Exerpts

Rather than boring you further with the news of extra-terrestrials, let me share with you some recent wisdom of my friend Warren.

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Dear Szeto,

How do you compare 2 and 1038 for a portfolio with equal emphasis on stable dividend income and capital growth? I am a bit worried whether 2 can still sustain its current dividend payout. Thanks.

Warren

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Dear Szeto,

Please check this out.

Although I haven’t examined the cash flow, but both the dividend increment and debt ratios favor 1038. However, 2 is remarkably (20-30%) more expensive than 1038.

I don’t know this huge premium of 2’s management over 1138’s is justified or not. After all, the superman didn’t exploit 1038 even during the worst days of their business in the early 2000s.

It appears that the institutional investors rushed to 2 for its apparently superior dividend rate in the short term as well as the higher liquidity.

You can also take a look of the 3rd slide which illustrates how Mr. Market treats these 2 companies as a weighing machine.

You can also take a look of 737. My wife is holding this and the current dividend rate is around 6.5%. However, I will sell it after reaching its intrinsic value (~25-30% to go).

Warren