Just One Man's Opinion - 13 July 2005

by JMac

UPDATE - UPDATE - UPDATE - WENDY'S INTERNATIONAL

On July 1, I stated that IF you thought Wendy's was going to spin off Tim Horton's restaurants, you might consider it a "buy".

Today my local paper reports that an investment firm with a major position in the stock is urging management to franchise some company owned stores and spin off Horton's. The investor thinks Horton's would bring $36 a share and Wendy's would go to $29. (Wendy's closed @ $46.61 on Tuesday).

STOCK TIP OF THE DAY - screen Manpower, Inc., with employment on the rise this is best of breed.

BONDS vs. DIVIDENDS -

Albert Einstein said the greatest invention of all time was compound interest. That was before the tax rate on dividends was reduced to 15%. Consistent dividends are a measure of a company's soundness (they can fake a balance sheet, but not a dividend check). Now, with the lowest tax rate at 15%, they must be considered by all investors. These are the current top dividend payers in the Dow ( I omitted GM @ 5.3% as I do not believe their dividend is safe):

1. Altria 4.4%
2. Bank of America 4.1%
3. SBC 4.0%
4. Verizon 4.0%
5. Coke 3.8%
6.Citigroup 3.5%

If you own a bond, or a bond fund, that is paying 4.5% you are doing okay, right? NO! In the top tax bracket you are paying twice the taxes you would pay if you owned a similiarly paying common stock. Since the rate reduction, investors have saved one hundred million dollars that they would have otherwise sent to the government. Were you one of them ?