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ziknik

Beaten down dividend paying shares that could be good for the long term

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To conclude here we’d refer back to what we will now call the Posen Doctrine - the bank crisis action plan recently put in front of congress by the deputy director of the Peterson Institute, Adam Posen.

 

This says, in short: sack ‘em. Sack the bank management, sack the regulators and sack the supervisors, because in a banking crisis all these parties are incentivised to lie and spin and obfuscate. Only then will you get the visibility and steeliness to decide which banks are going to survive and which should fail.

Interesting. Posen has just been appointed to the MPC:

http://news.bbc.co.uk/1/hi/business/8103253.stm

I wonder if the MPC know something?

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Another viable option for dividend seekers is the iShares ETF UK Dividend Plus (IUKD).

 

This is an index tracker of the top 50 dividend payers in the FTSE 350 (if I remember correctly) weighted by yield. This has been a big payer over the last decade. It rockets in bull markets and gets crushed in bear markets, almost as if it were a geared play on the FTSE 100. The last couple of years have reduced it to about half its former highest value (May 4th 2007 at 1381, now 586).

 

I think this is because, at the time, financials would have occupied a disproportionately heavy weighting of the underlying portfolio, since they were amongst the highest yielders - particularly the likes of Lloyds and RBS. Since the index is recalculated every 3 months (I think), these companies should be gone now. This will leave other risky blue chip high yielders like BT and Aviva, but also solid payers like BP, RDSB, GSK etc. and thus offers a nice risk mitigation through diversification. The annual total expense ratio is (I think) 0.4%.

 

I don't own this one yet but will be looking to buy in on any further weakness, to hold indefinitely.

 

http://www.digitallook.com/cgi-bin/dlmedia...&csi=144357

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For those interested in tracking the best dividend yields, I find the following site useful.

 

http://www.topyields.nl/Top_dividend_yield...ted_Kingdom.php

I'm a bit dubious about this site's data source. It lists Royal Bank of Scotland as the highest yielder at 12.57%. RBS have in fact cut their dividend to a nice round 0 since their bailout.

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You would be better served by buying a quality Newspaper that carries the previous days prices. The better ones then have data on Dividend Yield, hi and low share price. Highlight the interesting ones from your point of view and now you have a research list. From this research list you can use your own style and create a watch and buy a buy list.

 

 

 

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I'm a bit dubious about this site's data source. It lists Royal Bank of Scotland as the highest yielder at 12.57%. RBS have in fact cut their dividend to a nice round 0 since their bailout.

Good point, as it is not clear from the site as to the data source, although there are links to the LSE. I think you still have to do your own homework whatever source used as many of these companies with high yields, the banks being a good example, are simply not going to pay that dividend in the current environment anyway. You would not buy any bank for a dividend payment right now. I find lists like the above useful, not so much for the dividend details although it might be good, but as a guide to when the actual share price of a company that traditionally has paid a high dividend might be cheap and a potential buy. A good example is BP, currently falling below 500 again. My point is that to some degree, the potential of a high dividend payment will protect the share price to some degree. However, I will always double check against other sources.

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Digital Look currently have Lloyds Banking Group with a 16.05% dividend yield and there is no chance of that or probably any dividend being paid. Land Securities Group is 11.52%, which is also not likely to be paid.

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Interesting. Posen has just been appointed to the MPC:

http://news.bbc.co.uk/1/hi/business/8103253.stm

I wonder if the MPC know something?

I guess you have just discovered this thread Mr Big !

 

Id totally forgotton that post.

 

Interesting looking back as little ago as March, the next post from No6 said why would anyone invest in a bank right now - that was my thinking at the time also...... and look what has happened in meantime a nice banking rally :lol: I guess we gotta see it to believe it

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Digital Look currently have Lloyds Banking Group with a 16.05% dividend yield and there is no chance of that or probably any dividend being paid. Land Securities Group is 11.52%, which is also not likely to be paid.

Lloyds Bank have a new trick - they paid their last dividend in shares rather than in cash, this might be the way forward for a few co's

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Lloyds Bank have a new trick - they paid their last dividend in shares rather than in cash, this might be the way forward for a few co's

RBS also paid a "scrip dividend" on 15/9/2008, just before bombing out completely.

 

I've learnt not to be *too* greedy with respect to yields. BT was yielding 16% and RBS 21% at one time - clearly unsustainable.

 

Furthermore, checking out alternative data sources can be a really confusing pain in the ar$e. The calculated yields often differ. Are they calculating the yield based on current earnings or forecast earnings? Are they taking currency exchange rates into effect (important for $ payers like BP and GSK). I prefer to stick to one single benchmark data source that's earned my confidence. Digital Look, in other words.

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RBS also paid a "scrip dividend" on 15/9/2008, just before bombing out completely.

 

I've learnt not to be *too* greedy with respect to yields. BT was yielding 16% and RBS 21% at one time - clearly unsustainable.

 

Furthermore, checking out alternative data sources can be a really confusing pain in the ar$e. The calculated yields often differ. Are they calculating the yield based on current earnings or forecast earnings? Are they taking currency exchange rates into effect (important for $ payers like BP and GSK). I prefer to stick to one single benchmark data source that's earned my confidence. Digital Look, in other words.

I too use them, but as I said, Digital Look report Lloyds Banking Group with a yield of over 16% right now, which clearly will never be paid. Obviously, just as you cannot except any P/E figure for what it is, the same is true for yield, or many reported stats without doing further homework! So, when it comes to banks and other financial companies, I've tended to just dismiss them because the time is not right to buy them, other than if you want to speculate or try to catch upward moves in short term trading. They are best left alone until things settle and let's see who comes out of it intact.

 

In general terms, I would say that once a dividend yield gets above 9 - 10% and stays there, or goes higher, the chances are it won't be paid and there is something wrong with the company. Dividend yields can get out of synch and become a bargain if and when market sell offs result in the share price of decent companies falling just because everything else is. You then have a chance to use your judgement and buy more shares at the lower price and get a decent future dividend as well, but such opportunities will probably only be around for a short time. BP is currently moving up to around 7-8% in the latest sell off and at around 484 I wouldn't be surprised if the share price were to go lower from here, especially as oil is due a correction as well. This probably represents a decent buying opportunity.

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I bought some more BP this morning - one of the safest dividends there is and yielding 7.53% today. I'm back buying high yielding dividend paying stocks after my initial disaster and inexperience with banks, life insurance and BT etc - I use the FT stock screener to find companies that are safe like BP and Astrazeneca plus other smaller companies that have very little or no debt and high cash reserves.

 

Eg, I also bought China Medical System Hldgs yielding 5.92% - it has no debt, huge cash reserves and has growing revenues year on year. There are some great divident paying stocks abroad if you have the right broker.

 

http://markets.ft.com/screener/customScreen.asp

 

 

 

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I bought some more BP this morning - one of the safest dividends there is and yielding 7.53% today. I'm back buying high yielding dividend paying stocks after my initial disaster and inexperience with banks, life insurance and BT etc - I use the FT stock screener to find companies that are safe like BP and Astrazeneca plus other smaller companies that have very little or no debt and high cash reserves.

 

Eg, I also bought China Medical System Hldgs yielding 5.92% - it has no debt, huge cash reserves and has growing revenues year on year. There are some great divident paying stocks abroad if you have the right broker.

 

http://markets.ft.com/screener/customScreen.asp

Could be a good buy on BP.

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Private investors pile back into equities.

 

Angus Rigby, chief executive of TD Waterhouse, which runs a website and telephone service for investors, said: “We have seen a a surge in interest for equities since March, with a lot of private investors buying shares because there are very few other asset classes offering decent returns.

 

“This year we have seen a 35 per cent increase in volumes, with traffic on our website doubling. New accounts have also risen by about 50 per cent since the turnround in sentiment.”

 

He said the most popular stocks were the large-caps, which still offer dividends,. These included defensives, such as the telecoms giant Vodafone and the pharmaceuticals group GlaxoSmithKline and cyclicals, such as miners Rio Tinto and BHP Billiton. He also said there was a lot of speculative trading on the banks as some day traders sought quick profits.

 

http://www.ft.com/cms/s/0/782bb4d2-5cf2-11...?nclick_check=1

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Here's one you should all look at - Lamprell (LAM.L)

 

http://markets.ft.com/tearsheets/performance.asp?s=LAM%3ALSE

 

Huge cash reserves, yoy growth and a 5% dividend :)

 

I think it's AIM though so won't appeal to No6 ;) ........ or will it?!

 

Tipped by MoneyWeek I think - do a search.

Think Lamprell is FTSE small cap, moved up from AIM, so it is one that I could easily become tempted by.

 

It had a few problems a while back when the market for rigs collapsed if I remember right. Has been as high as 531.5 in the last year and as low as the 50's, so can be a volatile ride. Some questionmarks about its order book a while back, wonder what the latest news is?

 

http://www.sharecrazy.com/share2607share/s...re&epic=LAM

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I'm wondering about BP at the moment. The share price looks attractive, but it would appear that the oil stocks have fallen perhaps as a warning that the price of oil itself is pulling back, the shares could go lower?

 

11 June 2009

 

"Oh, you want an oil price prediction? We don't do predictions," was BP chief economist Christof Ruehl's response to one question at the launch of BP's annual Statistical Review of World Energy yesterday - but then he near-enough made one anyway. As oil broke through $70 the same day, Mr Ruehl warned that people expecting prices to remain solid at current levels had 'reason to be worried'.

 

http://www.investorschronicle.co.uk/Market...re-too-high.jsp

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I think JNJ is pretty safe. I believe they have a stash of $13B of cash. They are using the money for acquisitions - it's unlikely they'll cut their dividend. They've also just won a lawsuit of $1.67B against Abbott

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I'm wondering about BP at the moment. The share price looks attractive, but it would appear that the oil stocks have fallen perhaps as a warning that the price of oil itself is pulling back, the shares could go lower?

 

I have BP and Exxon Mobil on my watchlist.

 

I prefer Exxon. They’ve got over $10bn sat on their balance sheet.

 

I’m looking for oil to drop to at least $60 this summer so hopefully I will get a good bite at Exxon. I need Sterling to stay strong.

 

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10 shares that pay good dividends

 

Some familiar names here.

 

http://www.telegraph.co.uk/finance/persona...-dividends.html

 

I've had a look at most of them in the past

 

National Grid I’ll look at this again

Northumbrian Water Prefer Severnt Trent, bigger company and seems in good shape according to the money they are investing at the moment

British American Tobacco (BAT) On my B watchlist

Centrica I thought this was overpriced and had a lot of debt. I might look again after I get Exxon

BP On my Watchlist

GlaxoSmithKline I’ve got this

Vodafone Debt debt debt

Scottish & Southern Energy Lot of debt

Rexam I’ve not looked at this

RSA Insurance I’m avoiding insurance

 

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I've had a look at most of them in the past

 

National Grid I’ll look at this again

Northumbrian Water Prefer Severnt Trent, bigger company and seems in good shape according to the money they are investing at the moment

British American Tobacco (BAT) On my B watchlist

Centrica I thought this was overpriced and had a lot of debt. I might look again after I get Exxon

BP On my Watchlist

GlaxoSmithKline I’ve got this

Vodafone Debt debt debt

Scottish & Southern Energy Lot of debt

Rexam I’ve not looked at this

RSA Insurance I’m avoiding insurance

Utilities always seem to be relatively highly indebted. I guess those debts should remain serviceable, but only for as long as people need water, gas, electricity, sewage etc. ;) . I like both National Grid and United Utilities.

Look at the dividend cover and P/E ratio of BP! Clearly someone out there thinks that the price of oil is set to plummet. Utter madness!

GSK is yielding well with good dividend cover (AstraZeneca too, actually). Yields of 5%+ on pharma is quite rare. Nice.

GSK and BP both account in dollars, so you'll be afforded some protection when iff sterling collapses.

Aviva is currently on my watchlist.

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