Re: Buying stocks with high dividends?
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I agree. Its hard to know if dividends will have to be cut because of the lack of information about what is on the balance sheet. I imagine the banks themselves don't even know the value of some derivatives or CDOs.
Citi made $0.44 cents per share in the most recent quarter. That is less than they paid out in dividends. They had earned about $1 or more per quarter for the previous 8+ quarters. Most of this loss was due to a huge write down in CDO investments. Will the earnings bounce back or are there more write downs to come? Its hard to say. I am watching these banks, but I think it will take another quarter before we know whats going on.
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They won't cut dividends unless they have to, because they know they are dead meat if they do. Countrywide paid their last dividend, for crying out loud.
BTW, I think more write-downs are coming. Big ones.
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And right now, the market is saying that they'll have to.
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