash it generates to service its debt. "Free Cash Flow" is just another subtotal. All it does is to assume that depreciated assets must be replaced by netting capital expenditures against depreciation. It tells only part of the story.

    In the last two full fiscal years, they retired $677 million of debt. As of their last reported interim quarter (9/30/2010) they had $24 million of working capital, which is not much to finance a company doing over $5 billion of sales.

    Their sales have been flat for several years. Their product portfolio is in low growth commodities. The stock buy backs are a gimmick to provide temporary support to their stock price.

    Then again, perhaps their financial management has a degree of expertise beyond that of PG, CL, and other consumer non-durable companies.
    Jan 19 03:22 PM | 1 Like Like |Link to Comment
  • Sears Holdings: Outlook Declines for Operations, Improves for Shareholders [View article]
    Buffet, I believe, said never invest in anything you don't understand. Sears and KMart are two dinosaurs that have been passed and left in the dust by their competition. Their retail properties seem to have no other use given the consolidation of retail into just a few major players.

    Your only argument, jrabbit, is blind faith in a superman named Eddie.
    Jan 19 02:42 PM | Likes Like |Link to Comment
  • Clorox: Why This Dividend Aristocrat Deserves More Respect [View article]
    I respectfully disagree. Using OPM can be a good thing when done responsibly. CL (in which I hold no position) has 1.3X Debt/Equity. CLX has 10.5X Debt/Equity. That is irresponsible. It is playing with fire. When all is said and done, OPM must be repaid.
    Jan 19 08:55 AM | 5 Likes Like |Link to Comment
  • A Disciplined Approach to Weighting High-Dividend Yield Stocks [View article]
    "...buying the highest yield from that set each time, and sells to rotate out of a name only when the company announces something troubling which causes concern for the future of the company"

    You would have to have that negative insight before the general market has seen it and acted on it. What are any individual's chances to do that with any measure of consistency?
    Jan 18 10:31 PM | 2 Likes Like |Link to Comment
  • Analysts' Best Stock Picks for 2011 [View article]
    From my study of economics, I remember the "fallacy of composition" concept. If someone has a great concept and if he shares it with enough people, the concept will cease to have a competitive advantage.
    Jan 18 07:05 PM | Likes Like |Link to Comment
  • Sears Holdings: Outlook Declines for Operations, Improves for Shareholders [View article]
    My observation is that the stores are in malls and strip centers. Building something other than a retail store is not an option.
    Jan 18 06:56 PM | 1 Like Like |Link to Comment
  • Sears Holdings: Outlook Declines for Operations, Improves for Shareholders [View article]
    Down only 1/3, Hammer? Let me ask who is out there who would have any use for the Sears and KMart properties? There has been so much retail consolidation that there are too many doors for too few stores.
    Jan 18 05:32 PM | Likes Like |Link to Comment
  • Sears Holdings: Outlook Declines for Operations, Improves for Shareholders [View article]
    "Keep buying the shares back AND don't pay any attention to the critics.One day they will not be any shares left to buy."

    There are no shares left of Montgomery Ward and WT Grant either.
    Jan 18 05:29 PM | 1 Like Like |Link to Comment
  • Sears Holdings: Outlook Declines for Operations, Improves for Shareholders [View article]
    If I understand the point of this article, SHLD management is to be praised for their stellar liquidation performance. Sears and KMart were two losers. Putting them together achieved limited, if any, synergies. The two were done in by WMT, TGT, KSS, HD, and LOW. Putting the two together will not make those others go away.
    Jan 18 01:46 PM | 1 Like Like |Link to Comment
  • A Disciplined Approach to Weighting High-Dividend Yield Stocks [View article]
    This was a valuable contribution to the dividend income discussion. Investment decisions should be made using differing dimensions of criteria simply because that is how the world works. No single metric should be used. I like this simple, but nonetheless three dimensional, approach of:

    Dividend Rate
    Balance Sheet Strength
    Dividend Growth

    richjoy is correct in stating that there are additional fundamental and technical considerations, but this is a good start.

    Long: JNJ, CVX, ADP
    Jan 18 09:19 AM | 6 Likes Like |Link to Comment
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