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The Daily Dow LEXINGTON, Kentucky (December 23) -- In the absence of any crucial news, the markets were lackluster today. All have visions of sugarplum's dancing in their heads already and it's hard to get excited over the market during the holiday season, especially if you're a long-term investor where this week's doings are pretty unimportant to your plans. So, read this quickly and I'll let you get back to baking, gorging, visiting friends, watching sports, whatever your holiday fancy is. One point I want to bring up concerns AT&T and the impending spin-off of its NCR division. Investors about to update their Dow portfolios between now and the time of the spin-off want to know, do I buy AT&T? Do I buy it with or without NCR? Only you can decide whether to buy AT&T with or without NCR if your Dow portfolio includes it. There's no set rule for how to approach a new Dow stock purchase when it's about to set free a division. What I can tell you, though, is that AT&T has announced that it's retaining its full $1.32 dividend after the spin-off. And based on the current quotation for AT&T without NCR (symbol Twd), the spin-off will not affect AT&T's ranking within the Beating the Dow stocks. The stock is already the lowest-priced issue among the top-ten yielders, so that position will be more firmly locked in after it sheds NCR. But the lower price isn't enough to vault the stock into the highest-yielding spot. Going into today's trading, even the price without NCR leaves AT&T's yield behind both Philip Morris's and J.P. Morgan's. Conclusions? The spin-off doesn't affect AT&T's placement in the rankings one jot. It will remain the lowest-priced of the ten high yielders, yet won't be the highest yielder. So if you're following the Foolish Four approach, you would skip AT&T altogether. If you're following the Unemotional Value Approach, you would include AT&T. If you buy T, should you buy it with or without NCR? All I can say is that if I were buying it today as a Dow Portfolio component, I'd buy it without NCR since the spin-off occurs almost immediately. This isn't in any way a comment on NCR, a business I have not studied. It's just a way of making things simple for your BTD portfolio. Fool on! Today's Dow Numbers Stock Change Bid ------------------- DD -1 3/8 95.75 CHV + 1/8 66.00 MMM - 1/4 84.50 EK - 7/8 80.63 IMN - 1/4 29.88
Day Month Year History
FOOL-4 -0.48% 3.65% 31.12% 31.12% |
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