Friday, March 30, 2007
Thursday, March 29, 2007
Additionally, the company commenced the previously announced tender offer to purchase up to 150,000,000 shares, or about 10%, of its outstanding common stock at a price of $35.00 per share. The offer to purchase shares, which is not conditioned upon any minimum number of shares being tendered, commenced today and will expire at 12:00 midnight, New York City time on April 24, 2007, unless extended.
Wednesday, March 28, 2007
Tuesday, March 27, 2007
ANF is not a true dividend growth stock as the company's first dividend payment was the 1st quarter of 2004. Additionally, the company has not increased the dividend on every fifth quarter. On the other hand, the calendar year dividend has increased by 10 cents (approximately 16%) in each year since 2004.
Monday, March 26, 2007
Source: Standard and Poor's
Tuesday, March 20, 2007
- At the American Association of Individual Investors website: Four Basic Steps to Gauging a Firm's True Financial Position by Jay Taparia, CFA
- Secular Bull and Bear Markets Profile by Crestmont Research. An annotated version of the chart can be found here.
- Trend Macrolytics published an article at Smart Money, The Signs Point to a Correction, Not a Bear Market by Donald Luskin.
- Optionetics Weekly Outlook by Chris Tyler for March 19, 2007 notes: "In light of the recent bearish extremes and patterns in place, bullish opportunities do appear close at hand."
As I noted in my post the other day regarding dividends and buybacks (click here) there is concern about the magnitude of buybacks. S&P notes:
“We are concerned that the large expenditures on buybacks may be inhibiting dividend growth,” continues Silverblatt. “While Standard & Poor’s has yet to see a significant decline in the number of dividend increases, the lack of increases, as well as the absence of new initiations, speaks to the current climate of buyback preference.”
Silverblatt points out that the tendency for index issues to pay and increase cash dividends is much greater than that of the general market as 77% of the S&P 500 constituents pay cash dividends versus just 40% for the non-S&P 500 companies. For 2007, Silverblatt estimates that over 60% of the S&P 500 will increase their dividend payout compared to just 30% for non-S&P 500 companies.
Monday, March 19, 2007
Sunday, March 18, 2007
Dividend Aristocrat performance as of market close on 3.16.2007:
Friday, March 16, 2007
- reported earnings have grown at a compound annual rate of 14.2% since the beginning of 2001.
- the dividend growth rate has grown at a 10.6% rate.
- buybacks have increased at a 22% rate over the six year time span 2001-2006.
- As detailed on the chart below, the dividend payments/stock buybacks have grown at nearly the same rate as reported earnings.
Thursday, March 15, 2007
"Today's chart illustrates how the stock market has performed during the average pre-election year. Since 1900, the stock market has tended to outperform during the first six to seven months of the average pre-election year. For the remainder of the year, pre-election performance has tended to be choppy. This pre-election year has, for the most part (the main exception being the Shanghai surprise of late February), been true to form."
- In 2006, the company's dividend increase was only 6%.
- The five year average dividend growth rate is 13%
- The dividend yield on the new dividend rate increases to 2.07% versus the prior yield of 1.86%.
- The payout ratio on 2007 estimated earnings of $4.11 equals 36%. The five year average payout ratio equals 37%.
Wednesday, March 14, 2007
Tuesday, March 13, 2007
S&P's Dividend Aristocrats were essentially down in line with the major domestic indices as well today. Though, on a year to date basis the Aristocrats are down only -1.40%.
Monday, March 12, 2007
Sunday, March 11, 2007
The public portion of the American Association of Individual Investors' website contains an article, Retiree Stock Allocation Recommendations: Do You Fit the "Mold"? by William Reichenstein, CFA. The article discusses the differences in asset allocation recommendations among the various "lifestyle" type mutual funds from fund families like Vanguard, T. Rowe Price, to name a few. The recommended allocation to stocks ranges from 20% to 40% for retirees of the same age. An excerpt from the article notes:
Why the differences?A retiree's/investor's allocation to stocks/bonds/cash depends on a number of factors. The article provides a cursory review of some of these factors, for example, time horizon, asset levels, withdrawal rates, and a retiree's health.
The recommendations for a 20% stock allocation most likely come from evidence from historical returns indicating that portfolios containing these stock exposures have a risk that is no higher than an all-bond portfolio, a risk level that is appropriate for a shorter-term time horizon.
The higher recommended stock allocations most likely are based on studies concerning withdrawal rates during retirement.
For example, one recent study found that, for individuals withdrawing funds each year from their portfolio, the probability of not outliving retirement resources was maximized when initial withdrawal rates were kept below 5% (with subsequent withdrawals increasing with inflation). For a 4.5% initial withdrawal rate, the probability was maximized with portfolios consisting of 40% stocks and 60% fixed income (including both bonds and cash) over a 30-year time horizon, while for a 4% initial withdrawal rate, the probability is maximized with an allocation of 30% stocks and 70% fixed income. [For a complete description of this study, see "Bear Market Strategies: Watch the Spending, Hold the Stocks," a study by T. Rowe Price, in the May 2003 AAII Journal].
So, who should you believe—the 20% crowd or the 35% to 40% crowd?
Lastly, a brief analysis is provided regarding international diversification and the potential drag on returns that cash can create over longer periods of time.
Retiree Stock Allocation Recommendations: Do You Fit the "Mold"?
American Association of Individual Investors
By: William Reichenstein, CFA
Additionally, S&P has included several articles that appeared in the first issue of the company's newsletter The Outlook. A featured company reviewed in the first issue is General Electric on page 4 of the link.
Friday, March 09, 2007
- 31.3% increase in the quarterly dividend to 22 cents per share versus the prior 16.75 cents per share.
- S&P Earnings and Dividend Quality Ranking of A+
- 12.5% increase in the quarterly dividend to 36 cents per share versus the prior 32 cents per share.
- S&P Earnings and Dividend Quality Ranking of A+
Thursday, March 08, 2007
Tuesday, March 06, 2007
Following is an update of the performance of the Dividend Aristocrats. The major U.S. domestic indices did fair better than the Aristocrats today; however, on a year to date basis, the Aristocrats continue to outperform the previously mentioned indices.
(Note: performance should be is as of March 5, 2007)
Posted by David Templeton, CFA at 7:08 AM
Monday, March 05, 2007
China woes ripple through U.S. markets
What happens in China apparently doesn’t stay in China. A sharp sell-off last week on the Chinese stock market shook up markets all over the world. Every industry group fell as the U.S. market dropped 4.4% during the week. Not every industry suffered equally. Several industries viewed as risky or tightly tied to the economy, such as autos, financials and semiconductors, fell more than 6% for the week. More stable industries, such as utilities, were relatively spared with a 2% weekly decline. Investors will be watching “beige book” reports due this week for clues about the U.S. economy’s health.
March 5, 2007
Saturday, March 03, 2007
An investor should review their overall tolerance for risk just as they should have done during the market correction following the bursting of the technology bubble in 2000. An important question that each investor can only answer themselves is what minimum asset value puts their retirement, retirement goals or simply overall investment goals at risk. This evaluation process needs to be done even when the market is rising. It is better to buy low and sell high. Before this recent pullback, has the allocation between the various investments gotten out of line with ones original intentions? The rebalancing of ones investments is an ongoing process and should not just be done when the markets are declining.
Assuming all is well at this point, now what is an investor to do? There is an interesting post at Alpha Trends web site titled Adjusting For Higher Risks. The author theorizes the worst is behind us and the "natural question is what should be bought?" A couple of paragraphs from the post:
"What makes people want to buy a stock? There are many factors which people consider before purchasing a stock and while we primarily focus on the technicals, there is another group of participants whose focus is on the fundamentals of the company. I am not going to tell you that fundamentals really matter to me, because they don’t. I’m just looking for stocks that will go higher.
There is a large portion of investors who consider fundamentals to be the most important thing to consider before purchasing a stock. To me, the PE ratio is as valuable as the MACD or a moving average. By that I mean that by themselves, they are useless…that’s right, you read it correctly. The value of any market measurement is not in the literal interpretation, but in the correct assessment of determining when they will be considered important enough to a large group of participants to make a decision to buy or sell decision. If a widely followed indicator can be used to clue us to a potential move in a stock we cannot ignore it, that is common sense."
In order develop the list, several websites do offer screening capabilities, some better than others. Following are links to a few of the sites where one can begin their research.
- The Wall Street Journal's stock screener. The screens are located under the U.S. Stocks tab and the Stock Scan section.
- MSN's Money Central stock screener. The screens are located under the Find Stocks section of the web page.
These are just a few links where one can begin their search process.
Friday, March 02, 2007
From Chart of the Day:
Investors are very concerned about the future direction of the stock market following Tuesday's significant drop. For some perspective, today's chart illustrates the current trend of the Dow. It is interesting to note that as it currently stands, the Dow has backed off from resistance (red line) and subsequently moved right down to an intermediate term trend line (gray dashed line). So while a sell-off in Shanghai directly influenced markets around the globe, it is worth noting that many of these markets had been rallying themselves and we're exhibiting signs of being overbought.(click on chart for larger image)
Thursday, March 01, 2007
If you only read one shareholder annual letter, it should be the one released by Warren Buffett of the famed Berkshire Hathaway (BRK.A). His 2006 letter was released today and can be read by clicking here.