Investing in Dividends

The Consumer Price Index DROPPED 0.7% in December 2008.

That’s a marked departure from the gains we had been seeing. Even if you exclude food and gas prices, consumer prices were still flat for the month.

What’s more, the full-year data showed consumer prices rose a paltry 0.1% vs. a whopping 4.1% jump in 2007.
In fact, 2008 saw the lowest rate of inflation since 1954, when prices declined 0.7%.

With the continued job losses and curtailed consumer spending, you can expect to see further price weakness in the next round of data, too.

Find how your investing in dividends strategy may need to suite this inflation period.

To your dividend investing success,

InvestingInDividends.com

As far as most investors are concerned, there are really only three basic investment categories — stocks, bonds, and cash equivalents. Commodities, currencies, and a few other “alternative assets” round out the bigger list.

Yet even with just these few choices, it’s a challenge to figure out how much of your money should go to each.
One traditional rule of thumb says to subtract your age from 100. The resulting answer determines the percentage of stocks that should be in your portfolio.

For example, a 40-year-old investor would allocate 60% to equities.
The obvious idea here is that the longer you have until retirement, the more aggressive you can be with your portfolio.

Since stocks are historically more volatile — but also better able to outpace inflation over long periods — they deserve the lion’s share of a younger investor’s nest egg.

Learn more about investing in dividends and how to determining what should be in your retirement portfolio.

To your dividend investing success,

InvestingInDividends.com

It looks like Dow Chemical will not be able to complete its purchase of Rohm & Haas on time (if ever).

Dow Chemical is now trying to back out of the deal due to “unacceptable uncertainties on the funding and economics of the combined enterprise.”

What they’re really trying to say is that the swift decline in commodities prices has made ROH a less attractive purchase, particularly given what’s happened to share prices and credit conditions since the deal was initially announced.

To make matters more complicated, Dow’s CEO Andrew Liveris said this morning that a dividend cut is another “one of the things we would strongly look at.”

That would be a heck of a move considering that Dow has paid a dividend every year since 1912 without one single decrease!

Learn more about investing in dividends and dividend cuts.

To your dividend investing success,

InvestingInDividends.com

“Laddering” is a good way to hedge your bond portfolio against any sudden change in interest rates. After all, it’s much like the concept of dollar cost averaging into stocks.

It works like this: You buy bonds with various maturities. Then, as they mature, you re-invest the proceeds into new bonds at the highest rung of the ladder (i.e. with the longest maturities).

The approach allows you to always put some money to work at current rates while protecting other portions of the portfolio. So if rates are falling, you have some of your money in longer-dated bonds. If rates are rising, you get to keep buying at higher and higher rates.

No, you never get to plow all of your money in at the exact right time. But rarely can anyone time markets so perfectly anyway.

Learn more about “Laddering” through dividend investing strategies.

To your dividend investing success,

InvestingInDividends.com

The New Year got off to a strong start with stocks posting a nice little pop on the first day of trading. And even after yesterday’s pullback, the broad indexes are still well above their recent lows. Anyone who bought on the dips has done quite well.

Will the good times continue throughout the year?

Fundamentally speaking, our economy is probably in for more pain this year. And don’t expect a bottom in real estate, either. All the latest data points to continued weakness across the board.

But there are plenty of reasons to be optimistic, too. Especially when it comes to solid dividend stocks in the right sectors. So start digging around, and you’ll be surprised at what you can find.

Learn more about if the good times will continue throughout 2009 for dividend stocks.

To Your dividend investing success,

Investing in Dividends

An important law has been extended through 2009. Individuals age 70½ and older can still directly transfer up to $100,000 a year from an IRA to qualified charities without having to count those distributions as taxable income. Plus, the transfer still counts toward that person’s minimum distribution.

We also want to point out that you do not have to have the money in hand to donate for a 2008 write-off! You can charge your gift this year and it will still count. It doesn’t matter if you pay the bill in 2009. Similarly, a check mailed in 2008 counts for 2008.

Learn more about how to leverage your dividend investing today.

To your dividend investing success,

InvestingInDividends.com

With the holiday shopping season in full swing, you might be busily hunting for gifts that are both affordable and practical.

Well, why not give someone a share of your favorite dividend-paying stock?

The real problem isn’t finding good stocks to buy. It’s the logistics — while a single share of stock might be good for your budget, it isn’t always economical to buy in terms of commissions. Plus, how would you go about getting it registered in the proper name?

Good news: Plenty of websites specialize in this kind of thing — they’ll even send a nicely mounted stock certificate right to the person’s home.

That’s a great, tangible way to get somebody interested in investing!

Three popular sites for gifting stock are www.giveashare.com, www.oneshare.com, and www.giftsofstock.com.

Learn about these three dividend gift ideas for your favorite investor.

To your dividend investing success,

InvestingInDividends.com

When you sell a position at a loss, the IRS allows you to deduct that loss come tax day.

It works like this:

First, if you also booked gains for the year, you’ll be able to offset them on a dollar-for-dollar basis with no limit.

Second, if you recorded more losses than gains — or no gains at all — you can use your losses to offset some ordinary income. The maximum amount is $3,000 ($1,500 if married filing separately) … but you can carry additional losses forward for future tax years.

Doing this before year-end is a no brainer if you have losing positions that you don’t think will ever come back. You will not only get a tax break, but you can then take the proceeds from the sale and reinvest them in better long-term choices (such as solid dividend stocks).

Of course, even if you have underwater positions that you would like to continue holding for the long-term, you still might consider selling them at a loss for the tax advantage.

Why? Because as long as you wait more than 30 calendar days before buying back those same positions, the loss will count on your tax form.

Learn more about selling your dividend losers and how to make it a tax advantage in 2009.

To your dividend investing success,

InvestingInDividends.com

Because Roth IRAs do not require you to take minimum distributions, you can leave every single penny of your Roth IRA intact for your designated beneficiary. That’s great.

Even better is the fact that your heir will face a choice upon your death: Either withdraw the whole amount by December 31 of the fifth year after your death OR begin receiving minimum distributions based on his or her life expectancy.

Under either choice, all the proceeds should be tax-free (with the exception of estate taxes).

Think about what would happen if you loaded up that Roth IRA with stocks that steadily increase their dividends. And imagine what would happen if you were reinvesting those dividends back into more shares!

You’d be combining complete tax efficiency with multiple layers of compounding interest. Heck, with enough time, you could leave behind a nest egg that was rising faster than the rate of your heir’s mandatory withdrawals!

InvestingInDividends.com

Sure, there’s probably plenty of time to take advantage of these prices. They may even get more attractive before all is said and done. But you can’t let fear freeze you in your tracks. You’ve got to keep looking ahead and planning for better days.

Never forget these two basic facts:

First, many of the market’s major advances have come swiftly, and without warning. And they almost always anticipate economic recovery.

Second, an all-cash portfolio will almost certainly underperform over any substantial length of time.

To be clear, now may not be the time to go “all in” on stocks or take unnecessary risks. The volatility is still a bit too high.
But I you should stick to your investment plan … continue contributing to your retirement accounts … and diversify into some core income stocks if you haven’t already done so. These prices will not last forever!

InvestingInDividends.com