At the opening session on day two of the Morningstar Investment Conference in Chicago on Thursday, June 24, three dividend-focused mutual fund managers talked about what they called the great opportunities in dividend investing now, and pooh-poohed worries that higher taxes on dividends would lead companies to cut their payouts. Hersh Cohen, chief investment officer for Legg Mason’s Clearbridge Advisors, argued that a money manager who focuses on a company’s dividend “asks simple questions, but gets profound answers.”
The discussion ended with observations about investors who recently are looking for high yield. “Yield chasing can be dangerous,” said Kilbride, arguing that “sometimes a high yield is a message from the market that’s something wrong” with the company. Cohen agreed, saying “more money has been lost chasing suspect yields.”
Source: Investment Advisor
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A core consideration for income investors is an investment's yield, which indicates the value of the payments you'll receive. Yield can be a useful tool in considering whether you'd rather try to generate future income from bonds or stocks, and whether its price is appropriate.
A stock's yield also can help you determine whether a stock is undervalued or overvalued relative to its projected income. The dividend discount model uses dividend yield to calculate what the current value of a stock should be based on its anticipated dividends in the future. If dividends are expected to grow rapidly, the present value of a stock should be higher than if dividends are expected to remain relatively static.
Source: ExpertClick.com
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For a dividend investor, there is not much worse than a stock that cuts or eliminates its dividend. Suddenly, the reason you purchased the stock no longer exists. Many dividend investors, myself included, have a hard and fast rule to immediately sell any stock held as income investment if it cuts its dividend. However, when a company freezes its dividend at the current rate, the decision is not as clear-cut. At this point you must look look at alternative investments, along with the company’s current yield and future outlook.
Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends, it is not a list of recommend buys. As always, due diligence should be performed before buying or selling any stock.
Source: Dividends Value
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Dividend yield and growth are characteristics that typically do not co-exist in many stocks. However, there are characteristics of stocks that are considered unusual in historical terms but persist today. With one-year treasury yields slightly over 0.25% and five-year yields at about 2%, stocks yielding above these rates provide a higher expected return, and any stock that has expected growth prospects on top of that yield should be an investor's dream. As with all investments though, the risk involved with the business and industry needs to be considered along with the potential returns.
These four stocks go against the grain when it comes to high dividend yield and strong growth. They demonstrate that high yield is not limited to the traditional utility and, unlike the utility, can be accompanied by strong growth - a winning combination.
Source: Investopedia
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We have all heard it… Stodgy, for old people, yawn, boring! These have all been used to describe dividend growth investing. As a dividend growth investor, I sometimes think our strategy is the most misunderstood.
It seems everyone understands a traders mentality as evidenced by the numerous comments on capital appreciation – “Why would you buy that stock? It has been flat for 2 years.” Most understand the income investors mentality as noted by comments like – “Why would you buy that stock when you can buy Amalgamated Risk and it pays a 9% dividend?” Both of these strategies can be successful, as can a dividend growth strategy. Periodically, it is good to remind ourselves why we are dividend growth investors.
Source: Dividends Value
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High yield dividend stocks are easier to find then you think. Income investors looking for safe dividend stocks to stash their retirement money in are already familiar with many blue chips that have hefty yields. It's just that when investors stop at the grocery store or pay their phone bill, they aren't thinking about how the big brands they're doing business with are actually good income investments.
The market sell-off and skepticism about earnings in several sectors have driven the stock prices of some of America's most famous companies to outrageous levels. Yields are also rising as more companies with cash hordes begin to use it for share buy-backs and dividend increases.
Source: InvestorPlace.com
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Some investors believe that rather than wait for a whole year to collect a 3%-4% dividend, you could make 3-4 % per day in the market trading volatile technology stocks. The fact of the matter is that few if any investors could accurately forecast stock market moves in order to profit from large daily swings in some of the most volatile stocks in the market today. Dividend payments on the other hand are much less volatile than stock prices, which is what makes them ideal for investors who plan to live off their investments. The stability of the payments makes them a reliable source of income in virtually any market, without having to sell a portion of one’s portfolios and exposing yourself to market fluctuations.
The truth of the matter is that dividend stocks are a superior way to not only enjoy the market upside, but to also receive a positive return during bear market declines. Dividend payments could also generate much needed capital to investors to deploy into the market, thus further compounding investor returns over time.
Source: Dividend Growth Investor
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Good dividend returns can offer a variety of benefits to the stockholders. Reinvested dividends, for example, can build up the number of stocks held in a particular company, while dividend quarterly payouts can provide added income during retirement years.
If you'd like to learn more about dividend investing and dividend-related tax issues, you can find plenty of insights on the World Wide Web.
Source: The Sacramento Bee
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There is a lot of information on the web that covers how to select stocks, even dividend stocks. In this post I am going to take the negative angle and present what I feel to be three things that I, as a dividend investor, do not want to see in a dividend stock. In my view, if any of my own dividend stocks exhibit any of these traits then that is a red flag which I need to consider acting on.
The first two things dividend investors don’t want to see in their dividend stocks are pretty common – a dividend yield that is too high and a payout ratio the company cannot afford. The third – a stock with a yield less than the market – is more controversial in nature and I am not totally sure where I stand on this one yet. I have not done enough research to determine it Perhaps over the long term a company with a higher dividend growth rate will help offset the lower yields. Let me know what you think using the comments.
Source: The Dividend Guy
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Great dividend picks are easier to find than you think. Retirees looking for safe places to stash their cash are already familiar with many blue chips that have hefty yields. It's just that when investors stop at the grocery store or pay their phone bill, they aren't thinking about how the big brands they're doing business with are actually good dividend payers.
Some of America's best know public corporations have yields that are about twice what 10-year Treasuries pay. These low-risk blue chips are some of the most famous high-yield dividend stocks out there. So next time you're out doing the shopping or paying the bills, take notice. You could be looking at your next great income investment.
Source: Blogging Stocks
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Dividend yield and growth are characteristics that typically do not co-exist in many stocks. However, there are characteristics of stocks that are considered unusual in historical terms but persist today. With one-year treasury yields slightly over 0.25% and five-year yields at about 2%, stocks yielding above these rates provide a higher expected return, and any stock that has expected growth prospects on top of that yield should be an investor's dream. As with all investments though, the risk involved with the business and industry needs to be considered along with the potential returns.
These four stocks go against the grain when it comes to high dividend yield and strong growth. They demonstrate that high yield is not limited to the traditional utility and, unlike the utility, can be accompanied by strong growth - a winning combination.
Source: Investopedia
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After 10 years of a flat stock market, there is a clamor for dividends in a fashion that would have been unthinkable a decade back. In the late 1990s, dividends were an afterthought. Now they’re a primary focus, even for younger growth-oriented investors who previously considered income investing passé.
In today’s still erratic environment, telecom stocks, arguably the most “old school” dividend favorites, have also shown leading price action. According to research from Bespoke Investment Group, 89% of telecom stocks were trading above their 50-day moving averages last week, compared with only 39% of the S&P 500 and 53% of utilities. This is an objectively strong sector.
Source: SmartMoney.com
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RPM International Inc. makes specialty coatings and products for the structural waterproofing and corrosion control markets, as well as products for the consumer, do-it-yourself and hobby markets.
Historically, RPM has relied on its diverse product offerings to generate consistent free cash flow over the economic cycle. The company has competitive advantages in its coatings markets based on its strong brand identity, high entry barriers, patents and reputation. However, I have concerns about outstanding asbestos-related lawsuits and its current valuation. RPM is trading well above my buy price of $15.33, so for now I will remain on the sidelines.
Source: Dividends Value
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Martin Hutchinson detailed how high-yield dividend stocks provide a remedy for market volatility. They generate a yield or capital gains when the market is flat or gently rising, and offer protection against a market decline.
"Dividend-paying stocks provide better long-term returns in all but the most extreme bull markets," Hutchinson said. "Build yourself a diversified portfolio of solid dividend payers and you'll be exceptionally well protected." Companies consistently paying dividends are less likely to have dramatic share-price declines. Meanwhile, investors who go after short-term gains can be left empty-handed when the stock market reverses.
Source: Money Morning
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It’s a fact: During weak markets, shares that pay dividends tend to hold up far better than their non-paying counterparts.In 2002, the S&P 500 broad stock market index fell 23 percent. Shares of non-payers in the index fell 30 percent. And the dividend-payers dropped just 11 percent. In 2008, the worst year for stocks since the Great Depression, the same general trend held yet again. Dividend stocks outperformed non-payers by roughly six percentage points.
And that’s just speaking in generalities … a well-chosen list of dividend stocks can do even better. For example, the sum total of my dividend stock recommendations (open and closed positions) has outperformed the broad market by about 33 percentage points over the last three years!
Source: Daily Markets
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2010 has been fairly disappointing to investors following the huge market gains experienced in 2009. Sure the Dow Jones index is only down 1% for the year, but 18 of the 30 Dow components have posted losses in 2010. Standout performers from 2009, like Alcoa ( AA ) and Microsoft ( MSFT ), have delivered horrible returns to investors this year. Fortunately, the top Dow dividend stocks have outperformed the broader market. As we have pointed out before, the top Dow dividend stocks don't necessarily include the highest yielding stocks like Verizon or AT&T.
After being one of the worst performing stocks in 2008, Boeing bounced back last year to post a nice 27% gain. However, their performance in 2010 has been even more impressive. The stock has surged 23% since the beginning of the year and many analysts believe this is just the beginning of an up cycle for Boeing. Wall Street is expecting earnings to grow 25% next year. In addition to the strong growth prospects, Boeing also rewards investors with a 2.7% dividend yield.
Source: NASDAQ
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This past week I have been vacationing more than 1,500 miles from my home. As with most vacations, I have not done much work this week. However, a quick check of my brokerage account shows that my dividend stocks have been very busy this week. It is nice to know my income portfolio never takes a day off. What’s even better is the portfolio is frequently getting a raise through higher cash dividend payments.
Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends, it is not a list of recommend buys. As always, due diligence should be performed before buying or selling any stock.
Source: Dividends Value
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"You have to have a lot of guts to buy BP right now," said Basil Herzstein, a financial planner with Gallers Financial in Rockville, Md. But what about other dividend-paying stocks? Some say it's an ideal time to buy; others say banking on dividends right now is a bad idea.
Lawrence Carrel, author of "Dividend Stocks for Dummies," advocates for dividend-heavy portfolios, saying volatile markets are a ripe time to pick paying stocks. With stock values unpredictable, investors find comfort in knowing that they will at least be paid the dividend even if they lose out on stock value, he said. "More people want the income from dividend stocks now... they've had an awakening," Carrel said. "They are not gung-ho about growth anymore."
Source: Market Watch
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If income investing were as simple as picking the stock with the highest yield, everyone would be an expert. Most assume (rightfully so) that yield is heavily influenced by risk, but much more goes into determining yield.
Risk still plays an important role in setting the yield for a company. Consider these energy companies with a similar yields: Chevron Corp. (CVX) with a 4.0% yield, Exxon Mobil Corp. (XOM) with a 3.0% yield and ConocoPhillips (COP) with a 4.1% yield. Then there is BP plc (BP) with a 9.0% yield. Is there any question which of these is the more risky stock to own?
Source: Dividends Value
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For dividend stock investors looking for regular paydays to add to their retirement funds, things have finally started to look up in 2010. High-yield dividend stocks are back in favor as companies add to their payouts and investors look for low-risk ways to supplement their retirement investment funds. Dividend stocks with high yields offer stability as well as a regular payout, making them the perfect investing strategy right now.
As we reported in April, dividend stocks are increasing payouts across the board, from high-yield dividend aristocrats to up-and-comers. In the first quarter alone, dividend stocks added more than $6 billion in an effort to make back some of the ground lost by cuts and cancellations from the high-yield heyday before the financial crisis. Dividends have been making a comeback, with 284 companies raising them in the first quarter, up 47% from a year earlier, according to Standard & Poor's.
Source: TheStreet.com
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Many dividend investors pick stocks simply for their yield. This could be detrimental to investment returns, since most high yielding stocks are concentrated in few sectors and distribute almost all of their earnings. This leaves the dividend payment exposed to fluctuations in operating performance. Most successful dividend investors on the other hand tend to focus on companies that have solid fundamentals. Only such companies can afford to raise dividends consistently over the long run. Despite the importance of dividends however, investors should not forget about capital gains are important as well, particularly because they provide the other 50%-60% of annual total returns.
The beauty of dividends is that they are always positive; they don't fluctuate as much as the price returns, and as such present a somewhat more stable source of income.The truth is that dividend investors also diversify across the ten major sectors, and also geographies, continents, industries etc. Academic studies cite that company specific risk is reduced substantially in a diversified portfolio consisting of 30-40 securities from different sectors of market. Thus a portfolio of 30 companies should perform similarly to the returns of S&P 500 (the market). If you compared the returns of Dow Jones Industrials Average, which is a subjectively selected portfolio of 30 stocks, you would notice its returns are close to that of S&P 500. The latter has 470 stocks more than the Dow Industrials Average. As a result, investors do not need to own more than 30 or 40 individual stocks, in order to generate market like returns.
Source: Dividend Growth Investor
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In bull markets, dividends become more or less irrelevant. When the Dow Jones Industrial Average traded above 14,000 in 2007, very few stocks had a dividend yield of more than 5%. Indeed, at the peak of the 1998-2000 bull market, the yield on the stock market as a whole dropped close to 1%. Investors in such periods are seeking the next excitement, which will provide short-term capital gains. In 2000, they were looking for such excitements mostly from tech companies; in 2007 they were looking for excitement mostly from leveraged positions, perhaps through private equity or hedge funds. Either way, dividend yields played little role.
On the other hand, dividend-paying stocks provide better long-term returns in all but the most extreme bull markets. If the market is flat or gently rising, the dividends themselves provide a nice yield and possibly capital gains that easily outpace any modest capital gains generated by the broad market. If the markets decline, the dividends provide an excellent protection against outperforming the market on the downside.
Source: Money Morning
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Dividend investors are a unique and frankly, quite a passionate bunch! Those of us who have research the topic extensively and believe strongly in it’s benefits understand the impacts it can have on our own portfolios over the long-term. As such, I continue to invest in dividend stocks.
However, this has created some unique problems not all investors face when building a portfolio based on a strong and balanced asset allocation. One of these unique problems is what to do with those dividends that hit your accounts?
Source: The Dividend Guy
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The recent financial meltdown was replete with lessons for all types of investors. For dividend investors, though, one of the key lessons may have been the importance of diversification. Historically, the banking industry was a prime fishing hole for dividend lovers. But hefty losses during the panic led to dividend-slashing all over the industry. Income-oriented investors that overexposed themselves to banks may have suddenly found their portfolios' yields badly battered.
Tech and dividends, like peanut butter and guacamole. Just like the foods named above, I'm a fan of both the technology industry and dividends. Unfortunately -- in the case of the stocks at least -- the two aren't found together nearly as often as I'd like.
Source: Motley Fool
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The last few weeks of stock action have left an increasingly sour taste. Last week, stock prices dipped below lows reached during the so-called Flash Crash of early May. And there seems little relief from the pelting pessimism. But the retreat in prices has created some interesting investment possibilities. Shares of lots of good companies with decent cash positions are sporting historically high dividend yields. In a nervous market, a basket of dividend payers can be a shrewd way to position your portfolio to ride out the storm.
Like several other analysts and investors, HSBC has started noting the attractiveness of stocks paying high dividends. That's because dividend yields are rising, quickly. A dividend yield is calculated by taking the annual dividend payout and dividing it by the company's share price. So, if Mankato Fishing Lures (not a real company) trades at $100 a share and pays out $3 a year in dividends, it has a dividend yield of 3%. This yield is often compared to the yield on Treasury bonds or corporate bonds. Dividend yields are considered attractive when they rise above 10-year Treasury yields, which are currently at 3.3%. A good dividend also tends to pay more than the yield on a broad market measure. The Standard & Poor's 500-stock index is paying an average yield of 2.03%, and the Dow Jones Industrial Average is at a more handsome 2.7%.
Source: Wall Street Journal
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Standard & Poor's research shows that consumer staples, utilities, and health-care stocks outperform the market 80%-90% of the time during recessions. As my Foolish colleagues Tim Hanson and Brian Richards point out, this outperformance owes to their reliability and healthy dividend policies.
With that in mind, I used our new CAPS screening tool to discover which defensive stocks our 165,000-member CAPS investment community loves most. Of course, screens are merely a first step in the stock-selection process. As Miguel de Cervantes -- whose overly idealistic Don Quixote flails impulsively after unachievable dreams -- reminds us, "Diligence is the mother of good fortune."
Source: Motley Fool
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McDonald’s Corporation is the largest fast-food restaurant company in the world. Its restaurants serve a varied, yet limited, value-priced menu in more than 100 countries around the world.
MCD is the dominant brand in the global fast food industry. In addition to is strong brand, the company enjoys unrivaled scale advantages and substantial international growth opportunities. The company notes on their website that since going public in 1965, it has paid twelve stock splits and an investment of $2,250 in 100 shares at that time, grew to 74,360 shares worth over $4.6 million as of year-end market close on December 31, 2009. This stock is truly one of the great success stories for dividend growth investors and is found in virtually all dividend income based portfolios. I will continue to add to my position in MCD when it is trading below my buy price, which is currently $86.10, and as my allocation allows.
Source: Dividends Value
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Following a meeting with the President of the United States, the BP (BP) Board announces an agreed package of measures to meet its obligations as a responsible party arising from the Deepwater Horizon spill. Agreement was reached to create a $20bn claims fund over the next three and a half years on the following basis:
As a consequence of this agreement, the BP Board has reviewed its dividend policy. Notwithstanding BP's strong financial and asset position, the current circumstances require the Board to be prudent and it has therefore decided to cancel the previously declared first quarter dividend scheduled for payment on 21st June, and that no interim dividends will be declared in respect of the second and third quarters of 2010.
Source: StreetInsider.com
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Stocks have tanked lately, but you already know that. Why they've tanked is important. And while there are many reasons (most random and unexplainable), a big one is fear that European fallout will slow economic growth here in the U.S.
So if economic growth does stall, what do you do with your money? You could do worse than doubling down on dividends. The idea is that if the capital appreciation side of stocks spins its wheels, dividends can still carry you along with reasonable returns. The good news is that the recent crash has turned some traditional dividend stocks into veritable cash cows. Here are five:
Source: Motley Fool
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When a company pays a dividend, it’s a sign of financial strength. When a company has been paying dividends for decades, and raising its dividend regularly, you’ve got something really special. Today we’re looking for U.S. companies with exceptionally long records of dividend payments and dividend increases. These companies have history on their side.
Bill Bouchard, founder of dividendinvestor.com, calls these consistent dividend growers “dividend all-stars.” “It’s a sign of stability if a company’s been able to increase its dividend for 10, 15 or 30 years in a row,” he said. “A dividend increase shows that the board is confident in the company’s future prospects.”
Source: Globe and Mail
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A vision is taking the time to contemplate and anticipate, in detail, what the future will bring. A financial vision needs to consider future earnings, savings and economic issues such as inflation. Then based on your vision, you formulate an action plan to ensure the best possible outcome given your unique circumstances. You can’t have a retirement plan until you have a retirement vision. It would seem to me that there are a lot or retirement plans out there but very few retirement visions.
Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends, it is not a list of recommend buys. As always, due diligence should be performed before buying or selling any stock
Source: Dividends Value
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As the stock market continues to get more and more edgy, investors are starting to look for shelter from the coming storm. Although dividend stocks become even more attractive as stock prices fall, you need to understand going in that even stocks that make excellent long-term investments won't necessarily keep you from suffering short-term losses.
It's not a foregone conclusion that all dividend stocks will perform well under all market circumstances. As with any stock, you have to be willing to endure some short-term volatility with dividend stocks in order to get a good long-term payoff. Fortunately, though, even through the worst of times, you'll at least be getting a nice check every few months to boost your confidence.
Source: Motley Fool
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When you purchase individual stocks, risk is inherit. Sometimes bad things sometimes happen to good stocks such as the Chicago Tylenol murders of 1982. This shook Johnson & Johnson’s (JNJ), but eventually it prevailed. Sometimes it is difficult when a strong leader leaves a company and creates a void that just can’t be filled. Consider the performance of General Electric’s (GE) after Jack Welch retired and Microsoft’s (MSFT) after bill Gates began relinquishing his responsibilities. So how do you guard against these situations and disasters similar to what BP (BP) and their shareholders are currently facing?
It is a good idea to have a written mission statement for your income portfolio that includes your goals and what you will and will not do in the portfolio. It may sound silly to take the time to write this down, but it is very helpful when fear or greed tempts you from your predefined path.
Source: Dividends Value
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Special dividends are attractive to companies with cash to spare and high levels of inside ownership. A heavy insider presence is a factor right now because these payments represent a last chance to pocket some cash while paying a maximum of 15% in federal taxes. The 15% cap on taxation of dividend income -- part of the Bush Administration's set of tax cuts in 2003 -- is set to expire at the end of the year, and it would seem Congress has bigger fish to fry, such as the Gulf oil spill and financial reform, at the moment.
While having excess cash is a wonderful thing, it's important to consider a company's longer term prospects as well. Investors with short-term horizons need to remember that -- all things being equal -- the special dividend "comes out of the share price" on the ex-dividend date. That's the date on which you need to be an investor of record to be eligible to receive the dividend.
Source: TheStreet.com
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Dividend investing could be helpful for those investors who are trying to establish a viable income stream that would support their lifestyle in retirement. To get to that point however, investors have to give themselves several years of regular investing in income producing assets that they understand, before they generate enough in dividend income.
While the recent financial crisis has not let the universe of dividend stocks unscatered, most diversified portfolios did not experience large drops in incomes. Dividend investing is different than traditional retirement investing strategies, since it focuses on living off the income stream generated by the portfolio and does not focus on selling a chunk of one’s portfolio each year in retirement.
Source: Dividend Growth Investor
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The S&P 500 index of large American companies has a yield of just over 2%. Fewer than one in 10 of its members pays more than 5%. Over two centuries ended 2002, however, U.S. shares offered an average dividend yield of 4.9%. The stock market's recent performance underscores the importance of dividends. The S&P 500 index currently trades close to its level of 12 years ago. An investor who goes a dozen years without price gains while using a 5% dividend yield to buy more shares ends up with a profit of more than 80%, thanks to the power of compounding payments.
Of course, high dividend yields are only useful if they're sustainable -- if companies can be counted on to continue making their payments. Company managers are generally loathe to cut their dividend payments, so they tend to commit only to amounts they're confident they can pay.
Source: SmartMoney
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The nascent investors in this world of investment are always in search of useful saving tips. Being an amateur in the investment field, this article can act as the right vehicle that would help you to pave the right path with investment guidelines.
As the proverb goes “to have money is good, to have control of money is still better” and in order to have better control over the money choose a right investment plan.
Source: The Dividend Guy
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BP (BP) continues to free-fall to new 52-week lows, despite getting the oil leak under control, as investors worry about a dividend cut and concerns that the worst case scenario, bankruptcy, may play out.
It appears that investors are looking beyond the containment of the leak and staring at the potential 800,000-1 million barrels floating around in the Gulf. The spill has already wrecked havoc on wildlife in the Gulf region and threatens to inflict more damage on the environment and local economies. Analysts see total liability for BP ranging from $10-$40 billion. But with lawsuits flying, these estimates may need to be adjusted.
Source: TheStreet.com
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I've had a lot of people telling me lately that cash is king. I don't want to pop anyone's illusions, but for my money cash is certainly not king. Indeed, cash is dust because the rate of return for cash these days is almost zero. So in a world where everything seems like it is coming apart, where can you go with confidence? I think there are many safe places where one can achieve a reasonably good long-term rate of return. The key words here are safe and long-term.
If you are trading the market on a day to day basis, you will never understand the power of the words "safe and long-term." Here's what you are missing. Making money is hard, but if one invests in companies that can "last," it puts time on your side and not working against you. Among the qualities of companies that can last, are strong balance sheets, ample free cash flows, skilled and fair-minded management, and companies that, indeed, have stood the test of time.
Source: Donaldson Capital Management
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BP is yielding a sweet 8.6%, but before investors plunk down money and buy BP stock for the juicy dividend they may want to ponder if it will last. Dividend-hungry investors have long gravitated to oil stocks because oil companies throw off oodles of cash, but the costs of cleaning up BP's big spill in the Gulf of Mexico, which could run as high as $40 billion, could put the oil giant's dividend in jeopardy.
Besides eating up BP's cash stash for a dividend payout, BP could face political pressure to stop paying billions of dollars to greedy shareholders even as people living near the Gulf see their livelihoods destroyed and tarballs and dead pelicans multiply on the beaches and marshes. Already, two U.S. Senators, Chuck Schumer (D-N.Y.) and Ron Wyden (D-Ore.) have weighed in, calling it “unfathomable” that the company will continue paying dividends without knowing the extent of the clean-up costs.
Source: Forbes
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Stocks that deliver a strong dividend yield are gaining favor among money managers, thanks to the increasingly volatile stock market. For good reason, said Rick Ashburn, the principal at Creekside Partners.
“Dividend stocks offer a predictable income stream, which is all the more attractive in an up-and-down market,” said Ashburn. “Price appreciation is only a meaningful source of return when you can buy stocks cheaply -- cheap relative to their fair value. At present, we still feel that stocks are fully priced and that history tells us to expect rather mundane price appreciation from current levels. On average, stocks will appreciate by only 1.5 percent to 2.0 percent above inflation from prices like we see now.”
Source: PRLog.com
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T. Rowe Price Group Inc. operates one of the largest no-load mutual fund complexes in the United States.
TROW is well-positioned as an asset manager with a strong market share and a well-respected brand. It consistently produces net client inflows based on the relative performance of its funds (nearly 90% of its funds are in the top half of their categories on a five-year performance basis). When considering TROW as a possible buy, my concerns are three-fold. First, the yield at 2.18% is below my current 2.5% minimum. Secondly, its current valuation is 28% above my calculated buy price of $38.74. However, my greatest concern are the dividend fundamentals. The 15% dividend growth rate used in this valuation is driven off a strong past – the company averaged 17.4% between 2001 and 2008, but only averaged 6.1% in 2009 and 2010. For now, I will pass on TROW.
Source: Dividends Value
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Investors have long sought stocks with big dividends in troubled times. Now Swiss bank UBS offers up a palette of European companies which are offering above-market dividend yields but more importantly have "decent' dividend coverage in terms of earnings and free cash flow so there is less risk that the dividend will be cut.
Of course, investing in high-yielding stocks can be a double-edged sword. Sometimes stocks are yielding more than the market yield because investors believe the company faces serious challenges. In such a situation, there is a high risk that the dividend may be cut and, more ominously, the company may go out of business entirely so the original premise for investing--the idea that the big dividend cushions any capital loss--goes out the window.
Source: Forbes
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The lowest-risk, most secure way to a great retirement is to invest in blue-chip stocks. One caveat before we get started: Blue chips are not the way to grab slam-dunk, overnight returns -- you won't be eating caviar and vacationing in Majorca by next week. But because they produce steadily rising payouts and are the most solid companies around, dividend-paying blue chips are the surest way to guarantee that you'll have income when you need it most.
My case for dividend-paying blue chips is based on their rock-solid stability. You want to invest in blue chips that have proven they are committed to maintaining and increasing their payouts over time, and a company that survived this recession without slashing dividends is a pretty solid bet. Such businesses will reward your trust over the long term, as they've rewarded countless investors before.
Source: Motley Fool
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U.S. stocks sit midway between rich reward and punishment. If the economy continues to heal and, as Wall Street analysts predict, company profits hit a new record next year, then the Dow Jones Industrial Average can be expected to return to its former peak, too. That would make for a gain of 40% or so from today’s levels. If, however, recent signs of recovery turn out to have been an economic head-fake brought on by lavish stimulus programs, and the Dow plunges to its 2009 low, stock investors stand to lose about 35%.
Investors who find the bulls and bears equally persuasive might wish to focus their stock hunting on companies like the three listed below. Each has posted handsome increases in sales and profits of late -- just the thing the market tends to reward when shares are broadly rising. Each also pays a dividend yield of greater than 3%, versus about 2% for the S&P 500 index, providing a stream of cash that can be reinvested into more shares if prices tumble. Moreover, each has increased its dividend payments at a healthy pace over the past five years.
Source: Smart Money
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I am not a stock trader; I am a dividend and value based long-term buy-and-hold investor. When I add a stock to my dividend portfolio, it is my intention to hold the stock forever. I am not smart enough to time the daily gyrations of the stock market. When stock prices start dropping, our primal instinct of flight kicks in and we want to sell. In many cases that is the time to be buying.
However, sometimes selling a stock is the right thing to do. In determining when to sell a dividend stock, I have one hard and fast rule: When an individual stock held as a dividend investment lowers its dividend, immediately sell it.
Source: Dividends Value
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BP (BP) said it understands the importance of its dividend to stakeholders, but said future dividend payouts will be decided by the board. BP currently pays a $3.36 per share annual dividend, which has an attractive dividend yield of 7.8%.
With the oil spill, there have been concerns that this divided is not safe as the cash flow generated by the company will not be sufficient to cover the clean-up and litigation costs plus the dividend. BP has already spent $1 billion on the clean-up, which is expected to be just a fraction of the total cost.
Source: StreetInsider.com
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To succeed as a dividend growth investor you must identify and purchase stocks with sustainable dividend growth. Put another way, targeted companies must be both capable and willing to grow their dividends. Obviously, we can not look into the future and see who will and will not perform. However, there are critical bits of information that we can evaluate today that often foreshadow the company’s future behavior.
Inertia is powerful force. Once a company has established a track record of growing its dividend over the decades and developed a shareholder base that expects higher dividends each year, it becomes increasing difficult for management to cut or fail to raise their dividend. No CEO of this type of company wants a dividend cut to occur on his or her watch. There are precious few Dividend Aristocrats remaining and those left enjoy their elite status.
Source: Dividends Value
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I read an article titled “Rising Markets are Bad for Dividends”. The premise of the article was that rising stock prices tend to bring yields down. As a result the best time to invest in dividend stocks is during market meltdowns. As a long term dividend investor, I disagree with several points of the article.
While rising prices typically result in decreasing current yields, the dividend payments remain unchanged in most circumstances. Even better, if you select some quality dividend stocks such as McDonald’s (MCD) or Coca-Cola (KO) your dividend payment is likely to increase over time. As a result investors who purchased at the lower prices have essentially managed to lock in the higher yield. This means that their yield on cost would be higher than current yields and would most likely increase if the company raises distributions.
Source: Dividend Growth Investor
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Sure, Buffett is known primarily as a value investor, but the Oracle of Omaha has made a career of finding businesses that pump out cash like oil from a well, a trait that makes them primed to be outstanding income stocks. Such cash-flow companies include high-quality insurers like GEICO or other well-run financials such as Wells Fargo and American Express.
One of the worst misconceptions about dividend investing is that it's boring. If you mean regularly increasing gobs of cash delivered to your brokerage account, then OK, it's boring. Heck, some even think dividends are dumb. But for those of us who love it when someone deposits money into our accounts, it's the most powerful and low-risk form of investing around, I would argue. And I have.
Source: Motley Fool
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For those of you unfamiliar with the term ADRs, it stands for American depositary receipt. An ADR is a stock that trades in the United States but represents a specified number of shares in a foreign corporation. ADRs are bought and sold on American markets just like regular stocks, and are issued in the U.S. by a bank or brokerage company.
Do I invest in dividend-paying ADRs? In a word, no. The reason I don’t is because I have enough trouble following the stocks that I currently own. I have written time and time again that for an investor to invest in individual stocks then they need to ensure they have enough time to focus on the analysis of potential stocks to buy as well as the current stocks in a portfolio. Adding in ADRs to an investment mix adds additional risk (more on that risk in a moment) to a portfolio that takes additional time and effort to FULLY understand and make sense of. Watching out for the risks associated with our own local stocks is difficult enough.
Source: The Dividend Guy
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