Proxy Vechiles for Investing in Emerging Markets

On many occasions I have mentioned that emerging markets of India and China will be driven for growth in global economics. For US based dividend investors, there is really a lack of good quality dividend-based investing vehicle(s), and couple that with lack of maturity in financial markets, and we feel we are out of options.

TIP Guy at presented his thoughts on how dividends are perceived at least in India’s corporate world. I am reproducing certain snippets (with author’s permission).

continue reading rest of the article….

Which High Do You Prefer?

Do you prefer a company with high profitability, high revenue, high income, high dividends, high market share, high cash flow, etc. Aren’t all these highs depicting a good picture about any given company’s state of business? We can find an answer to this in the concept of value investing i.e. wide moat and under pricing. These are the two key ingredients for value investing. Here, the concept of wide moat and under pricing is in the context of its business environment or competition. It is a relative term. Similarly, when we think about any given company’s financial metric, we need to look at it in relative terms. High profitability or high income, or high EPS growth rate as a standalone does not provide a true picture.

We can get a true picture by looking for consistency. Two simple statistical measures of average and standard deviation can help us measure consistency. A standard deviation that is narrow and lower than average is a good observation. The table below shows some examples of randomly selected financial metric for few companies. continue reading rest of the article….

QCOM – Stock Analysis for Dividend Growth Portfolio

This article originally appeared on The DIV-Net, April 4, 2009.

Qualcomm manufactures and markets digital wireless telecommunications products and services based on its code division multiple access (CDMA) technology and other wireless communication technologies. QCOM is neither a dividend aristocrat nor a dividend achiever. QCOM has started showing some dividend growth trends in last five years. My objective here is to understand if QCOM has any potential to be a dividend investment.

Trend Analysis

This section looks at trends for past 10 years of corporation’s revenue and profitability. These parameters should show consistently growth trends. The trend charts and data summary are shown in images below.

  • Revenue: In general, after 2001, QCOM has stable and consistent growth in revenue. The average revenue growth for last 5 years is 24.3% (with 6.62% standard deviation).
  • Cash Flows: Relatively increasing trend for operating cash flow. In the last five years, the corporation’s operating cash flows are consistently higher than net income. The concern I have is the free cash flow is more or less similar to net income. There is very little room for flexibility in allocating cash for dividends.
  • EPS from continuing operation: In general, the EPS also has an increasing trend since year 2003 with average growth rate as 50%. Most of that growth is coming in 2003 and 2004. Since 2005, the EPS growth rate has been approximately 20%.
  • Dividends per share: Dividends per share are consistently growing for the last 5 years. continue reading rest of the article….

Opportunities for Technology Dividends

This article originally appeared on The DIV-Net, March 25, 2009.

Standard and Poor’s “S&P North American Technology Sector Index” (henceforth referred as Tech index) is widely used to benchmark the technology sector in North America. As of February 2008 the Tech index had a weightage of approximately 20% to 23% in overall S&P500 index.

The Tech index represents different sub sectors that include hardware (20 companies), internet (21 companies), multimedia networking (27 companies), semiconductors (43 companies), services (31 companies), and software (40 companies). This is a total to 182 companies in the Tech index. However, similar to any market capitalization based index, Tech index is also top heavy. The cumulative weightage for top 10 companies is approximately 64%, for top 20 companies it is approximately 79%, while top 30 companies it is approximately 86%. The table below shows top 30 companies including the annual per share dividends. There are 17 companies out of top 30 companies that pay quarterly dividends. continue reading rest of the article….

Demise of Dollar – Does it Affect Dividend Growth?

A quick and simple answer is, no it does not affect dividend growth if dividend investors understand what it really means.

Corporations pay dividends from the combination of profitability, cash flow, income, prudent money management, etc. With the current state of economy in United States (and other parts of the world) majority of the corporations are facing negative growth. In such a scenario where will dividend growth come from? In these challenging environment dividend investors need to look at the macro economic scenario and understand how it will play out in long haul over a period of next 10 years, 20 years, or 30 years.

We read a lot about demise of US dollar. At a very fundamental level, which country’s currency becomes a global currency will depend upon political maturity and economic stronghold at global level. continue reading rest of the article….

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