Category Archives: Geraldine Weiss

Dividend Cuts

Posted on February 23, 2024 by | Leave a comment

On February 22, 2024, we saw the following posting that reminded us of the information that dividends convey:

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Posted in dividends, Geraldine Weiss, NEM, PMI, Price Momentum

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DJIA Yield Profile: 1948-2043

Posted on March 11, 2020 by | Leave a comment

In a July 1999 issue of Investment Quality Trends published by Geraldine Weiss, it was observed that a dynamic shift in the history of the Dow Jones Industrial Average may have been in the process.  Weiss said the following:

“For more than 100 years, the benchmarks of value for the Dow Jones Industrial Average have been 3.0% at Overvalue and 6.0% at Undervalue.  Now, the venerable D.J.I.A. has climbed so extremely high, it’s dividend yield has dropped to 1.5%…the lowest in history.  The situation intrigues us and causes us to wonder if the Dow is establishing a new profile of value between dividend yield extremes of 1.5% at Overvalued (where stocks should be sold) and 3.0% at the former Overvalued level (where stocks can be bought).  Throughout history, there has been a 100% differential between the high and low dividend yields at historical extremes.  The D.J.I.A. now is 100% above its historic benchmark of Overvalue.

“If in fact the profile of value has changed from the Dow Jones Industrial Average (time will tell), then it is reasonable to assume that some blue chip stocks which also have climbed far beyond their historic levels of Overvalue, may be experiencing a similar fundamental change in their profiles of value.  We saw the other side of the coin in 1982, when interest rates rose to unprecedented levels and some interest rate sensitive stocks established extremes of high yield at Undervalue. (Weiss, Geraldine.  Should Some Overvalued Stocks Be Re-Evaluated? Investment Quality Trends. Mid-July 1999. page 12.).”

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1983-2010

Our updated dividend yield profile for the Dow Jones Industrial Average since Weiss’ 1999 observation is below:

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We’ve included the old high yield of 6% and old low yield of 3% with the new 1.50% overvalued level for contrast.

Because the March 2009 low fell short of the 6% dividend yield on the Dow Jones Industrial Average, many market analysts were not willing to accept the fact that the market would turn to the upside.  They waited and waited with the view that the rebound was a Fed induced rise rather than a fundamentals and values based increase.  Those same analyst were forces to wait out the most hated bull market in history, claiming a crash was coming for over 10 years.

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Posted in DJIA, Geraldine Weiss, IQTrends, Yield Profile

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Dow Altimeter Review

Posted on May 20, 2014 by | Leave a comment

As the Dow Industrials meander near all-time highs, it is necessary to review Edson Gould’s Altimeter for the index.

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Posted in Altimeter, Dow Industrials, Dow Theory, Edson Gould, Geraldine Weiss

Dividend Yield is a Matter of Perspective

Posted on February 28, 2010 by | Comments Off on Dividend Yield is a Matter of Perspective
A reader asks:

How is it that you can characterize stocks that yield less than 2% as "dividend" stocks?

Touc's reply:

The purpose of tracking the stocks in our Dividend Achiever Watch List is because the companies have a history of increasing their dividend every year for at least 10 years in a row. The choice of selecting a Dividend Achiever based on the yield becomes up to the investor.

However, as a matter of observation, selecting stocks based solely on the "high" yield has seldom resulted in long-term financial security. In addition, my "research" has shown that stocks with a low dividend yield but a higher average annual compound growth of the dividend tend to outperform stocks with a "high" dividend yield but a low compounded annual growth rate of the dividend. For this reason, I'm willing to look more closely at the compounded annual growth rate of the dividend for lower yielding stocks. Again, this is among the many factors that go into selecting any one of the stocks on our New Low Watch List.

Another factor that we consider when selecting Dividend Achievers is the relative yield of the stock. If a stock has a history of dividend payment increases over an extended period of time then we can determine the relative buy and sell points. Buying and selling stocks based on the relative yield is explained in the books Relative Dividend Yield by Anthony Spare, Dividends Don't Lie by Geraldine Weiss and Dividends Still Don't Lie by Kelley Wright. An excellent February 20, 2010 interview of Kelley Wright's most recent book can be found on the Financial Sense website here.

One example of a low yielding stock is Helmerich & Payne (HP). We recommended the stock on Sept. 2006 because, on a relative basis, the stock was under-priced. Subsequently, we gave a sell recommendation after the stock had gained 141% in August 2008. We later recommend HP when, on a relative basis, it was attractively priced in March 2009. Since March 2009, the stock has increased over 80% to the current price of $40.52. The point is that, on an absolute basis, the yield on HP never reached 1.50% when the stock was at its lowest price (high price = low yield/low price = high yield.) However, on a relative basis, the yield was very high for the stock.

It is far more important to focus on the history of dividend increases rather than the yield. Once you’ve narrowed down the quality stocks based on dividend increases then it is suggested that you compare the current dividend yield to the historical range for the stock in question. At least, this is the way the New Low Observer team likes to look at dividend paying stocks, regardless of the yield.

-Touc

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Posted in Anthony Spare, book, dividends, Geraldine Weiss, Kelley Wright, relative yield