Forum Archive Index - September 2002

[Phyllis Bergquist <phyl@clear.net.nz>]

Umm - where is it??????   Phyl
----- Original Message -----
From: <tennyson@caverock.net.nz>
To: <sharechat@sharechat.co.nz>
Sent: Thursday, September 05, 2002 12:49 AM
Subject: Re: [sharechat] Undervalued Gems article - found it


> 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."
>
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