- I think GATX is a wonderful business with an illustrious dividend history. The business also seems to be well insulated against the economic harm caused by COVID-19.
- That said, investors don't buy a company's future cash flows directly. They buy the stock, and the stock is often a poor proxy for the health of the underlying business.
- The last time the shares were trading at current multiples, they went on to underperform. History may not repeat, but it often rhymes.
- The history of my GATX short put trades reveals how these simultaneously enhance returns while lowering risk.
For further details see:
GATX: The Yield Doesn't Compensate For The Risk