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This is why I don't.........

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This is why I don't.........

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  #11 (permalink)
Calgary Alberta/Canada
Posts: 934 since Feb 2014

johnedoe View Post
This is why I don't listen to the news or put any trust in fundamentals...........

If reading analyst reports and media rags are what you consider "fundamental" analysis then you are only asking for trouble.

If you want to deal in fundamental analysis you should learn how to tear apart a Financial report and not depend on others, who may have their own agenda, doing it for you.

For example in your example of Prospect Capital has a monthly dividend with a 13% yield paying $0.111/share/month

Stock Market Quotes | Stock Market Quotes and Symbols

SO....this is not a stock that one would buy for a day trade or even a short term swing of 3-4 buy it for the dividend....a cheap stock of about $10/share...if you had say 10,000 shares you would be making $1110.00 in dividends every month.

The big questions you must ask....from a FUNDAMENTAL point of view are:

1. Has this company ever defaulted on its dividend payment?

2. Has the dividend payout risen or fallen over the past years? answer these questions you look for the answers either by combing through their financial records

Prospect Capital Corporation

or you may have a source that will visually give you this information

Stock Market Quotes | Stock Market Charts and Graphs

You would find out that prior to 2010 the dividend was quarterly and after that the dividend was monthly.....this company NEVER missed a dividend payout and the dividend rose constantly since 2010...there was a drop in payout from $0.40/share/quarter to $0.10/share/month gut over the last 4 years the dividend (and share price has been inching upward)

FROM A FUNDAMENTAL point of view a good benchmark for evaluating a dividend stock is: what happened to this stock during the crash of 2008 -2009.

Well if you check out that chart I gave you.... not only did the dividend not miss a payout but the payout actually had a slight increase through this time....check out JPM, C and BAC as to what their dividend profile was like then.

As for the publications from Motley Fool goes

Prospect Capital Corp.: A High-Yield Dividend Stock on Sale (PSEC)

By Matthew Frankel

Specifically, the biggest concern for a lot of shareholders is Prospect's ability to continue paying its high monthly dividend, which is why many people invest in the company in the first place. Prospect generally declares its monthly dividends well in advance. For example, during the last quarterly report (in May), it declared the amount and dates of its dividends all the way to the end of the year. No such announcement was made this time, which led to investor speculation that a dividend cut might be on the horizon beyond December.

During the company's most recent conference call in late August, Prospect President Grier Eliasek said investors shouldn't read too much into the situation. Rather, since the company has already declared distributions through December, management has more time to digest market information over the coming months. And the company continues to have "spill back" income to use as a bank.


Despite the potential of a slight dividend reduction after December, Prospect looks like a pretty solid buy right now. The company currently trades at about a 5% discount to its net asset value of $10.56 per share, so even if the dividend ends up falling to say, 12%, you are still buying a pretty nice income-generating pool of assets at a discount.

A pretty positive analysis and one I agree with frankly.

Now this one is written by a different analyst - Jordan Wathen

3 Reasons Why Prospect Capital Corporation Stock Could Fall (PSEC)

There is a case to be made that shares could continue to decline, however -- although, of course, no one can predict the future (so they could in fact go up).

I love that quote... talk about definitive...hardly an analyst I would follow. Since he wrote the next article I would completely ignore him as he cannot make up his mind

3 Reasons Why Prospect Capital Corporation Stock May Rise (PSEC)

If you are going to take advice from sources like Motley Fool and Seeking Alpha find an analyst who consistently makes good analysis of a stock....all analysts are not equal.

Better yet....learn how to do it yourself ......... that is the best way.

Based on the fact that the dividends for this company are cast in concrete until December and its past performance, especially during the crash, if I owned the stock I would probably look to increasing my holdings on the dip.

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  #12 (permalink)
Eugene, Or. USA
Posts: 18 since Sep 2014


All good points and I understand what you are saying.
As to the motley fool I don't subscribe to them either...... The paste up of the reports was only an illustration regarding the wide range of opinions sometimes even buy the same guy who appears to be bipolar and can't decide weather PSEC is a good buy or a bad one..
As to PSEC I agree it is an income type stock that would be better used as such and not a short term trade as a rule, but not entirely eliminated from that arena either.

Anyway thanks for the great contribution.....

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September 20, 2014

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