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  • TARP Is Bad for Dividend Investors
    I couldn't disagree more. It's not the TARP that's bad news for investors, it's the current economy and credit crisis. That State Street is using the TARP as its excuse for not raising the dividend is unsurprising, as it wants to maintain this "dividend aristocrat" reputation, but can't responsibly raise its dividend currently. There's nothing in what is quoted that indicates that the TARP means the end of dividends or dividend increases.

    The first paragraph is quite similar to language seen in any preferred share prospectus; the company may not pay dividends on common stock unless it pays dividends on the preferred, and in the case of cumulative preferred unless it has paid all dividends owed to date.

    The second paragraph says the Treasury must give consent for an increase in dividends. It doesn't sound at all that Treasury is putting undue restriction on dividend payments. Rather, it's making companies justify any dividend increases. Sounds logical to me.

    I don't think any company that's successful enough in this environment to increase its dividend would face a Treasury "veto." I also don't think rational investors should expect any company to increase dividends these days. I'd rather see companies conserving cash or making smart acquisitions.
    Dec 31 10:58 am |Rating: +5 -1 |Link to Comment |View article
  • TARP vs. Non-TARP: Investing with Uncle Sam at a 60% Discount
    The preferreds are indeed interesting - take a look at the PGF, the dividend of which has been impaired (dropping from about 0.125/month to .108), now yielding about 9.5% and priced about 27% lower than its August average, (when the yield was a bit more than 8%), and 37% less than its average from the first part of the year (when the yield was about 7%). Assuming the big banks' and insurers' preferred dividends survive (which they must, since losing those dividends are would crush their ability to raise additional capital), this fund should have a nice capital gain; if not it still provides a monthly income stream.

    Of course, yesterday it lagged the overall market by more than 8%.

    One quibble: don't expect 3-month LIBOR to grow at any point in the near future; expect it to shrink.
    Oct 29 08:26 am |Rating: 0 0 |Link to Comment |View article
  • Schumer Is Way Off
    You write as if you think this capital infusion is the sum total of what's happening. Did you even listen to Neel Kashkari Monday morning?
    Oct 15 08:29 am |Rating: 0 0 |Link to Comment |View article
  • News Flash to BofA's Lewis: Demand Isn't Problem - Supply Is
    But you're missing part of the story. Your earth-sized hurricane doesn't just destroy the energy infrastructure - it destroys much of everything else, so there is certainly a demand aspect to your example.

    Of course, your example isn't particularly apt, as much of the increase in revenue in the financial industry has been increasingly disconnected from the real economy for years.
    Oct 08 08:22 am |Rating: 0 0 |Link to Comment |View article
  • History Suggests the Financial Bottom May Be Near
    "Reminds me of the character in Animal House who is yelling during the parade "everything is fine - everyone remain calm" while the riot ensues."

    That would be Kevin Bacon.
    Sep 16 12:18 pm |Rating: 0 0 |Link to Comment |View article
  • Financials To Resume Meltdown Momentarily
    "...buy and hold has been a losing strategy."

    Has there EVER been a bear market where "buy and hold" wasn't a losing strategy? For that matter, is there ever a time when "buy and hold" isn't outperformed by any number of other strategies? The difficulty (some would say impossibility) is in selecting short-term strategies which, looking back over a longer term, have outperformed.

    "1. SEC protection against naked short selling ends now."

    And you don't think the recent decline in the financials is anticipatory of this rule change? Why do you think the effect isn't already priced in?

    Much of the rest I agree with, except one thing: the value of prime mortgages. The decline in prime, GSE-backed mortgages presents a huge opportunity for the well-capitalized, as the market has beaten down their values unnecessarily. Those who are able to keep large amounts of these assets on their books will be rewarded on the other side of this correction, as these assets will appreciate almost exactly as much as they have depreciated to date. The government has made clear that it will make good on FNM and FRE promises - where's the risk that has caused these assets to decline?
    Aug 13 08:39 am |Rating: 0 0 |Link to Comment |View article
  • The 20 Highest of the High-Yield Dividend Aristocrats
    Don't forget to consider Countrywide as an entry for BAC. It's running about 90% of the deal's value, which I don't think is enough of a spread to cover the risk involved, though there has been no indication of BAC backing away. If you're interested in BAC and want to play arbitrageur, consider CFC if the spread widens.
    Jun 19 01:32 am |Rating: 0 0 |Link to Comment |View article
  • The 20 Highest of the High-Yield Dividend Aristocrats
    Be very, very careful with this list. Here be some monsters.
    Jun 18 15:51 pm |Rating: 0 0 |Link to Comment |View article

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