Stock Banter

At 10:55 this morning, I sold 1/2 of my INTC position at $23.2716 per share. Since we are past the x-dividend date of May 4 and the date of record of May 7, I will still recieve my June 1 dividend payment.

Why the sell?
1. Goldman Sachs downgraded the stock to a target of $20 per share.
2. I can buy back the stock before the August 4 (estimated) x-dividend date.
3. It looks as if INTC has reached a peak. So I’m taking some off the table.
The dividend rate is currently 3.04% so I want to be back in this stock before the first of August. If the stock drops below $20, I will likely buy at that time.

I still believe that INTC has a great story and will be a large part of the future of computing. If the stock does drop yet the fundamentals hold up, I may double my buyback. And I’m keeping half of my position just in case Goldman is wrong and the corporate pc upgrade kicks in large.

Uncle Gary Asks, “If dividends are the way to accumulate wealth, does it pay to own stocks that don’t pay a dividend?”

The idea that triggers this thought is an article I read a few weeks ago:

http://seekingalpha.com/article/215869-a-10-step-process-of-improving-portfolio-returns-part-i?source=email_most_popular
Adopt a long-term investment approach (future dividend flows), rather than momentum (short-term price change).

Step one is all about a simple choice you have. You can decide to invest in a business as an owner, allowing the business to generate long-term wealth for you. Or you can decide to buy a piece of paper in hopes that someone will buy your paper at a higher price than what you paid for it.

As the owner of a business you are entitled to receive all the earnings that your company can generate through its day to day operations. These earnings can be paid to you in either a check, or as a reinvestment towards the future growth of you business.

For the past 100 years or so, businesses in the U.S. have generated about a 5% annual growth in capital through reinvested earnings, and in addition have paid about 4.5% a year in income to their owners. The funny thing is, the U.S. Stock Market has averaged an almost identical return with a 4.5% dividend yield and a 5% earnings growth.

The problem for many shareholders in adopting this long term approach is that many of you measure the value of your business by the daily market price of your company’s shares. Thinking only about the short-term price swings, instead of business operation performance, will place you into the momentum camp. Resist it and you will be rewarded.

I  like stocks that yield rather than bonds. Bonds are overbought in my opinion and many others .

Even with dividend taxes going up January 1, 2010 (if the Bush tax cuts are allowed to expire), I believe in dividend paying stocks. They are all near their lows for the year since investors have been anticipating the tax cut repeal.

But what if the tax cuts are extended for some or all including those making over $250K/yr? This could be extra bullish for high dividend yielding stocks.

That’s why I have been buying high dividend stock such as MO (my favorite at 6.74%), ED at 5.04%, INTC at 3.4%, GE at 3.3%, PG at 3.2%, TAP at 2.5%, WMT at 2.37%, MSFT at 2.18, CSX at 1.98% and KR at 1.87%.

I bought another 1/4 of my target position in INTC.
Happy to get a 3+% divident yield on this safe tech play.

I currently hold 50% of my target position in INTC.

More: INTC

Another down day, another chance to buy really on the cheap.  Here is my current ‘bottom fishing list’.

AAPL ‘Apple Inc Com Limit 200

GE ‘General Electric Co Com Limit 15

HPQ ‘Hewlett Packard Co Com Limit 40

MO ‘Altria Group Inc Com Limit 20

C ‘Citigroup Inc Com Limit 3.5

GOOG ‘Google Inc Cl A Limit 400

INTC ‘Intel Corp Com Limit 20

Looking for great deals on Tech, Finance, and high dividend yielders.

I don’t want to see these stock fall to these levels. But if they do, I’m a buyer.

Citicorp

Goldman Sachs

Procter and Gamble

I have buys in for C at $3.80, GS at $140 and PG at $60. I will be picking up 1/4 of my max target allocation in these securities if they fall to my strike price.

Fantastic opportunities once again are presenting themselves to investors. I’m ready with more cash right now.

Selling is on hold until the next up-tick, where I hope to sell MSFT at $35 and INTC at $29.

This trade looks like a steal at $20. INTC just reported last week a fourth-quarter profit of $2.3 billion, or 40 cents a share, compared with a profit of $234 million, or 4 cents a share, for the year-earlier period. Revenue was $10.6 billion, up from $8.2 billion for the same quarter in the year-earlier period. Adjusted income was 55 cents a share.

Check the chart, this INCT is way oversold due to remarks made by President Obama on banks receiving TARP and his plan to collect ‘our money.’

Analysts had expected the chip giant to report earnings of 30 cents a share, on revenue of $10.2 billion, according to a consensus survey by Thomson Reuters.

Last Friday, analyst Vijay Rakesh of ThinkEquity upgraded Intel’s stock to buy from hold, citing the company’s “strong execution, good value, a stronger 2010 PC cycle.” Strong server chip sales also reaffirmed the anticipated up tick in corporate demand as businesses begin upgrading and replacing aging systems. The trend is expected to give Intel and other chipmakers a new big boost.

INTC”s strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, attractive valuation levels and expanding profit margins.

INTC’s revenue growth has slightly outpaced the industry average of 22.2%. Since the same quarter one year prior, revenues rose by 28.5%. The gross profit margin for INTEL CORP is currently very high, coming in at 76.50%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.60% is above that of the industry average.

This is a new position in INTC although I have previously owned and sold all INTC shares in the past.

I sold all shares of INTC at $16 on 06/19/2009 booking a 14.57% profit in about 6 months. I saw no impetus for this stock in the short term, therefore I sold my entire INTC position once the stock crossed $16 per share. I will consider buying back INTC in the future if the stock adjusts or new products look like they may move the stock. For more info why I sold see: Sell all INTC at $16