Comments on: Five Dividend Stocks With Different Reasons Not To Buy *

By: Carnival of Personal Finance #217: The French Money Quotes Edition — Almost Frugal- a frugal blog

Mon, 10 Aug 2009 11:17:39 +0000

[...] from Dividends Value presents Five Dividend Stocks With Different Reasons Not To Buy, and says, “Sometimes good companies aren’t good buys, and this is not always a bad thing. [...]

By: Weekly Dividend Investing Roundup – August 8, 2009 | The Dividend Guy Blog

Sat, 08 Aug 2009 11:03:02 +0000

[...] Five Dividend Stocks With Different Reasons Not To Buy [...]

By: Dividends4Life

Dividends4Life — Thu, 06 Aug 2009 17:44:59 +0000

Daniel: A good model will point out the buys and let you know when not to buy.

Best Wishes,
D4L

By: Dividends4Life

Dividends4Life — Thu, 06 Aug 2009 17:43:06 +0000

Mike: I calculate Free Cash Payout from data on Morningstar. Free Cash Flow = Operating Cash Flow – Capx. The FCF payout id the dividend/share divided by FCF/share.

I look at everything together, including share price. In addition, BP competes with all other viable stocks. When I make an investment decision, I look for the best place to put my money to work based my allocation and the specific factors each company brings to the table. Though, I wait at least 3 months between purchasers, I will not buy just because time has passed.

Currently, BP is overpriced based on my model. Also, it has froze its dividend – which is the first step to a sell. BP may end up being ok, but right now I am seeing warning signs, so I will wait and watch.

Best Wishes,
D4L

By: Daniel M. Ryan

Daniel M. Ryan — Thu, 06 Aug 2009 04:43:17 +0000

Interesting way to show how your model works, not to mention test it in real time. I’ve found it’s a good use of time to pick through an unappealing company’s fundamentals. Reverse cognition works, sometimes as well as reverse psychology.

By: Mike

Mike — Thu, 06 Aug 2009 03:09:17 +0000

I have several questions – specifically about BP.
You state BP’s Free Cash Payout is too high – where do you find this info?

What is your strategy about buying more shares of BP?
Do you analyze your metrics (like FCFPayout) and buy when the numbers meet your criteria – regardless of share price?

I am new at this – so bear with me.
I thought the idea was to buy good companies – like BP – periodically – and then hold for a long time.

What is the reason for not buying BP at this time?
Are you not buying BP now because you think the shares might come down in price?

THanks,
Mike.

By: doug

doug — Wed, 05 Aug 2009 16:40:07 +0000

Any stock or ETF that is any good is over priced now. If it isn’t the market already tells us to stay away due to the lack of oarticipation in this historic rally. So, we wait for a pullback that may not come or we hold our noses and buy.

By: Dividends4Life

Dividends4Life — Wed, 05 Aug 2009 11:23:05 +0000

Monevator: I was disappointed that BP froze their dividend at $0.84/share (ADR), but with the rising oil prices, I think the company will be ok.

Best Wishes,
D4L

By: Monevator

Monevator — Wed, 05 Aug 2009 10:35:58 +0000

Interesting angle, to look at companies you shouldn’t buy, rather than those you should. A nice mental exercise.

I tend to think most stocks are fairly priced, even dividend payers (i.e. that the higher dividend is making up for either lower growth prospects or more risk).

With this mindset, you’re less likely to get confused by mistaking a good company for a good opportunity, just as you say at the start.

That said, I’ve been thinking of investing in one of your rejects – BP. It takes two to make a market.