Two Plus Two Newer Archives  

Go Back   Two Plus Two Newer Archives > Other Topics > Business, Finance, and Investing

Reply
 
Thread Tools Display Modes
  #1  
Old 11-21-2007, 05:33 PM
Yobz Yobz is offline
Senior Member
 
Join Date: Oct 2004
Location: Crackin\' skullz
Posts: 3,238
Default Buying stocks with high dividends?

I'm a guy who doesn't do any day trading, I guess I'm in it for the relative long run although not true long run (2 years, maybe)? What do you guys think of stocks like C or BAC which right now are projected to have huge (6-7%) dividends? I don't have too much cash to invest, between 5k-20k, depending how many other positions I'm willing to sacrifice. Any clues? What are the chances of the dividends being cut/killed?
Reply With Quote
  #2  
Old 11-21-2007, 05:42 PM
Messiahkid Messiahkid is offline
Senior Member
 
Join Date: Dec 2006
Location: NYC
Posts: 1,776
Default Re: Buying stocks with high dividends?

Very slim chance Citi cuts its dividend FYI
Reply With Quote
  #3  
Old 11-21-2007, 06:27 PM
pokerpunchout pokerpunchout is offline
Senior Member
 
Join Date: Feb 2006
Posts: 224
Default Re: Buying stocks with high dividends?

I have been in OHI, SFL and FRO for quite a while now and they have consistently paid very nice dividends with a capital gain as well.

Check them out but be sure to do your own research.
Reply With Quote
  #4  
Old 11-21-2007, 09:08 PM
mmctrab mmctrab is offline
Senior Member
 
Join Date: Sep 2006
Location: Steeler country
Posts: 478
Default Re: Buying stocks with high dividends?

[ QUOTE ]
I'm a guy who doesn't do any day trading, I guess I'm in it for the relative long run although not true long run (2 years, maybe)? What do you guys think of stocks like C or BAC which right now are projected to have huge (6-7%) dividends? I don't have too much cash to invest, between 5k-20k, depending how many other positions I'm willing to sacrifice. Any clues? What are the chances of the dividends being cut/killed?

[/ QUOTE ]

I'm wondering the same thing. Eventually I think many bank stocks are going to get to the point that they are ridiculously cheap (like less than book value) but they aren't there yet. The problem is nobody really knows what's on their balance sheets, and then there are questions about what they have off balance sheet.

I suspect there's going to be a lot more in the way of write offs by banks and their stocks are going to get cheaper. It's hard to know what book value really is for a lot of these companies that have a lot of derivative and subprime exposure. I think I'll probably wait at least a few more months before I do anything.
Reply With Quote
  #5  
Old 11-21-2007, 09:49 PM
maxtower maxtower is offline
Senior Member
 
Join Date: Sep 2005
Posts: 1,264
Default Re: Buying stocks with high dividends?

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.
Reply With Quote
  #6  
Old 11-22-2007, 12:33 AM
gull gull is offline
Senior Member
 
Join Date: Sep 2006
Posts: 981
Default Re: Buying stocks with high dividends?

An index fund will have much lower volatility (and hence better risk-adjusted returns) than individual stocks. WisdomTree has some dividend-weighted ETFs that may interest you. Be aware that high dividends make investments less tax efficient. On the flip side though, dividend yield is a weak part of value, and you can expect slightly higher returns and volatility from stocks with higher dividends.
Reply With Quote
  #7  
Old 11-22-2007, 01:20 AM
pig4bill pig4bill is offline
Senior Member
 
Join Date: Dec 2005
Posts: 2,658
Default Re: Buying stocks with high dividends?

[ QUOTE ]
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.

[/ QUOTE ]

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.
Reply With Quote
  #8  
Old 11-22-2007, 01:31 AM
adios adios is offline
Senior Member
 
Join Date: Sep 2002
Posts: 8,132
Default Re: Buying stocks with high dividends?

[ QUOTE ]
They won't cut dividends unless they have to, because they know they are dead meat if they do.

[/ QUOTE ]

Not necessarily. I've seen divi cuts received well in the past. GM comes to mind as one of many examples. Also too, divy cuts are very often anticipated. Surprise divy cuts aren't received so well. Don't know what the sentiment is on C.

A quick note, in theory stocks that pay dividends aren't any more valuable than stocks that don't. The decision to pay a dividend and how much to pay is not an easy question for companys to answer. Some stocks are required to pay dividends such as REITs in order to maintain their tax status.
Reply With Quote
  #9  
Old 11-22-2007, 02:12 AM
fearme fearme is offline
Senior Member
 
Join Date: Sep 2004
Location: CA
Posts: 465
Default Re: Buying stocks with high dividends?

ive heard UBS is the least likely to cut their dividend and i think buffet is accumulating, it also got hit the least out of these beat up bank stocks, dont listen to me though i am new to stocks
Reply With Quote
  #10  
Old 11-22-2007, 02:17 AM
PRE PRE is offline
Senior Member
 
Join Date: May 2007
Location: Council Bluffs
Posts: 571
Default Re: Buying stocks with high dividends?

If you want high dividends then invest in MLPs.
Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump


All times are GMT -4. The time now is 03:08 AM.


Powered by vBulletin® Version 3.8.11
Copyright ©2000 - 2024, vBulletin Solutions Inc.