Dividend Prince or Pauper? Valuation Tips to Separate Good from Bad

Hum as you read the following ... How much is that dividend-doggie in the window? The one with good dividends trailing. How much is that dividend-doggie in the window ... is it over-priced or at a good sale? Sometimes it can be a bit difficult for new income investors to separate a good dividend paying company from a mediocre one. Yields are insignificant if capital losses feast on your total portfolio worth. You may even end up paying tax on supposed income, while sitting at a net loss. We are going to attack a couple dividend-doggies (not used in a derogatory sense, but instead a cute puppy waiting to be bought) and come up with a rough valuation for the stock, and some general guidelines for how much the stock could earn in the future. We will start with a utility company and then end with a technology stock. The Southern Company (SO) Over the past five years this stock has bounced between $26 - $40 per share, and it currently is making another run at all time highs. The forward annual dividend yield is 4.8%. What we want to know is if this is a fair price for the stock and how much we can expect to earn over the next 10 years.... Read more