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Subject:  Re: tough times for yield Date:  3/22/2013  11:41 AM
Author:  kelbon Number:  13992 of 25361

JNJ, Chevron, Merck, Total etc are too expensive now.

I see that NJ, Chevron, and Merck might seem expensive in the context of capturing outsized dividend yields, but Total puzzles me.

At its current stock price Total's yield is around 6.2%. The stock is priced as if earnings are going to flat-line, or even decline; which they might for a few years. All the same, the dividend is likely to be relatively stable and is within historic pay-out ratio norms.

On the downside there's the issue of France's withholding tax on dividends and currency exchange rate fluctuations. In spite of these headwinds the yield is high enough to ameliorate them to an extent producing a "real world" yield of around 5%.

Total's stock price never really recovered from the 2008-'09 contraction. It's hardly a runaway stock now out of reach because of investor enthusiasm and a lofty valuation.

For what it's worth, Value Line predicts a stock price of between $80 and $100 for 2016-'18 based on a projected P/E of 12. Total also gets their highest marks for Safety and Financial Strength, 1 and A++ respectively.

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