Thursday, January 29, 2015

Dividend stocks: a commentary

Here's P&G:

It's down 10%, but it yields 3% today. Would you buy that, or a 10Y UST?

Hold on, before you answer: their dividend also goes up by about 6% a year. Literally. I mean I checked the chart and I don't see a time when they've ever cut their dividend over the past 20 years. So, if you were to buy this and reinvest the dividends, that would be the same as a bond yielding 3.83%. That is, if the stock price remained constant, which it hasn't, it's gone up 50% over the past 10 years and that timeframe includes a market crash.

Would you buy that, or a 10Y UST?

Sure, it's underperformed SPY since 2002, but we're not talking about equities, we're talking about fixed income.

I'm not the type of person who buys P&G, but dammit why are people selling this?

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