More on Cisco

·         Cisco was up 10% in one day when she announced earning and boosting the dividend rate from 1.8% to 3.2%. The intrinsic value of the company is the same as the day before and dividend should not change its value by 10% in one day.

Dividend investors are willing to pay premiums on dividend stocks and some dividend ETFs have to buy them when they raise dividends above the average (about 2% for S&P 500 companies).

For the same reasoning, if a dividend stock cuts its dividend, their stock price will fall. As of 8/2012, it happened to several energy trusts. In the boom days of oil prices in 2007, two of my energy trusts were almost doubled and paid great dividends. When the oil prices fall, the reverse would be true especially with so many blind dividend chasers. These trusts require more effort in preparing tax returns unless you buy them in your retirement accounts.

Cisco should use its cash to buy companies like ALU, which would provide the state-of-the-art products they do not have and a customer base in the EU.

·         Every time I posted this article, it was deleted. Do you find this article offensive or wrong?

·         Whom to blame: A beautiful and sexily dressed girl jogging in the middle of the night in a quiet street or the rapist? Both but only one goes to jail.