Investing in Dividends

By no means are we advocating racking up debt on a shiny new card. Rather, we suggest you buy only what you can afford, and pay for it all with one card that actually gives you something back (cash, airline miles, whatever). As long as you promptly settle up the entire owed balance on every due date, you’re effectively getting something for nothing!

Plus, you receive a nice monthly inventory of all your expenditures, which is great for honing your budget. If your statements come electronically, you might even be able to dump them right into any financial management software you use.

One word of warning, though: Make sure the card you choose doesn’t carry hefty fees. You might consider paying a low annual fee if you’ll be receiving outsized benefits overall. But you should also know that there are rewards cards out there that don’t have annual fees at all.

According to a recent Consumer Reports survey, American Express’ “Blue Cash” card was one of the overall best cash-back rewards cards. So you might consider using that as a benchmark when you do your research. Learn about four more great personal finance tips that you can use when you start investing in dividends.

To your dividend investing success,

InvestingInDividends.com

I don’t know anyone who would dispute Wal-Mart’s position as one of the biggest growth stories of the 20th Century.

In the span of a few decades, the company went from an unknown small-town store to the poster child for big business. Take a look at some highlights from the company’s history …

• Sam Walton opened the first Wal-Mart in 1962.
• The company went public in 1970.
• In 1974, it paid its first dividend.
• In 1975, Wal-Mart had 125 stores in operation with sales of $340.3 million.
• By 2005, it was the world’s largest retailer (and its largest private employer!) with annual sales reaching $312.4 billion.

As you can see, Wal-Mart began paying a dividend just four years after it went public and that didn’t hurt the company’s growth one iota!

What’s more, Wal-Mart has not only continued to pay dividends to this day, but it has steadily increased those payments along with its rising revenues and profits.

See, in the theoretical world of academia, a perfect growth company may very well reinvest every penny back into its business.

But in the real world, entrepreneurs, executives and shareholders want to reap some of the profits while the growth is happening!

Bottom line: When a company is firing on all cylinders … and bringing in cash by the boatload … it’s more than capable of rewarding shareholders and totally dominating its industry. Find out Why dividends and growth go together today!

To your dividend investing success,

InvestingInDividends.com

Contrary to popular belief, you do not need perfect timing to survive — and thrive — in markets like these. Rather, you can use a strategy known as dollar cost averaging.

Despite the name, dollar cost averaging has nothing to do with currencies at all. Instead, it refers to buying equal dollar amounts of the same investment on a predetermined schedule.

For example, let’s say you’ve decided to invest $10,000 in XYZ Corp. Rather than deploying the entire amount at one time, you might instead opt to purchase $1,000 of XYZ stock on the first day of each of the next 10 months.

What’s the logic behind this approach? Well, you can expect just about any stock’s price to vary substantially over a ten-month period. So, when the price is higher, your $1,000 will buy less shares; when the price dips, your $1,000 will buy more shares.

In other words, buying equal dollar amounts over time allows you to reduce your risk to a stock’s short-term price movements, automatically encouraging you to buy more when prices are lower and less when prices are higher.

For more on how this strategy – and how it could have made you money even during the Great Depression, read all about a great “Dividend Investing Strategy” for the Ages

To your dividend investing success,

InvestingInDividends.com

Hi guys,

As you know, compounding takes time, as the money you’ve already earned on your investments begins to earn returns of its own.

For example, if you put $10,000 into a savings account with a 6% annual interest rate, you’ll have $10,600 after one year. Next year, you’ll be earning 6% on the $10,600 rather than just the original $10,000. That might not seem like a big deal, but the effects can really add up over time. Ten years later, you’d have almost $18,000, 80% more than you started with!

When you reinvest your dividends, you’re combining the power of dividends with the power of compounding to form one mega-force. Here’s why:

You’ll be steadily increasing your holdings of a particular stock over time, setting yourself up for even more dividends down the line.

As various studies have proven, dividend reinvestment is responsible for much of the market’s historical performance.
In fact, asset management company Eaton Vance says as much as 65% of U.S. stock gains have come from reinvested dividends!

Make Dividend Reinvestment Work for You!

To your dividend investing success,

InvestingInDividends.com

Back in the 1970s, the misery index was widely cited. The measure, which was created by economist Arthur Okun, combines the government’s unemployment and inflation rates to give a quick picture of the on-the-ground economy.

Right now, the U.S. misery index is hovering around 8.9 (inflation of 3.9 combined with unemployment of 5%).

That’s not great, but it’s hardly alarming by historical standards. In the 1970s, the index was running near 15%, and it hit a record of 20.6 in 1980.

The real reason that the current misery index looks so tame is because of the way the government measures inflation. There are at least four reasons to find fault with the Consumer Price Index. There are plenty of reasons to find fault with the employment side of the misery index, too. For example, if someone is unemployed but has not looked for work in the last month, they are excluded. Peculiar, isn’t it? Here’s the bottom line: No matter what the statistics say, real people are suffering real hardship right now. Learn more about “The Real Misery Index” right now.

To your dividend investing success,

InvestingInDividends.com

Last Friday, the Financial Times reported that InBev SA, the giant Belgian brewer, is working on a $46-billion takeover bid for BUD.

The shares rose to a new all-time high of $58 shortly after the news hit the wires. So if you already own BUD stock, you might want to crack open a cold one and celebrate!

And even if you don’t yet own the stock, a $46-billion buyout implies an acquisition price of $65 a share. That represents another 14.8% gain from BUD’s closing price before the Memorial Day holiday. Should this deal end up happening, even new investors stand to reap plenty of profits.

Even near all-time highs, the stock is shelling out a dividend worth 2.5% a year. That’s more than most CDs and money markets are paying right now!

To learn more about the deal, and what it means for dividend investors, click here .

To your Dividend Investing Success,

InvestingInDividends.com

The typical company is a plain old corporation, a separate legal entity from its employees and investors. They’re treated as separate legal entities come tax time, too.

Thus, if shareholders receive dividends, they’ll eventually pay taxes on the income, too. That’s why some companies choose to organize as partnerships, which are not considered separate legal entities. In other words, the partners are liable for the obligations of the partnership but also get all the direct benefits. Example: Master Limited Partnerships (MLPs), also known as publicly traded partnerships (PTPs).MLPs are required by law to pay out most of their cash flow to partners in the form of regular quarterly distributions. By all appearances, these payments look like plain ol’ dividends. However, there’s an important difference at tax time — the bulk of the quarterly distributions are considered a return of capital and not taxable investment income.Translation: Most of your distributions are tax deferred!To learn more about how it all works, check out this article on Money and Markets.

To your dividend investing success,

InvestingInDividends.com

Hi guys,

We have a great way to find great stocks. Did you know that there are thousands of stocks trading on U.S. exchanges right now? And there are thousands more trading on major foreign exchanges. So there are clearly lots of opportunities out there at any given time but the million-dollar question is: How do you separate the wheat from the chaff?
The answer is:

Stock screeners, which are filtering programs that draw on databases of stored information, allowing you to search for investments based on pre-determined criteria. They’re both extremely useful and fun to play with.
Plenty of websites now offer advanced tools and rich data sources absolutely free of charge. For example, Yahoo! Finance has an interactive stock screener that encompasses more than 150 different criteria. I think it’s very impressive, and worth checking out.

Other sites have quality screeners, too. Zacks Investment Research offers up a custom screener as does Morningstar, which includes the company’s analyst rankings as one of the possible criteria. Morningstar also offers a premium screener, which is available by subscription only.

You should also check to see if your broker offers its own proprietary screening tools. Fidelity provides one to its customers, for example.

Some sites offer a number of pre-defined searches to help get you started. But in my experience, the most interesting (and relevant) results are produced when you select the criteria yourself.

Feel free to experiment and see what you can come up with. And if you’re interested in seeing the results of a dividend-focused stock screen, check out this article!

To your Dividend investing success,

InvestingInDividends.com

Last week, chewing gum powerhouse William Wrigley Jr. Co. made a major announcement — it was being acquired by privately-held Mars Inc. Even more interesting: Warren Buffett’s Berkshire Hathaway, an investor with keen investing insight, would be financing the deal.

We were elated by the news, especially because we’ve been highlighting Wrigley in our Dividend Superstars special report “Seven Stocks to Triple Your Income Over Time” Heck, as soon as the buyout news hit the wires, the shares rocketed toward the offer price.

Since the initial release of that report, Wrigley’s stock is up 33.7% (including reinvested dividends). Not bad for a conservative stock that has been doling out regular (and increasing) dividend checks since the 1920s! And even better when you look at what the S&P 500 has done over the same period — from June 4 of last year through yesterday, the broad stock index posted a total return of 7%.

But even if you missed out on the Wrigley action, don’t worry. In this post, we’ll tell you about three important lessons from this transaction:

Lesson #1. When it comes to stocks, look for big brand names, solid product lines, and a global reach.

A lot of investors overlook one simple fact: When you buy a stock, you’re not buying a lottery ticket … you’re buying a stake in a business. If you can’t understand the business, you probably shouldn’t invest. And if you wouldn’t want to own the business for any length of time, you definitely shouldn’t invest in it! You can see why we advocate investing in companies that already sell terrific (and terrifically popular!) items around the world … companies that are easy to understand … companies that have strong brands … and companies that consistently share their profits with shareholders through dividend payments.

Lesson #2. Even in this lousy credit environment, there are still big deals being done.

Profitable businesses selling at attractive prices will always be hot. And savvy investors will always be willing — and able — to buy them lock, stock, and barrel.

Lesson #3. When it comes to investing, patience and conviction are rewarded.

Investing is about steady returns over time. Taking a longer-term approach lets you ride out the market’s bumps, and positions you for the big, sudden gains. As the Wrigley deal proves, a huge up move can come out of nowhere. If you tried to trade in and out of the shares, you likely would have missed that HUGE one-day pop!

To your dividend investing success,

InvestingInDividends.com

Hi,

We’ve got something we wanted to get off our chest. Last time I checked, very few elementary schools — or even high schools, for that matter — were teaching kids anything about finance. And that’s a real shame.

Few students will ever use their knowledge of frog anatomy. But every single student will have to make major financial decisions for the rest of their days!

So, if you have a child or grandchild in your life, we encourage you to do all you can to help set them along a path of financial independence. Today, we’re going to focus on 3 ways to teach children about money and the financial markets.

#1. Get them started on an allowance early.

When it comes to money, I think it’s important that kids get their hands dirty. The personal connection with the exchange becomes far more real this way.

#2. Help them establish a budget.

This dovetails with the idea of an allowance. Have them write down a future purchasing goal, and then help them track their progress toward that end.

#3. Give them an investment of their own.

Plenty of kids know about Disney, Nike, and Coca-Cola. So why not let them “own” a little piece of the firm, and explain the benefits, especially the importance of dividends!

You may have your own approach or various ways to tweak my suggestions. That’s great — every child is different and every person has their own teaching methods.

The important part is showing our kids how to make sound financial decisions before they come asking to borrow our credit cards!

To your investing success,

InvestingInDividends.com