AAAMP Value Blog

A Value Investing Blog

Slow and Steady Wins the Race

Dividend Coverage Ratios: How Safe is Your Dividend?

Dividend Coverage Ratios allow analysts to evaluate the safety of a company’s dividend. Many investors concentrate on the dividend yield but don’t give sufficient attention to the safety of that dividend.

In the long run companies must create enough cash flow to pay expenses, invest in the future (capital expenditures), service their debt (if any), and return money to shareholders.

Dividend Yield: Definition, Calculation, & Relationship

Dividend yield is the annual dividend per share of a company compared to the price of the stock expressed as percentage. In other words it tells you the percentage dividend return the stock owner receives on the current price of a stock.

The dividend yield has historically provided approximately one-half of long term total stock market returns to investors. It’s a little less than one-half for those who take their dividend and little over one-half for those who reinvest their dividends.

Dividend Payout Ratio vs. Cash Dividend Payout Ratio

Dividend Payout Ratios provide us valuable information on how much money a company is returning to shareholders and their ability to pay and increase the dividend. One of these ratios is far superior to the other.

The Dividend Payout Ratio and the Cash Dividend Payout Ratio are compared to find out which is better at providing pertinent information to differentiate between various dividend paying companies.

Net Financial Debt and Ratios: Analyzing Leverage & Risk

Net Financial Debt and its ratios are an effective and efficient metric when analyzing companies. These metrics are more important than ever because of the corporate trend to leave cash overseas and borrow domestically.

The balance sheet is the foundation from which a company operates its business. A company’s liquidity and the leverage used play a big role in the success or failure of a business. Net Financial Debt is a critical metric for investment analysis.

Low Cost No Commission ETF Portfolios

Low Cost No Commission ETF Portfolios are the best approach for investors to get started with small investment amounts. ETFs are the perfect investment vehicle for beginning investors, smaller portfolios, and larger portfolios that want significant diversification in a particular geographical area, sector, or industry.

Intrinsic Value and Its Relationship to Margin of Safety

The purpose of estimating intrinsic value is to take advantage of mis-priced assets. Don’t get discouraged because you feel it’s difficult to determine the intrinsic value of a stock. It is not a science! It is the variables that make up your estimated intrinsic value that are more important than an exact intrinsic value number.

Portfolio Diversification Definition and Purpose

Portfolio Diversification is a foundational concept in investing. It can be a rather basic and easy to understand concept. However, in its implementation, many investors make catastrophic mistakes with too much concentration and others settle for average performance because of over diversification.
Portfolio diversification is a balance between concentration and over diversification to optimize risk and potential return.

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About

Ken Faulkenberry - Arbor Investment PlannerAs founder of the Arbor Investment Planner my passion is to educate and empower the individual investors to manage their own investment portfolio. The Arbor Investment Planner is a value investment portfolio management guide for those individual investors who choose to manage their own money. I focus on ideas and concepts important to the self directed investor; but put special emphasis on risk management, value investing strategies, and proper asset allocation and diversification.

- Ken Faulkenberry

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