BMY yields 6%

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LTAccumulator
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BMY yields 6%

Post by LTAccumulator »

What's the catch w Bristol Myers Squibb yielding 6%
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RJSachs
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Re: BMY yields 6%

Post by RJSachs »

LTAccumulator wrote:What's the catch w Bristol Myers Squibb yielding 6%
Article from this week's Barrons
http://online.barrons.com/article/SB500 ... OL_hpp_mag

Full article can be accessed using the standard Google back-door trick.
richard
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Re: BMY yields 6%

Post by richard »

LTAccumulator wrote:What's the catch w Bristol Myers Squibb yielding 6%
That the dividend won't necessarily continue at that level
mkatz
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Re: BMY yields 6%

Post by mkatz »

RJSachs wrote:
LTAccumulator wrote:What's the catch w Bristol Myers Squibb yielding 6%
Article from this week's Barrons
http://online.barrons.com/article/SB500 ... OL_hpp_mag

Full article can be accessed using the standard Google back-door trick.
And what is the "standard Google back-door trick"?
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RJSachs
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Re: BMY yields 6%

Post by RJSachs »

mkatz wrote:And what is the "standard Google back-door trick"?
http://lmgtfy.com/?q=wonder+drugs+andrew+bary
Click on the result that matches the article (should be the first one).
metfield328
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Post by metfield328 »

The dividend has remained there and raising for the past 23 years, and it is about as safe as they come.
xerty24
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Re: BMY yields 6%

Post by xerty24 »

LTAccumulator wrote:What's the catch w Bristol Myers Squibb yielding 6%
when they pay out the dividend, the stock falls by that amount so you don't make money.
metfield328
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Post by metfield328 »

very wrong my friend.
kenbrumy
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Post by kenbrumy »

Holding individual stocks is always a losing game even for dividends. An individual stock even if it pays a dividend is subject to the same risk factors for such a focused investment. Bank of America, Fannie, Freddie, Citi, BP and many others used to pay a good dividend. Right now they are "gone with the wind."

An index fund of high dividend paying stocks along the lines of a total market index would be a better approach.

BMY pays 6% for a reason. The "smart money" must see a big drug coming off patent soon or high risk due to an existing drugs liability. The list goes on and on.

My advice is to stay out of individual stocks.
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DiscoBunny1979
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Post by DiscoBunny1979 »

kenbrumy wrote:Holding individual stocks is always a losing game even for dividends. An individual stock even if it pays a dividend is subject to the same risk factors for such a focused investment. Bank of America, Fannie, Freddie, Citi, BP and many others used to pay a good dividend. Right now they are "gone with the wind."

An index fund of high dividend paying stocks along the lines of a total market index would be a better approach.

BMY pays 6% for a reason. The "smart money" must see a big drug coming off patent soon or high risk due to an existing drugs liability. The list goes on and on.

My advice is to stay out of individual stocks.
----------------

This is crazy. The reason a boglehead would stay out of individual stocks is because of company specific risk. . . but . .

There isn't really a mass exodus from "smart money" selling BMY to lower prices so that the dividend is higher. According to Yahoo, there has been a net selling of 3.57% of shares AND only 2.4% shares are short. The stock is going lower because the overall market is in a poor environment. What's wrong with a Return on Equity of 23% and Quarterly Earnings Growth of 16%? The only bad thing is the pay out ratio of 91%. That's pretty steep.

Staying out of invidual stocks such as COP with a 4.5% yield, or MO with a
7% yield, or VZ with a 6.8% yield is fear. No one made any money by making investing decisions based on fear. And that's exactly why an Index Fund works for some investors. Index Investing takes the fear out of making bad choices. . . .one can blame the "market" for giving a bad result, rather than them making specific bad ones. It's easier to pass blame and responsibility to others and that's why Vanguard and other mutual fund companies will stay in business for a very long time.
minesweep
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Post by minesweep »

LTAccumulator wrote:What's the catch w Bristol Myers Squibb yielding 6%
The catch is that BMY has a current dividend yield of 5.18%.

Mike
kenbrumy
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Post by kenbrumy »

DiscoBunny1979 wrote: ----------------

This is crazy. The reason a boglehead would stay out of individual stocks is because of company specific risk. . . but . .

There isn't really a mass exodus from "smart money" selling BMY to lower prices so that the dividend is higher. According to Yahoo, there has been a net selling of 3.57% of shares AND only 2.4% shares are short. The stock is going lower because the overall market is in a poor environment. What's wrong with a Return on Equity of 23% and Quarterly Earnings Growth of 16%? The only bad thing is the pay out ratio of 91%. That's pretty steep.

Staying out of invidual stocks such as COP with a 4.5% yield, or MO with a
7% yield, or VZ with a 6.8% yield is fear. No one made any money by making investing decisions based on fear. And that's exactly why an Index Fund works for some investors. Index Investing takes the fear out of making bad choices. . . .one can blame the "market" for giving a bad result, rather than them making specific bad ones. It's easier to pass blame and responsibility to others and that's why Vanguard and other mutual fund companies will stay in business for a very long time.
When 30 year Treasuries are yielding under 4% (no risk if held to maturity), the only reason a stock would yield significantly above that is that the overall investment community has determined that there is a significant risk inherent with BMY and demands compensation in the form of a high dividend yield. The "overall investment community" could be right or could be wrong. I know I don't have any special insight into BMY so I'm sticking to the boglehead approach of avoiding individual stocks.

If you or anyone else are so inclined, go for it. We all have to make our own decisions.
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baw703916
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Post by baw703916 »

DiscoBunny1979 wrote:
kenbrumy wrote: ...An index fund of high dividend paying stocks along the lines of a total market index would be a better approach...
----------------

This is crazy. The reason a boglehead would stay out of individual stocks is because of company specific risk. . . but . .

There isn't really a mass exodus from "smart money" selling BMY to lower prices so that the dividend is higher. According to Yahoo, there has been a net selling of 3.57% of shares AND only 2.4% shares are short. The stock is going lower because the overall market is in a poor environment. What's wrong with a Return on Equity of 23% and Quarterly Earnings Growth of 16%? The only bad thing is the pay out ratio of 91%. That's pretty steep.

Staying out of invidual stocks such as COP with a 4.5% yield, or MO with a
7% yield, or VZ with a 6.8% yield is fear. No one made any money by making investing decisions based on fear. And that's exactly why an Index Fund works for some investors. Index Investing takes the fear out of making bad choices. . . .one can blame the "market" for giving a bad result, rather than them making specific bad ones. It's easier to pass blame and responsibility to others and that's why Vanguard and other mutual fund companies will stay in business for a very long time.


Sorry, but I have to agree with Ken on this one. To randomly pick a dividend-oriented ETF, DHS has a distribution yield of 4.5%, a reasonable expense ratio (0.38%), and less than 10% of its holdings in any single company. It seems like a pretty inexpensive way to hedge company specific risk, if one wants to follow a dividend-based approach. (I don't own this fund).

Brad
Most of my posts assume no behavioral errors.
kenbrumy
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Post by kenbrumy »

baw703916 wrote: Sorry, but I have to agree with Ken on this one. To randomly pick a dividend-oriented ETF, DHS has a distribution yield of 4.5%, a reasonable expense ratio (0.38%), and less than 10% of its holdings in any single company. It seems like a pretty inexpensive way to hedge company specific risk, if one wants to follow a dividend-based approach. (I don't own this fund).

Brad
Be careful, most people found agreeing with me on any subject are frequently referred to as "sorry." :lol:
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