With all the spooky headlines in the news today, it's no wonder everyone is piling into bonds.
Average investors are freaked out about the equity markets and are unknowingly underestimating the risk of bonds. Investors would be in a better frame of mind if they listened to Chris Davis. In comparing stocks and bonds, Davis says, if people got their statement and looked at the dividend yield and earnings yield, they might do things differently right now. But you have to be able to numb yourself to changes in stock prices, and most people can't do that.
As stock prices drop, the dividend yields rise - the bond dynamics have been developing in reverse (prices up, yields down). With S&P 500 earnings catapulting upwards +84% in Q1 and the index trading at a very reasonable 13x's 2010 operating earnings estimates, stocks should be able to outmuscle bonds in the medium to long-term (with or without steroids). There certainly is a spot for bonds in a portfolio, and there are ways to manage interest rate sensitivity (duration), but bonds will have difficulty flexing their biceps in the coming quarters.
Source: NASDAQ
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In an economic downturn many investors turn to dividend stocks which are sometimes referred to as defensive stocks. These stocks offer sustainable dividends providing the investor with a minimum level of positive return, which helps buffer the downward pressure from the market. But what happens when the market turns up?
Dividend stocks tend to have low betas. That means during a market downturn, they tend to decline less than the total market. Hence, the term defensive stocks. It is also important to note that many defensive stocks are non-cyclical. Examples would include food, tobacco, oil, and utilities where demand is remains stable under difficult economic conditions. Here are several dividend stocks with betas (as provided by Google Finance) less than 1.00:
Source: Dividends Value
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My biggest problem as an investor is the never ending desire to tweak and alter my portfolio. Even as a dividend investor focused solely on achieving long-term investment performance, the desire to constantly adjust my portfolio is huge. In this article I talk about the problem and explain what I have done to combat it.
Overall, constant tweaking is bad because it does not allow your portfolio to do its work and generates fees an other friction costs associated with constant buying and selling. Emotions are typically at the route of this desire to tweak. My response to manage this desire is to understand that these emotions cause problems and to build an asset allocation that I am comfortable with and can live with for the long term.
Source: The Dividend Guy
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The plunge in markets worldwide is starting to open up some bargains for long-term investors. As usual, you should ignore the panic around you and look for solid value. Don't worry what the other guy is doing: Worry about your own money. I don't think stock markets overall are cheap yet, so I wouldn't be an indiscriminate buyer, even in this rout. But there are opportunities. If you stick to quality you should do well over time.
And if you want to get an extra 15% off the price of the shares you buy, take a look at some closed-end funds. Closed-ends are regulated, professionally-managed mutual funds just like the Vanguard or Fidelity ones everyone knows about, but with one twist: Shares in closed-end funds trade on the stock market, like those in, say, Apple or Exxon. What that means: You can sometimes buy shares for less than the value of the fund's underlying holdings. That's like buying $1 worth of investments for 85 cents.
Source: Wall Street Journal
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The four important characteristics of successful dividend portfolios include entry and exit criteria, diversification, dollar cost averaging and selective dividend reinvestment. I have built my dividend portfolio around those important characteristics over the past few years. I have grouped the stocks I own by sector. I have also included additional information about each company, and I have also marked any companies which I do not find attractive at the moment with "HOLD". Just because a company is not attractively valued at the moment however does not mean that it is automatically a sell. Any companies which I have considered to be a sell have been sold off.
I typically have between ten to fifteen stocks which are attractively valued at any time. I also keep a list with stocks I would consider buying on dips. This list typically varies depending on market conditions. Back in 2008 and 2009 this list was rather small, and the list of attractively valued stocks was large due to depressed market prices. If a stock is very close to my entry price I might consider initiating a small position and then build my exposure from there. It is very important however to keep current on the overall market environment in order to scoop up any bargains from the waiting list.
Source: Dividend Growth Investor
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With the escalating Eurozone-debt-contagion fears of recent weeks, a significant shift is taking place in the global stock-and-bond markets. As that differentiation plays out, such income-oriented plays as high-yielding dividend stocks, real estate investment trusts (REITS) and master-limited partnerships (MLPs) will prove to be major beneficiaries, experiencing a handsome run-up in price. Shrewd investors will move into those investments before their prices increase.
Investors considering these moves shouldn't dawdle: The global debt contagion emanating out of Europe could accelerate the afore-mentioned differentiation. Investors were reminded of these fears again yesterday (Monday), after the rescue of a regional bank in Spain added to concerns about the health of Europe's economy.
Source: Money Morning
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High dividend yields are always nice right away, but smart long-term income investors will also plant the seeds for future dividend growth. These stocks may not have the juiciest yields on the market, but they generate more than enough free cash flow to boost their payouts and reinvest in the business for years to come.
I've set out to find 10 of the most promising dividend-paying stocks for the next decade and beyond. Five of them will be focused on dividend growth, while the other five will be focused on higher dividend yields. You want to have a helping of both types in your portfolio to promote both payout growth and payout stability.
Source: Motley Fool
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Given the parlous condition of state and local finances, you might conclude that muni bonds are a disaster waiting to happen. I disagree. In fact, I feel even more confident about most munis after doing some research into what causes them to blow up.
In April, Moody’s Investors Service issued a summary of every default since 1970 by a municipal issuer with a Moody’s rating (that includes all state and local governments and most revenue-generating public authorities, so this isn’t a case of Moody’s stacking the deck by selecting only the highest-quality issuers). For all that time, Moody’s counted 54, or barely more than one a year. A default is any event that interrupts the timely payment of interest and principal or forces bondholders to take a “haircut” -- for example, having to accept a less valuable new bond in exchange for the original. The average loss of principal one month after these 54 incidents was 40%. Corporate-bond defaults, by comparison, typically cost bondholders 63%.
Source: Kiplinger
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For retiree Carol Klonowski, 59, portfolio management has become a 20-hour-a-week job. Her efforts have paid off. Unlike the portfolios of many of her peers, Klonowski's investments have already recovered from their losses in 2008 and early 2009, partly because she started buying the stocks of large, dividend-paying companies including Johnson & Johnson and Kraft just before their shares came bouncing back.
Klonowski's strategy of managing her own investments is unusual among retirees. Many of her peers turn their money over to professionals or stick with funds designed to automatically become more conservative as they age. Target-date funds have become increasingly popular, with investors pouring $45 billion into them in 2009, according to Morningstar. But advisers say such tools can give retirees and soon-to-be retirees a false sense of security, and that successful investors are usually more involved in the decision-making process.
Source: U.S. News & World Report
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An analysis of publicly-traded U.S. bank holding companies by TheStreet highlights six bank stocks with attractive dividend yields and strong prospects for growth. A stable dividend exceeding 4% is quite compelling considering how low interest rates are.
Based on first quarter regulatory data and market data from Friday's close provided by SNL Financial, we narrowed down the list using the following criteria:
Source: TheStreet.com
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Johnson & Johnson engages in the manufacture and sale of various products in the health care field worldwide.
There is no perfect dividend growth stock, but JNJ comes close. The company enjoys a diverse revenue base, an excellent research pipeline, a pristine balance sheet and exceptional free cash-flows to cover it dividend. This diversity and strength will help the company overcome near-term results from patent losses on Risperdal and Topamax. I will continue to add to my position as my allocation allows and when JNJ is trading below my buy price of $70.24.
Source: Dividends Value
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When investors put their hard earned money to work, they are always hoping that they would receive a positive return on their investment. The profits could come either through capital gains, from dividends or from a combination of both. Dividends have traditionally been more stable than capital gain returns. Stock prices are volatile, and it would not be unheard of experiencing 40% losses in one year, which is then followed by 30% gains in the following year. That’s why many retirees these days are building their retirement income strategies exclusively off of dividend stocks.
The payback that these investors are targeting is mostly from the dividend income stream in order to estimate how long it might take to get their money back. Dividend payback is just that – how long it would take for the dividends from a stock investment to exceed the investment itself. Savers have two options – either go for a higher yielding but slower growing company or go for a stock with a lower current yield but has a huge dividend growth potential.
Source: Dividend Growth Investor
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AstraZeneca plc (AZN), a $60 billion biopharmaceutical company focused on a number of different areas of healthcare, trades at just 7.36x its trailing 12-month earnings and offers investors a large 8.29% dividend yield. Five analysts covering the firm also believe on average that shares will hit $47.80 over the coming year.
Mercury General Corporation (MCY, Free Analysis), a provider of automobile insurance in a number of states including California, has seen its shares rise 7.77% so far in 2010 despite a tough economic environment. Still, the stock trades at just 6.36x its trailing 12-month earnings and pays a healthy dividend yield of 5.58%.
Source: SumFolio
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“It’s important to remember that stock returns are driven by two key components: dividends and capital appreciation,” says Jason Crowley, financial adviser at Buckhead Investment Partners in Atlanta. “Since 1926, the S&P 500 has returned approximately 7% annualized when adjusted for inflation. Reinvested dividends account for roughly two-thirds of that return with the remaining one-third attributable to capital appreciation.”
Owning dividend stocks is a great idea if there is a chance of a market correction, since the dividend returns can offset losses due to a decline in share price. But dividend stocks are sound investments in any market. Over longer periods, dividend stocks tend to be among the highest performers in a diversified portfolio.
Source: Mint.com
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In a down-market when many people are rushing to buy gold, I take comfort that I already have mine. No, not that kind, but something much better! A growing stream of dividend income from solid companies. While everyone else is panicked about their portfolio’s decline, I see a downturn as an incredible buying opportunity. Lower prices, rising yields and growing dividends, its hard to beat that combination.
Selecting stocks with increasing dividends is critical for an income growth strategy. As always, due diligence should be performed before buying or selling any stock.
Source: Dividends Value
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Investors who have been getting stomach aches watching their stocks go up and down are reaching for dividends to find relief. It's easy to understand why. Dividends, those steady and often increasing cash payments made by companies to stockholders, are one thing investors can hang onto during unsteady times.
be careful when you're chasing stocks that pay lofty dividend yields. Many times, the yields are high because the stock price has fallen. If a stock is in freefall because the company paying the dividend is in trouble, you could see your entire annual dividend get wiped out in just one bad trading day. Even so, buying dividend paying stocks can be a good strategy for investors looking for a little more predictability in their investment results. You can find stocks that pay dividends at most financial websites.
Source: USA Today
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Did May 6th frighten or excite you? I received a few emails from frightened dividend investors letting me know they were getting out of the market, while others asked if this was the beginning of another significant downturn. The first group are destined to always lose money in the market (sell low/buy high) and my answer to the second group was, ‘I hope so!’ Let me explain.
As a long-term dividend investor I love buying blue-chip companies when they go on sale and there is no underlying fundamental business reason. If you can buy a Ferrari at the price of a Camaro, most people would consider that a good thing, but for some reason many long-term investors fret whenever there is a major clearance sale on the stocks they want to own. I keep a list of great stocks that I would love to buy or add to my current position. Here are a few on that list:
Source: Dividends Value
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If you invest in individual dividend growth stocks, then you know that there are inherent risks in buying individual stocks. That is why I advocate a basic core portfolio of index funds before venturing into individual stocks. With this structure in place, you drastically reduce the individual stock risk you take on by buying dividend growth stocks. That being said, there are things an investor can do to help their individual dividend stock performance. One in particular has to do with dividend yield.
One suggestion that many investment advisers give, including Charles B. Carlson in his bookThe Little Book of Big Dividends: A Safe Formula for Guaranteed Returns, is to analyze dividend yield in comparison to other companies in its industry. What we want to see is that the dividend yield offered by one company is not way out of line with the dividend yield of that company’s peers. If the yield is a lot higher, then there is a lot more risk and that company and perhaps you should consider putting your money elsewhere
Source: The Dividend Guy
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If you don't have a pension, and don't expect Social Security to meet your retirement needs, income investing can become a powerful plan B. But you're not careful, you could end up blindsided by some of this strategy's notable drawbacks. Here are some to consider:
1. Inflation
2. Taxation
3. Overconcentration
These cautions shouldn't keep you from investing in strong dividend-paying stocks. The best of them will pay you steadily, even as they rise in value on their own. For all their potential pitfalls, income stocks remain some of the most attractive investments on the market.
Source: Motley Fool
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During Tuesday’s Mad Money, Cramer described the negative affects that the feds here could have on dividend-paying stocks, one of his all-time favorite investments. Next year President George W. Bush’s tax cuts will expire, sending the tax rate on dividends and capital gains soaring from its low 15% level. While Cramer wasn’t predicting an out and out sell-off, he said it’s very likely that money managers will unload their dividend holdings before the expiration. And why not? They’ll need the money, and the tax-friendly gains they once enjoyed will be gone.
Even despite the potential tax increase, though, Cramer still likes dividend stocks. Especially the accidental high-yielders he’s been recommending. Because at the end of the day many of them will still yield more than US Treasurys, while both will be taxed at the same rate. And don’t forget about the power of compounding reinvested dividends, which have generated 40% of the total return from the S&P 500 going back to 1926.
Source: CNBC
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After budget troubles in Europe sparked some gut-wrenching moves in the market over the last few weeks, many investors may be looking for a safe place to hunker down and hide. And in times of trouble, there are fewer equities that are more attractive than low-risk, high-yield dividend stocks.
These blue chips not only have the staying power and stable share price that make them good long-term investments, they have a history of strong dividend growth and high dividend yields that mean a regular paycheck. Rather than chase down a stock that will jump in share price, why not stick with a steady and reliable large-cap stock that regularly pays a hefty dividend?
Source: TheStreet.com
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Over the last five years, Kiplinger's reports, the average beta of a dividend-paying U.S. stock has been 0.98 percent while nonpaying stocks has been 1.5. I don't expect everyday stock researchers to check the beta factor before buying a stock, but this diminished volatility of dividend-paying stocks has been reported many times.
Worried about the effect of the Great Recession on your stocks? Dividend-paying stocks have shown more buoyancy than nonpaying stocks in hard economic times. For example, in the catastrophic year of 2007, stocks that paid dividend lost and average of 39 percent on a total return basis, while those of nonpaying stocks fell 45 percent. In 2002, the stock market's second worst year of the decade, non-payers fell 30.3 percent while dividend stocks surrendered only 10.9 percent including dividends, according to Kiplinger's.
Source: MercuryNews.com
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Historically, companies that pay higher dividends materially outperform those that don't. In the last 36 years, dividend stocks outperformed the rest of the S&P 500 by 2.5% annually. And they outperformed nonpayers by nearly 8% each and every year, according to a study from NDR. That means that when a company actually increases its dividend, investors would do well to take notice.
Income investing is a philosophy that's been somewhat pushed aside since the tech boom of the late 1990s eschewed old-school dividend-payers for high-growth companies that plowed back their earnings to build their businesses. But in the two recessions that followed the dot-com bust, Wall Street has gotten an unpleasant reminder of just how profitable dividend-paying stocks can actually be.
Source: TheStreet.com
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Each year in May, with the bulk of the previous year's financial reporting behind us, EuroShareLab compiles a list of the UK and Europe's highest dividend yield stocks to identify attractive market sectors and possible high yield investments. The yields available at the moment are surprisingly high with the average dividend yield of my top 10 European high dividend yield picks being 6.9%. Not bad when compared to the low interest rated available on bank deposits and high quality bonds.
What is also surprising is that the share prices are not much above their 52 week lows. On average my top 10 picks is trading at just over 15% above their 52 week lows. This means these high dividend yield companies have not participated in the market rally at all. Similar to last year utilities, telecommunication and integrated oil companies make up the largest part of the highest dividend payers.
Source: EuroShareLab
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Owens & Minor Inc. is a leading domestic distributor of medical and surgical supplies to the acute care market, a health care supply chain management company, and a direct-to-consumer (DTC) supplier of testing and monitoring supplies for diabetes.
OMI should see increasing demand for its medical/surgical supplies based on our aging society. The company has been focused on developing new services and cost control. OMI expects its new third-party logistics business to achieve break-even by year-end 2010 and its ambulatory surgery center initiative should start contributing to operating earnings in 2011. Long-term health care reform should eventually lead to higher utilization of hospitals. Although OMI is trading below my buy price of $33.91, its erratic cash flows, including negative free cash flow in 3 of the last 10 years, will keep me on the sideline.
Source: Dividends Value
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Dividends provide investors with a return on investment even when markets are down. As a result investors get paid to hold their stocks through thick and thin. It is important however to pick a stock selection strategy that fits with your financial goals. A good entry strategy is just the beginning however. Investors should also be following the strategy at all times in order to be successful.
Four important characteristics of successful dividend portfolios include entry and exit criteria, diversification, dollar cost averaging and selective dividend reinvestment.
1. Entry/Exit Criteria
2. Diversification
3. Dollar Cost Averaging
4. Selective Dividend reinvestment
Source: Dividend Growth Investor
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One opportunity that's been in the crosshairs of many investors is British Petroleum stock. The stock has been trading down about 15% with a yield of 7% ever since the oil rig explosion in the Gulf of Mexico. The company's market cap is also roughly $30 billion lower than it was on April 20, which seems to be an overreaction to the oil spill. Greenpeace USA oceans campaign director John Hocevar noted that "In terms of total quantity of oil released, it seems this will probably fall short of Exxon Valdez ... but the environmental impact will be worse."
An investment in BP may be attractive right now as public opinion on the stock remains relatively negative. With a 7% dividend yield and costs of the oil spill estimated to be less than the $30 billion in market cap lost already, the stock is out of favor but appears undervalued. (Stocks that have fallen out of favor with investors can make for great value plays. for further reading, check out America's Top Dividend-Paying Stocks.)
Source: Investopedia
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Dividend investors are enjoying fatter payouts again, to the tune of $10 billion per year. The reason? More than one-quarter of companies in the Standard & Poor's 500 have increased their quarterly payouts over the past five and a half months, with just two cutting dividends. "It speaks to confidence in the strength of the underlying economy, and their ability to cover dividend payments without breaking the bank," S&P analyst Howard Silverblatt says.
Here are five things investors need to know about dividend investing now:
Source: CNBC
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It is very easy for a CEO to get on a conference call and talk about confidence in the future while communicating glowing projections, but do they really believe what they are saying? Are there any actions that would make you believe what they are saying? Senior management purchasing company stock is a strong indicator of confidence in the future. Another indicator is sticking with a dividend plan, including regular increases.
It takes more than confidence to increase dividends each and every year -- it takes a well managed company. For a list of stocks with a long string of consecutive cash dividend increases, see this list.
Source: Dividends Value
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The big conundrum for ... average investors today is they are frightened by the stock market, but they're not happy with the returns they get in safe money market funds," said John Buckingham, chief investment officer at Al Frank Asset Management in Laguna Beach, Calif. That's why retirees are so attracted to dividend-paying stocks that provide a steady income as well as the potential for capital growth if the stock price appreciates.
It's important when building a dividend stock portfolio to pick high-quality companies with long track records of paying dividends that have increased over time. "Dividend-paying stocks offer a couple of benefits," said Mark Luschini, chief investment strategist for Janney Montgomery Scott, Downtown. "Usually the payer of the dividend is a company whose financial situation is very stable and therefore tends to decline less in share price when the stock market swoons.
Source: Pittsburgh Post-Gazette
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While investors generally embrace the concept of buy-and-hold investing, they fear missing out on gains that come with other strategies. But investment guru —and self-proclaimed Dividend Detective— Harry Domash recently created a list of seven dividend-paying stocks that investors can hold with confidence for the next seven months. Mr. Domash came up with investments based on their financial strength, growth history, history of dividend payments, and future dividend prospects.
#1 McDonalds Dividend yield: 3.1%
The fast-food purveyor may have reached a saturation point in the U.S., but McDonald’s sees big dollars in ovetseas expansion. The company recently instituted a quarterly dividend — making it an ideal growth and income stock.
Source: InvestmentNews
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Your dividend portfolio foundation is key. My view is that investors need to have a core portfolio of strong index funds that provide a base with which to build from. This core foundation will provide you with the basis for the next two things you need to have.
If a company is set up strongly enough, then it should be able to continue dividend payments through natural disasters. And when these dividends are paid that impacts the index positively and you receive the benefits (albeit to soften the losses if the share prices are going down). The same thing happens when you own individual dividend growth stocks.
Source: The Dividend Guy
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Still casting about for a long-term investing strategy? How about "Follow the money"? Get ready for a flurry of stock buybacks and dividend payouts over the next couple of years, predicts Deutsche Bank Chief Strategist Binky Chadha, thanks to record amounts of cash building up in corporate coffers. His team has identified 50 companies most likely to participate in this payout upcycle.
These large companies found themselves with an embarrassment of riches because their costs got slashed faster than revenues over the past couple of years. Even though other corporate purposes also are in line for budget increases, Mr. Chadha figures about $100 billion this year and another $200 billion next year will go to dividend payouts "just to keep the cash mountain from growing."
Source: Wall Street Journal
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The data is clear: In a bull market, price gains dwarf dividends, with the latter only contributing about one-fifth of stocks' total return. However, in range-bound markets, which are characterized by weak price returns, that contribution expands dramatically, to approximately 90% of stocks' total return.
We are now in a range-bound market. Therefore, investors should expect weak stock price gains, while dividends contribute the lion's share of total returns. In that context, investors should tilt their stock portfolios toward high-dividend stocks that pay a sustainable dividend.
Source: Motley Fool
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Do your homework, pick your stocks, reinvest the dividends, and wait.That's the yawn-inducing advice of market pros who recommend a long-term investment strategy focused on high quality, dividend-paying blue chips.
When the market was surging from last year until quite recently, Elvis Picardo, an analyst and strategist at Global Securities in Vancouver said, investors favored so-called "high beta" stocks, or those that rise the most when the market is rocketing upward. "Now that things have turned, you might see a renewed appetite for some of these defensive names," Picardo said.
Source: Reuters
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Many individual investors were spooked by the bizarre developments that unfolded in the markets on May 6th. Amid a big pullback, a series of events took place that seemed to push the Dow Jones Industrial Average down nearly 1,000 points in the blink of an eye.
During these uncertain market times, dividend stocks make more sense than ever.Indeed, dividend-payers offer a measure of security that non-payers can never achieve. A solid dividend yield is a very strong and historically-tested defense against market downturns. Plus, as stock prices decline, making them easier to buy, dividend yields rise, increasing your annual rate of return. Remember, these stocks pay you just for owning them!
Source: Dividend.com
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Is a stock with a 3% yield and a 9% dividend growth rate better than one with a 7% yield and a 1.5% dividend growth rate? Last week we looked at yield-on-cost (YOC) and how it can be used to track the progress of a growing dividend of an individual stock. However, it is not a good metric for comparing multiple dividend stocks with each another. For this I devised a metric I call NPV MMA Differential.
As with any projection based on historical information, the analyst must determine the sustainability of the inputs going forward. Put another way, past performance is no indication of future results. I have always heard the luckiest people in the world are those who work the hardest. In the same vein, the secret to finding the best dividend stocks often involves rolling up our sleeves and doing our homework.
Source: Dividends Value
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Closed-end funds have insanely high yields and offer people a chance to generate substantial income while they wait for interest rates to inch their way up from the bottom. Gabelli Utility Trust (GUT), for example, is selling at a whopping 58% premium. By now you can probably guess why an investor would be willing to pay such an incredible premium-- the fund offers an extremely generous 9.3% yield.
That yield that you're probably gushing over right now is incredibly deceiving. Closed-end funds have what is called a "managed distribution policy," where they can return to the investor not only a regular dividend, but also long-term capital gains -- and even a portion of your original capital. This is done to provide investors with some semblance of a steady cash flow. Capital gains and original capital shouldn't be included in the yield calculation, but most times, they are. For instance, even though Gabelli's yield looks like 9.3%, the actual "income-only" yield is about 3.7% -- quite a surprise for investors who think they're getting a high traditional yield.
Source: Motley Fool
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The Procter & Gamble Company (P&G) is focused on providing branded consumer goods products. The Company markets its products in more than 180 countries. Linked below is a detailed analysis and commentary.
PG is one of the few premier dividend growth stocks. As a company, it is a leader in understanding consumer needs, marketing and building brand loyalty. After stumbling in the last economic downturn, PG’s new CEO has implemented plans to grow revenue and earnings. Going forward, the company’s broad product portfolio and sizable distribution network will continue to be a strengths, along with its balance sheet and free cash flow. As my allocation allows, I will continue to buy PG while it is trading below my buy price of $75.54.
Source: Dividends Value
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Cash dividends are certain to rise this year and next regardless of where stock indexes go. This year, the 366 dividend-paying members of the S&P 500 are expected to hand out $206 billion in cash, up 5% from 2009. Already, 72 S&P 500 companies have announced dividend increases in 2010.
The reason for this largess is plain: Corporate America is flush with cash, and S&P 500 companies are sitting on $3.2 trillion of it. But executives are reluctant to make big capital expenditures, hire more people, or raise salaries and benefits substantially until they feel more confident about the economic recovery. And, like you, they're earning next to nothing on their cash stashes.
Source: Kiplinger
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Berkshire has never paid dividends and Buffett is famous for shunning them. However, at the shareholder’s meeting, Buffett hinted that the company could pay dividends at some point in the future. Below are his comments:
“There will come a time when we cannot intelligently use 100% of the capital we’ve developed internally. Whatever is in the best interests of the shareholders will be done at this point.”
Source: Wall Street Journal
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With utilities generally regarded as defensive stocks, their pronounced fall and consequent struggles through the recovery point to some possible value. Even if the sector as a whole continues to lag behind its flashier counterparts (namely technology and retail), the dividends alone will compensate investors for taking the chance.
With utilities generally regarded as defensive stocks, their pronounced fall and consequent struggles through the recovery point to some possible value. Even if the sector as a whole continues to lag behind its flashier counterparts (namely technology and retail), the dividends alone will compensate investors for taking the chance.
Source: Investopedia
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Some traditionalist would say your home is your greatest wealth building asset. I would argue it is not. Others would say your income is your greatest wealth building asset. Thought there is a lot of truth to the statement, it is still not your greatest wealth building asset. So, what is your greatest wealth building asset? Everyone is born with it. Few realize its importance until they lose most of it. The asset is so priceless it can’t be bought. Your most valuable wealth building asset is time.
With time, you can wait for blue-chip stocks to build a high yield-on-cost by growing their dividends. To maximize long-term wealth we must find companies that will grow their dividends well into the future.
Source: Dividends Value
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For the month and YTD, payers outperformed non-payers; payers were up 3.23% compared to nonpayers, up 1.68%. YTD, the rates are +11.87% and +10.17%, respectively, and the 12-month returns are a staggering +51.92% and +57.19%, respectively.
Beyond the S&P 500 (NY, ASE, NASD common), dividends were also very good. Dividend data for the month of April shows that increases are up 64.0% from April 2009, but are still 23.3% below April 2008. Decreases are down 85.8% from April 2009.
Source: S&P
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Stop-loss orders are supposed to protect investors when prices plunge, but during Thursday’s market chaos, the strategy may have backfired horribly and contributed to the massive slide in stocks.
A stop-loss order instructs the broker to sell a stock or exchange-traded fund when the price falls below a certain level. But when the price level is breached, the order is automatically converted into a market-order, meaning the sale is executed at the best available price. That’s fine if the market is liquid and orderly, but when volumes are thin and prices are bouncing around violently, the sale may end up being executed at a ridiculously low price if that’s the only bid on the books.
Source: Globe and Mail
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What happens when that raging bull market suddenly and unexpectedly turns bearish, and all your high fliers start looking like falling stars? That's when the savvy investor gets nimble and starts rotating into more conservative stocks, adapting a more defensive position to protect those gains from unwanted volatility.
Maybe we should place this one under the "self fulfilling prophecy" category, because when investors flock to dividend stocks during times of market turmoil, that surge in demand can provide some much needed protection in a volatile market. Most dividend stocks tend to be large-cappers, which have historically been more stable than the small and mid cappers, which in and of itself provides another layer of stability. And when you factor in the guaranteed return of the dividend, producing a stream of income when capital gains and losses are in question, its easy to see why investors love dividend stocks during times of market peril.
Source: Zacks
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Over the past two years, we've seen the worst side of dividends -- cuts, eliminations, and suspensions. In the S&P 500, 62 companies cut their dividends in 2008, followed by another 90 in 2009, including Bank of America (NYSE: BAC) and Morgan Stanley (NYSE: MS). In 2009 alone, companies eliminated $58 billion in dividend payments to shareholders. Following regulators' warning to U.S. banks in March that dividends and buybacks shouldn't be reinstated until the economy has regained its footing, I wouldn't hold my breath for a recovery of their pre-crash dividend yields anytime soon.
No one wants to get fooled (lower case "f") again, of course, but trading in and out of dividend-paying stocks doesn't make much sense, either. Instead, here are five scenarios where a long-term, income-minded investor should consider selling a dividend stock.
Source: Motley Fool
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If you have been following me for some time now, you know that I often suggest investors build up a core index portfolio before taking on dividend investing through individual dividend growth stocks. One way to look at that core portfolio is to consider Vanguard’s extensive lineup of dividend orientated funds.
Vanguard is best known for their low cost indexing approach to investing. Personally, I hold Vanguard Emerging Markets Stock ETF, the Vanguard REIT Index ETF , the Vanguard Value VIPERs, and the Vanguard Small-Cap Value ETF. I have been furthering my research into their dividend focused funds and can offer the following summary of the funds that have available with a dividend based focus.
Source: The Dividend Guy
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An article in Friday's "Wall Street Journal" bemoaned the fact that taxes on dividends could rise dramatically by the end of the year. The recent health-care bill includes a 3.8% surcharge on all investment income, including dividends, beginning in 2013. This would nearly triple the top dividend rate to 43.4% in Mr. Obama's four years as President. While these changes to dividend taxation are not yet the law of the land and the details may change by January 1, 2011, there is now ample evidence that the Bush dividend tax breaks enacted in 2003 will be allowed to die.
dividends for most of my 35 years in the investment business have been taxed at ordinary income rates. So the the new taxes are not really new but merely a return to the old way dividends were taxed prior to 2003. The tax breaks of the past 7 years have been a blessing, but with the runaway government deficits this country is experiencing, it is too much to expect that President Obama would hold to his campaign promise of only hiking the tax on dividends to 20%.
Source: Rising Dividend Investing
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Microchip Technology, (MCHP), is a dividend paying stock listed in the Tech section of our High Dividend Stocks by Sector tables. MCHP’s current dividend yield is 4.66%. MCHP is a leading provider of microcontroller and analog semiconductors, and is based in Arizona. The firm recently upped its earnings guidance for Q4 fiscal 2010, from $.34/share to $.42, (non-GAAP), citing stronger bookings and sales. They also expect sales to be up 8%. MCHP reports earnings this coming week, on May 5th.
MCHP recently bought Silicon Storage Technology, whose SuperFlash technology is used widely in advanced microcontrollers. MCHP will now be able to embed this technology in its microcontrollers, which is their core business. Although its debt load is slightly higher than its peers, MCHP’s balance sheet is solid, and this firm fares well overall in our Industry Comparison table.
Source: DoubleDividendStocks.com
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There are income investors and Dividend Growth investors. While the distinction is rather simple, it slips past many casual observers. Income investors are investing for maximum current income, while dividend growth investors are looking to maximize income over an extended period of time -- usually sacrificing current income for potential greater future earnings.
Often when I write about a stock that is yielding 2%, 3% or even 4%, I get a question that goes something like, "Why would you buy that stock when there are better options like 'Amalgamated Risk?' Its currently yielding 7%, 8%, 9% or more?" With this statement the reader has possibly identified themselves as an income investor, and but definitely established the fact that they are not a dividend growth investor.
Source: Dividends Value
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