Email question about:
Goodyear Tire & Rubber Co. (GT)

Q:      This question is in response to your comment recently about GT and automotive-related stocks. I understand the reasoning against automaker stocks at this time. However, if people aren't purchasing new automobiles, then doesn't it stand to reason that they need to maintain their current vehicles? As such, wouldn't aftermarket automotive parts-related stocks, possibly including GT, be potential good investments at the current price point? If so, do you have any advice in this area?

Jim:    The only one that has reported an upside surprise is Monro (MNRO). I'm not going to go beyond MNRO. I don't need a lot of names in this space. GT is too related to the 11 or 12 million... well, probably 11 million cars that are going to be built. You need 15-16 for them to be able to make a lot of money.

Monro Muffler Brake Inc. (MNRO)

See GT comments above for:
MNRO

Email question about:
General question about dividends and companies' ability to pay them.

Q:      Lately, you've promoted a reasonable strategy of investing in stocks for their dividend. My only concern is that, in this environment, how do you tell if a company is going to lower their dividends significantly? Could you enlighten on reading the financials of a stock to determine if they can and will maintain the dividend?

Jim:    I have a lot in the book, Real Money, about how to do this. But the main thing you need to realize is that you've got to look at what the company is earning, okay... and then you've got to figure out whether they can pay that dividend, if that dividend is less (I think he meant more) than what that company is earning. With some companies, you have to look at cash flow... that's a harder thing to do. But I am going to be on this over and over again, explaining what to look for. But the most important thing is a red flag of a double-digit dividend. Traditionally, those cannot be contained, unless I tell you they can.