In late 2007, Citigroup (C) insiders – who should have known better – comforted themselves with a security blanket that, in hindsight, was better fit for a Goodwill donation.
“The dividend’s as safe as the next board meeting,” they told themselves as the yield on their shares climbed well above 10%. On a trailing basis, that is.
Next board meeting, their payout was chopped – and their shares dropped more than 90%.
Stock yields of 10%, 11%, 12% or more are usually too good to be true. Citigroup reminded us why ten years ago, and telecom disaster Frontier Communications (FTR) reinforces the point today.…