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Retirees: Beware Of High Dividends

Published Wed, 26 Jun 2019 17:00:33 -0400 on Seeking Alpha

I see a lot of retirees chasing big yields with little regard to their principle. Investing is about total return. Total return is dividends plus capital appreciation. The vast majority of returns in the stock market come from capital appreciation.
This is my strategy for picking stocks that I think can deliver alpha going forward.
I like stocks that still make sense from a value proposition, but they must also exhibit strong relative strength. This is a very rare combination that narrows down my universe considerably.
I call it Best Stocks Now. It does not matter if it is a Mega-Cap, Small-Cap, Micro-Cap or dividend paying stock, they must have both value and momentum at the same time
Now for my current analysis on a stock that I own in one of the four stock portfolios that I professionally manage. I currently own Microsoft (MSFT) in my Dividend & Growth portfolio.
Microsoft reported stellar earnings this past quarter, they beat on both the top and bottom lines. Their top line revenue growth came in 14% higher than the same comparable quarter last year, and their earnings growth was a very good 20% higher.
The company earned $3.88 per share last year, and if they meet their number this year ($4.59), they are looking at an annual increase of 18.0% in earnings. Not bad for a $1.06 trillion market cap company.
The consensus estimate for next year currently stands at $5.11 per share which would be growth of another 11% vs. next year.
Over the last... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
AT&T 33.26   12.4 2.68 2.04 6.05
MICROSOFT 136.27   30.3 4.50 1.84 1.32

AT&T - T
AT&T - T  

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