Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Terrapin who wrote (4880)	8/30/1998 1:27:00 PM
From: Joseph G.	Respond to of 78516

<< So what do you look for in a company in this environment?>> Just wait a year hoping things clear out a bit? <<if the Fed lowers rates as some have suggested, the dividend of even a no-growth company like US Steel starts to look attractive! >> In 1933 DJIA paid 11.2% (after the cuts) while discount rate was 2.5%. In 1949 DJIA paid 7.9% with discount rate of 1.5% and 20 year treasury at 2.5%. Point being if you buy at 5% div, price can still decline by, say, 70% - happened before. <<For the past decade companies have forsaken a healthy dividend yield for stock buybacks (if this assertion is wrong please correct me).>> Few did, like IBM, in order to offset sales/earnings decline. Many more, like MRK, issued more new shares in option plans then they actually bot back. Buybacks are publicized, option dilution is not. As far as I know most Cos. don't carry own stock bot back on their books, but "retire" or reissue it.