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Strategies & Market Trends : Dividend investing for retirement -- Ignore unavailable to you. Want to Upgrade?

To: Chris Forte who wrote (3799)	2/15/2010 2:47:56 PM
From: Kip S	Read Replies (1) \| Respond to of 34328

Chris, Not knowing anything about NCMI, I tool at quick look at Yahoo. First of all, a company can pay out more than it is earning, even for a number of years, by borrowing, tapping internal sources of funds, etc. If a company's payout ratio rose to around 100% during a recession, that might even be a good sign, especially if they are a cyclical business. That suggests they want to maintain the dividend and feel confident they can. I don't have complete data, but it looks like Intel might have paid out more than they earned in 2009. [Edit: Looks like INTC earned $.77 per share in 2009 and paid out $.63. Note that earning are expected to rise to the $1.70 per share area this year.] Having said that, payout ratios near 100% are not sustainable, and I would be careful with such stocks. As dabum said, 50% for a mature business is good, 60% probably OK, but starting to get a bit high. Then there is the market's take. Here's how I would interpret that with respect to NCMI. With the stock yielding just 4%, my interpretation is that the market is not expecting a dividend cut at this time. If it were, the price would come down, and the yield would likely be 8%, 10% or more. Grain of salt warning. I know nothing about the company.