Mark Your Calendar: August 18 at 4 p.m. EDT…
|ECONOMY & MARKETS | August 15, 2016|
Dividends, Buybacks and Low Interest Debt. Oh my.
By John Del Vecchio, Editor, Forensic Investor
When I'm on the hunt for an investment opportunity, I want a company that pays ME first!
Is Your Portfolio Sucking Wind???
But the third way to create shareholder yield is to pay down high-interest debt. A company that does that essentially "pays" us well to own it. By paying down debt it saves cash because it's not paying interest.
The market is just now catching on to the debt pay down, and growing cash pile, at this boring telecom.
The old Xerox has evolved into a very financially sound company and a large part of that is slicing away 42% – almost half! – of its long-term debt in the last five years. In addition, Xerox freed-up 50% of its short-term obligations in the last four years. This is phenomenal. It provided cash for the company to buy back a third of its cheap shares.
So what has the former copier giant, now services provider, done to pay us even more? Since the time it began mega-buybacks, Xerox has boosted the dividend every year for an 82% overall bump.
With a 3% yield and only a 30% payout ratio today, there is much more room to pay down debt, buy back more cheap shares – they are cheap – and hike the dividend.
The market hasn't rewarded the stock yet – it's watching numbers that don't matter – but I see the future.Use this shareholder yield trifecta to identify stocks that pay you first. Your investment portfolio will benefit!
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This work is based on SEC filings, current events, interviews, corporate press releases and what we've learned as financial journalists. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation.
Monday, August 15, 2016
Hidden Profits: Stock Pick Trifecta
Posted by Unknown at 4:21 PM