Picking Dividend Stocks - Dividend safety and Bank of America Story

This is, of course, investing in equity, that dividend stocks score highly on the best dividend yield, consistency and growth. If you focus on dividends (and not just on price), made it clear that companies that (pay more than a bank) has a decent return on their initial
pay their dividends without fail and to increase their dividends regularly.

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

Like the story, you want a proven stocks paying dividends consistently (never missing a payment) and raises often are. In my e-book, "The Top 40 titles of the dividend for 2008," I present a scoring system for rating stocks along these two scales (plus some others) that I'm (TM) Easy-Rate system.

A story tells of dividendsA couple of things you can reasonably project into the future. For example, if a company has a quarterly cash dividend for ten consecutive years and raised the dividend in seven of those years that the company so that the dividends are paid is the standard stroke is recommended. Management continues to expect the quarterly dividend payment in cash, and manage the company's money accordingly. They know they have a constituency of shareholders, the dividend and periodic increases providedand their "game" of this election cycle. Skipping a payment or cutting the dividend would probably cause many shareholders 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 of any provision of weather forecasts, picking your Fantasy Football team, the selection of the best reserves. Even though the odds are with you ", or" all signs point in that direction, "there is a risk that any forecastwrong.

And so it is with the stock dividend. Although precautions can we do for stocks only with a good yield, great dividend history, and the strongest signs of continuing to take the pick history, we may be wrong.

The financial sector in the last 12 months provides some illustrative examples of such risks. Many retail banks, commercial banks, investment banks and mortgage lenders have the subprime mortgage crisis that turned into a fist was full-blown credit crisis. The iconicBear Stearns failed (it was saved by the government). The iconic Citigroup cut its dividend along with more than 10,000 jobs. Countrywide Financial, the nation's largest mortgage issuer, almost gone out of business, "saved" just bought the fact that a fire-sale price by Bank of America.

In my e-book, I chose Bank of America (BAC) as a dividend for the first 40 titles. It had a yield of 6.6%, willingly, and had raised its dividend for over 25 years in a row - aSelect club with only 59 members. But the crisis BAC has been hit hard by the credit crisis, and it is difficult to say whether the acquisition of Countrywide, even for a song idea is good or bad soon. (It is probably very good in the long term.)

BAC, as many banks right now, she needs money. One way to make money, of course, cut its dividend. Sun BAC dividend at risk. "So far, BAC has resisted the temptation. It 'paid for the first quarter dividend, eveneven though the payout exceeded its profits. It 'paid for the second quarter dividend on June 4. Its next dividend (not yet declared) 28 is scheduled for September - and this is normally paid quarterly dividend increase in BAC every year. In its second quarterly report a few days ago, said CEO Ken Lewis that management has recommended to the Council that the third quarter continued as planned disbursement. This is consistent with previous statements of Lewis, who said he sees "Dividend as safe "(as reported by MarketWatch) early in the second quarter payment in June.

A substantial reduction in prices in June by the highest BAC was 11.4%, and some analysts and experts said that the recovery of hand, which would reduce its dividend BAC because he needed money. It turns out that they were wrong, at least for this quarter.

I was in the Top 40 list BAC, and is still there. I own shares. It turns out that if one of the marketsThe recent news about the second quarter of BAC was so relieved that the shares jumped more than 70% in a few days.

Otherwise, the risk reduction of the dividend deemed to have fulfilled all my requirements for a BAC higher stock dividend. Even during the recovery in prices (to the point where it was mid-May), one could argue that this is a possibility, once-in-a-lifetime to get a global company - which is now the largest creditor mortgage - with a return thatover 7%. Opportunities do not come often. Note that if the dividend is not cut to 7% yield to a new buyer can not never fall in relation to the original investment. In fact, it's up if and when BAC increases the dividend.

In the case of BAC still on my Top 40 list? Maybe. Do you think that Lewis, as he is the dividend 'safe', you say? What do you expect that he said? You BAC dividend increase, its year? I do not know, but this alonenot to the exclusion of the company. Do you think in the future, the financial sector will recover, and stocks like BAC, the price returns to the first? I know, although it will probably take some years. Think of the savings and loan crisis of the years 1980 and 1990? Banks recovering from that, but with much aid the government and a series of bank failures. A similar scenario played today: A lot of government help, along with some errors.

AsInvestor can form your own opinion about the Bank of America. For my money, it seems a good long term investment. The occasion is close to zero otherwise. The dividend is very high for a strong economy. And I think this storm and will continue to appreciate again in the price.

I go for the dividend, so I'm not so worried until I get a field of "growth" would be. In the meantime I will happily collect my checks eachQuarter.

This is my guess.

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