Exelon Buyback the Good News, Guidance the Bad
is giving investors mixed news Thursday. The company announced a stock repurchase program, while at the same time lowering its 2008 earnings guidance.
The company said it plans to purchase $1.5 billion of its shares over the course of the next six months. At the same time, the company lowered its earnings guidance for 2008 to $4.15 to $4.30 a share, below the estimates of analysts surveyed by Thomson Reuters of $4.36 a share.
We turned cautious on the stock on Aug.1, when we removed the name from our recommended list. The stock was trading at $78.62 at that time. We noticed the price action was beginning to lag, and felt the stock's dividend yield was too low for us to want to hold it through the drop we felt was coming. The company's dividend yield is 2.78%, based on Wednesday's closing stock price of $71.91.
Exelon is a solid company, but we just don't find it to have an attractive risk/reward at this time. The stock isn't a recommended dividend stock at this time, holding a Dividend.com rating of 3.4 out of 5 stars.
Lehman Partnership Rumors Running Rampant
is a hot topic, as the financial services company continues to search for a suitor to help solve its liquidity issues.
The latest rumors include state-owned
Korea Development Bank
proposing to buy a 25% stake in Lehman through a consortium with other South Korean banks. There also has been talk of Britain's
HSBC Holdings PLC
as an interested party. Japan's
Mitsubishi UFJ Financial Group
, previously mentioned as a possible partner, has denied reports it's considering making a bid for Lehman.
We still think this situation isn't a good one for long-term investors. For an investor focused on the shorter term, there is the possibility of getting in and out on different headlines that cross the tape. But we advise avoiding Lehman.
Lehman isn't recommended dividend stock at this time, holding a Dividend.com rating of 2.8 out of 5 stars.
AIG to Spin Off Bad Securities into Separate Firm
American International Group
, according to the New York Post, may be working on a deal to spin off the bad securities that have handcuffed the company into a separate entity.
The company traded recently near its 52-week lows, even as some financials have been starting to show some life. AIG's move, in concept, is apparently very similar to what
had done recently.
Many investors have to be scratching their heads as to how these financial maneuvers can even take place. We're sure many individuals would love the luxury of being able to scrap some of their own bad personal debt into a "new" entity. We're still avoiding shares of AIG at these levels. AIG may be able to bounce back at some point, but we certainly wouldn't be on board yet with this company.
AIG isn't a recommended dividend stock at this time, holding a Dividend.com rating of 2.4 out of 5 stars.
H&R Block Reports Narrower First-Quarter Loss
reported quarterly losses that were narrower than a year earlier.
The company reported a fiscal first-quarter net loss of $132.7 million, or 41 cents a share, compared with a year-earlier loss of $302.6 million, or 93 cents. Improved off-season results from tax services were offset by a loss in the consumer financial services segment, mainly because of a roughly $20.4 million increase in loss reserves and asset write-downs at H&R Block Bank.
Tax services revenue rose 7.7% from a year earlier to $75.3 million, primarily because of a 16% increase in U.S. retail clients served.
Management also maintained its previous 2009 earnings guidance of $1.60 to $1.70 a share.
We like H&R Block at its current levels, and would use any significant drop to add or start a position in the name. We have been recommending the shares since we initiated coverage in early June, when shares were trading at $22.98. The company currently has a 2.26% dividend yield, based on Wednesday' closing stock price of $26.50.
H&R Block is a recommended dividend stock, holding a Dividend.com Rating of 3.5 out of 5 stars.
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At the time of publication, the author had no positions in stocks mentioned, although positions may change at any time.
Tom Reese and Paul Rubillo are senior editors of Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.