WWII 036: How to Analyze Dividend Paying Stocks, Reverse Stock Splits, Trading Cyclical Stocks, Payrolls Grew 246k in January

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This episode is about a bunch of things to think about when analyzing dividend paying stocks.

Main Topic: Analyzing Dividend Paying Stocks

This list is not meant to be all-inclusive, but represents a short list of things to look at, analyze, and think about when analyzing dividend paying stocks.

· Stable, diversified business with a competitive advantage.

· Predictable growth in revenue and net income

· Increasing underlying net cash flow to feed growing dividends

· Low payout ratio

· Long history of growing payouts, not static

· Dividend Yield that is higher than the average

· Low enough market cap that it can grow

· Share repurchases

· Quality Management

· Low Debt to Equity

· Reasonable price – earnings yield, FCF yield

I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.”



Mark Cuban
Investor

Ask JB: Reverse Stock Splits and Trading Cyclical Stocks

submitted 2 months ago by athermalwill

I own some Alcoa (AA) shares. They recently announced a 1 for 3 stock reduction. How wil this affect my shares?

JB Says: A reverse stock split does not change the value of your underlying shares, or the total amount you have invested. It only changes the number of shares outstanding. In this case, simply divide the total number of shares outstanding by three. Your stock may be rising from $5 a share to $15, but your position value stays exactly the same.

Trading durable goods based on GDP? (self.investing_discussion)

submitted 3 months ago by xcaliberdude

I was reading about durable goods (cars, tires, refrigerators, etc.) in my economics class and I learned that these goods not only follow GDP, but are magnified by it. So for example, when the economy is good, people are more likely to buy the durable goods that they need to replace. The exact opposite happens during a recession.

So my question is, would it be a good idea to trade companies that sell durable goods based on how the economy is doing? That is short them during a good economy and trade them regularly during a bad economy?

Sorry if I am completely off with this idea. I am new to investing and I am trying to make these types of connections with what i'm learning in my courses.

JB Says: Most of this information is already factored into stock prices. Further, shorting creates unlimited potential losses for you. A stock can rise forever (no upper limit) but you can only make 100% on the short if it goes to zero. If the good economic times last longer than you planned, you go broke.

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News:

http://www.cnbc.com/2017/02/01/private-payrolls-grew-246k-in-january-vs-165k-est-adp.html

http://www.cnbc.com/2017/01/26/sell-ratings-by-wall-street-analysts-almost-never-happen.html

Thoughts on this podcast? Disagree with me on some point? Something I missed? Leave a comment!

About the Author

Jeremy Scott Bailey is an investor, author, entrepreneur and host of the "What Works In Investing?" podcast now available on iTunes. He is founder and Chief Investment Officer of Burgeón Group, Inc. an investment advisory firm that provides portfolio management services to families and individuals.

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