Forum Archive Index - September 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Tim,

>
>
>Found what I was looking for. Embarrassing to say where.
>
> 

If you had swallowed your embarrassment and told us where it was you 
would have saved me ten minutes trying to find it. Why are some 
people embarrassed so easily!!!   

I guess you are talking about the front page of the sharechat 
website with the link to the David McEwen article?

A couple of points I would make about it.  The reason why US 
companies don't pay out high dividends is that it is not tax 
effective for them to do so for investors.  There is no equivalent of 
our 'imputation credit' scheme in the USA.  So paying out a  dividend 
means the profit used to create that dividend is taxed twice.  I 
think McKewen's allegation that low dividends implies dodgy 
accounting is churlish and even a little mischievous.

McEwen raised the idea of a share screening test based on a series of 
questions.

quote
-------------

1/Have earnings per share grown in five of the last six years?

2/ Has the company increased or maintained its dividend in five of 
the past six years?

3/ Is the dividend yield at least 50% higher than the risk free rate 
you can get from government stock?

4/ Has the company produced positive cash flow in at least five of 
the past six years?

5/ Does it have a low ratio of debt to equity, compared with others 
in the same industry?

6/ Is the company vulnerable to a fall in earnings because, for 
example, it is a minor player in an increasingly competitive 
industry, or it operates in a cyclical industry?

--------------
unquote

Wouldn't it be great if you could find a company that satisfied all 
of those *and* paid a great dividend yield of 8% or so (which would 
be needed to satisfy (2) ).  I noticed though, that McEwen didn't 
name such a company.  I'm not surprised as I can't think of a 
single company that would fulfil these criteria.  Perhaps some other 
sharechatters can?

SNOOPY








---------------------------------
Message sent by Snoopy 
e-mail  tennyson@caverock.net.nz
on Pegasus Mail version 2.55
----------------------------------
"You can tell me I'm wrong twice, 
but that still only makes me wrong once."

----------------------------------------------------------------------------
To remove yourself from this list, please use the form at
http://www.sharechat.co.nz/chat/forum/