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Strategies & Market Trends : Value Investing
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To: E_K_S who wrote (26425)3/30/2007 9:21:48 AM
From: SI Bob  Read Replies (1) of 78745
 
I've been feeling that a dividend cut was priced in and that it would go up substantially if the dividend weren't cut, but had been prepared and willing to hold through a cut. Of pretty much exactly this amount. It looks like the market nailed the amount of the cut. Took a third out of the value of the company before the company took the same amount out of the dividend.

I don't think the reverse of "buy the rumor sell the news" works when the expected news is bad, so I expect some pain short-term. Holding long-term, want to be in for the 4th quarter provided Q's 1 through 3 don't disappoint and might get a buying opp. I'm going to work under the (hopefully correct) assumption the 15 cent dividend will hold (unfortunately, no way to predict Q4 dividend) and base any future buys on dividend yield. I tend to find 6% pretty tempting and 7% irresistible and it wouldn't have to come down much to get that kind of yield.

Knee-jerk selling could very well present those kinds of yields short-term.

Could be (dividend-earning) dead money after the next few trading days, though. There's too much uncertainty around this company for it to easily get bought up to an effective 5% yield. Before the shakeup at the top, though, the yield hung out in the upper 5% range for a long time.
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