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For sure it would have my attention. In a fundamental way good dividends from mature companies help to offset there lack of growth with cash from the cash flow. So you get a trade off of risk vs. return. GE being less risky than a growth play you wind up with an annual return over time of 4% from the dividends plus the the rate of inflation plus small growth = annual returns of 7-12% depending on inflation ETC.
I definately look for stocks that pay dividends when I am looking for long positions nothing says I love you like cash every quarter. Even modest dividends are better than none in alot of cases when you are holding a long position.
The trick with dividends is to look at the history of the payouts and the consistancy of the increases. Then when youevaluate the company you got to figure out if they will be able to maintain the payouts for the forseeable future. Nothing is worse then having a company stop its dividend for the short term price of the stock. Generally a blue chip is going to be stable and if they pay a dividend they will continue to pay one through good and bad times. Some companies have been paying dividends for a very long time so the record will speak for itself. A company like MSFT on the other hand does not have that long of a history but has extraordinarily deep pockets and is likely to pay dividends for a very long time.
The thing that makes me very fond of dividends is when I find a value play that is paying a modest dividend. In July 2002 Telus (TU) was trading around $6-7 a share it is now trading at $48.++ a share. The annual dividend is $1.30 We bought it around that time and we never paid for it because the dividends did over time and at the current price the yield is 2.68% but for us it is about 18.57%. Can't get enough of these kinds of things and there were risks we bought NT around the same time hoping that it would turn around and saw it auger in to the $2.++ range from our purchase at $11.++ since then it has had a reverse split 1 for 10. So there are no guaranties.
You all have been unbelievable with all of your help. I'm speechless to say the least Thanks for all the info and I guarantee that I will be back on here asking even more questions. I can't thank you all enough!
It's composed of 30 value stocks that you might like in your portfolio since Zecco offers free trades. You can effectively have your own mutual fund. I've added it to my blog as it has not received much viewing.
Well that depends on your investment strategy. If you want mature blue-chip companies, you're looking at the dividend. Otherwise, you might be looking for growth that's reinvested in the company.
Thanks for all the info and I guarantee that I will be back on here asking even more questions. I can't thank you all enough!
Hallo people!..
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