Comments on: Measuring Dividend Stocks Investment Risk Profile

By: Dividends4Life

Dividends4Life — Sat, 10 Jan 2009 04:04:00 +0000

Anon: What is listed above is all the information that S&P provided. Beyond that it is just my conjecture.

Best Wishes,
D4L

By: Anonymous

Anonymous — Sat, 10 Jan 2009 03:16:00 +0000

This site is excellent. I've been reading it end to end and updating my own dividend analysis strategy based on some of the ideas here.

I would like to understand your reply to Chris's comment on how you assess your Risk/Quality analysis.

If GE is more likely to have something bad happen to their business doesn't that mean that something bad is more likely to happen to their earnings stream making their earnings less predictable in the future. It seems like there should be a correlation between the two concepts, I suppose an entity could fail even though earnings are stable (due to a disaster like a credit crunch for example) but less stable and less predictable earnings it seems to me would contribute to the likelihood of a failure.

By: Dividends4Life

Dividends4Life — Tue, 09 Dec 2008 03:07:00 +0000

Chris: The Qualitative Risk Assessment (letter) and S&P Quality Ranking (number) are independent of each other, to an extent. In the example you asked about, GE with a B rating is at a higher risk than USB with an A ranking of operationally failing (e.g. bankrupting, etc.) However, GE with a Quality rank of 1 means its growth and stability of earnings and dividend is more predictable/likely than that of USB which is ranked at 3.

Put another way, GE is more likely to have something bad happen to their business than USB, but GEs earning stream is more predictable than USB's.

Best Wishes,
D4L

By: Chris

Chris — Mon, 08 Dec 2008 21:15:00 +0000

How are your RQ Ratings ranked? Is an A# always higher than a B#? Or is, say, a B1 higher than a A3 or A4? Is GE more or less risky than USB in your example above? In other words, do you give more weight to the Qualitative Risk Assessment or the Quality ranking or are they considered equal?

I’m really enjoying your site.

By: Dividends4Life

Dividends4Life — Wed, 19 Nov 2008 00:50:00 +0000

Jae: Thanks. I tend to turn everything I do into an analytical exercise.

Best Wishes,
D4L

By: Jae Jun

Jae Jun — Tue, 18 Nov 2008 17:56:00 +0000

wow this is an excellent thought out process you have here.

Thanks for the tip, I think I should start something similar and start rating each company I look into.