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When to Sell Dividend Stocks
The question of dividend cuts is fascinating since it is actually a potential buy signal rather than a sell signal. All dividend cuts take place after the stock has taken the largest portion of the declines that are likely to occur (in the short and medium term.)
A dividend cut reflects the company management's realization that action needs to be taken in order to shore up the company's finance. Once the cut takes place, an investor can then fairly assess the potential for a healthier balance sheet.
Another method for avoiding the decline in dividend paying stocks is to sell when the stock is selling at a historically low yield and buying at a historically high yield. This keeps the perspective on the company in relative terms rather than trying figure out when management is going to make the tough decision to cut the dividend long after the decline has taken place.
Some good sources for understanding this and other key dividend investing concepts without having to do the work yourself is found in the Investment Quality Trend newsletter (www.iqtrends.com). In their newsletter, IQTrends gives you the historical high and low yields for over 300 high quality dividend paying stocks. Another good source is the book Relative Dividend Yield by Anthony Spare and Nancy Tengler. Finally, my all time favorite is Mergent's Dividend Achievers (mergent.com/productsSe...) as recommended by Peter Lynch in the book Beating the Street.
Because of these sources of information, I had a great 2008 and I think that they will benefit anyone who takes careful consideration of the ideas contained within. Enjoy.
Touc
Dividend Inc.
www.dividendinc.blogsp...
Sysco: A Surprising Inflation Hedge
Thanks for reading my blog posting. The comparision with gold and silver companies is very much with merit. Especially when the whole purpose of investing in gold and silver is to beat inflation.
When Value Line says that 84% of sales were due strictly to inflation then yes, the comparision is with complete merit. After all, gold and silver stocks are supposed to be a hedge against inflation. I picked the highest inflationary post war period (considered a gold and silver bull market) and showed how you could have done better to invest in SYY than any of the gold and silver stocks. This came as a shock to me especially when I hold the physical gold and silver metals myself.
Altria Has Been Great, Time to Exit
I found your article interesting especially since it is in stark contrast to my recent research recommendation of MO (dividendinc.blogspot.c....)
As I remember it, during the year of 2000, the regulatory pressures were more intense than today which is the reason the stock was yielding 10% at the time. The proposals were more draconian and punitative than what were seeing at this time. In fact, the government is even more amiable to big tobacco than ever before.
I'm curious to know if you bought the stock in 2000, as I did at $19 but foolishly sold at $55, what was the distinguishing chacteristic then that compelled you to buy the stock?
Thanks for your thoughts and great article.
-Touc
Gold - Not the Safe Haven People Think it Is
I got a good laugh at your comment. Man, I have stories from all three that would have you laughing 'til you cried.
Thanks.
-Touc
Gold - Not the Safe Haven People Think it Is
dividendinc.blogspot.c...
-Touc
Gold - Not the Safe Haven People Think it Is
dividendinc.blogspot.c...
-Touc
Gold - Not the Safe Haven People Think it Is
While you make good points about other countries throughout history I will at least provide you with at least one source that I'm working from specifically from American history. While I don't know history very well, I do know there are many quality sources and yours may differ from mine.
If you get the chance please view the following chart:
3.bp.blogspot.com/_pRR...
note: you may need to cut and past the link. Enjoy.
Touc
Gold - Not the Safe Haven People Think it Is
Please reference my November 17 article regarding gold during the gold bull market of the 1970's at dividendinc.blogspot.c.... That article applies to all three categories: Majors, Juniors, and exploration.
Hello Henal,
I agree with you that perception is reality however in the case of gold in the last year perception hasn't provided enough fuel to help gold and gold stocks go above the old highs. This is the reason that I've introduce the history component to see if there were some answers there.
Greetings Paultaut,
I think there is a grammatical error on my part regarding the XAU. What was meant to be said was, "...the long term trend higher that started in the 2000 as reflected in the XAU..." I can see where I wasn't clear. Thanks for heads up.
-Touc
Gold - Not the Safe Haven People Think it Is
I would like to respond to when you said, "I wonder why you harp on this subject. I think it's very unhelpful of you since you're really not an expert in this area."
When I first produced my article on gold, respondents said I was taking "facts" and misconstruing them while at the same time lacking any kind of literary skills. I was challenged on my true understanding of gold and economics and the current monetary crisis. All this despite the fact that I have solid facts and source citations for anyone to dispute the claims that I make.
I wrote the second article as an attempt to answer the critics with further evidence on the topic of silver since the history on gold wasn't satifactory. When I provided that information, I was accused of not knowing what I was talking about and that I should crawl under the cardboard box that I came from. This despite the facts about the price of silver throughout history has not been hidden by government propping as with gold.
Finally, my third article was an attempt to answer my critics claims that "this time is different." This time is different because we're on the verge of a currency crisis or realignment a la 1929. I specfically gathered the data from the period of 1924 to 1933 to further illuminated the situation on gold and silver stocks during a deflationary/currency crisis. I was as broad as I could be with my selections. In fact, I left out examples that were even more extreme than what I presented. Clearly I cannot satisfy the appetite of those not willing to take in the facts as they are.
Unfortunately GMiki, I cannot go to your blog to get the full breadth of your explanation of the reason gold is the place to be. However, I am fully aware of the good points that most gold bugs have issued; the problems in the economy as well as the currency situation. As a person who has held actual physical gold and silver since 1996, I can tell you that I, more than anyone else, have a vested interest in the price of gold and silver going up. In fact, I said that when gold turns so too does the general market. What's wrong with that possibility?
I have read and studied the markets on gold and silver for quite some time. I'm sure the classic retort to that last remark is that, "I need to go back and study history again 'cause I sure didn't learn anything." However, I only generated those articles to help gold and silver investors. If gold bugs will only take in what I'm saying then they'd realized I'm trying to offer a perspective based on the numbers and the facts. If I'm constantly contested on this matter I become more inspired to dig deeper which further irates decent people like you.
I am now inspired to show the South African gold and silver stocks traded on the London Stock Exchange prior to 1800 to further demonstrate the issue that needs to be voiced. I want gold and silver to go up. But what is the point of going blindly into the sector without clarity. I don't mind if gold bugs don't care about the facts, but I'd rather offer information that is useful when considering how much money to invest in gold and silver rather than stuck with a bill of goods (though it is clear there is much debate, or none, about the usefulness of what I have presented.)
Now let's look at your point about me not being an expert. True, I'm no expert but the data is solid. Yet, no one was satisfied with my claims and demanded that I come clean on my lack of knowledge of people like James Dines, Richard Russell and the Aden sisters. This is despite the fact that I have subscribed to Russell and Dines since 1995. Now, the true gold bug would say,"obviously, I haven't learned anything from those experts therefore my subscriptions must have been a waste of money." However, look at the performance of a person like Dines who is clearly an expert in gold. Dines has been wrong by a country mile. Look at the quotes that I have pulled from Dines during prior bear markets in gold. Is it not surprising as to the reasons why he would question himself? Doesn't it make you wonder what the reasons are that someone, who is an expert in the area of gold and silver, would openly wonder how they could have gotten it so wrong? Well, I wondered and did a little digging. That digging lead to the "research" that I attempted to present on my blog.
Thanks for taking the time to read my post GMiki.
regards,
Touc
Why Gold Will Decline More than the Markets
Your suggestion that the data that I have used didn't go back far enough. I, like you, would have preferred data points much further back in time. However, as a substitute I looked at commodiy prices, real estate prices and inflation rates for the period of 1929 to 1934. During this specific period gold was on the decline and hit bottom in 1934. I will post on my blog, at a future date, the charts that confirm this data.
The point being, gold can't go up until the deflation ends. Therefore I am cautious about outlook for gold if the Dow keeps falling.
Touc
Why Gold Will Decline More than the Markets
The purpose of this exercise is to offset the expectations for gold if at the same time there are expectations that the Dow is going to decline as well. I believe that the Dow should be headed to the 4000 level at the very least. If my belief on the Dow is correct then I can't ignore the fact that gold and gold stocks also crash when the Dow heads lower.
Again, any significant decline in the Dow will put pressure on gold and gold stocks.
Thanks
Touc
Air Products & Chemicals: Worth Considering at These Prices
"Air Products and Chemicals Inc. is estimated to fall between the $61.84 and $53 levels."
Coincidentally, the stock traded to the intra-day low of $57.69. At this level the stock came within $0.27, or 0.004%, of the exact middle of the $61.84 and $53 level. While there is little proof that the stock will actually move higher from the current level I suspect that there is a good chance APD will move to the $81 level.
Also, USER 666, read the section of my blog called About This Site. You'll see the exact strategy to employ when following up with my research recommendation. Enjoy.
-Touc
So the Perpetrators Are Now Our Saviors?
Housing: Did We Learn Nothing from the Dotcom Bust?
What exactly did we learn? First we learned that as long as the perceived price of the asset continues to increase then you must be a genius. Who cares that there are 24 realtors for every one prospective homebuyers. What does it matter if a bank doesn’t require full documentation; they’re going to sell the loan to Fannie and Freddie anyway. This is reminiscent to the dot-com companies that were not profitable but had a market cap that exceed the combined value of 3M and Intel Corporation.
Next, if the value of your asset is threatened then find alternative means to fudge the numbers. No harm done if everyone else is doing it. After all, the federal government places any unpleasant expenses on the “off-budget” section of the ledger. If it is on the “off budget” section then it really doesn’t exist.
When the value of your company or asset is falling you should assure everyone that all is well. Tell your investors that you’ve got a plan to deal with the problem as soon as someone throws more money at you.
Finally, if someone questions your ability as a viable entity your first response should be to accuse whoever dare question you as a “speculator” and “short seller.” Never admit that you screwed up. Admission of guilt, problems, or incompetence are punishable by not ever getting financed for your next hair-brained, money losing enterprise.
Thankfully, we have learned an enormous amount from the dot-com bust.
Archer Daniels-Midland: Why I'm Ready to Buy
This stock’s movement could be related to the ethanol subsidies offered by the U.S. government. However, the decline in ADM is not unique. Look at the majority of the stocks in the commodity sector and you’ll see that they have all declined precipitously relative to other industry groups outside of banking and insurance.
Regarding your thought that the price wouldn’t retrace the highs any time soon is obviously a challenging one to answer. If you ask anyone at the peak of a stock price they’ll often tell you that it can’t possibly go down and vis versa. However, I will respond by pointing out that it took the years from 2000 to 2005 for the stock to retrace the peak of 1997. In that regard, you’re right, five years seems a bit long.
However, the purpose of Dow’s Theory is to determine a point that you can expect to buy the stock. For this reason, if the stock fell to the $7.80 or 2/3 level and you bought it in September 2000 you would have likely sold the stock at $14.33 in February 2001. A gain of 83.7% in 5 months. If you were confident of Dow’s Theory then you would have kept the stock at least until the $25 dollar level in January 2005 or possibly the $46 high in May of 2006 a gain of 220% and 489% respectively.
Only time and the nerve to buy will tell the story on this stock. I will be tracking this stock on the blog for the benefit of those who wish to see which story will prevail. Thanks again and visit Dividend Inc. when the stock is at the $22-$20 level.