Comments on: What To Do With A Dividend Freeze? http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/ Dividend Investing & Value Investing For A Superior Portfolio Mon, 15 Mar 2010 08:02:40 -0600 http://wordpress.org/?v=2.8.6 hourly 1 By: Dividends4Life http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/comment-page-1/#comment-2729 Dividends4Life Thu, 06 Nov 2008 13:02:00 +0000 http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/#comment-2729 Mark: As a dividend investor I am looking for steady performers - stocks that create an ever increasing dividend stream. Valuation only plays in on the buy side (I want to buy cheap stocks).<br/><br/>Yield is not the main focus, growing dividends is. Over time growing dividends beats out current yield.<br/><br/>Best Wishes,<br/>D4L Mark: As a dividend investor I am looking for steady performers – stocks that create an ever increasing dividend stream. Valuation only plays in on the buy side (I want to buy cheap stocks).

Yield is not the main focus, growing dividends is. Over time growing dividends beats out current yield.

Best Wishes,
D4L

]]> By: Mark Perkins http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/comment-page-1/#comment-2727 Mark Perkins Thu, 06 Nov 2008 07:40:00 +0000 http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/#comment-2727 I don't understand why you put a stock like Home Depot on the shelf and even sell it at depressed prices just bc of a flat or decreased payout. I guess I don't see stocks as dividends first though. If your looking for dividend income from stocks your return in the stock seems as important to me. I mean Home Depot will no doubt bounce back when housing recovers and if you take the long-term view which it seems you do selling just before their business turns around doesn't make sense to me from a stock investment, which it is regardless of how you look at dividends. It seems if dividends are you main focus high yield bonds,munis etc would be more on target. having said that i do think the right stocks can give better compound dividend grwth vs bonds but all in all a stock is a stock. I don’t understand why you put a stock like Home Depot on the shelf and even sell it at depressed prices just bc of a flat or decreased payout. I guess I don’t see stocks as dividends first though. If your looking for dividend income from stocks your return in the stock seems as important to me. I mean Home Depot will no doubt bounce back when housing recovers and if you take the long-term view which it seems you do selling just before their business turns around doesn’t make sense to me from a stock investment, which it is regardless of how you look at dividends. It seems if dividends are you main focus high yield bonds,munis etc would be more on target. having said that i do think the right stocks can give better compound dividend grwth vs bonds but all in all a stock is a stock.

]]> By: Dividends4Life http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/comment-page-1/#comment-2723 Dividends4Life Wed, 05 Nov 2008 01:25:00 +0000 http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/#comment-2723 Assetologist: Excellent points. Thanks for sharing your thoughts!<br/><br/>Best Wishes,<br/>D4L Assetologist: Excellent points. Thanks for sharing your thoughts!

Best Wishes,
D4L

]]> By: Assetologist http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/comment-page-1/#comment-2722 Assetologist Tue, 04 Nov 2008 01:02:00 +0000 http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/#comment-2722 Excellent discussion. <br/><br/>In a pure and disciplined dividend-growth portfolio like you describe, I think you are correct in cutting loose the stock after one year of dividend stagnation. The only caveats in my mind are whether there are better competing opportunities for your dollars and whether holding the dividend is part of a responsible plan that will allow the company to emerge much stronger.<br/><br/>Delaying dividend growth can be seen as a positive and prudent action in times of struggle such as these. Money can be diverted into bolstering the survivability and eventual reign of the company & it's stock. Just think of it in terms of a hockey team in the 'rebuilding' years. There is a lot of short-term pain in hope of a future sipping from Stanley's cup. If these companies that are holding (or even cutting) dividends are also taking all the other responsible steps - cutting lard and controlling compensation for example, than this may be the most responsible plan.<br/><br/>Should you continue to hold these companies though? It depends on your perception. The first step is picking survivors. Excellent discussion.

In a pure and disciplined dividend-growth portfolio like you describe, I think you are correct in cutting loose the stock after one year of dividend stagnation. The only caveats in my mind are whether there are better competing opportunities for your dollars and whether holding the dividend is part of a responsible plan that will allow the company to emerge much stronger.

Delaying dividend growth can be seen as a positive and prudent action in times of struggle such as these. Money can be diverted into bolstering the survivability and eventual reign of the company & it's stock. Just think of it in terms of a hockey team in the 'rebuilding' years. There is a lot of short-term pain in hope of a future sipping from Stanley's cup. If these companies that are holding (or even cutting) dividends are also taking all the other responsible steps – cutting lard and controlling compensation for example, than this may be the most responsible plan.

Should you continue to hold these companies though? It depends on your perception. The first step is picking survivors.

]]> By: Dividends4Life http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/comment-page-1/#comment-2721 Dividends4Life Tue, 04 Nov 2008 00:35:00 +0000 http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/#comment-2721 Dividend Tree: There is definitely more than one path to a winning portfolio! :)<br/><br/>Best Wishes,<br/>D4L Dividend Tree: There is definitely more than one path to a winning portfolio! :)

Best Wishes,
D4L

]]> By: Dividend Tree http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/comment-page-1/#comment-2720 Dividend Tree Mon, 03 Nov 2008 21:03:00 +0000 http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/#comment-2720 While making such a decision, one of the issue that I always struggle with (and continue to do so) is how to balance dividend growth with capital loss/appreciation. I maintain two portfolios viz., dividend portfolio (for cash flow) and value portfolio (for capital appreciation). Dividend cutters are absolutely “no” in dividend portfolio (same as many of us dividend investors). But to sell them (or buy new) depends upon the value preposition. <br/><br/>e.g. I bought C four years ago and was good dividend growth stock. I received dividends for four years. When it cut the dividend, the total price was below my cost basis. Does it make sense to sell at loss after four years? Every company will struggle at some point in time! That’s when I look at value preposition and decide next step. Consider the case for BAC, C, and GE. I believe BAC has value preposition and hence, bought few more and moved it to value portfolio. C was sold and did not deserve a place in either of the two portfolios. I have held GE for last 6 six years. So far it has met dividend growth requirement. But value of my capital has been going down. It has now frozen the dividend until 2009, and future dividend growth can be questioned (very high debt – they will need more cash flow to service it). So although GE may not be dividend growth sock, it may be a value play.<br/><br/>So while I agree dividend cutters are absolutely no-no in dividend portfolio, but whether to sell it completely is based on qualitative thinking. While making such a decision, one of the issue that I always struggle with (and continue to do so) is how to balance dividend growth with capital loss/appreciation. I maintain two portfolios viz., dividend portfolio (for cash flow) and value portfolio (for capital appreciation). Dividend cutters are absolutely “no” in dividend portfolio (same as many of us dividend investors). But to sell them (or buy new) depends upon the value preposition.

e.g. I bought C four years ago and was good dividend growth stock. I received dividends for four years. When it cut the dividend, the total price was below my cost basis. Does it make sense to sell at loss after four years? Every company will struggle at some point in time! That’s when I look at value preposition and decide next step. Consider the case for BAC, C, and GE. I believe BAC has value preposition and hence, bought few more and moved it to value portfolio. C was sold and did not deserve a place in either of the two portfolios. I have held GE for last 6 six years. So far it has met dividend growth requirement. But value of my capital has been going down. It has now frozen the dividend until 2009, and future dividend growth can be questioned (very high debt – they will need more cash flow to service it). So although GE may not be dividend growth sock, it may be a value play.

So while I agree dividend cutters are absolutely no-no in dividend portfolio, but whether to sell it completely is based on qualitative thinking.

]]> By: Dividends4Life http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/comment-page-1/#comment-2716 Dividends4Life Mon, 03 Nov 2008 13:03:00 +0000 http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/#comment-2716 Anon: Yes, I would consider a stock that held its dividend flat for one year once it showed that was a one-off event. It is hard to make money trading stocks, so if a stock can earn a hold and improve its situation, then I am better off not selling it. <br/><br/>Each of your points are valid and something I have wrestled with. Experience may change my mind in the future.<br/><br/>Best Wishes,<br/>D4L Anon: Yes, I would consider a stock that held its dividend flat for one year once it showed that was a one-off event. It is hard to make money trading stocks, so if a stock can earn a hold and improve its situation, then I am better off not selling it.

Each of your points are valid and something I have wrestled with. Experience may change my mind in the future.

Best Wishes,
D4L

]]> By: Anonymous http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/comment-page-1/#comment-2715 Anonymous Mon, 03 Nov 2008 08:29:00 +0000 http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/#comment-2715 Would you buy a stock with a dividend that does not increase? Probably not if you are looking for dividend growth. If that's the case, why would you not sell a stock which has ceased increasing its dividend? A freeze doesn't mean that a cut is coming but it's definitely not good news. Waiting for a dividend cut will often cost you a great deal of money. I think that holding a stock that has ceased increasing its dividend is a cop out. Would you buy a stock with a dividend that does not increase? Probably not if you are looking for dividend growth. If that’s the case, why would you not sell a stock which has ceased increasing its dividend? A freeze doesn’t mean that a cut is coming but it’s definitely not good news. Waiting for a dividend cut will often cost you a great deal of money. I think that holding a stock that has ceased increasing its dividend is a cop out.

]]> By: Dividends4Life http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/comment-page-1/#comment-2691 Dividends4Life Tue, 28 Oct 2008 17:38:00 +0000 http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/#comment-2691 Nurseb911: Agreed, putting the stock on the does present a downside if the the stock survives. To answer your quest, I would put PG on the shelf if it froze its dividend. I must not lose focus on the goal of my income portfolio. Some of these might be a candidate for my capital appreciate portfolio. <br/><br/>Jae Jun: It didn't make it through my pre-screen. It has only increased its dividend 4 consecutive years and its NPV MMA Differential is less than $3,000. For a company that has increased its dividend less than 10 years I would look for $10,000.<br/><br/>Thanks for the suggestion!<br/><br/>Best Wishes,<br/>D4L Nurseb911: Agreed, putting the stock on the does present a downside if the the stock survives. To answer your quest, I would put PG on the shelf if it froze its dividend. I must not lose focus on the goal of my income portfolio. Some of these might be a candidate for my capital appreciate portfolio.

Jae Jun: It didn’t make it through my pre-screen. It has only increased its dividend 4 consecutive years and its NPV MMA Differential is less than $3,000. For a company that has increased its dividend less than 10 years I would look for $10,000.

Thanks for the suggestion!

Best Wishes,
D4L

]]> By: Jae Jun http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/comment-page-1/#comment-2689 Jae Jun Tue, 28 Oct 2008 16:14:00 +0000 http://dividendsvalue.com/1453/what-to-do-with-a-dividend-freeze/#comment-2689 D4L,<br/><br/>Have you ever done an analysis on American Express? I tried searching but nothing came up.<br/><br/>I believe it's finally come down to value territory and the yield is currently at 3% which could make for a nice dividend. D4L,

Have you ever done an analysis on American Express? I tried searching but nothing came up.

I believe it’s finally come down to value territory and the yield is currently at 3% which could make for a nice dividend.

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