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1 Dividend to Buy, 1 Dividend to Sell

The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Brendan Byrnes and consumer goods editor/analyst Austin Smith discuss topics across the investing world.

In today's edition, Brendan and Austin discuss one dividend they'd buy and one they'd sell. Brendan dislikes Safe Bulkers, even despite its high dividend and low P/E. Austin likes The Buckle for its special dividend and long tenure in the retail space.

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Austin Smith and Brendan Byrnes have no positions in the stocks mentioned above.The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (3) | Recommend This Article (8)

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  • Report this Comment On January 20, 2012, at 2:53 PM, KaiUli wrote:

    Good information on The Buckle. You mentioned that the dividend yield is over 7% with the inclusion of the special dividend that seems to be an annual event. However, you excluded the special dividend when mentioning the payout ratio of around 25%. With the special dividend, the payout ratio is unsustainable at 106%.

  • Report this Comment On January 20, 2012, at 3:34 PM, TMFBWItime wrote:


    Thanks for the comment!

    You bring up a great point, and this is the tricky part with a special dividend. I chose to mention the payout ratio for the regular dividend because that is the one they are more "married to" so to say. Because the special dividend is a one time event, they are not bound to try and maintain an unsustainable payout ratio.

    Thanks for the thoughts, fool on!

  • Report this Comment On January 21, 2012, at 12:40 PM, lemonpeel2 wrote:

    I am not sure your advice on SB is a sound one, even though you are largely correct on the state of the industry. Here is why:

    1. Good contract coverage for 2012/2013, meaning the P/E and payout ratio is not going to change much. If industry suffers going beyond 2014-2015 they may be in trouble, but I am betting some companies would be under water by then, taking some of the oversupply out. I applied similar logic to AHT 2-3 years ago when it was less than a dollar.

    2. Insider ownership. If you apply this to Buckle, you should apply it to SB.

    3. What SB has to do with Greece, except that ships are under this flag? Could you give some hypothetic scenario under which SB is taking a hit?

    4. High net profit margin compared to industry average

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