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Two Ways To Play: The S&P Dividend Snip


Strengthen your portfolio in good times and bad.

The Wall Street Journal reports Standard & Poor's cut its estimate for 2008 dividend payments by the members of its S&P 500 index, and said it expects fourth-quarter dividends to fall by 10%. If so, it would mark the worst quarterly performance in 50 years.

Senior analyst Howard Silverblatt said the prospects for dividends are extremely cautious; he specifically highlighted financial stocks. The firm sees index members paying $28.05 a share, down $0.80 from S&P's previous estimate, and up just 1.2% from a year go.

Silverblatt also noted S&P 500 companies have announced 35 dividend cuts totaling $31 billion for all of this year. In the previous 5 years, there were just 12, totaling $3.1 billion.

For more context on the economy, see Professor Depew's Five Things You Need To Know.

From the Bull Pen: Consider Verizon (VZ) for an upside play. With relatively healthy cash levels, a 6.5% dividend yield, and the stock already near its 52 week low, it may be poised to pop.

From the Bear Cave: Bears are wary of high yielding financials stocks. One example is possibly Citigroup (C) which yields 4.51%. This stock shouldn't even be paying a dividend and bears would be wise to steer clear.

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No positions in stocks mentioned.

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