ACROSS THE UNIVERSE
If
you are a child of the Sixties – or a teenage
girl, apparently – don’t miss this wonderful movie.
DENTYNE ICE—THE PERFECT FOOD
I know: more
fruit and vegetables. I do that
too. But consider the advantages of chewing
a couple of those little white Dentyne Ice chiclet-like things every time you finish eating something. It’s akin to brushing after every meal, and thus good
for your teeth . . . good for your breath . . . which is good for your
social life and workplace relations . . . it’s a 20-calorie dessert substitute
(assuming you go crazy and chew four pieces, seriatum)
. . . which is good for your weight and thus for your health, social life again,
and self-esteem . . . it may even make you smarter. And at drugstore.com, it’s less than a buck a
pack.
WA-MOOOPS!
Friday’s
suggestion about Washington Mutual January 2010 LEAPS may or may not turn out
to be a good one, but there’s something one of you pointed out that I hadn’t considered: The underlying stock is currently paying a
6.3% dividend and has a multiyear history of raising the payout by a penny
every quarter. Which
is very nice, except that, of course, with the LEAPS you forgo the dividend –
and, perhaps more to the point, you will effectively have to pay it out of your LEAP price every
quarter when the stock goes ex-dividend.
Not literally pay it; but what happens when the 56-cent dividend is
declared is that, by definition, the stock is worth 56 cents a share less than
it was a minute ago . . . because each share represents ownership in 56 cents
less cash.
This is doubtless
one of the reasons the LEAPS carry only a modest premium over their intrinsic
value. (I may not have thought of this;
but the market has.)
I’ll probably
hang on to the LEAPS I bought. If,
despite the likely continued housing and credit problems, WM’s
dividend continued to increase a penny a quarter . . . bringing it to
$2.33 or so by January 2010 . . . and if by then the market had decided it could live
with a 5% dividend from WM . . . then the stock would be $46.60. (A $2.33 dividend divided by 5% =
$46.60.) In this happy scenario, the
option to buy it at $30, which today costs about $8, would be worth $16.60, or
about double.
Of course, if any
manner of challenges and difficulties should cause the stock to remain
unchanged, at $35 or so, you would have lost
a big chunk of your money (and if the stock were $30 or below you would have
lost it all) . . . whereas someone who had
chosen simply to hold the stock, rather than swing for the fences with the
LEAPS, would have been contentedly collecting more than 6% a year in dividends.
If you buy the
LEAPS, you must be prepared to lose your money.
It’s a definite possibility.