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Author: yielderA Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8754  
Subject: Re: 15 Dividend Payers For A Big Cap Comeback Date: 12/18/2004 4:22 PM
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http://moneycentral.msn.com/content/P101819.asp

is exactly the kind of article that will burn a lot of people who are considering dividend based investing.

How can the author consider TS to be a stock that pay[s] promising dividends? The per share data before the IPO is all pro-forma. There's no way of telling what the company's recent performance is. Similarily, CHT has paid a dividend for just one year, has a payout ratio around 80% and is over 70% controlled by the Chinese gov't. D hadn't raised its dividend since 1995 and then only by 1.2%. The current increase is 3.1%. That's dividend growth of 0.4%. 10 year earnings growth is 2.5% although 5 year growth has picked up to 4.2%. The payout ratio over the past 10 years has ranged from 53% to 105% and averaged 82%. With no earnings/dividend growth, this one has to be bought and sold based on yield. Over the past 10 years, the yield has ranged from 4.1% to 6.3% and averaged 5.2%. At a current yield of 3.9%, this one is very expensive.

Somehow Markham does not strike me as a dividend based investor. Looks to me like he's writing financial porn - whatever sells. He has access to MSN's deluxe screener. Surely he could have used more rigorous criteria than market cap, yield, and a blackbox variable - the MSN StockScouter rating system. None of these look at the sustainability of the dividend or whether the stock is currently cheap or expensive.

He concludes that these stocks provide [g]ood counterbalance. While unexciting, they probably will provide the foundation for portfolios that have more speculative investments and trades as well.

Maybe by luck but certainly not based on his screening criteria.

Regards & season's best,
Mike
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