Dividend paying stocks more dependable than "earnings"

I got an email today from Schaeffer Research, which is basically Bernard Schaeffer who publishes The Options Advisor, his entry-level option newsletter product, predicting that there're going to be a lot of disappointing earnings announcements in the weeks to come, now that the first quarter has closed out and companies will be providing their net earnings for the first quarter.

And of course he says this will mean a lot of profit opportunity -- he foresees a lot of volatility.

Yet the thrust of the email is bullish, so apparently he think that companies will post earnings that are actually higher than investors expect. So even if they're lower than the last 3 years, they'll be higher than expected, and that means a lot to a lot of traders.

Of course, earnings always go up and down. Plus, earnings is an accounting figure subject to accounting manipulation. Cash flow is a more dependable indicator in many instances, because it can't be manipulated. Either there's money in the bank account or not. The bank doesn't care about appreciation or off the books limited partnerships.

And the best way to evaluate cash flow is to find the companies that continue to increase dividends year after year -- they are more dependable than quarterly earnings statements.

Schaeffer's tracks a put/call ratio, and that's the highest it's been in over 3 years. So stock prices may well go higher, if he's right.

But remember that you can spend dividends and still keep the stocks.




dividend increases
dividend increases