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Strategies & Market Trends : Dividend Investing -- Ignore unavailable to you. Want to Upgrade?

To: Smooth Drive who wrote (140)	12/4/2001 3:10:58 PM
From: Paul Senior	Read Replies (2) \| Respond to of 387

EK is a buy by the relative dividend model. My opinion is that dividend is secure if stock price remains above current lows: For: 1. BOD recently raised dividend. First time in several years. They'll look like fools (to me anyway) if they soon cut that div. 2. Most people I guess believe EK (camera film) to be a dinosaur. I assume therefore, EK execs/directors believe the dividend is a significant aspect which keeps people interested in the stock and props up the stock. Against: 1. If stock price drops to new lows, BOD can say, that given that the div. yield is so high and far out of line with other div. paying companies, they (the BOD) will cut the dividend so EK stock yield is similar to other yields of comparable companies. (But if they do that, it'll crater the stock imo.) 2. Sales have decreased over the years. Long term debt though has tripled to $1.8B. Looks to me roughly like 15% stock reduction since '95. 3. I hope these guys aren't paying for the dividend with long term debt. My family's been stockholders of EK for decades. Recently I've added to my small position based on relative dividend. I'm not happy about it. I don't like that debt increase coupled with EBIT decrease. I'm very diversified so I can fool myself into believing I can take a small position in a stock I don't like (EK) and not get too hurt. It fits the model, so I bought. I know that I can't predict which stocks in the model will prosper and which will not, but overall there should be a profit. I won't add more EK - my plan is to try to carefully monitor EK performance during the next 6 months - if I suspect a dividend cut, I plan to take my lumps and exit the position.