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StockCentral :: Community
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Join in on the discussion with other like-minded investors in our community forums. Learn about the fundamental investing methodology and participate in educational workshops in the Investing forums, stay up-to-date on StockCentral news and make suggestions to the StockCentral team in Central Square, and discuss your favorite stock or recent market news in our A-Z ticker-based forums.
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Danny Matthews
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Bob Blanchette
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| 01/18/2008 4:53 PM |
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Danny,
Interesting report. What are your thoughts on how dividends effect stock price. Specifically, announced dividends; x-dividend date; and paid dividends. I would think price would increase when announced and increase to a delta equal to the dividend until x-dividend date then fall.
I think Graham wanted stocks that had at least 10 years of increasing dividends. Are there growth stocks that meet this criteria?
Bob |
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Danny Matthews
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| 01/18/2008 5:52 PM |
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Bob, here is the last paragraph from the article I will look further and see if I can come up with the list.
S&P keeps a list of S&P 500 members that have increased their actual dividend payments in each of the past 25 years. For 2008, it added five companies -- Aflac Inc., Avery Dennison Corp., Exxon Mobil Corp., Integrys Energy Group Inc. and Pitney Bowes Inc. -- to the list of 58 and subtracted three: Altria Group Inc., First Horizon National Corp. and SLM Corp.
I don't know what you mean by increasing to a delta equal to the dividend.
As far as the dividend affecting the price, sometimes you see a bump in a price after a significant dividend increase announcement, but I think eventually it will come down to earnings growth. It is just my personal preference that I like to see dividend growth equal to earnings growth. Most often dividends are stable so they shouldn't affect the price significantly. I don't know of any timing strategy to get in by the ex dividend date, but I'm sure there are some who do this. |
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Danny Matthews
Tuscola IL |
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Jim Thomas
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| 01/18/2008 9:20 PM |
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> I would think price would increase when announced and increase to a delta equal to the dividend until x-dividend date then fall. <
I think for normal dividends any such price changes would get lost in the noise of day to day fluctuation. However for unusually large dividends it might be detectable. For example, a $3/sh MSFT special dividend was announced on 20 Jul 2004 and the ex-dividend date was 15 Nov 2004 (see http://www.microsoft.com/msft/FAQ/dividend.mspx). If you look at the MSFT price history from Jul to Nov 2004 you can see evidence of price moves of about $3/sh on the announcement date (very short lived increase) and again for a few weeks leading up to the ex-dividend date.
-Jim Thomas |
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Danny Matthews
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| 01/18/2008 9:25 PM |
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Here's the S&P dividend list in excel, click on the link when you get to the S&P page
http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_dai/2,3,1,0,0,0,0,0,0,0,3,0,0,0,0,0.html
you can also read about the list and how it is comprised from this site |
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Danny Matthews
Tuscola IL |
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Bob Blanchette
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| 01/19/2008 10:05 AM |
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Jim,
I saw a similar thing of Microsoft's special dividend with Total Systems (TSS). I can see where MSFT's dividend of $.11 isn't significant. On the other hand, Pfizer's 5+% dividend yield seems to be supporting the stock price. Maybe the expiration of the dividend tax laws in 2010, might hurt dividend stocks.
Bob |
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Bob Blanchette
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| 01/19/2008 10:31 AM |
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Danny,
I would guess you could create a nice conservative portfolio from the list of 63. If bought at the right price, I could sleep very well at night owning most of them.
Bob |
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Danny Matthews
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Bob Blanchette
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| 01/20/2008 9:44 AM |
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Danny,
I crossed the Mergents top 50 with Aristocrats. I found 7 and I own 3 of them. I also ran take stock against Aristocrats and found 5 (different from the 7) with acceptable quality ratings.
The charts for Mergents top 50 led me to believe that they were heavy into small caps and financials. For a long term - 10 year- that strategy has done relatively well. Recently, small caps and financials have taken it on the chin.
I'm a fan of diversification but not sure the best way to diversify a stock portfolio. Do you diversify by stock size (market cap, sales)? Do you diversify by sector and if so, how many? Do you diversify by the number of stocks disregarding size and sector and if so how many stocks? I've heard 5 to 20 stocks with no stock being greater than 20% nor less than 3%.
Thoughts and opinions please.
Bob |
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Ralph Seger Jr.
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| 01/20/2008 11:22 AM |
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January, 23, 2008
Diversification is used to reduce risk. This
means diversification among industry sectors so that unexpected adverse economic
events will not blow your portfolio out of the water. Mark Robertson has
an easy to remember "rule" for diversifation. That is sweet 16 plus minus
4. A small portfolio is 12 issues, all in different economic
sectors. A very large portfolio is 20 different issues with no
concentration in any one or 2 or 3 sectors. Diversification is one of the
ways to reduce risk. Risk is measured by the prospects of losing real
value. The concept of volatility of market value to measure risk if
flawed. Risk of individual stocks can be determined in several ways.
Look at the coverage of interest to be paid from borrowing by the coverage of
interest to be paid by pretax income plus interest. Make sure accounts
payable are not growing faster that sales. There should be a comfortable
safety margin of growth of receivables compared to growth of sales.
An additional method is to carefully examine the
quality and risk of each issue. Remember that risk and potential reward
are opposite ends of a teeter totter. There is no such thing as a free
lunch. If you keep all your assets in cash the income return will be low;
probably less that inflation. If you concentrate your investments in assets
which do not grow such as bonds, preferred stocks, money market funds most
annuities and other "safe" situations inflation will eat you alive.
Currently we are in a situation where the Fed is on the horns of a
dilemma. If it reduces the discount rate to increase money in the economy
it will lead to inflation. If it tightens to avoid inflation we will have
low or no growth. In fact what we face is so called stagflation.
This is a combination of inflation and low growth as we had when Jimmy Carter
was president.
Ralph
----- Original Message -----
Sent: Sunday, January 20, 2008 9:42
AM
Subject: [The Classroom]: RE: Barrons -
"Speaking of Dividends" (efb1c192-fce7-4d4b-954d-89d576c917ba)
From the The Classroom forum at StockCentral.com, Bob
Blanchette writes:
Danny,
I crossed the Mergents top 50 with Aristocrats. I found 7 and I own 3
of them. I also ran take stock against Aristocrats and found 5
(different from the 7) with acceptable quality ratings.
The charts for Mergents top 50 led me to believe that they were heavy into
small caps and financials. For a long term - 10 year- that strategy has
done relatively well. Recently, small caps and financials have taken it
on the chin.
I'm a fan of diversification but not sure the best way to diversify a stock
portfolio. Do you diversify by stock size (market cap, sales)? Do
you diversify by sector and if so, how many? Do you diversify by the
number of stocks disregarding size and sector and if so how many stocks?
I've heard 5 to 20 stocks with no stock being greater than 20% nor less than
3%.
Thoughts and opinions please.
Bob
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Posted by: Bob Blanchette
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To view the complete topic, reply, or unsubscribe to
this topic please visit: http://www.stockcentral.com/community/tabid/143/view/topic/postid/4278/ptarget/4879/language/en-US/Default.aspx
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Gene Rooks
Gotha, FL (W. of Orlando)
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| 01/20/2008 11:33 AM |
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And then, there come times in the market where even
the most thoughtful diversification doesn't help much, like right now
;-) All my personal and club stocks have headed south, the only ones
still in the green are those I've held for a pretty long time, anything bought
in the last year or so is toast. But, revisiting the SSG's, none alarm me
as losing in fundamentals, so I'm staying put, at least until all the 12/30
quarterly reports come in for a fresh review.
Gene
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Gene Rooks, Director
Space Coast Chapter
Accounting Instructor |
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Danny Matthews
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| 01/20/2008 12:06 PM |
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I crossed the Mergents top 50 with Aristocrats. I found 7 and I own 3 of them. I also ran take stock against Aristocrats and found 5 (different from the 7) with acceptable quality ratings.
I'm a fan of diversification but not sure the best way to diversify a stock portfolio. Do you diversify by stock size (market cap, sales)? Do you diversify by sector and if so, how many? Do you diversify by the number of stocks disregarding size and sector and if so how many stocks? I've heard 5 to 20 stocks with no stock being greater than 20% nor less than 3%. Thoughts and opinions please.
Bob
What are the 12 stocks you came up with?
I do not pay attention to the 25/50/25 sales cap size we have been taught over the years. I try and look at overall best candidate. As far as sector diversification I would not overlap more than two in the same sector. Mostly because of the theory that a rising market floats all boats, and visa versa. It would have to be a slam dunk to own two in the same sector. As far as stocks to own I usually stay in the 10-12 range, sometimes I will go over the twelve but never less than ten. If I reduce a position because it grows to over 15% of the portfolio I will try to add to an existing position. I wouldn't be concerned that a stock that is less than 3% of the portfolio as I am thinking that it will either grow by appreciation or by my adding to it as time goes on. As you can tell by the title to this thread, dividends do have a considerable weight on my decisions when researching a stock.
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Danny Matthews
Tuscola IL |
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Bob Blanchette
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| 01/21/2008 11:00 AM |
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Danny,
5 stocks meeting TS quality are APD, BDX, TGT, WAG, and WMT. The 7 with Mergents cross are BAC, BBT, CMA, EMR, FITB, PFE, and USB.
Full disclosure: I own TGT, WAG, BBT, EMR and PFE.
Bob |
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Bob Blanchette
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| 01/21/2008 11:12 AM |
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Gene,
I too am waiting for annual reports. Seems this week will be full of new reports 10k's.
Are you increasing cash position or bonds or both?
Bob |
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Gene Rooks
Gotha, FL (W. of Orlando)
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| 01/21/2008 12:08 PM |
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Bob, until I see the 12/30 reports, I'm not doing
anything. If I decide to sell anything then that looks like it will be a
long time recovering, I will probably reinvest in adding to other positions
whose sales are staying steady and that appear more poised for a strong
recovery. Gene
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Gene Rooks, Director
Space Coast Chapter
Accounting Instructor |
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Danny Matthews
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| 01/21/2008 12:28 PM |
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Posted By Bob Blanchette on 01/21/2008 11:00 AM
Danny,
5 stocks meeting TS quality are APD, BDX, TGT, WAG, and WMT. The 7 with Mergents cross are BAC, BBT, CMA, EMR, FITB, PFE, and USB.
Full disclosure: I own TGT, WAG, BBT, EMR and PFE.
Thanks Bob, looks like a pretty good screened list
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Danny Matthews
Tuscola IL |
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Danny Matthews
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Bob Blanchette
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| 02/26/2008 1:51 PM |
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Danny,
Interesting article. It reinforces my view that Graham has it right about dividend stocks.
Bob |
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Danny Matthews
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| 02/26/2008 3:11 PM |
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So true Bob, when I hear "It's different this time" that is a signal to run, not walk away from that source. |
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Danny Matthews
Tuscola IL |
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Danny Matthews
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Bob Blanchette
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| 03/01/2008 6:21 PM |
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Danny,
Thanks. I do own Pfizer and although not doing well in price appreciation, I am being paid nicely to wait. I also own a utility that I bought on a whim when I first started. I thought if I paid OGE a monthly bill, why not own it. Initially it was not a very good investment but it has done very well. In fact, OG&E was my first annual meeting I attended. The CEO came up to me and asked how many shares I owned. I said proudly that I owned 13 shares (About $30 a share). He said "We all must start somewhere. Don't forget we have a DRIP". He smiled and went on to other shareholders. Paying my electric bill is a tiny bit easy now. (G)
Bob |
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Bob Blanchette
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| 03/01/2008 6:25 PM |
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Gene,
If the fundamentals stay good, isn't a down market a buying opportunity. I see several companies that I've wanted to buy but the price was too high. Also I've finding as the price drops my dividend yields are going up.
Bob |
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Danny Matthews
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| 03/01/2008 6:48 PM |
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Good idea Bob, maybe over time you'll have enough shares to pay the power bill some day! |
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Danny Matthews
Tuscola IL |
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Danny Matthews
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| 03/13/2008 11:40 AM |
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I am adding Hank Paulson to my list of idiots...
NEW YORK (MarketWatch) - The largest U.S. banks saw their stock prices slide during a choppy trading day and following remarks by Treasury Secretary Henry Paulson suggesting that banks may need to suspend dividend payments in order to shore up capital. "We are encouraging financial institutions to continue to strengthen balance sheets by raising capital and revisiting dividend policies," ![]() Paulson made the comments as part of a larger speech that called for greater regulatory oversight of lending and the simplifying of financial products. Banks, thrifts and securities firms have lost almost $200 billion in the credit markets since January 2007. |
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Danny Matthews
Tuscola IL |
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Danny Matthews
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| 03/13/2008 11:40 AM |
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I am adding Hank Paulson to my list of idiots...
NEW YORK (MarketWatch) - The largest U.S. banks saw their stock prices slide during a choppy trading day and following remarks by Treasury Secretary Henry Paulson suggesting that banks may need to suspend dividend payments in order to shore up capital. "We are encouraging financial institutions to continue to strengthen balance sheets by raising capital and revisiting dividend policies,"
![]() Paulson made the comments as part of a larger speech that called for greater regulatory oversight of lending and the simplifying of financial products. Banks, thrifts and securities firms have lost almost $200 billion in the credit markets since January 2007. |
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Danny Matthews
Tuscola IL |
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