re: the "correction" seems to have begun.....how low do we go? prediction thread

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So only 1 question. Should I be looking at the yield more then the actual dividend amount?

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Do not listen to ACGeaux, I can't tell if he was kidding or not about not understanding beta, but no you do not want higher current dividend only, you want dividend growth combined with a high yield. What do I mean?

From 2008-2013 These are the stats

PM dividend went from .46/quarter to .85/quarter

MO dividend went from .29/quarter to .44/quarter

Visa dividend went from .11/quarter to .33/quarter

coke dividend went from .19/quarter to .28/quarter

What does that mean?

PM grew its dividend by 84.7% in that time

MO grew its dividend by 51.7% in that time

Visa grew its dividend by 200% in that time

coke grew its dividend by 47%



Dividend growth is effectively a raise in your income, so in that time frame all are incredible bc most people haven't garnered even a 51.7% raise in income at their jobs so even altria with its low dividend growth is spectacular but PM and V are high dividend growth stocks bc their payout ratios are so low PM is at 65% of earnings vs MO at 85% of earnings....visa is even lower. So not only is PM growing earnings faster than altria, but its also growing its dividend double digits annually, much quicker than altria and their single digit dividend growth. So like I said, I own both, but Im shifting more to PM for this reason

I said in my other threads I love visa and its my favorite growth stock bc of the rate the dividend is growing at BUT bc of how low the total dividend is it would take tons and tons of share to accumulate significant new shares in a drip and that was a big concern of mine after a run up and a possible correction at any time.

So lets say you made $100,000 in PM dividends in 2008, you make $184,000 today....incredible. If you made $100,000 in altria dividends then, you make $151,000 today....also incredible and that's if you weren't on a DRIP. Like I said both are amazing but PM is where the growth is, no idea why ACGEAUX is all over me saying Im running with my head between my legs, I keep giving an analysis of my opinions while he keeps bashing me

Dumb question, does index funds give good dividends, like the vanguard total market one?

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Again, I really love your take on Visa - so is Visa an even better buy if someone were to buy in this quarter, and keep adding shares with new money, quarterly, over 3 or 4 years? I tend to think so with the growth rate, as you suggest - there would be additional dollar cost averaging and shares would accumulate a little faster over the short-term (3 or 4 years) to get to a critical mass faster?

Or am I overthinking it?

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Well if you look at projected growth rates, visa is expected to grow at 15%/yr for the next 5 years, spectacular, but that doesn't mean if there's a gigantic selloff in the market visa won't be affected. Look visa is amazing with what they're doing, their growth story is nothing short of incredible, but a giant correction and you'll be wishing you owned PM instead, the reason is at .33/share dividend it would take 545 shares of Visa to buy 1 share a quarter in a drip....thats $98,000!!!

If you had $98,000 in and it corrected by 20% for no fundamental reason other than a sell off you get no added benefit of accumulation of new shares at a lower price vs $98,000 in PM gives you near $1000/quarter which if the price goes from $92 to say $72 for the same reason, you buy 13 shares to add to your income pile. In the long run both will be tremendous, but like I said, I plan on retiring within 6-8 years and although Visa's dividend will grow at insane rates in that time frame, it doesnt fit MY personal timeframe. I do own a few hundred shares and wish I had the time for the dividend to come around bc I love the 80% margins they operate at.

If you have 15+ years to wait for the dividend to be significant, i wouldnt think it would matter when you bought, but like I said its up from $111 early this year to $180 now but still at barely 22x forward earnings, not bad for a growth stock.

Even those who bought @ $40 in 2009 with the $1.32 dividend only collect a 3.3% dividend today haha. Yes,those who sank $40,000 into 1000 shares have $180,000 position that yields them 1.8 new shares/quarter

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ItNeverRains

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no i just said the truth....that PM/MO are addictive blue chips, and frankly there are no others. Then you got upset bc you proclaimed LVS was an addictive blue chip and I stated my opinion on why it wasn't. You got pissed off and began a rant. I don't know how you can consider a company that:

has a $47B market cap and owns casinos in Nevada,Pennsylvania,Singapore and Macau and reaches a fraction of the worlds population, a company that also has under 2 years of dividend history combined with an astronomical 3.6 beta

and compare that to

PM who has a $150B market cap, reaches everyone on the planet not in america by operating in over 200 countries( vs LVS who operates in 4), has a low beta of .9, has a dividend history extending through its parent company for nearly 100 years, and has proven to thrive in good times and bad.

You frankly got upset and I don't really get it, I just didn't feel LVS was a staple. I'm sorry you feel LVS is a blue chip that thrives on addiction, gamblers are addicts but they can run out of money and there goes the addiction. Even Whales who gamble millions cut back on their spending habits if work sours in any way. Buying a simple $5 domestic, or $2 internationally pack of smokes from either PM or MO will never be hurt by good times or bad. I have almost 20 employees who are broke working at my stores ie under $350/week and some still manage to afford cigarettes, cartons mind you every week that are $40+ so smokers will ALWAYS find a way to buy their addiction. Think about that for a second, a poor minimum wage cashier who earns $17,000/year spends $2000+ of that on cigarettes......thats $12% of their pay. Find me another company on earth that can target poor people at such a high rate of their income? Then combine that with the fact wealthy people smoke as do the middle class.The funniest is the fact some poor people are such addicts that they're hooked on expensive stuff like Newport or American Spirits(neither sadly is a PM/MO brand) that go over $70/carton and they still find a way to pay $280/month for 4 cig cartons while they live in a $400/month apartment.Think about the ratio for second. Is there any product you spend 50%+ of your rent on monthly? How many people spend 50% of their monthly rent at the casino? I'll bet it's a much smaller percentage than smokers who are poor.

So when you have a product that even the poorest people on earth in sub saharan africa can afford for $1/day which many of the cheaper PM brands afford....you have a dominating product, thats why you release it from US regulations and allow it grow on it own without having to pay its profits into the United States Tobacco Master Settlement. Its only been on its own for 5 years but Id say over 100% growth in share price along with 84% growth in the dividend is proof its growing quite nicely on its own.There is absolutely no substitute for the real cigarette, ask any smoker who has smoked fake ones, they can't get away from the real, more expensive one. It's not like sodas where I'm seeing a surge in generic soda sales as lower income people aren't seeing the urge to pay up the extra money for coca cola or pepsi in these hard times. They will pay up for those great cigarette brands though.

thus i feel safe having a gigantic position in either, they're never going anywhere, world governments depend on the taxes generated by these companies....did world governments depend on bear stearns,enron,kodak or any other giants who collapsed?

Actually you did go to page 3 of this thread. I said

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quote: There is not one blue chip on earth that is an addictive product besides PM/MO....name me one?

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. Then you said.

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LVS!!!!!111one any questions?????

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. So actually you suck at the Internet /thread before he edits his old post

This morning looks UGLY, down 120 in the early futures.

The media is really pimping this concept of bernanke cutting off the QE, I personally don't see it happening

Thoughts?

A little color on dealer liquidity that I mentioned. This is more bearish than what I expect but still great color from somebody a lot smarter than me.

El-Erian on Liquidity