10-15-2013, 09:09 AM
(This post was last modified: 10-15-2013, 09:42 AM by hendi_alex.)
I think that paying too much attention is counter productive anyway. Quarterly variations tend to make a person far to short term oriented. I've heard complaints from CEOs on Bloomberg or elsewhere, that the pressure to keep up quarterly numbers is often a distraction from the longer term goal of the company.
Also there is the apple to oranges aspect, of business like MLPs and REITs which use FFO or DCF or other metric to better reflect overall profits and dividend coverage. Comparing these to other companies, using GAAP would needlessly create a false cause for concern.
Perhaps do as you are doing, but mostly pay attention to the tone of the CC/quarterly releases, and then dig into the annual reports once per year to compare YOY performance. But even YOY only has relevance in the context of the business cycle or in comparison to performance of competitors.
"As many have observed, companies can tinker endlessly with earnings, but dividends can't be faked -"
For fairly prolonged periods dividends can be covered by share offerings or by issuance of debt. What you say is probably true of the well known big cap dividend Aristocrat types of stocks that most investors here hold. But when one enters the murky waters of MLPs, REITs, MREITs, BDCs, telecoms, etc. determining dividend coverage, to me, becomes one of the most important metrics. Dividend coverage can not be calculated without finding some real measure of the cash that is left over after all of the bills have been paid.
Also there is the apple to oranges aspect, of business like MLPs and REITs which use FFO or DCF or other metric to better reflect overall profits and dividend coverage. Comparing these to other companies, using GAAP would needlessly create a false cause for concern.
Perhaps do as you are doing, but mostly pay attention to the tone of the CC/quarterly releases, and then dig into the annual reports once per year to compare YOY performance. But even YOY only has relevance in the context of the business cycle or in comparison to performance of competitors.
"As many have observed, companies can tinker endlessly with earnings, but dividends can't be faked -"
For fairly prolonged periods dividends can be covered by share offerings or by issuance of debt. What you say is probably true of the well known big cap dividend Aristocrat types of stocks that most investors here hold. But when one enters the murky waters of MLPs, REITs, MREITs, BDCs, telecoms, etc. determining dividend coverage, to me, becomes one of the most important metrics. Dividend coverage can not be calculated without finding some real measure of the cash that is left over after all of the bills have been paid.
Alex