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American Capital, Ltd. Message Board

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  • steveredlish steveredlish Dec 18, 2007 12:38 PM Flag

    How many here were fooled by the Dividend hype?

    There is a pool of stocks with low PE's high yields and moderate payout ratios. The high yield is based on Wall Streets expectation that the dividend will decrease. Some of these stocks consistently outperform the expectations of the "smart money managers" ACAS is one of them. At this point there are also a number of good growth/dividend plays among the dry bulk shippers.

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    • Dry bulk shipping is difficult. Dry Ships stock cratered when it said it was getting into moving oil.

      Diane shipping cratered from mid-$40s. If economy slows down the dry bulk shippers' rates will immediately feel it to extent that they maintain short term contracts.

      • 1 Reply to ferdiefor
      • I know this board is about ACAS but my point was there are growth opportunities among high yielding stocks. No question that ACAS has been crushed recently but history suggests that their dividend is secure and a long term 10% + yield would be sufficient for many of us.

        I mention Dry bulk shippers only because some of them also have fairly substantial yields. Wall Street seems to be saying that either the rate of new ships coming on line will exceed the rate of demand for them or demand itself form markets like India and China will slow. If Wall Street is wrong you will get both capital appreciation and high yield since companies like DSX and EGLE tend to distribute most of their free cash flow. If Wall Street is right, I would expect a smaller dividend but not much loss of principal since the negative expectations seem to be priced into the stocks. I thought DRYS got into the oil drilling business not the transportation of oil ???

 
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