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Old 01-25-2013, 07:20 PM   #21
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Investing in dividend paying stocks should be no different then any other stocks in ones planning.

Whether the company sells a piece of itself off to pay the dividend or one takes a non dividend payer and sells a piece off to create a dividend it is the same thing.

It all requires the same planning and provisions for having cash in good and bad times.
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Old 01-25-2013, 07:55 PM   #22
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Zathras & Mr. Ha state the case better than I could. Nokia was paying a dividend of 3.8% while its business was declinig. People relying on their dividend income should have left long ago. In the same vein they should have Intel on their radar screen, and MS as well.
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Old 01-25-2013, 09:12 PM   #23
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Originally Posted by Zathras View Post
You are joking, right?
You take one example, of a company that has been going downhill for five years, has had an unreliable dividend during that time (jumping up and down) and when they finally suspend their dividend, you say "this is why I am not a fan of living off dividends"??

When you invest, with any strategy, you at least need to invest intelligently. I would be willing to bet not one dividend investor in this forum was invested in Nokia.

Living off dividends is some of the most stable, reliable income I have had (and yes, that was through the latest recession).

Good choices and diversification lowers risk in any strategy. If someone is buying funds, they should research the funds. If they are investing in individual companies they should research them.
If either fails to do their research I would not be surprised if their investments end up performing poorly.
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Old 01-26-2013, 12:24 PM   #24
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Your opinion. Are you an individual stock dividend investor?

Ha
Yes, it's my opinion based on reading your posts. I am sure you'll disregard it. That's fine with me.

Yes, I have been... so? And I have been getting out of it too.
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Old 01-26-2013, 02:20 PM   #25
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Zathras & Mr. Ha state the case better than I could. Nokia was paying a dividend of 3.8% while its business was declinig. People relying on their dividend income should have left long ago. In the same vein they should have Intel on their radar screen, and MS as well.

If you were an investor in NOkia 10/15 years ago, you might have persisted in it as an income/dividend investment, past even the above (like some who hung on to GE in 2008, for example).
However, my youngest who works at Microsoft bought it about 6 months ago as a growth/high risk and is sitting on a 110% gain. I've been waiting for a Fibonacci retracement to buy it as a high risk, recovery fallen angel. Haven't pulled the trigger obviously.
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Old 01-26-2013, 03:39 PM   #26
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I agree 100% with the words in your post, with one small exception.
You seem to be implying that many of the people that rely heavily on dividend income also have an adequate cash buffer.

I am curious where you gathered this from?

Again, I think a critical part of any investment strategy is to have enough of a cash cushion so you don't have to sell in a bear market. I see no reason though that investing in dividend stocks precludes one from doing so.
Anyone with a reasonably conservative allocation (healthy dose of bonds) wouldn't be selling stock in a bear market - - they would be buying stock (by selling bonds).
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Old 01-27-2013, 11:12 AM   #27
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As one who does believe in solid dividend paying companies, for the discipline they install in a proper dividend company, Nokia has been screaming stay away from me since at least early 2009 when they cut their dividend. I would advise against investing in any stock that cut it's dividend in the last 10 years as a way to avoid companies that will cut dividends to solve financial problems. By not cutting dividends you are forced to address financial problems before they get to the dividend cutting stage. The last thing you want to be is a dividend holder of a company thinking "if this doesn't work out we can just cut the dividend".

Nokia also had the following very strong warning signs that have safely kept me away from the stock:

It is a "4" in safety by value line, meaning it is fiscally in the bottom 25% of all 1700 companies in Value Line along with a B financial Strength, and all other statistical ratings by value line under 65% of all companies. Value line has predicted a dividend cut for nearly 6 months now as well. There is great value of this publication to me as early warning signs for dividend troubles.
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Old 01-27-2013, 11:40 AM   #28
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By not cutting dividends you are forced to address financial problems before they get to the dividend cutting stage.
While I don't know what the aggregate data would show, from my experience working for several companies, I found that dividend policy didn't have a lot of impact on management tactical decision making. In one case, I worked for a firm that, in order to preserve the dividend during a recession, borrowed so much money that it nearly collapsed. The consequences in this case were dramatic. In order to survive, the rescue management ended up closing down several viable US plants, sold businesses to raise cash that could have contributed to growth and prosperity for the workforce. The business were sold to LBOs (called PEs now) and they were stripped and pillaged like many businesses bought by PEs today.

One the other side, my last employer reduced the dividend in 2001 during that recession in order to preserve cash that was being invested in new technology. The dividend was raised back up in 2003, the stock took off and my NQ options went from my strike price of $11 to over $90.

My point is, that I think it is a myth that dividend policies have a lot of power over management. Incompetent management will find a way to destroy a firm, dividends or no dividends and vice versa.
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