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Old 04-17-2016, 07:55 AM   #21
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Originally Posted by Texas Proud View Post
I got burned by investing in a BDC.... yes, it had great dividends... but then the price started to go down... I did not know why, so hung on... and it kept going down... I am sure there are some bad loans that will eventually come out, but I sold it a year ago... I guess I will check some time, but I do think I lost overall...

I just took a quick look at your first... ARI...

Earnings per share.. $1.54, dividends... $1.84... I would be there is some non cash items that make up the difference, but that just means it is liquidating over time... so unless they keep issuing shares I do not see how they get money to invest....

I do see they have a preff.... and that divi probably has to be paid before common... wonder what the yield is on that...

OK, looked it up... 8.68 yield but not rated... but seems safe as they cover the common pretty well... and it is cumulative, so there is that...

Ticker ARI.PA....
Dividends Come Out of Cash Flow, Not Earnings

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Old 04-17-2016, 08:22 AM   #22
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Originally Posted by garyt View Post

Amateur wanna be accountants like me can get in a lot of trouble when thinking they know something about "the books" when in reality I dont. Myself, I still want it to come back to profitability. I definitely do not want "return of capital" dividends. These things are complicated and way over my head. A company I am invested in per their own annual statement use these requirements in determining common dividend... "Pay out ratio of earnings", "projected cash flow", "future cash flow requirement", and "projected earnings". So clearly there is a meshing of the two, not just one. However with that being said I stick mostly with monopoly utility company preferred stock that have 30-50 times after tax profit dividend coverage and just clip my 6% and move on. I do not really need to understand the intricacies of financial accounting as I know they will pay, and pay every time.
That doesn't mean anything paying higher isnt a good investment, its just a concession I am not smart enough to really make an informed decision.

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Old 04-17-2016, 08:42 AM   #23
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Originally Posted by garyt View Post

The only way you can get cash flow without earnings is to have a lot of assets that are depreciating... IOW an expense without current cash needs...

Which is why I said they had to be liquidating over time...

If you want a company to continue to grow you need to invest in money making assets... or at least replace the ones that you have...

Now, if you do not have assets to depreciate, then you have to have more cash coming in to pay those dividends... which sounds like a ponzi to me...

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