The Pimco California Municipal Income Fund II said Wednesday it may be forced to delay the payment of its November dividend, as well as the declaration of its next scheduled dividend due to severe market disruptions.
http://biz.yahoo.com/ap/081126/ p…d_dividend.html

You’re right, Tortoise. I also worry about the deeper implications that corporations saw fit only to buy back stock during the best times, having seen no more useful way to spend or reinvest it. Was that a result of compensation structures, or a sign that trend growth in our economy has slowed badly?

This time around, the markets are going to be injected (continued) with liquidity that will blow your mind. Share prices and markets should go up due to the prop job but the value of the dollar will wipe out any gains……This is called hyper-inflation. Not a bubble but pure lack of confidence in a currency.

Happens all the time. Past, present and future.

http://radio.goldseek.com/sinclairnuggetnov25.mp3

Likewise for the articles arguing that stocks are cheap because P/E is low: Invariably, no one is using realistic forward estimates for that earning denominator.

As a corporation, you’re right. As an investor, that’s precisely when you do want the dividends, so you too can reinvest them cheaply. As a laid-off commenter here ruefully pointed out, dollar cost averaging when you only get paid and receive dividends during the good times is a real screwjob.

Anyway, buying equity is definitely a gamble in this environment but with prices the way they are, you can come out way ahead if you pick winners.

Just be careful. Every fundamental metric you’d use to value these securities must be treated as suspect in this environment, including dividend yield. If the worst should happen, you absorb all losses first.

If you feel bullish, you might apply your instincts to buying junk bonds or convertibles instead. They’re at record wides to Treasuries, and in the unlikely event of bankruptcy, you’re in a much better position.

Anyway, buying equity is definitely a gamble in this environment but with prices the way they are, you can come out way ahead if you pick winners. Everybody investing for the long haul understands this, but everyone also has a different concept of what a winner is, so the rally just around the corner will lift everything. Don’t drink the kool aid, focus on value for your investing dollars, and you’ll get to share in the rewards. Isn’t that what capitalism is all about?

As I continue watching the yield curve fall apart, I question how long it will be, before the 10-year Treasury falls below 3%, thus when I see any corporation with a div yield near or above 3%, alarm bells go off
A great recent example is a stock like Citi which has a crashing share price but a dividend that hangs in place, frozen and unchanging, as if Citi is a great future growth opportunity. The juxtaposition and inequitable disparity of the crashing market value and the illogical off-set of offering dividend bait is absurd to a point where it’s false and misleading touting. How can a company like C support and then sustain a dividend? Citi has EPS of negative $4.09 per share and they have to beg taxpayers for cash to keep the doors open, but they have a div yield of 10.80% — wow, I’m impressed and I wonder how many people will get a piece of that going forward. Going back to my theory, C, IMHO is overvalued by at least 11%. Don’t get me started on compensation and XMAS Bonus structures, or I’ll never shut up…

The solution to this dividend problem can be easily found by going back and doing some DD on WaMu, Indymac and a long list of stocks that have decreased EPS, decreasing earnings yields (the inverse of the P/E) high share prices and high div yields — which obviously are related to Treasury yields at zero.

Furthermore, this overvaluation of these assets is directly related to the probability of deflation, thus in this story here, to read that, “ Stock dividends are disappearing at the fastest rate in 50 years as the worsening recession forces U.S. companies to conserve cash” is no shock to me at all. The fact is, money is being destroyed and not replaced.