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

To: - with a K who wrote (14639)	6/14/2002 7:12:36 PM
From: Paul Senior	Read Replies (2) \| Respond to of 79000

-with a K, regarding ILA. I'd say an investment now in ILA would depend on what one's goals were. I've been in for the dividend. To me, a potential investment now is iffy, because management is suspect. ILA are considering now altering their dividend amount, and that's dropped the stock. From the annual report (2/28/02) though, they say, "We set the current $1.20 annual dividend rate on our common stock four years ago. Each year since then, our earnings available to common shares have increased. This has caused the dividend payout ratio to decline to its present level of about 48 percent of diluted earnings per share. The trend is likely to continue as we concentrate on long-term earnings growth. We remain committed to paying the dividend at the current level of $1.28." Apparently these people have a different idea of the meaning of "commitment" than I do. (Or else the outlook has changed so drastically in 4 months, that the company is VERY desperate) My reason for buying was that I want that dividend, and I want it maintained at least. I don't expect the company to be a barn-burner, but I want the steadiness provided by the dividend to offset some volatility in my portfolio. The company says they're good guys, although they're being investigated by the Feds. But now, after the notice they are looking at making a change to the dividend, the leadership just does not provide me with a feeling that they're credible with any of their pronouncements. When a company grows sales a huge 43.7% annually (10-year avg.), but diluted eps only 4.8%, book value only 5.6%, and market price (year-end) per share grows only 2.9% (all 10-yr avg. figures), I say then I don't know why they bother to pump up sales when benefits to stockholders don't seem to result. The company - with its potential trading problems and governmental investigations - does not seem to be in any better shape now with $40B in alleged sales, than it was four or more years earlier when it was a 2 to 10B company. In other words, I'd rather have the dividend in my pocket than give it up so these clowns can muck up the business even further. I'll hold my shares - for now - , but at current price ($10+), I'd not be a buyer. If dividend is eliminated, stock could drop sharply. If div. is cut from the current $1.20/sh to say .60 (a 6% yield on $10), that might stabilize the stock at $10. If there's no change, the stock will recover quickly from today's price. Almost a crapshoot for short term holders. Longer term - couple-three years, maybe the stock will recover from lows. There's a real business in there someplace, I am guessing. We'll see. Paul Senior ... and -with a K, thanks for giving me an opportunity to vent! -g-