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Business
What homeowners don’t know about insurance coverage can hurt them
By EILEEN ALT POWELL
A]¥ Business Writer
NEW YORK (AP) - If
your house is flooded
during a hurricane, is the
damage covered by your
homeowners insurance
policy? Will it cover a
motor scooter stolen
from the backyard? Or
your son’s possessions
when he moves into his
college dormitory?
The answer to all those
questions is generally
“no,” though a surprising
number oF homeowners
don’t know that, accord
ing to a study by the
National Association of
Ranks of world’s
richest grow in
2006; wealth
By JACKIE FARWELL
A¥’ Business Writer
NEW YORK (AP) -
Suprose all of the world’s
wealthiest people got
together and pooled their
assets into one lump sum.
How much money would
that be?
According to a report
released Wednesday, the
combined wealth of the
globe’s richest individuals
rose more than 11 percent
to a grand total of $37.2
trillion (27.68 trillion) last
year.
The rise marks the first
double-digit increase in
seven years.
Thanks to a strong glob
al economy, 9.5 mfilion
rcople held at least $1 mil
ion (740,000) in financial
assets — excluding the
value of their primary
homes — in 2006, up from
8.7 million in 2005,
according to the Illth
annual World Wealth
Report compiled by Mer
rill Lynch & Co. and the
consulting firm Capgemi
ni Group.
Those accumulated tril
lions give these individuals
control of about a quarter
State pays Philip Morris S7SOK weeks before closing announced
CONCORD, N.C. (AP) -
Virginia-based Philip Morris
USA received $750,000 in tax
payer money from a fund cre
ated o save jobs just weeks
before it announced the dosing
of its massive cigarette factory
in Concord, a newspaper
reported Thursday.
The nations No. 1 cigarette
maker could also continue col
lecting local tax breaks as it
winds down operations at the
fl::td\mughmlfl,fl\cflw-
Observer reported.
Tuesday, Altria Group Inc.,
parent ofy the Philip Morris cig
arette companies, announced it
was cutting half its U.S. manu
facturing base, dosing the
Cabarrus County plant that
employs 2,500 as it moves cig
arette production for non—Lchg
markets to Europe.
The manufacturing shift
comes amid a dedining U.S.
cigarette market and Wall
Street speculation that Altria
would soon move to split its
domestic and international
tobacco businesses into two
companies.
Philip Morris USA will trans
fer all production from its Con
cord plant to its Richmond,
Insurance Commission
ers. That means many
homeowners may not be
carrying the right insur
ance to protect them
selves from storms, fire
and other perils.
The association, which
represents state insur
ance regulators, asked
nearly 700 homeowners
who carry insurance
about their policies and
found widespread misun
derstanding about what'’s
covered and whart isn't.
“We were surprised at
some of the mispercep
tons, -id Cathy
Weatherford, NAIC’s
chief executive officer.
of the world’s total wealth,
or nearly three times the
United States’ gross
domestic product.
If the rich decided to
combine their assets and
split the money evenly
among all 9.5 million of
them, theyd cach be left
with nearly $3,915,789
(2,913,967). That would
be enough for each person
to buy af;()ut a dozen Rolls
Royce luxury cars, or more
than 7,000 of Apple Inc.’s
new iPhones.
Worldwide, gross
domestic-product growth
and acccfi*rating market
capitalization — or the
varuc of corporations’ out
standing sEarcs in the
global marker - fueled the
generation of wealth, the
report found.
Despite last year’s strong
international economy, the
world’s wealthiest shifted
their money away from
“alternative investments” —
such as hedge funds, for
eign currencies and com
modities - in favor of
high returns on real estate
ventures, the study stated.
The investment strategies of
Sce Wealth, page 10A
Va., production center, which
will become its sole American
manufacturing plant by 2011.
Local leaders in Cabarrus
County were surprise by the
announcement, and had pro
vided the local incentives — pro
jected to be worth $3.6 mifi}on
over six years — for the compa
ny’s investment of $l3B million
in new equipment.
“I'm very offended;
$750,000 can't be that impor
ant to Philip Morris versus
their reputation. Thats a
rounding error for them,” said
state Sen. David Hoyle, D-
Gaston, who heads a new leg
islative committee examining
how business incentives are
oyle called th
H e state pay
ment “unoonscionafiz,' :
because Philip Morris had t
know it woulg be leaving when
it requested that the payment
be made last month.
In 2004, Gov. Mike Easley
announced that Philip Morris
would mglrve $1 r;;lhon in
exchange for buying the equi
ment and preserving jobs. 'l‘l":
deal was to pay the company in
four i:mll:\ymts over three
years through this October. But
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“But it will help us create
better consumer educa
tion programs.”
The study found that
Dividend funds can draw investor attention
in jittery market sted’positions’ in quote
%TIM PARADIS
Business Writer
NEW YORK (AP) - With
the stock market having jitters
after a strong run-up in 51c past
year, some investors might
want something more low-key.
Dividend funds, though sl
subject to the vagaries of the
stock market, can give comfort
to investors looking for more
defensive arenas.
While dividend payouts have
increased in recent years, thanks
in part to federal tax cuts enact
ed in 2003, many of the large,
established companies that are
traditional dividend payers are
sitting on record |cveanf cash.
That makes it easier for them to
pay dividends and repurchase
shares.
The large-capitalization
stocks that are typical dividend
rmviders, like those that popu
ate the Standard & Poors 500
index, operate differendy than
startup companies that might
be forced to reinvest most of
their cash flow to support a nas
cent business.
Donald Taylor, a portfolio
manager for the anEl(i)n Ris
ing Dividends Fund, looks not
only for companies that make
steady pa{outs, but, as the
name implies, those operations
that are likely to boost their
payments.
“We want companies that
have a long record of consistent
and substantial dividend
the state Commerce D('Fan
ment didnt release any of the
money until May 25, per the
company’s request.
'lhp:ndep;erinem is lmld;:fi
into whether Philip Morris wi
have to return the $750,000,
said Don Hobart, general
counsel at the Commerce
[)thcnt.
ether the company
would be paid the balance was
unclear.
On the local front, Concord
has already paid its share of
about $1.2 million over three
years. The county’s three years
of payments totaling more than
$1.6 million arent slated to
bcg')n untl next year.
me Cabarrus CO;;Z
to get out of thcdml[l})g)rtgiv
ok
company said it’s talking
to local a:f:;tc leaders about
a “broad range of issues” that
includes past and future tax
incentives.
Philip Morris has met its
- investing in new equipment
and retaining at least 95 percent
of d\cworki)mcfiom its 2004
levels, said company
despite all the media cov
erage of Hurricane Katri
na and its aftermath,
one-third of those sur
increases,” he said.
The fund screens for compa
nies whose dividend has at least
doubled over the past 10 years,
thouefh he notes the approxi
mately 45 stocks that mui:e up
the fund have done better than
that. On average, the dividends
in the portfolio have increased
22 years in a row.
Not surprisingly, many of the
chs of stocks that meet the
nds requirements are indus
trial, financial and consumer
companies — traditional divi
dencr;:yers.
In recent years, Taylor noted
corporate earnings and cash
flow have remained robust, giv
ing many companies ample
room to pay a dividend.
“Operating margins have
been very strong and compa
nies have been relatively cau
tious in reinvesting, so that
leaves free cash flow strong,” he
said. “That leads to more and
larger dividend increases and
share repurchases.”
Taylor wants to first see that
companies will remain consis
tent dividend pcllyers. He not;:d
that companies long known for
their cycfi)na;; natt%e, such as
energy utilities, have improved
their dividend records in recent
years but havent yet proved
themselves for an adequate
amount of time to merit inclu
sion in the fund.
“If it stays strong long
‘enough it’s going to meet my
screen,” he said, referring to the
spokesman Brendan
McCormick.
The 12 high-speed machines
that make agarettes eventually
will be shipped out of the state,
he said.
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¥ 5
veyed incorrectly believe
flood damages would be
covered by standard
homeowners insurance
parameters by which he evalu
ates stocks. “The companies
that screen the best are the ones
that can grow their business
with relatively littde capital
investment. If its relatively
modest then that leaves more
to be returned to the sharchold
ers in the form of a dividend
increase.”
Taylor cautioned -that he
avoids companies that boost
their dividend payments at the
expense of growth.
“What I'm not looking for is
the dividend growing because
of a big change in the payout
ratio, fic said. “Althot ’t\ there
are certainly times v:fl?]m is
Serving the
investment needs of
the community.
R o . . .
7" o j T ‘Financial Planning
e i ‘Money Management
B o *Estate Planning
b ‘i.ufi, ‘ ‘IRAs and Pension Plans
;.-‘r- : ”
R o ‘Government Securities
: ‘Tax-Free Bonds
‘ -Corporate Bonds
Constance L. Woods “Stocks and Bonds
Financial Planning Specialist
Financial Consultant ‘Mutual Funds
R o ‘Annuities
One Tenth Street, Sute 600
Augusta Ga 30901
(706) 823-8144
www fc smithbarney comwoods
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citigroup |
€2004 Crigroup Globs! Markets inc Al (ights reserved Member SIPC Sauth Barmey is & division Bnd servce mark of Citigroup
Global Markete nc and its sffiliates and s waed and regitered throughout the werid CITIGROUP and the Umbrella Devies are
Mumm-umn-n«mmn“nflwmm-—n
July 5, 2007
policies.
“After so many reports
from New Orleans about
flood damage not being
covered, ‘.l{;()ll( home
owners unable to collect,
[ would have thought all
of us would have gone
back to check with our
insurance companies and
our agents,” Weatherford
said.
While most homeown
ers polices cover rain
damage, most specifical
ly exclude flood damage.
But flood coverage is
available separately
through the National
Sec Homeonwers, pagc 8A
appropriate, it stll has t be in
r{w context of seeing the busi
ness grow in the longer term.”
Jc# Tjornehoj, an analyst at
fund-tracker Lipper Inc,
offered a similar assessment.
“I would be cautious about
pursuing yield without an eye
tor risk,” he said. He noted that
while there are companies with
dividend yields above 10 per
cent, some might be in trouble.
“They got into that position
because [%]cir stock prices are
beaten down so badly,” he said.
“Just because a company’s divi
dend yield is rising, doesnt nec-
Sce Market, page 8A
7A