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Unformatted text preview: ne of his companies. When he called the company, he was told that they had run into
financial trouble and were suspending dividend payments. Sam, to his surprise, found out
that even companies that have paid dividends for decades are not legally obligated to keep
paying them. Sam also found that four of the companies in his portfolio called themselves
real estate investment trusts, though he was not quite sure what they did He found out soon
enough when the entire real investment trust sector dropped 30% in the course of a week,
pulling down the value of his portfolio. Much as he tried to tell himself that it was only a
paper loss and that he could continue to receive dividends, he felt uncomfortable with the
knowledge that he had less savings now than when he started with his portfolio. Finally,
Sam also noticed that the remaining six stocks in his portfolio reported little or no earnings
growth from period to period. By the end of the third year, his portfolio had dropped in
value and the dividend yiel...
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- Spring '11