As I was reading the backdated January 2012 Smart Money, there’s a topic on (Where to Invest 2012) One of them is the Dividend payers stocks which they have recommend.
Excelon (EXC) – US company in the utility services dealing with energy generation business. 2/3 of their business is dealing with Nuclear Energy.
High dividend yield stock with good past dividend track record, however, between March and May, there’s a cut in their dividend.
Assume the dividend growth remains the same; Excelon share price has already exceeded the intrinsic value. However, most people will tend to go for its high dividend yield.
Even though, the investor will still continue to receive their dividend but they will also lose their initial capital which they have invested. From the stock chart, we can see that the share price has been trending down all this while since after the financial crisis.
Therefore, this particular stock should be avoided & in regardless any stock picks from the media, books or magazine, we should always take it with a pinch of salt.