BAC yields 6.02% at todays price
yitbos
Posted on 02/11/2008 10:41:37 PM PST by bruinbirdman
Bank of America and Chevron became the latest companies to be selected for the Dow Jones Industrial Average stock index on Monday in the first change to the share market barometer since 2004.
The new members to the benchmark, which dates back to 1896, replace shares of Altria and Honeywell from next week.
The Dow has been one of the most recognisable equity benchmarks for investors since its inception as a 12-stock average.
The Dow set a record close of 14,164.53 last October and is trading at 12,122.71, down 8.6 per cent so far in 2008.
Changes in the average are supervised by The Wall Street Journal’s editorial board and this is the first time that the 30-member average has been changed since Dow Jones was bought by Rupert Murdoch’s News Corp last year.
“The catalyst for these changes is the restructuring in progress at Altria, which will result in a much smaller and more narrowly focused company,” said Marcus Brauchli, managing editor of The Wall Street Journal.
Constituents of the Dow are chosen with the aim of making the benchmark representative of the US economy.
The Dow has gradually moved away from reflecting just industrial companies but critics contend that it remains a narrow market benchmark. Broader, rival indices include the S&P 500.
The average is calculated on the price of its 30 constituents and not their market capitalisation. This means Dow stocks with high share prices carry more weight in calculating the average.
The addition of Bank of America and Chevron will raise the weighting of the financials sector from 11 per cent to 13.9 per cent and energy from 5.5 per cent to 10.8 per cent, said analysts at Bespoke Investment Group.
Bank of America was trading 0.6 per cent lower at $41.93 while Chevron was down 0.7 per cent at $78.73. Chevron was in the Dow from 1930 to 1999.
Honeywell was dropped because it is the smallest of the industrials in terms of revenue and earnings, said Dow Jones.
The changes mean that the weighting of the industrial sector in the Dow, its largest group, will fall from 26 per cent to 22 per cent while consumer staples will decline from 16.4 per cent to 11.6 per cent, said Bespoke.
The Dow was last changed in April 2004 when American International Group, Pfizer and Verizon Communications replaced AT&T, Eastman Kodak and International Paper. Since then, AIG has fallen 44 per cent, Pifzer has lost 38 per cent while Verizon is up less than 1 per cent.
AT&T subsequently become part of the Dow again in November 2005, through its merger with SBC Communications, which had joined in 1999.
The Dow is a ‘dinosaur’. Sure it gets the most press—but professional investors use the S&P 500 as their baseline.
Bank of America was one of the chief culprits in the subprime crisis, as they were pushing for no document loans to illegals. They should be put out of business.
Yes, they were.
But they (and all lending institutions) were also pressured by the GOVERNMENT to give inner-city and minorities 'sub-prime' loans--when normally those groups would have NEVER normally qualified.
BAC pursuing CFC was a dumb move. BAC may well get ripped off.
But with the FED pushing down interest rates...and the government dropping money out of 'helicopters' (i.e. this latest WEALTH TRANSFER SCHEME)--who knows.
BAC yields 6.02% at todays price
yitbos
That yield is VERY enticing....but so was C’s. They just cut their dividend.
It was the CFC stockholders that got raped. BofA got it for pennies on the dollar. Even if cfc’s portfolio has more big writedowns, BofA landed one of the best servicing providers in the industry which was the crown jewel. CFC services something like 1.5 trillion in loans. Its a huge longterm revenue generator. Word is already out that BofA plans to shutdown most of countywides operations in CA, and move the majority of it to Texas and the east coast.
If BofA makes this work, it will be an incredible deal for them.
How about Chevron?
Yield 2.88%
yitbos
Sports Illustrated cover jinx?
yitbos
yeah, welcome to the new economy. Insanity I tell ya.
So how many “former” Standard Oil companies are on the Dow now?
[as if the Standard Oil trust was broken up yesterday - that’s been almost 100 years ago now]
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