Investing in Dividends

According to some estimates, Americans shell out $265 billion every year — more than $900 for every citizen — to comply with the current tax code. That hardly sounds like an efficient system!

The good news is that there’s no reason we have to accept token changes or the status quo. There are at least two other proposed tax systems out there that make a heck of a lot more sense than what we have now.

One alternative is a simple, flat income tax. Steve Forbes and Dick Armey have been two big proponents of this system.

Basically, the approach would mean we all pay a set percentage of our income to the government (17% under Forbes’ plan). The only exception would be a certain initial amount of income — somewhere around $40,000 perhaps, which would allow low earners to keep enough money to cover their basic living costs before taxation.

No doubt, the flat tax proposed by Forbes is not 100% flat. Some credits and exemptions would remain, and the income exclusion would effectively mean we’d still have brackets of some sort. But proponents argue that this system would be far less susceptible to lobbying or other forms of political manipulation. And according to advocates, all it would require is a simple postcard-sized form.

Sound completely ludicrous? Well, it’s worth noting that a handful of U.S. states, such as Pennsylvania, are currently using a flat tax system.

The other major alternative tax system is the idea of a national sales tax, known by its advocates as a “fair tax.” Recently, the idea has been gaining steam in Washington, too.

In one of its most popular incarnations, as espoused by www.fairtax.org, U.S. citizens would pay 23% on all new goods and services for personal consumption. Used goods and business-to-business purchases would be exempted.

This national sales tax would replace federal income taxes, including personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes.

Wouldn’t that hurt low-income consumers who spend more of their money on life’s necessities? Well, proponents of the fair tax propose a monthly prebate that would ensure all U.S. citizens receive enough money to cover essential goods and services (known as poverty level expenditures).

In terms of numbers, fairtax.org estimates that a couple with two children would receive a family consumption allowance of $20,800 a year, which amounts to an annual rebate of $4,784 or $399 monthly. In other words, it would be assumed that a family of four spends $20,800 a year on necessities and should be excluded from paying a 23% tax on those goods and services.

And so that we don’t end up with a national sales tax PLUS a federal income tax, FairTax advocates are seeking to repeal the 16th Amendment, which allows income taxation, should our country adopt their plan.

As with the flat tax system, some states already have this basic “fair tax” arrangement right now. Florida is a good example. Residents don’t have to bother filling out state income tax forms at all! Learn more about dividend investing and other tax system alternatives.

To your dividend investing success,

InvestingInDividends.com

The China Securities Regulatory Commission — Beijing’s equivalent of the U.S. Securities and Exchange Commission — is pressing the country’s listed companies to adopt more generous dividend policies.

Previously, China-listed companies that wanted to issue additional stock had to pay out at least 20% of their annual average profit for the past three consecutive years in the form of shareholder dividends (cash or stock).

The CSRC wants to raise the minimum amount to at least 30% of profits to shareholders. If a company refuses to comply, it will be punished by not being able to float new bonds or sell additional shares.

According to the Chinese agency:

“Giving fair returns to shareholders is part of listed firms’ responsibilities and is the foundation of stable and healthy development of the securities market.”

Listed companies will also have to include information on their cash dividend policies and previous cash dividend data in their annual reports.

If they don’t declare cash dividends? Well, they’ll have to tell investors why, along with what they plan on doing with their retained earnings!

What do we think of the plan? We love it!

Read all about China’s talks to dividend stock companies to implement generous dividend policies in China.

To your dividend investing success,

InvestingInDividends.com

This past Friday, consumers in ten Latin American countries were lining up to get Apple iPhones.

That’s right … the most coveted cellphone in the world is now available in Argentina, Chile, Colombia, Ecuador, El Salvador, Guatemala, Honduras, Paraguay, Peru and Uruguay.

And for the company that’s bringing the device to the region — America Movil — it looks like another coup. Already, the company has been expanding its footprint through acquisitions, and now it is clearly the carrier with the most cachet in its operating area.

Its stock pays a dividend, too. Although it provided just a token payment from 2000 through 2004, AMX has been making more substantial distributions lately. Particularly through special dividends.

To read more about America Moviol dividend payouts today!

To your dividend investing success,

InvestingInDividends.com

August 19, 2008

It’s no secret that I believe a concentrated list of well-chosen dividend payers is the best way to secure healthy income and reap nice capital gains over time.

That’s especially true if you follow a long-term buy-and-hold strategy.

Why? Because you’ll pay only small brokerage commissions the few times you buy or sell, and you’ll avoid big tax bills or annual expenses the whole time you’re holding.

If you do your investing inside tax-sheltered accounts like IRAs, the strategy works even better!

However, maybe you’re not a big fan of watching stocks move up and down or making adjustments on a regular basis.

That’s okay.

I’m a big fan of keeping things simple, too. And in the investment world, few things are simpler than exchange traded funds (ETFs).

These vehicles — which function like mutual funds but trade like stocks — are an easy way to get a broad stake in a particular asset class with minimal effort or expense.

In general, ETFs don’t require lots of micromanagement … you can simply “set them and forget them.”

In fact, some investors take this to the extreme by building so-called “lazy portfolios.”

Here’s how it works:

Read the rest of this article and learn which Dividend Superstars portfolio companies made payments in July.

To your dividend investing success,

InvestingInDividends.com

Unfortunately, the current environment is forcing some firms to pare back their distributions, especially in the financial sector. Fannie Mae’s dismal second-quarter results last week — which included a $2.3 billion loss and a dividend cut from $0.35 to $0.05 — is just one example of the kind of news that’s coming over the wires.

In fact, according to data from Standard & Poor’s, the second quarter saw the greatest number of dividend cuts in 18 years. So yes, there are reasons to be worried about weak companies being forced to cut.

But there are also plenty of companies that continue to pay — and increase — their dividends.
Recent examples of dividend hikers include Cummins and CVS. And seven stocks in the Dividend Superstars portfolio made payments in July.

Larger companies, particularly those with longer histories of dividend payments, look far more likely to continue their streaks. These companies have strong balance sheets and have survived plenty of other market cycles.
Bottom line: There are still plenty of places to find solid, reliable yields … you just have to do a little legwork.

Read the rest of this article and learn which Dividend Superstars portfolio companies made payments in July.

To your dividend investing success,

InvestingInDividends.com

When companies like Pfizer, Philip Morris, and Colgate sell their products in foreign markets, they price them in euros, Japanese yen, Australian dollars or Brazilian reals. But when it comes time to tally those sales and bring the money home, they get translated back into U.S. dollars.

Result: A weaker greenback means these companies collect more dollars on every foreign sale. Moreover, this same phenomenon allows U.S. companies to charge less for their products in foreign markets and STILL get the same dollar amount in sales. That makes the companies more competitive on the world stage.

Please note that it’s not one particular industry that benefits from this phenomenon. Pharmaceutical firms … tobacco concerns … toothpaste makers … they all gain from a falling dollar as long as they’re selling a lot of goods overseas.

Even a U.S. engineering firm that did a project in London would benefit from a weaker dollar. Of course, it helps that the three companies mentioned today boast world famous, market-leading brands. After all, even during a recession (in the U.S. or a foreign country!) consumers will still take their medicine, smoke, and brush their teeth. That gives these firms steady demand around the world, no matter what.

Find out how other dividend stock companies bank big from a weak dollar.

To your investing success,

InvestingInDividends.com

The markets are volatile right now, so you urgently need two things:

First, you need protection against the risk of stock price declines. You can get that by using stop loss orders and/or reverse index exchange-traded funds.

Second, you need solid, high yields you can rely on quarter after quarter, giving you double, triple — even quadruple — the best return you could get on Treasuries, bank CDs, or virtually any other fixed-income investment.

You can get those from a select group of common stocks. But you can’t simply scan the paper and blindly pick out the companies that happen to be paying the biggest dividends today. For each and every high-yielding company you invest in, you need to make sure they have a solid history of faithfully paying — and even raising — their dividends year after year. You want to make sure they have the financial wherewithal to continue dishing out juicy double-digit dividends in good times or bad. See who’s paying the biggest dividends today so choose wisely!

To your dividend investing success,

InvestingInDividends.com

There’s no quibbling with the popularity of index funds — for investors seeking a simple approach to investing, these vehicles are a real boon.

But they can also help those of us who still try to beat the market, especially when we’re already holding a stock before it gets added to a major index …

Remember, many passive managers will buy the stock once it goes into their target benchmark. The resulting stampede can result in a nice pop in the stock’s price. That’s especially true in the case of additions to the S&P 500 since so much money is tied to the index! See what other dividend index funds area popular by reading our article on “A Little-Known Benefit of Stock Indexes “.

To to your dividend investing success,

InvestingInDividends.com

Dow Chemical said it was acquiring Rohm & Haas at a huge premium, and ROH shares shot up 64% when the news hit the wires!It just goes to show you that despite all the bad news coming across the tape, there are rays of sunshine if you know where to look. It also proves that many well-known, dividend-paying stocks remain attractive — not just for their income potential — but also because of their stable businesses and hidden value. Find out more about dividend-paying stocks and why you should get in on this.

To your dividend investing success,

InvestingInDividends.com

Rough market?

Think dividends! June wasn’t kind to the stock market. In fact, the S&P 500 had its worst month since September 2002 and its worst June since 1930. So far, July hasn’t been much better.

End result:

The S&P 500 is now back below 1300, the same place it was at in the beginning of 2006. In other words, it has given up all the gains made throughout 2007.

In fact, the S&P 500 was at the very same 1300 level as far back as 1999. In between were massive rallies, sure. But over the last eight years, the market has basically gone nowhere.

Don’t despair, though. Select dividend-paying shares are the perfect way to get paid while the market idles in neutral and interest rates remain insultingly low.

Remember, dividend-paying stocks have performed better during past bear markets than non-dividend-paying shares. Want proof? Just read this special report “Why Dividends Will Almost Always Make You Money.”

To your dividend investing success,

InvestingInDividends.com