Dividends are normally from their cash-flow. As long as the dividends are below their cash-generation ability. It's sustainable.

And JTI is generating a lot of excess cash. Which is why the paid the special dividend last year. Their normal dividends are still below their cash from operations.

EPS is not an accurate indicator of a company's ability to distribute dividend, although it is still an important factor. The cash generation from operations is a much more important data.

This post has been edited by skiddtrader: Feb 28 2013, 12:52 AM

Thanks for the clarification gark.

Your assumption that cash flow generated is used to calculate the net profit is wrong. Net profit and EPS is calculated without taking cash flow into account.

Which is why EPS should not be used as a main indicator of dividends because it does not reflect the ability of the company to pay CASH.

Neo is one of the few people I know of in this forum that made it to millionaire status investing in stock.

Though his methods are more aggresive using leverage from banks to by more and more share. Only when you achieve a certain degree of confidence will you 'sai lang' your wealth to a particular stock and see it fly.

I'm sure there are other more quieter sifu around here also millionaire status.

Yup, most of us would not dare. Which is why he made it faster than most of us.