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Or you can now use TapaTalk again!Dividend Stocks
- Thread starter Show-me
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CountryBoy
Well-known member
Yep, T and GE both increased their dividends and it sure brought a big smile to my face.
CB
Show-me
Well-known member
http://biz.yahoo.com/ap/080105/wall_main.html
AP
Investors May See Dividends Disappear
Saturday January 5, 4:24 am ET
By Stephen Bernard, AP Business Writer
Dividends in Financial Services Sector Likely to Be Casualties of Tightening Credit Markets
NEW YORK (AP) -- With credit markets continuing their downward spiral, investors could see their dividends disappearing in 2008.
Dividend cuts or suspensions will continue to pick up among financial services firms in 2008, said Howard Silverblatt, a senior index analyst at Standard & Poor's. In 2007, fewer companies increased dividends, according to Standard & Poor's, while more companies in 2007 than in 2006 actually cut or suspended dividends.
Many investors rely on dividend payments as a source of income, and financial institutions in particular have been rich sources of large payouts. Their need to raise capital in the face of rising loan defaults, though, has made their dividends one of the first places they look to save money.
Diane Merdian at Keefe Bruyette & Woods noted that banks, in general, are offering a dividend yield that is near an all-time high when measured against the dividend yield on the S&P 500. Yields are based on a company's full year of dividends compared to the current share price.
Higher yields indicate the company might be distributing more cash to investors than it can afford. Drastic dividends cuts or outright suspensions are likely steps if companies are struggling with earnings or other cash needs.
Since early July, credit markets have been in a free fall, mostly due to rising defaults on mortgages, especially subprime loans given to customers with poor credit history.
As a result of the rising defaults, investors have shied away from purchasing bonds and debt backed by the loans because of fears of mounting losses. As investors stopped buying the debt, banks and other holders of the bonds have been forced to write down their value. The writedowns -- which eclipsed $100 billion in 2007 -- have strained earnings, forcing companies to look for new ways to raise capital and preserve cash.
More at link.Excellent Thread! I must say...I love to read about other investors that value dividend paying stocks like I do. As to the story of investors seeing dividends disappear - while that may be true for some companies...the quality companies out there have enough cash to continue to payout increases or maintain their current levels without decreasing their dividend payments. My list of dividend companies that I hold in my Roth are: General Electric (GE), Proctor and Gamble (PG), Johnson & Johnson (JNJ), Pfizer (PFE), Bank of America (BAC) and Aqua America (WTR). I have substantial amts in GE and BAC...over $10,000 each. But all of the stocks listed above are on the dividend aristocrats list....companies that continue to raise their dividends year after year...etc. Stock that I bought in GE when it was in the $25-27 range back after the huge drop in from the upper $50s...$60 range...is now yielding almost 5% and BAC...although I'm under the price I bought it at now....is now paying 6.5%.....all the companies listed above have tons of cash to get through a slow down and many of them have revenues outside of the US which is good.
I've always been in favor of having dividend paying stocks in a Roth IRA and here is the reason. It's easier for tax purposes....since you don't have to figure the cost basis...etc. and you don't pay taxes on the dividends now or later. I have a strategy of getting nice paying companies that have been around a while, increases dividends yearly, and have good growth. I've also tried to pick stocks that pay out in different months of the year so when I turn off the "reinvestment of dividends" feature on my Sharebuilder account....I'll get a monthly check deposited into my bank account while still saving the principal. The stocks don't have to be rockets like Google or Apple. It would have been nice to own them over the last year/2 yrs but that is not my investment style. I love to cook pulled pork with my smoker and the only (best) way of making out of this world pulled-pork is cooking it....low and slow....just like my investing. The key is saving.....we put aside about $22,000 of our total $90,000 a year into our Roth/401(k)'s each year and the only debt we have is the house. Good Dividend paying stocks, while they don't shoot up like crazy all of a sudden....over time...they get the job done and with minimal risk. Don't look at the stocks that only pay high dividends either....look for good quality companies that you know, have been around for a while, and have stockpiles of cash on hand. Other choices of companies other than the ones above would be....Coca Cola, Pepsico, Altria, Wells Fargo, 3M, Abbott Labs, Lowe's, Regions Financial, Walgreen, US Bancorp. They will have ups and downs just like the rest of the market but long term - buy/hold investors will make out very well. Make sure you find out their current payout ratios though....try not to get companies that are above the 50% payout....50% of thier earnings...they may not be able to sustain the dividend....unless they have bundles of cash on hand to get through a slow down...etc. I 1st got started into looking at dividend stocks back when I was in Jr High School.....late 80s...I read "Buying Stocks Without a Broker" by Charles Carlson......at that time there was no Roth...but I knew the power of reinvesting dividends.....the rest is history. Stocks that I would suggest right now to buy because they are cheap and they will rebound this year or going into next year....Bank of America, General Electric and Pfizer....they will reward investors that are going to hold onto the stocks for a while...a nice dividend to hold onto during the slowdown and then they'll start climbing in price towards the end of the year when things start looking better in the economy. GE in particular because it's been neglected by Wall Street even though it has increased earnings almost 10% for the last 2 yrs....and the stock has gone nowwhere.....with it's wind turbines, energy/infrastructure business....it's cashflow is great compared to other companies out there that are getting more attention.
CountryBoy
Well-known member
Scottydog,
I enjoyed the thread and we seem to have the same investing plan when it comes to ROTHs and Dividend paying stocks. I like the Dogs also. We sure do have alot of the same stocks. Besides several of those that you mentioned, I also have included UTX, T, DUK, D and for some international flavor BHP and DSX ( A little spec on this one also.)
Thanks for sharing. I always enjoy seeing how other's invest, cause there is always something to learn.
CB
Bullitt
Well-known member
Scottdog, let the good times roll. Good for you for not being a chaser by choosing not to fall for Wall Street's Great Growth Trap. Think of how many people you agitate with your strategy. You're one less person an institution can sell to at the top. I applaud your post.
Hey Countryboy, unjustified beatdown going on in T right now. Opportunity knocks.
CountryBoy
Well-known member
Yeah Bullitt,
I saw that yesterday, I got a few shares, but really wish I had more money on hand, but then that's always the problem.
I just keep plugging away.
CB
CountryBoy
Well-known member
For my fellow stock buyers out there,
Since this is my first bear market or major pullback, the question I have, is what do you buy, especially with limited funds. I’m in CP mode for my TSP, but for our ROTH’s, do you buy a recession proof stock, ie like D, DUK, JNJ or PG or something that is getting beat up like BHP, WFC, UTX, DSX or BAC or alternate between recession proof and beaten up stocks as you gather your funds. Or should you base your decision on dividends or largest share price drop at the time of purchase? Financials should be nice and cheap next week after they begin reporting.
Since I’ve only been buying stocks for about a year and a half, I want to make the best of a bad situation and ya’ll have been involved in purchasing stocks longer than me.
Appreciate any advice or what method you use.
CB
Birchtree
Well-known member
Country Boy,
I've been buying out of favor stocks in the financial and housing sector related areas. These are definitely out of favor stocks and that is intentional - I'm buying for the available income that will be automatically reinvested as dividends. I have no plans to make capital gains during the next couple of years - the longer they take to recover the more shares we will purchase. I've listed many of them on my thread - but here are a few more: WRI, MNI, MBI, MPG, CLI, KIM, JRT, IFC, IRC, IMB, IAR, HIW, HR, HST, GKK, GTY, FIG, FMD, FHN, FCF.
wv-girl
Member
Do you do your own research? How do you determine what to buy? I know they all offer a dividend but what other criteria do you use? And do you buy hugh amts? Or do you limit the amt of money used? I am not asking for a specific amount of money you use, but maybe a pct or something like that. Just trying to get an idea or two. It seems you buy so much that I can't imagine you get much sleep.
Birchtree
Well-known member
Most of the stocks I'm buying for my daughter will initially be in 50 to 100 share positions with the idea of adding to them in the future. I've been in the markets since 1972 or there abouts and have done a lot of homework over the years that eventually becomes cumulative with experience. These stocks are all essentially on their yearly lows and many without good provacation - collateral damaged if you will. I'm setting up an automatic dividend reinvestment plan that should provide close to 350 dividend payouts/year. There will undoubtedly be a few loosers in the group as well as some outperformers and that provides flexibility down the road to make changes. Once the program is in motion I'll sleep just fine knowing money never sleeps and will be working even when I'm not paying any attention. It will all be on automatic pilot. I'm basically a contrarian investor that has developed this way in an unintentional manner. It works for me. Snort.
CountryBoy
Well-known member
Hey Birch,
I gotta couple of outta favor stocks in the financial sector, and I've dipped my toe in a bought a little, but I tentatively plan to add even more after the financials report in the next week or so. I feel they still have some more beating to take. After the beating I'll be buying the ones I already have, WFC and BAC, because of the good divvys and I think are to solid to stay beaten down long and will definately pay off in the long term, as I am a long term investor for our ROTHS's.
Now the housing sector scares me to death and not being familiar with it and with other beaten stock choices out, I'll stay with what I've already got.
Thanks for your input,
CB
Jackbnimble
Member
Birch did you mean NRF instead of NRE?
I have been in and out of that out of favor commercial REIT myself.Similar threads
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