09-02-2013, 11:16 AM
(This post was last modified: 09-02-2013, 11:32 AM by Horace Cugle.)
I have a position in KRFT I started last fall around $47. It has been as high as $58 but that was a momentary thing, it typically danced around $56 the last few months. It's under $52 now.
I'm not unhappy with that because I bought it for dividend reinvesting and on the hopes it might become a cash cow like MO with yearly dividend increases that make an impact. I wasn't expecting anything ridiculous like 15% raises, but hoping for 7%-8% DG for the next 5-10 years. Maybe a hair aggressive but not unrealistic, IMO.
Just reviewing some data on yahoo shows EPS estimates at $2.82 for 2013 and $3.21 for 2014. That's 14% earnings growth! Do I believe it, I don't know but I want to. 5 year forward estimate is 6.5% earnings growth. That doesn't bode well for my hope of 8% dividend increases. I don't explicitly trust yahoo data either, I often find mistakes.
But the fact is there's nothing that leads me to believe they'll raise the dividend at all; old KFT didn't do anything with its dividend. So maybe I'm banking on a bunch of hope, and as we've all found out, hope doesn't cut it if you can't back it up with something.
If you buy KRFT today you get a 3.86% yield and a big question mark on the dividend growth. If it grows the dividend as I hope it'll be a good stock to hang onto, if it becomes a 3% dividend grower then I don't think there's much point to holding it long term unless you just want an average performer or some ballast.
Feel free to straighten me out on KRFT. I want to love this stock but right now I'm just not feeling it.
I'm not unhappy with that because I bought it for dividend reinvesting and on the hopes it might become a cash cow like MO with yearly dividend increases that make an impact. I wasn't expecting anything ridiculous like 15% raises, but hoping for 7%-8% DG for the next 5-10 years. Maybe a hair aggressive but not unrealistic, IMO.
Just reviewing some data on yahoo shows EPS estimates at $2.82 for 2013 and $3.21 for 2014. That's 14% earnings growth! Do I believe it, I don't know but I want to. 5 year forward estimate is 6.5% earnings growth. That doesn't bode well for my hope of 8% dividend increases. I don't explicitly trust yahoo data either, I often find mistakes.
But the fact is there's nothing that leads me to believe they'll raise the dividend at all; old KFT didn't do anything with its dividend. So maybe I'm banking on a bunch of hope, and as we've all found out, hope doesn't cut it if you can't back it up with something.
If you buy KRFT today you get a 3.86% yield and a big question mark on the dividend growth. If it grows the dividend as I hope it'll be a good stock to hang onto, if it becomes a 3% dividend grower then I don't think there's much point to holding it long term unless you just want an average performer or some ballast.
Feel free to straighten me out on KRFT. I want to love this stock but right now I'm just not feeling it.