Quote:
Originally Posted by GregWeld
Good article.... and is what I've been pounding here... remembering that this is Investing 102 -- not anything more or less.... because we can veer off and get into all kinds of investing/investments/hedge strategies etc. But that was not the OP question or direction...
I did go back and check out United Technologies (UTX) since it was mentioned here - and had been asked about in this thread.
I'm still not a "fan" for the reasons stated earlier.... which is -- in my portfolio --- the growth (18% over 5 years) doesn't overcome the relatively low 2.48% dividend. When I have a lower dividend - it's okay - if it's offset by better than average growth. In this case I don't think 18% over 5 years is worth the 2.48% cash flow. I think there are better opportunities out there when you do the comps.... Coke (KO) comes to mind -- with it's "low" dividend % of 2.79% but even this steady eddy has a 5 year growth DOUBLE that of UTX....
So remember... do your homework... no guessing. These comparisons are easy and just take a few minutes. And I'm using this as an EXAMPLE only of the way I personally think and do my investing. If there are OTHER REASONS someone wants to own UTX over COKE - I'm totally good with that -- that's their choice... and their reasoning. Just make sure if you're investigating companies to invest in - that you've done your own work and UNDERSTAND your choices. That's the key takeaway.
I compared UTX against a boring holding I have in the portfolio - Johnson and Johnson (JNJ) and the growth rate is "horrid" on JNJ -- it's actually DOWN 4% over 5 years.... and I mention this to make a point out of the above statement... I own this because of the stability it gives my account - and more importantly - my head. If you look at the long term chart - it (JNJ) don't go down much either. So for me - that's every bit as important. And here's why - to me - maybe we're in a funky market for 4 years or so and I'm down 35% overall -- and along comes a "deal" I want to do... I look around for available funds - and everything I own is down 35%... do I want to sell low? No! Am I getting good dividends off most of these "losers" -- YES! So here sits JNJ -- not much of a dividend - and it's only down 15%... guess where the cash is going to come from? I can sell JNJ - not be down "much" and won't loose much income either.... so it's what I call "parking" money... and everyone needs to have some money "parked".
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How about over a 10 year period which was what I was looking at. UTX up 143%, KO up 49%, JNJ up 12%.
That brings up a question. Depending on the time period you look at, one stock may look better over 5 years, but another may look better over 10 years. How do you decide what time period to use?