Picking stock dividends - Dividend safety and Bank of America Story

And 'axiomatic in dividend investing that the best dividend stocks high dividend yield, the score of consistency and growth. If you focus on dividends (and not just on price), you obviously want that first company a decent performance (more than just a bank deposit)
fail to pay their dividends and raise their dividends regularly.

How to invest in shares, you must go to the selection of individual securities is, history andConjecture. Presumption of reasonable conclusions to be drawn from history and current conditions.

As the story you want to find stocks that pay dividends consistently demonstrated (never paying) and the collection of these is often lacking. In my e-book, "Top 40 dividend stocks for 2008:" I present a scoring system for rating stocks along these two scales (plus many others) I have the Easy-Rate (TM) system call .

A history of dividend payments tellsSome things you can reasonably project into the future. For example, if a company paid a dividend every quarter for ten consecutive years and raised the dividend in seven of those years that the company in a way that dividends are paid, suggests is the norm. The Council continues to expect to pay a quarterly cash dividend, and run the company the money accordingly. They know they have a constituency of shareholders who expect regular dividends and increasesand their "game" that election. Skipping a payment or cutting the dividend to shareholders would probably cause many to abandon the stock, bring a catastrophic decline in the share price.

But any projection into the future is a guess, is not it? There is a risk in any prediction of weather forecasts, stock-picking your fantasy football team, the selection of the best reserves. Even if the odds are with you "or" All signs point in that direction, because the risk is that any forecastwrong.

And so it is with the stock dividend. Even if we take the highest precautions to be taken only stocks with a good yield, great dividend history and the strongest sign of the continuation of this history, we may be wrong.

The financial sector in the last 12 months gives some examples of such a risk. Many retail banks, commercial banks, investment banks and mortgage lenders have the subprime mortgage crisis that was pummeled into a full-blown credit crisis. LegendaryBear Stearns did not (he was saved by the government). Citigroup lowered its dividend icon with more than 10,000 jobs. Countrywide Financial, the country's largest issuer of mortgage, almost ceased, "saved", only to fire the purchase price of Bank of America.

In my e-book, I chose Bank of America (BAC) as one of the top 40 dividend stocks. Had a yield of 6.6% a proper assessment and raised the dividend by more than 25 years in a row - aSelect club with only 59 members. But the crisis BAC has been hard hit by the credit, and it is difficult to say whether the acquisition of Countrywide, even for a song is good or bad in the short term. (It 's very good in the long term).

BAC, as many banks right now, she needs money. One way to get money, of course, cut its dividend. Sun BAC dividend is "at risk". So far, BAC has resisted the temptation to know who has paid its dividend in the first quarter, evenif the payment exceeds its profits. He paid a dividend for the second quarter on June 4. The next dividend payment (not stated) is scheduled for September 28th - and this is normally the quarterly payment in which BAC increases its dividend every year. In reporting its second quarter a couple of days ago, said CEO Ken Lewis, the management board that the payment in the third quarter to continue as planned recommended. This is in line with previous statements of Lewis, who said he sees "that hadDividend as safe "(as reported by Market Watch) early in the second quarter payment in June.

Due to significant price erosion, BAC in June, the production of very high 11.4%, and some analysts and experts have said flatly that BAC would cut its dividend because he needed money. If it appears they were wrong, at least for this quarter.

I held my BAC on Top 40 List, and is still there. I own shares. It turns out that if the market heard thatLatest news from BAC 's second quarter, was so relieved that the shares jumped more than 70% in a few days.

that the risk of cutting the dividend, BAC satisfies all my requirements of a dividend has more than others. Even in the price recovery (back where it was mid-May), one could argue that this is an opportunity once-in-a-life, a world-class companies - is now the largest mortgage credit providers get is - a return thatover 7%. Opportunities do not come often. Note that if the dividend is not cut, that 7% return for a new buyer will never in connection with the initial investment. In fact, it will work if and when BAC increased dividends.

If BAC still on my list is Top 40? Maybe. Do you think that Lewis, when he says that the dividend is "safe"? What do you expect he say? Do you think BAC will increase its dividend this year? I do not know, but that alonenot to the exclusion of society. Do you think in the future, the financial sector will recover, and stocks like BAC are the prices back to before? I know, although probably a couple of years. Think of the savings and loan crisis of 1980 and 1990? Banks recovering, but with much aid the government and a number of bank failures. A similar scenario played today: helping many of the government, together with some errors.

AsInvestors can, you have your image on Bank of America. For my money, it seems a good long term investment. The occasion, it is otherwise zero. The dividend is very high for a strong economy. And I think it will be to deal with this storm and continue to reassess the price.

I go for the dividend, so I'm not concerned with how, for how long, but I would be a growth "stocks. Meanwhile, I shall address each of myQuarter.

This is my guess.

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