I am not a financial advisor but an individual investor trying to navigate my way through a mind field. In these posts, I am acting as an unpaid financial journalist and an occasional ornery political commentator. I am also aggregating financial news stories that I view as important and providing any reader of these posts, assuming there are more than a couple, with links to those articles, sort of a filtered, somewhat intelligent, free search engine. Any discussion made by me of particular securities is not a recommendation to buy or to sell. Trade at your own risk. Consult with your financial advisor prior to making any purchase or sale. I will try to identify my sales too but it may take a few minutes after I implement them to create a post explaining my reasons. The sale may before or after the post. Before buying or selling any stock, even one recommended by a trusted financial advisor, please research it and make up your own mind which is what I always try to do. Research would include reading reports, reviewing financial records, earnings estimates, sec filings and prior earnings releases and news. In this post, and all others by me, I am merely describing my reasons for purchasing or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale. The securities mentioned in this and all posts written by me may not be suitable for others based on their unique financial position and risk profile. Always read the prospectus before buying a Trust Certificate, bond, preferred stock or other bond or bond like investments
Monday, November 10, 2008
Emerson Electric Great Plains Energy & Trust Certificate Dividends
One of my many daily routines is to check the WSJ's Market Data Center for information. The first page has data on such items as LIBOR yields and a link to the dividend page containing dividend declarations and stocks that go ex-dividend the next day.Dividends - Markets Data Center - WSJ.com I noticed this morning that three Trust Certificates that I own will go ex-interest Wednesday (tuesday is Veterans day) -JZV, JZE & JZJ. I know now to expect that the price of each of these TCs will be adjusted down by the amount of the interest payment on the ex dividend date. This is true also for some stocks that I own which I have discussed in these posts including Emerson Electric, Ingersoll- Rand and DuPont. Normally, I would not consider buying anything so soon before the ex-dividend date, unless there was a significant decline in price shortly before the ex-dividend date. I do not expect such a decline today.
I have previously discussed Emerson Electric (EMR) and Great Plains Energy (GXP). I mentioned that I wanted to wait to see whether the 2009 guidance by GXP was in effect an earnings warning.More Pain to Come: Cisco and NWSA; BDN, GXP & ALJ EARNINGS I now believe that it was, due in part to the share dilution resulting from its acquisition of Aquila and the anticipated lower demand for electricity caused by the economic slowdown. After reading the transcript of the earnings call, I believe that management is making an effort to preserve the dividend even though the dividend payments per share will likely exceed EPS next year. Great Plains Energy Inc. Q3 208 Earnings Call Transcript - Seeking Alpha This can not continue for very long however. I am going to maintain my plan for a possible small add to my existing position in GXP.
I also previously noted that I was impressed with Emerson Electric's 3rd Quarter earnings.Stocks & Politics: Emerson Electric and the Goodyear Tire TC XKK Emerson was very cautious about the prospects for 2009 which caused me to pause in making an add. Emerson Electric Co. F4Q08 (Qtr. End 09/30/08) Conference Call Transcript - Seeking Alpha This caused many brokerages to slash their target prices and their earnings estimates for fiscal 2009, ending in September. With a weakening global economy, it would be reasonable to expect one or more earnings warnings in 2009 from industrial companies like Emerson. On the other hand, I do have a favorable opinion of this company and its management. The long term chart reveals that the stock climbed steadily from an adjusted price of 2.34 in August 1982 to what looks like a double top in the 56 to 57 range in December 2007 and May 2008 (price adjusted for 3 splits, two 2 for 1 and one 3 for 1) The stock is not close to its September 2002 low during the last bear market of around 21 but it is near its prior price in the late 1990s. Balancing the risks and benefits as best I can, recognizing that more pain will likely come, the current price is just to tempting to ignore. I will therefore add to my small position in very small increments, meaning 25 or 30 shares, with no buys over 35 and spreading out the purchases in the event the stock falls further, buying additional shares at 32 to 34 , then at 28 to 30, 24 to 25 and 19 to 21. With online brokerage commissions so low, it does not cost me much to do it this way. I also realize that I do not save that much. This is more psychological than anything. If I took a full position now, I might sell to stop losses with a 15% decline and then I might be reluctant to buy it back after even more of a decline and of course after waiting more than 30 days to avoid the wash sale rule. Doing it the chicken way is psychologically tuned for me, keeping me honed to a plan that I can follow which will work long term provided I am picking the right stocks. Needless to say, this kind of approach would not have worked with Lehman, AIG, Washington Mutual, Bear Stearns, Worldcom, Enron, Fannie and Freddie, just to mention a few examples that I have managed to avoid. If any of these targets are not reached for Emerson, then I will simply hold onto whatever shares I have, waiting until the next bull market shows its age and then start to sell, starting with the higher costs shares using FIFO accounting.