Dividend Stocks ( General Discussions )

[-dol-]

Where All the Money You'll Ever Make in Stocks Will Come From
By Dan Ferris, editor, Extreme Value

I'm convinced the return of the king is upon us.

The only king I see is the one without clothes. Yes, his return is upon us.

[kennynah]

so Dol, you are absolutely negative about the future of equities and if so, for how long do you a depressed market? tx in advance

[-dol-]

k,

Frankly I don't know.

Actually, stocks have been far from depressed since March.

If the current policies of world govts is all that they can muster the past year, may be the US/Europe will follow a similar path to Japan's last 2 decades? If the rest of the world cannot get out of the US-consumer led model, then how likely is it that they can decouple from the Big 3?

May be something will change the above prognosis. But I am not seeing it now.

All views welcome.

[winston]

The 3 types of successful dividend investing
From Dividends Value:

There are certainly many ways to categorize the different styles of investing in dividend stocks, including yield, risk, growth, etc.

An investment strategy based on any of these could be successful, if implemented within the framework well-crafted plan.

http://dividendsvalue.com/5138/3-styles ... investing/

[winston]

Six Steps to Finding Safe, High-Yield Investments by Louis Basenese

When looking for the best dividend-yielding stocks, the simple answer might sound a bit backwards: Don't chase yield.

This is because a high yield typically indicates that there's a higher risk of the dividend being cut or - even worse - being eliminated altogether.

Instead, focus on companies with the following six characteristics:

~ Simple Business: The fewer moving parts, the fewer things that can go wrong, thus sapping cash intended for dividend payments. So focus on companies with businesses that you understand, rather than massive corporations that have dozens of (often puzzling) operating segments.

That means shunning companies like General Electric (NYSE: GE) and its countless divisions, and instead going for companies like Philip Morris (NYSE: PM), which only does one thing and kicks back a $2.32 per share annual dividend (a 4.6% yield).

~ Steady Demand: After identifying companies with simple business models, the next step is to verify that there is demand for the product(s). After all, a company needs a steady stream of cash, so it can afford to pay dividends to shareholders. Stick to industries or sectors with recession-proof or recession-resistant demand (food, alcohol, tobacco, healthcare, etc.)

~ Cash Flow Positive: If a company isn't generating cash each quarter, the only way to pay a dividend is by borrowing or tapping into cash reserves. Such practices aren't sustainable over the long-term - and the dividend will eventually be cut.

~ High Cash Balance: Speaking of cash... it's still king. Especially when it comes to maintaining a dividend. Consider it insurance against any unexpected slowdowns. At a minimum, insist on enough cash to cover one quarter's worth of dividends.

~ Minimal Need for Credit: Securing credit in this market is extremely difficult. Accordingly, I recommend focusing on companies that don't need to raise significant amounts of capital. That's because when interest rates rise, so will their interest payments.

I also suggest you look at companies with a reasonable, or low debt load. This ensures that interest payments won't sap money intended for us.

~ Earnings Buffer: Insist on a dividend payout ratio (annual dividends divided by annual net income) of 80% or less. This will provide ample wiggle room for the company to pay the dividend in the event of an unexpected slowdown. Or even better, to justify raising the dividend.

Three Dividend-Yielders to Buy Now

I've covered several suitable and safe dividend stocks in previous Investment U columns. In addition to Philip
Morris that I mentioned a moment ago, you should also consider...
~ Windstream Corp. (Nasdaq: WIN), which sports a $1 per share annual dividend (9.2% yield).
~ Lorillard (NYSE: LO), which pays a hearty $4 per share annually (5.2% yield).

All three stocks remain attractive at current prices.

Source: Investment U

[winston]

From GRP Thread:-

by cif5000 » Wed Feb 17, 2010 12:15 am

Hi Lithium,

It's nice to see your interest in dividend as I am a huge dividend fan. Nowadays, my first criterion for having a stock is that it pays dividend. No dividend, don't bother. Why "invest" in a company that pays nothing? One may argue that he or she can simply sell part of the holdings to cash out, but I see that as an issue.

Firstly, the market has to be right in appraising the company all the time so that when you sell, the fluctuation will not result in an unfavorable price - i.e. a discount to its real worth, or at least reflecting the higher value, and that the appraisal also had to be right when you first bought it.

Secondly, the money from selling shares in the open market is not coming from the company. Someone else has to pay you a higher price for you to unload the shares to them. I would rather not to have the stock market to determine the "intrinsic value" but have the dividend do that job. That is, even if the market is mis-appraising the stock price, I am fine. I get my money regularly and I can choose to buy more shares in the same company, or in other companies, or simply spend them, in whichever way that suits me.

That means, without dividend, you need a market to be available to you when you need it and when it is available, the prices offered have to be right.

Thirdly, as long as the money is in the company, it is the money at management's disposal. Paying salary and directors' fees, renovating the office, buying cars, etc, you name them. It is management money although you own a pro-rata of it. Pay it out and it becomes the shareholders' money. This is a qualitative factor for judging management. What kind of respect do they give to the (minority) shareholders?

Fourthly, if a company has a track record of dividend, you can use that as a quantitative factor to judge the business. A surprise cut means something, but if there were no dividend to begin with, good or bad you wouldn't know.

If I could make a general conclusion...modern ideas have revolutionized the original idea of owning stocks to receive dividends. Since buying and selling stocks allow "investors" to realize gains and losses more easily, new concepts of stock valuations appeared. Participants embracing these new concepts buy and sell more frequently, resulting in the emergence of yet another group of predators.

These predators don't care about valuations because they know that valuations as a group is more of a mirage than a guiding beacon. They attempt to take advantage of these lost boats. Of course, there are predators who made it but many don't - just like those who attempt to buy stocks using funny valuation concepts.

[winston]

From GRP Thread:-

by Blackjack » Fri Feb 19, 2010 9:52 pm

Interesting discussion on dividends. I am a fan of investing for dividend yield as well. Certainly agree that without any dividends, it takes out much of the returns that can be generated from being vested in a counter. Unless one is looking for capital appreciation rather than constant dividend pay, then it may make more sense for the earnings to be retained (of course it should be utilised effectively).

I think cif's 2nd point about having the dividend determine the intrinsic value is especially true for our local market, where counters can remain undervalued for infinity. This is also my biggest reason for taking such a liking to dividend paying counters.

Ultimately, it depends on whether we are holding the counter for dividends or for capital appreciation. Different objective would of course, determine whether to sell or hold when companies stop or change their dividends.

[winston]

Put Your Dividend Stock Investing Knowledge to the Test

Dividend stock investing has once again become a hot topic with the investing public. After long stints of avaricious performance chasing in the late 1990s and mid 2000s that ultimately turned south, investors now realize that the gains you make in a stock aren't just via the share price.

In fact, the dividends and income paid out by a stock can really take care of investors, especially during times where volatile price swings are the norm. And while it's true that many companies either lowered or halted dividend payouts altogether in response to the “Great Recession,” a huge number of fantastic dividend stocks have returned to paying out very attractive income.

If you're looking to take advantage of this new, old trend toward buying companies with sound dividend payouts, then there a few things you need to know.

The following 10 questions will test your knowledge, and hopefully, teach you a thing or two about how to make the most of your dividend stock investing and income-investing efforts.

http://www.investorplace.com/dividend-s ... en=3879240

[kennynah]

everytime there's a sizeable corrrection...this topic of "dividend play" gets discussed...naturally ....

[iam802]

Lots of UK pension funds have money in BP

Is there any wonder that BP's CEO will continue to pay dividends to save his golden parachute?