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

To: cfimx who wrote (14494)	5/18/2002 4:40:39 PM
From: Wallace Rivers	Respond to of 78535

What you say could absolutely be true, but these guys have a long operating history, and have paid a fairly consistent, on balance rising, dividend for many, many years. Not saying things can't fall apart, witness Meditrust, which had a policy of increasing the dividend half a penny each quarter. It doesn't exist as Meditrust, rather exists in a much smaller way, as La Quinta. Also, it does not pay a dividend at all. Do you have any reason to doubt ALD's management? Some might argue they are in the unassailable class. I listened to the CC, and have done some research on them, and seem to be very up front, and capable in implementing their business plan, and managing it. Just because the div. is 10% doesn't mean that it won't hold - it was just raised!

To: cfimx who wrote (14494)	5/18/2002 6:00:52 PM
From: Grommit	Read Replies (3) \| Respond to of 78535

ALD is a regulated investment company and therefore at least 90% of earnings must be passed thru to shareholders. It is similar to a REIT, but the pass thru rate for REITs can be lower. Many REITs with a 70% pass thru (dividned to FFO) yield 7.5% to 8% presently. Generally, REITs with lower pass thru rates (higher retention rate), have higher risk, and lower growth rate (because the retain less earnings for growth), so they have higher yield. Some REITs which have a retention rate of 90% are yielding 10+% -- TCR, for example. A year ago, before REITs were smart to own, they yielded higher rates. An 8% dividend is sustainable if the market prices the stock to yield 8%. If the stock price drops due to unfounded worries, and the yield increases to 10%, then a 10% yield is sustainable. Nothing has changed but the price of the stock. You said -- "Stocks don't yield 10% in a 2% divi environment.", They certainly do, and management says they will maintain it, and increase it. You also said you would be careful owning any bank stock now. You are cutting yourself off from some nice possibilities. WM still has room to increase. GSB which has been mentioned here, is now rumored to be on C's acquisition list. grommit