Folks, I was taught that the overall "return" in a stock held includes the dividend which is reflected IN THE PRICE OF THE STOCK. (Sory for the caps, I'm not yelling but don't know how to underline on this thing.)
In other words, what would the stock be selling for if they were not paying $X.xx in dividends? Seems like a logical, if simple, way to look at things to me. So all this talk about "return on the dividend" is a bunch of hooey in my mind. Bottom line is that BBT's stock price has lagged others -and this is a relative game you know - and I've still got my sell a little bit bias in place.
I've said before that I'm over weighted BBT, but I'm about to get about right. Thank you all of you still willing to buy above $38. Again, not a bad company, but the bloody Dow beat 20% in 2003. So for now, my extra $$ goes elsewhere.
PS. I agree with the comments about show the steet internal sucess without the noise of further dilutive purchases. Fast Eddie did the same at FTU until it caught him. I worry that BBT can't show it's made good buy's by letting the market see a clean 2-3 quarters. I just don't have a lot of confidence in JA and what's left of the ENC mafia to pull it off any more. And watch for more "retirements". They'll be coming in 2004 I predict. All the above is MHO only, but the Dow did gain > 20% last year - that's fact. Did BBT??
"I don't know nothin' about preferred, Miss Scarlet," but I posted this regarding MLP's and distributions on the SPH board a while back:
"As an MLP, SPH does not pay a dividend. SPH pays a distribution. The difference is detailed along with other information in the following link:
You should be ready to hire a tax accountant with experience in MLP's..."
Would prefer dividends be covered with profits & not be a return of capital--some MLP's return capital with payout but this lowers the tax base--don't quote me on this but feel that this is correct.
Group, I'm new to the board. I don't own but, am researching some financial services stocks. Let me offer my two cents.
I was taught to calculate total return on the stocks assuming that dividends are reinvested at the time they are paid. I believe the total return graphs included in the annual MD&A uses this methodolgy. Someone made the comment that a dividend is priced into the stock. That's correct, a dividend is simply a return of capital.
I would argue that calculating a return based only on your original investment is faulty logic. You could, and may, steer those dividends elsewhere for investment. Excluding the tax impact (which we really can never exclude)if you don't believe those dividends can return your bogey in that stock, you should reconsider the actual investment.
Good and intelligent conversation on this board! And everyone seems to understand that this should be fun and thought provacative.
Greetings and best wishes for the New Year,
My father-in-law has a bookoo of BBT all the way back from Home Savings and Loan and Security Fed. in Durham...about 15 year holder. Every 3 years dividends alone gives him back m-o-r-e than his initial investment.
Certainly other stocks are just as good but you can't crack on that.
Good Luck in the New Year,
Hey, don't apologize.
You CAN'T underline in this thing.
I've lurked here for about 4 years, and think a lot of many of the posters, compliment intended, Sir.
I have no position. As I posted earlier, I think megalo-management has turned the stock into a trading issue. A fairly safe one, at that.
Ergo, no "YAHOO! LT Sentiment" on my posts.
You say you're overweight BBT. I'm not. Further evidence that we all have unique perspectives and needs.
But IF I HAD BBT stock and anticipated a 13+/-% return in 2004 on my initial capital investment, via a fairly reliable untaxed dividend, I'd be hard pressed to take the long-term gain to go look for 20% appreciation.
And all this talk IS, to some extent, hooey. These message boards are often similar to the 6 blind men describing the elephant, all grasping a different appendage.
Like when traders, daytraders, buy and hold fellers, all with credible strategies, rip and roar about how wrong or moronic the other is....
Uh, take note: The venue is called YAHOO!
Stock, are you a retired accountant?
I think Jim is an accountant.
Driving out to put my face into the Golden Corral trough, I discussed our conversation with The Prettiest Girl In Town, CPA. (She will attest that I am a reasonably functional knucklehead.)
She talked a lot like Jim, and a little like you, lecturing on "The Time Value of Money."
TPGIT took it well, and agreed to some extent when I mentioned she was a score keeper, and that is a valuable function and all, but often theoretical and removed from MAKING MONEY.
One can calc returns and all that forever. One must follow ones training and do what feels right.
My question is, "What, with acceptable risk, will legally put the most money, cash, moola, dinero, bread, green, etc. in my pocket?"
If I have $XXX, how do I make it $XXX + 10% or 15%, or $XXX + 20%. With which approach am I most comfortable?
Best wishes in your investments,
"It appears you may have had a current 12-20% +/- annual return on dividends alone.
Many seek such a return, and I could sit on that myself, but hope you find the investment vehicle you seek."
My replies were all directed at your original post to Cree which is above. Think I've proved the point that the 10 year return on dividends has not even been close to 12-20% annually.
On your statement about MSFT that is exactly what you are doing on using an investment price of 10 years ago and then comparing current dividends to the original purchase price. Just my opinion.
The big question is what is my current return on an annual basis? The answer to that question is that if you bought this stock in the last 5 years or so the annual return on investment has been horrible. On Cree's stock he probably would have been considerablely better off if he has sold the stock in 1998 and invested the proceeds somewhere else.
If what you say is true, then all Cree has to do is find a stock that pays a better dividend rate then BBT. That is not hard to do as BAC is one. If he buys BAC which is about twice the price of BBT he would receive a dividend of $3.20 verus $2.56 for BBT on two shares in 2004. Both would have the same tax rate. Which would you prefer to own? $2.56/$76.60 equals a 3.3%return $3.20/$79.09 equal a 4.0% return
I agree with your last statement. The correct approach for each of us is what puts the most money in our pocket for what we have invested.
By the way I'm not an accountant. Just want to know what I make and what makes me the best returns.
The really correct way to judge any investment in my opinion is what was it worth on Jan.1 and what is it worth on Dec.31 of the same year. If it is $38 on Jan. 1 and ends the year at $38 all you have made is the dividend. So one should really figure he has an investment of $38 in the stock with no appreciation on his capital for the year except the dividend on the $38 price. The reason for this is the fact that you could sell the stock for $38 and place it in any investment vechicle. $1.28/$38 is a 3.36% return for the year.
In any case I'd like to thank all the people on the board for their input. More information equals a better decision.
Yours for better investing and hope your day goes well.