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Gold/Mining/Energy : Copper Fox
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To: Hog Head who wrote (10226)5/18/2016 11:38:23 AM
From: dsikorsk1 Recommendation

Recommended By
louel

   of 10654
 
Although I haven't read their balance sheet, it is not surprising nonetheless. Usually companies with exceptionally high yields are like that because the market has priced in unsustainability.

I learned my lesson on high dividend earners back during the 2008 crisis on a company called ACAS (feel free to look it up). Although I barely invested in it, it was a good lesson to learn as I foolishly thought they could sustain their dividend and weather the storm when the share price dropped to around $20 in late 2008 (increasing the yield close to 20-25%). A few quarters later they announced massive writedowns and slashed the divvy and the SP still hasn't topped $20 eight year later.

So like I said before I carefully analyze balance sheets before I get into any company now (especially after the CUU debacle) and try to only invest in companies that can handle depression conditions. Like what Ben Graham's book says, you should evaluate every company under depression conditions and ensure they have an adequate "margin of safety" :)
In rare case I'm sure companies exist that can sustain it but I would only invest after careful earnings/cash flow/balance sheet analysis.

Cheers.
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