Just when things were looking bright and sunny, Wachovia steps up to spread gloom. The company reported yesterday higher than expected losses and a dividend cut. I never cease to be amazed at the fact that in this age of free-flowing information, a company like Wachovia can “surprise” investors with a loss of $350 million and a 41% dividend cut. Maybe we were all lulled into a dream-state by Wachovia CEO, G. Kennedy Thompson. In January he proclaimed:
Will Wachovia cut its dividend? And the answer to that question is we have no plans to cut the dividend, because we don’t need to cut the dividend. We are confident in our ability to meet our 2008 business plan and that plan, as we have said before, will generate cash earnings that will cover our dividend payments, continue to build necessary credit reserves, improve our capital ratios and support growth in our business lines.
Thanks Mr. Thompson. It was (not) nice having you as CEO of Wachovia. The Thompson job watch has now officially started.
The Thoroughbred Folio took a severe beating over the last week. Not a surprise as the market continues to sour on inflation and earnings reports. I just have to marvel at the fact that these corporations are incapable of coming clean with investors from the start.
No dividends this week which brings my spirits down even more. Combine that with the recent cold snap and I feel like I have been transported back in time to two months ago. Nucor and VF Corp continue to dominate and Family Dollar has climbed on board with the leaders. The bottom of our Folio is littered with banks. Fifth Third and Regions were not helped by Wachovia’s confession. Leggett & Platt continues to under perform and has solidified its spot in the bottom three.
Thoroughbred Performance (Week 17 of 52): $-209.83 (-6.99%)
Dividends To Date: $24.47
Top 3 Stocks
- Nucor Corp
$12.09 (16.13%) - VF Corp $7.25 (9.67%)
- Family Dollar Stores $2.63 (3.51%)
Bottom 3 Stocks
- Fifth Third Bancorp $-21.22 (-28.29%)
- Leggett & Platt $-17.65 (-23.53%)
- Regions Financial $-16.17 (-21.56%)
Stocks used in this post:
- (FITB: 7.805, +1.23%, Yield: 15.30%)
- (FDO: 25.31, +0.96%, Yield: 1.95%)
- (LEG: 12.50, +2.12%, Yield: 8.17%)
- (NUE: 26.65, +4.43%, Yield: 8.50%)
- (RF: 7.72, +0.78%, Yield: 16.19%)
- (VFC: 41.29, +3.33%, Yield: 5.81%)
April 15th, 2008 at 3:56 pm
I had been leary about a dividend cut Wachovia for a while now.
One of the newsletter I subscribe to had it as a recommendation so I gave it a good hard look especially with a divided of 9.1% On close examination of thier there was no way they could of supported thier then present rate. I’ll be honest and say I thought the cut would be in the 60% range.
I am still kicking the tires of two US banks but haven’t but I am not in any hurry to buy. We will see what WFC reports this week.
April 15th, 2008 at 3:58 pm
The end of the previous post should read as:
On close examination of thier cash flow there was no way they could supported thier then present divided rate. I’ll be honest and say I thought the cut would be in the 60% range.
I am still kicking the tires of two US banks but haven’t but I am not in any hurry to buy. We will see what WFC reports this week.
April 15th, 2008 at 4:08 pm
We all wait with bated breath as all the banks report. Regions Financial reported a 1% increase in net income today. Nice to see that not all banks are as idiotic as Wachovia and Citi. Regions said part of their gain was due to Visa IPO.