Qualcomm Inc (QCOM)

[khemara_qc]

For dividends, heed potential of 'single-digit'

CHICAGO TRIBUNE

June 20, 2004

You hear about these "hefty" increases in stock dividends. Then you look, and they're still in the low single digits! That can be misleading, because dividends may rise over time (unlike interest on a bond, which is fixed for the life of the bond), and today's "low" stock dividend can turn into a nice return later if you're a buy-and-hold investor. Today, yields of most blue-chip stocks are between one-half percent and 4 percent, with the average of 1.7 percent. The yield is calculated by dividing the annual dividend by the stock price.

Example: Allstate insurance company stock pays $1.12 a year in dividends and sells for about $44, which gives it a yield of 2.5 percent. But if you had bought it when it went public in 1993 at $13.50, your return would be a neat 8.3 percent. With last year's federal tax cut on dividend income, Joseph Keating of AmSouth Bancorp says his firm is emphasizing "stocks that have a long-run history of paying dividends and that also have the potential to boost payouts from current levels."

Keating's list: Bank of America Corp., Coca-Cola., May Department Stores, United Technologies and Johnson Controls.

Rick Keller of Keller Group Investment Management in Irvine, Calif., wants his clients to consider fast-growing companies that may not pay great dividends now, but have the ability to pay much more.

Keller's list: Microsoft, Qualcomm and Goldman Sachs Group.

http://www.newsday.com/business/local/newyork/ny-bztipsb3859359jun20,0,6534259.story?coll=ny-nybusin...