culture, politics, commentary, criticism

Monday, January 13, 2003
The rush to dividend-paying stocks has begun. Want to take advantage of Bush's latest salvo in the War against Non-Rich Classes? Here's a tip sheet from
NEW YORK, Jan 12 (Reuters) - Even before U.S. President George Bush this month unveiled his tax cut plan that could eliminate dividend taxes for investors, Merrill Lynch's chief U.S. strategist picked 18 dividend-paying companies he said could offer investors safety and income, according to Barron's magazine.


Bernstein's picks include Merck & Co. Inc. (NYSE:MRK), Procter & Gamble Co. (NYSE:PG), Abbott Laboratories Inc. (NYSE:ABT), Gillette Co. (NYSE:G), 3M Co. (NYSE:MMM) and BellSouth Corp. (NYSE:BLS).
"Let Us Praise Steady Dividends," the original article in Barron's (subscription only – link) adds to the above information with a little-known aspect of the "stimulus package":
Of course, there will be other ways to benefit from a dividend tax cut. One lower-profile area set to benefit is the market for perpetual preferred stock. Those shares pay a dividend (although they typically give the issuer the option not to make the dividend payment), and they do not mature.

There is about $24 billion of perpetual preferred stock outstanding, estimates William Scapell, a director at Merrill Lynch. That's about 15% of the larger preferred market, which also includes trust preferreds and preferreds issued by real estate investment trusts. Those two, however, wouldn't benefit from the Bush plan because their issuers have already received a tax benefit.

Unfortunately, many of the more appealing preferred issues have rallied sharply in anticipation of the tax change. For example, Alabama Power, a unit of Southern Co., has perpetual preferred that pays a 5.2% dividend. On December 18, the yield to the 2008 call date was 11.3% and now it stands at 5.96%.

Likewise, Citigroup's perpetual preferred, with its 6.365% dividend, once offered investors a yield of 9.26% but now yields 5.53% to its 2007 call. But if Bush's tax cuts and Bernstein's predictions of a more risk adverse world come to pass, even low dividends could command the market's attention.
How much does W love the rich? Giving them $674 billion is a very public display of affection.

Say farewell to growth stocks for a while. Kiss computer technology, wireless, biotech and nanotech goodbye.

The "stimulus package" is already shaping up to be a scandal analogous to Daddy's S&L debacle, which was quite generous to W's competence-free brother Neil Bush.

Greatest Hits · Alternatives to First Command Financial Planning · First Command, last resort, Part 3 · Part 2 · Part 1 · Stealing $50K from a widow: Wells Real Estate · Leo Wells, REITs and divine wealth · Sex-crazed Red State teenagers · What I hate: a manifesto · Spawn of Darleen Druyun · All-American high school sex party · Why is Ken Lay smiling? · Poppy's Enron birthday party · The Saudi money laundry and the president's uncle · The sentence of Enron's John Forney · The holiness of Neil Bush's marriage · The Silence of Cheney: a poem · South Park Christians · Capitalist against Bush: Warren Buffett · Fastow childen vs. Enron children · Give your prescription money to your old boss · Neil Bush, hard-working matchmaker · Republicans against fetuses and pregnant women · Emboldened Ken Lay · Faith-based jails · Please die for me so I can skip your funeral · A brief illustrated history of the Republican Party · Nancy Victory · Soldiers become accountants · Beware the Merrill Lynch mob · Darleen Druyun's $5.7 billion surprise · First responder funding · Hoovering the country · First Command fifty percent load · Ken Lay and the Atkins diet · Halliburton WMD · Leave no CEO behind · August in Crawford · Elaine Pagels · Profitable slave labor at Halliburton · Tom Hanks + Mujahideen · Sharon & Neilsie Bush · One weekend a month, or eternity · Is the US pumping Iraqi oil to Kuwait? · Cheney's war · Seth Glickenhaus: Capitalist against Bush · Martha's blow job · Mark Belnick: Tyco Catholic nut · Cheney's deferred Halliburton compensation · Jeb sucks sugar cane · Poindexter & LifeLog · American Family Association panic · Riley Bechtel and the crony economy · The Book of Sharon (Bush) · The Art of Enron · Plunder convention · Waiting in Kuwait: Jay Garner · What's an Army private worth? · Barbara Bodine, Queen of Baghdad · Sneaky bastards at Halliburton · Golf course and barbecue military strategy · Enron at large · Recent astroturf · Cracker Chic 2 · No business like war business · Big Brother · Martha Stewart vs. Thomas White · Roger Kimball, disappointed Republican poetry fan · Cheney, Lay, Afghanistan · Terry Lynn Barton, crimes of burning · Feasting at the Cheney trough · Who would Jesus indict? · Return of the Carlyle Group · Duct tape is for little people · GOP and bad medicine · Sears Tower vs Mt Rushmore · Scared Christians · Crooked playing field · John O'Neill: The man who knew · Back to the top

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