Analyst Articles

One of the things I like best about dividends is that they are paid in cash and thus impossible to fake. With that said, however, dividends can be cut or eliminated altogether if a weak company gets into trouble. Dividend cuts may happen if earnings plummet, debt covenants kick in, acquisitions are made and any number of other reasons. If you’re an investor who relies on dividends to supplement your paycheck or retirement, then the bottom line that you’ll have… Read More

One of the things I like best about dividends is that they are paid in cash and thus impossible to fake. With that said, however, dividends can be cut or eliminated altogether if a weak company gets into trouble. Dividend cuts may happen if earnings plummet, debt covenants kick in, acquisitions are made and any number of other reasons. If you’re an investor who relies on dividends to supplement your paycheck or retirement, then the bottom line that you’ll have less income to cover life’s necessities.#-ad_banner-# The best way to avoid a dividend cut is to limit your investments to financially strong companies that manage their cash conservatively. A key measure for this is the dividend payout ratio, which is the percentage of earnings the company allocates to cover dividends. Lower payout creates a safe cushion for covering the dividend even if temporary setbacks depress the company’s earnings. The great news for income investors is that we are in the middle of… Read More

When assessing any stock, you need to weigh the risk against reward. Yet for Apple’s (Nasdaq: AAPL) shareholders, it’s a challenging task. To be sure, it’s really hard to see how much risk there is when Apple’s net cash balance stands at $137 billion — and is on its way to $200 billion in a few years. Management has started dropping hints that shareholder-friendly moves are coming, which usually means stock buybacks or big dividend boosts.#-ad_banner-# Still, even as Apple carries relatively minor… Read More

When assessing any stock, you need to weigh the risk against reward. Yet for Apple’s (Nasdaq: AAPL) shareholders, it’s a challenging task. To be sure, it’s really hard to see how much risk there is when Apple’s net cash balance stands at $137 billion — and is on its way to $200 billion in a few years. Management has started dropping hints that shareholder-friendly moves are coming, which usually means stock buybacks or big dividend boosts.#-ad_banner-# Still, even as Apple carries relatively minor risk, it’s not clear what kind of upside investors should expect either. As I noted a couple days ago, competition is gaining on Apple, which could lead to market share erosion and falling margins as price cuts ensue. Yet there is another major consumer electronics company that also carries a fairly low level of risk, but also offers the potential of significant upside. It’s a company that was the “Apple” of the industry before Apple took off like a rocket during the past decade. And it’s a company that… Read More