In addition the tax laws treat dividends much less

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Unformatted text preview: n translate into low expected growth rates in earnings. In summary, a strategy of buying high dividend stocks historically has made the most sense for investors with low tax rates or for investments that are tax exempt, like pension funds. With the changes in the tax law, more investors may find this strategy to be attractive. If you adopt such a strategy, you should screen high dividend paying stocks for sustainability (by looking at dividend payout ratios and free cashflows to equity) and reasonable earnings growth. 42 Appendix: Firms that pass the dividend screens – October 2002 Stocks with dividend yields>4%, dividend payout ratios < 60%, dividends < FCFE and expected EPS growth > 4% Company Name Alexander & Baldwin AmSouth Bancorp. Arch Chemicals Banco Santander ADR Bay St Bancorp Books-A-Million Citizens Banking Cleco Corp. Colonial BncGrp. 'A' Comerica Inc. Commonwealth Industries Electronic Data Sys. Equity Inns Inc. FirstEnergy Corp. FirstMerit Corp. Goodrich Corp. Goodyear Tire May Dept....
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This note was uploaded on 01/17/2012 for the course ECON 101 taught by Professor Econnorm during the Spring '11 term at Art Institutes Intl. Minnesota.

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