(12-26-2013, 10:25 AM)ronn38 Wrote: Are we assuming any company with that low a payout ratio will raised dividends to attack buyers to the stock, is that the play? I think the company has a future and will be around for many more years... but I guess this, at least to me, seems like a gamble.
Hey Ronn. As far as playing F with options, I consider it a complete gamble. I'm playing a hunch with just a few dollars for fun and education. I'll be pleased if I turn a profit, but no biggie if I lose. I did pull the trigger, by the way, on the Jan 2016 call $15.00 strike for $2.43. My "thesis," if you can call it that, is just that they are going to sell a lot more cars than anticipated, which will cause some better than expected earnings reports and share price increases. There are a thousand ways I could be wrong.
As far as buying F shares outright as a good dividend growth stock, I would not buy it today. I did buy 200 shares of Ford back in July 2012, for less than $9 per share. They had real earnings, and it had a big margin of safety then in my mind, and I figured they would grow the dividend aggressively at least in the short to medium term, so I jumped in with a small position. I believe in the company and still think the dividend will grow nicely from here, so I am happy to hold those shares as part of my dividend growth portfolio. I'll keep a close eye on it, though, perhaps even with some trailing stops. I doubt it will be a hold forever position like KO or JNJ. With the share price up a lot and recently reduced guidance, though, I wouldn't buy it today as a dividend growth stock. There are plenty of other fish in the sea!
