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|Subject: Re: RISING DIVIDENDS ANYONE?||Date: 11/10/1999 8:21 PM|
|Author: JAFO31||Number: 15267 of 77391|
brucedoe: "It took me decades to "know thyself", but I finally figured out that I needed stocks that pay dividends, preferably rising dividends, in order for me to hang in there on the dips. I have not been able to locate a listing of stocks with rising dividends but am gradually beginning to compile a list of my own. The following stocks all raised their dividends through the Nixon (1973-1974), Reagan (1982), and Bush (1990) recessions.
The Fabulous Forties (number of years of rising dividends in parentheses): Proctor and Gamble (44), Genuine Parts (44), MMM (41), Old Kent Financial (41), Johnson and Johnson (40)
The Thrilling Thirties: Cinncinati Financial (39), Coca Cola (37), Tootsie Roll (34)(also give annual 3% stock dividends), J.P. Morgan (33), Pfizer (32), Philip Morris (32)"
Obviously, you know yourself better than any poster on this board would, but what other screens do you use in addition to rising dividends. I ask because I have finally figured out how to articulate my concern.
Having enough money to pay dividends, and rising ones at that, is just another competing use for limited corporate funds. I would not want to see dividends paid by shortchanging operations, including R&D, or by borrowing money, or more likely, not paying back expensive existing debt in order to have funds available to pay the dividend. IOW, I am looking for the next BRK or Microsoft.
Divdends are also taxed as income and do not receive the benefit of capital gains. Thus a stock whose yield is comprised of dividend payment and appreciation generally needs to yield more than one whose yield is all apprecition in order to give the same after tax return.
For example, assume 33% marginal bracket, 10% yield comprised of 3% dividend and 7% appreciation; one-third of 3% is 2% after tax, and assuming stock is sold, (1-20%) of 7% is 5.6% for a total 7.6% after tax. Now compare with 10% yield, no dividend and sale after one year (1-20%) of 10% is 8% after tax or .4% more. If stock is held longer, the spread will only increase beecause tax on divends is due annually but capital gains is due only when stock is sold, but I am too lazy to construct the spreadsheet.
I am thankful for the list, though.
Just my $0.02. Regards, JAFO
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