To the Editor:
Your article on companies that pay sustainable dividends was interesting, and I assume the context was in a taxable brokerage account (“Yes, You Can Retire on Dividends,” Cover Story, March 26). Personal cash flow in that type of account is easily accessed by check or transfer, and it is a common methodology in building an income stream.
If all goes well, this account will yield both income and growth, but the latter becomes a problem when capital-gains taxes are considered; therefore, securities with growth potential are better placed in individual retirement accounts or 401(k)s. This will become more important if President Joe Biden is successful in his efforts to increase the capital-gains tax.
Yes, there is a subtle concern about sustainability in some large companies with a long history of paying a dividend with a high yield today. Notable are Exxon Mobil and others, where many older investors depend on the dividend.
No chief executive officer wants to be the first to break tradition, and so borrowing to cover the payout is accommodative, but worrisome.
William Mueller, Laguna Woods, Calif.
To the Editor:
To Lawrence C. Strauss’ credit, the preferability of a balanced portfolio in retirement is mentioned several times. Putting 100% of one’s assets into stocks at retirement to live off the dividends (plus Social Security or a pension) seems like a last-ditch effort by someone who either does not really have enough money to retire or should cut expenses before going into retirement.
Steve Martin, Northbrook, Ill.
To the Editor:
The article was interesting, although the author didn’t mention amortization as a retirement tool. He assumed that the principal investment would be maintained. Besides cash, many seniors have real estate equity for their heirs to inherit. Their cash has to last only for their lifetime. Assuming a 3% return rate, amortizing $1,500,000 over a 30-year period would provide a yearly cash flow 30% higher than the $45,000 mentioned in the article.
Charles Keeler, Sunnyvale, Calif.
To the Editor:
I was quite surprised to see S.L. Green Realty on your list of dividend stocks. True, the company currently pays an ample dividend. However, expectations that in-person attendance in Manhattan offices will return to prepandemic levels, or levels close to those, are a tad optimistic. The potential downside for this company could be quite substantial. In that instance, the plump dividend could become an afterthought.
Sean R. Smith, Brooklyn, N.Y.
Not “Old School”
To the Editor:
Up & Down Wall Street (“Higher Taxes? Deficit Spending? Why the Stock Market Isn’t Worried,” March 26) describes Berkshire Hathaway’s recommendation that shareholders reject proposed diversity and inclusion reporting and disclosure as a “reflection of CEO Warren Buffett’s old-school management style.” It would be more accurate to say that fear is the reason Berkshire leaders want to turn down the reporting.
Reporting would let investors and others see quantitative, comparable data in order to understand the effectiveness of Berkshire’s diversity, equity, and inclusion, or DEI, programs. Transparency is necessary for achieving a diverse and inclusive workplace. If Berkshire’s efforts are not achieving success, then allow stakeholders to understand what is being done. Holding back critical data is out of touch.
Ezra Schneier, Yardley, Pa.
Inflation Risk
To the Editor:
Regarding “Why—and How—Investors Should Gird for Inflation Risk” (The Economy, March 26), what the Federal Reserve says always reflects politics and its attempts to manipulate expectations. But being prepared for the risk of higher inflation, as Lisa Beilfuss suggests, is perfectly aligned with what the Fed is doing, namely printing money. As for the Fed’s forecasts, they are as unreliable as anybody else’s guesses about the future.
Alex J. Pollock, Lake Forest, Ill.
Writing Covered Calls
To the Editor:
Steven M. Sears suggests selling covered calls against stocks with huge gains (“What to Do if You’re Sitting on Huge Gains,” The Striking Price, March 25.) I have another idea for protecting huge gains: Sell your shares and pay the taxes, rather than wait until they plunge to write a covered call. Discovery Communications was over $77 on Monday, March 23. Selling a covered call after it had dropped to $41.90 in a week is cold comfort indeed. I sold my Viacom and Discovery on Monday and slept like a baby when they went into free fall.
Vincent Vilasi, Great Falls, Va.
Off-the-Wall Metrics
To the Editor:
Kudos to Eric J. Savitz on his summary of the numerous spurious financial performance metrics that now exist (“The Cloud Is Already Confusing—the Metrics Make It Worse,” Tech Trader, March 19). In this age of widespread inflated valuations and new off-the-wall metrics to justify the unjustifiable, perhaps we should add the ultimate metric to his list, EBAC, or earnings before any costs—probably soon coming to a market theater near you.
Greg Wahowiak, Milford, Mich.
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