Comments on Dividend Growth Investor: High-Yield Dividends at Risk

Well done!

2009-07-24T00:09:59.712-07:00

Well done!

David, Your comment sounds like a good addition t...

2009-07-01T06:01:53.162-07:00

David,

Your comment sounds like a good addition to what I already posted. When times get tough, as stock prices decline yields increase dramatically if payments are unchanged. More likely than not, a rapid increase in dividend yield does signal that the market is pricing in a dividend cut. And then the cut is materialized some time down the road. For example, before the financial crisis hit, one could purchase GE stock at $31 in 2008, for a 4% yield ( the qtrly div pmt was 0.31/share). As the crisis intensified the stock price dipped to $8-$10/share and the dividend was cut to 10 cents/quarter. At $10/share the yield was also 4%..

But you are correct that evaluating dividend investments during a crisis boils down to assessing whether the trouble will pass or not..

Perpetua,

I would rate CINF as a hold. As long as the dividend is maintained I see no reason to sell.

What do you think of CINF, Cincinnati Financial? T...

2009-06-30T14:11:47.637-07:00

What do you think of CINF, Cincinnati Financial? They have a very high dividend and the stock price is down 1.15% for the month. I think you analyzed it a while ago. But what do you think now?

Rather than say "stocks with the highest yields ar...

2009-06-30T09:49:49.679-07:00

Rather than say "stocks with the highest yields are the first to cut distributions when trouble arises", wouldn't it be better to say that when a stock has a high yield it means that the market has perceived impending trouble and driven the share price down? In that case, the job is to decide whether the trouble will pass and the price rebound.