Monday, February 20, 2006

Financial Leverage: $3.03 - situation overview

Financial leverage continued ...

Our couple: 50 years old, limited savings, poor retirement prospects, so did equity take-out of $200,000 from their house, additional loan payments of $1,199 monthly, intend to invest in dividend paying "Widow and Orphans" stocks, which are projected to have a small negative cash-flow for a few years, but are expected to become cash-flow positive in the sixth year and by their 70th birthday, is anticipated to be providing around $28,728 annually in positive cash flow.

We found them 12 large NYSE-listed companies. Not only does it seem likely that the dividend will cover the mortgage payment in a few years and continue to increase thereafter, there's also the prospect that at some point the mortgage will be fully paid off. In addition, we've got to consider that it's quite likely that the value of these stock holdings will be increased in the future.

We'll take a look at what those values are likely to be ...

The Confused Capitalist

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