Dividend Stocks ( General Discussions )

[winston]

How To Build a 6 Figure Income Dividend Portfolio with $600 per month
by Mike in Core Portfolio, Investing Strategy

Last week, I discussed how to build a retirement portfolio with dividend stocks. Since bonds and certificates of deposit offer historically low rates, chances are that retirees and future retirees will invest more money into “safe” dividend stocks.

Following this post, a reader asked me how to build a 6 figure income dividend portfolio. First of all, this is not an easy task; making 100K per year from your investments requires 3 things:
- A lot of time
- A lot of capital
- A bit of luck

http://www.thedividendguyblog.com/how-t ... per-month/

[winston]

The Safe, 17% Income Solution By Brian Hunt, Stansberry & Associates
Tuesday, July 19, 2011


When you see a stock offering a 17% yield, you should almost always run the other way.

A high yield is often a dangerous trap. The dividend will be slashed soon…

Either the business is generating so much cash, it'll attract a flood of competition, which will drive down profit margins and thus dividend payments…

Or the business is in decline and investors have sold off shares in anticipation of a dividend cut, which drives up the apparent yield.

Once the dividend cut comes, the share price declines even more. Any dividends you do receive will be peanuts compared to the big capital loss.

That's why "reaching for yield" is often one of the costliest, riskiest things you can do with your savings. And that's why I knew a headline I wrote last fall, "How to Make 17% Income on the World's Safest Cheap Stocks," sounded crazy. Such a big yield and the word "safety" almost never go together.

But that was the situation back then… and it still is now. Let me explain…

As we've pointed out many times in DailyWealth, big tech companies like Apple, Google, Intel, and Microsoft are some of the greatest values in the market. When you factor in their big cash hoards, many of these firms trade for less than 10 times earnings… which is absurdly cheap for a great business.

Microsoft, for example, is a huge, stable business with large profit margins. Many investors can't stand the stock because its fast-growth days are behind it.

But I'm like a lot of folks out there. I'm not interested in reaching for the moon right now. I'm more interested in a safe return of 10%-20%.

And Microsoft is a safe investment here. Just from a common sense technical analysis standpoint, you can see that Microsoft always enjoys buying support from investors when shares trade near $24 per share.

This is important: Microsoft may not rise 100% or 200% in the next year, but chances are very good that it won't go down.

This situation is why the strategy I laid out last year is generating a great income stream with Microsoft. Anyone who has done it with Microsoft or a similar stock is generating annual income in the 10%-20% range.

The idea is to use the world's biggest, most stable technology companies as a "base" for a covered call program. In short, what you do is sell the bulk of a stock's upside for an instant, upfront payment. (I explain the full details in this piece.)

Back in October, you could make about 17% annualized with this super-safe trading strategy. And that's still the case.

When I look at most traditional income vehicles out there, like real estate stocks and bonds, I see too much risk for not enough reward. To generate substantial income on a portfolio, we have to get a little creative …

If you're willing to try something new, consider this unusual "safe 17%" solution.


Source: Daily Wealth

[winston]

HK Yield Stocks

DJ MARKET TALK: SHKF Picks High-Yield HK Stocks Amid Choppy Market

1509 [Dow Jones] Investing in this year's highly volatile market should not be about trying to "time the market" for quick and substantial gains, says SHK Financial; rather, the focus ought to be on longer-term accumulation of low-valuation stocks, keeping an eye on long-term fundamentals.

The house believes yield plays will be relatively attractive given that "a sustainable high yield will at least lend price support."

It comes up with 11 Hong Kong yield plays, including Zhejiang Expressway (0576.HK), City Telecom (1137.HK), GZI REIT (0405.HK), Jiangsu Expressway (0576.HK), Bank of China (3988.HK), China Construction Bank (0939.HK), ICBC (1398.HK) PetroChina (0857.HK), Hutchison Telecom HK (0215.HK), Link REIT (0823.HK) and China Mobile (0941.HK).

Source: Dow Jones Newswire

[winston]

High yields may not lower risk of losses
Tuesday, August 30, 2011

Almost all the forecasts made about the Hang Seng Index at the start of the year have been proved wrong.

To stay prudent, many experts have urged that investors buy shares with a high dividend yield.

But no one can guarantee the high yields can be maintained.

For example, Regal REIT (1881) just revealed it will pay an interim dividend of HK$0.057. Last year, it paid HK$0.086. The stock has fallen from HK$2.60 to HK$2 in one month.

China Light and Power (0002) is still offering a dividend of HK$2.48 per year. CLP is up from HK$53 in early 2010 to an all-time high of HK$72.

How about mainland banks then?

The yield for Bank of China (3988) is 5.5 percent But if the mainland's property bubble bursts, it may have to shoulder a huge burden of bad debts, prompting a rights share issue and putting downward pressure on the stock.

BOC's share price have fallen more than 30 percent in the past five months, which cannot be covered by dividends.

So, buying high-dividend shares may not be prudent. If you are afraid to lose money, you should buy yuan bonds.

http://www.thestandard.com.hk/news_deta ... 10830&fc=2

[winston]

DIVIDENDS – THE KEY TO RETURNS, EVEN FOR GROWTH STOCKS14 By Lance Paddock, CEO Thompson Creek Advisors

A good article on dividends and their importance in the Wall Street Journal. Two quotes stuck out for me:

“First, stock returns don’t typically consist of exciting price gains with dinky dividends tacked on.

http://pragcap.com/dividends-the-key-to ... wth-stocks

[winston]

Your Broker's Worst Trick – Revealed By Dan Ferris, The 12% Letter

Since the beginning of May, the stock market is down 12%.

In other words, for every $10,000 you had "in the market" back in May, you now have $8,800.

But while most investors have seen their portfolios shrink, subscribers who have followed my unique stock system have actually made money.

My subscribers – and (hopefully) regular DailyWealth readers – have loaded their stock portfolios with the world's safest, most profitable stocks.

They've loaded their portfolios with World Dominating Dividend Growers… and companies that "sell the basics."

If you haven't taken my advice to get off the stock market roller coaster… and into these safe investments, it's not too late. Today's chart might convince you…

Below is a chart that displays the performance of Abbott Labs (green line), Altria (red line), and Coca Cola (blue line) since mid-April. Each of these companies produces basic "recession proof" products like prescription drugs, cigarettes, and soda. Each of them pays out a relentlessly growing dividend.

These three stocks are either break even during this time… or have advanced a few percent.

Now note the black line. This is the performance of the S&P 500 stock index. This index contains many of the biggest and best companies in the U.S. It even contains Abbott Labs, Altria, and Coke.

But it also contains lots of crappy businesses I'd never invest my hard-earned money in. For example, it holds many of the banks you hear about so much in the news – the ones that have billions of bad loans on their books.

The S&P 500 also contains an airline, steel companies, and homebuilders. These businesses are almost always deeply in debt and are prone to going bankrupt.

Worse, many of these companies don't pay a cent to their shareholders in dividends.

"Shareholders" in these companies are more like "bagholders." Wall Street banks see folks who own shares in these kinds of companies as an unsophisticated and constant source of fees.

When you "churn" your account – trading in and out of lousy stocks, chasing risky speculations, and falling for the next "good story" – you produce commissions for your broker. But when you own companies like Coca Cola and Altria, you simply sit back and cash dividend checks.

So considering that these world-champion, dividend-paying companies are available to investors, I can't understand why anyone would shortchange themselves by owning lots of volatile, deeply indebted, barely-profitable businesses. It's like choosing SPAM over filet mignon.

I don't know why anyone would listen to an advisor who tells them to own anything but the world's, best, safest, most profitable companies… companies with fat profit margins, high returns on equity, world-class brand names, enduring competitive advantages, and a history of treating shareholders well by paying out ever-increasing dividends.

If you're not interested in worrying about what "the market" is doing… if you're not interested in worrying about the latest crazy plan from Washington D.C… if, instead, you're simply interested in safely compounding your wealth… in short…

IF YOU'RE INTERESTED IN GETTING RICH IN STOCKS…

…then dominant dividend payers are the only stocks you should own.


Source: www.dailywealth.com

[winston]

Let Wall Street Drop… It’s Time to Go Shopping by Matthew Carr

At the heart, I believe in crisis investing – looking for opportunities during disasters, sell-offs, downturns, or outright market implosions, to get the biggest bang for my buck, using broader investor panic as an advantage. And right now is one of those times.

I consider this current sell-off more of an opportunity, than the beginning of the apocalypse or the end of America.

And even better, the opportunities don’t have to be exotic. Because when we’re in a volatile market like this, we want stability.

In my other publications, we’ve been banging one particular drum for a while now: dividend stocks.

These are the true safe havens – not gold.

Dividend-paying stocks consistently outperform the market and, as a whole, trump the performance of non dividend-paying stocks.

But not all dividend-payers are created equal…

• We want to focus on companies that pay a dividend that outpaces inflation (which is currently around three percent).

• And we want to target companies in industries that have growth and where earnings per share are more than the dividend yield (so we avoid the risk of having the dividend cut).

http://www.investmentu.com/2011/Septemb ... stock.html

[winston]

How To Know When To Sell A Dividend Stock

I have stated on numerous occasions that I have one hard and fast sell rule for my individual dividend stocks: When an individual stock held as a dividend investment lowers its dividend, immediately sell it.

For me and my stocks held as dividend investments, there are other times it makes sense to sell. Consider these:

1. Flat Dividend Leading to Poor Dividend Fundamentals
2. Significant Price Run-up Distorting Dividend Fundamentals
3. Historical Performance Is Not Indicative Of Expected Results
4. Substantial Change In The Business
5. Buy-And-Hold Not Buy-And-Forget

http://www.dividend-growth-stocks.com/2 ... stock.html

[winston]

When Is It Time to Sell a Dividend Stock?

Dividends provide a guaranteed payday, but that doesn't mean your strategy is profitable

By Jeff Reeves, Editor of InvestorPlace.com

There are five conditions that are helpful in sounding the sell signal for any dividend stock investor.


The company cuts or altogether eliminates its dividend.

This one is fairly obvious. You can sometimes stomach a company that keeps dividends flat for a few years, but if a company is slashing dividends it means that the balance sheet has gotten so bad that it needs to literally take money out of shareholders’ pockets.

The most likely scenario in this situation is that investors will be stung twice — once with the cancellation of dividends and again as share prices suffer.


The dividend stock sees its annual dividend yield drop below 1%.

There are plenty of stocks out there that offer a nominal dividend — even small-cap companies with lower volume and a comparatively small pool of profits to share.

However, if a company’s dividend is below 1%, chances are it’s not a dividend stock. It’s just a stock that happens to offer a dividend.


Your “yield on cost” for the specific stock is below 2%.

Let’s say you bought shares of Home Depot (NYSE:HD) in 2000 at their peak of around $60 a share. The current annualized dividend for HD is $1 per share — meaning your yield based on the cost you paid is just 1.6%.

Yes, Home Depot might be offering investors a dividend yield of 2.7% based on current valuations … but if you bought in at twice that, then your personal “yield on cost” is dramatically different.

Just as profits are relative depending when you bought in to a stock, so are dividend yields.


The dividend stock is bought out. Frequently, such deals are made with a lot of cash — meaning there’s less to pay out in dividends.

So don’t wait around three months anticipating a payday that won’t be all that impressive in most cases.

Other times you might find that a company with a great yield and good potential for shares has been bought by a less favorable competitor, so it’s better to move out of the position instead of accepting the resulting shares from the buyout.

Lastly, obviously if the company goes private, there will no longer be shareholders to share in the profits.


Your position in the dividend stock is down 50%.

Though small fluctuations in share price are not necessarily a problem for dividend investors, watching a position get hacked in half should set off warning bells.

A dividend stock with a yield of about 2% will take 50 years to “double your money” via dividends — or pay for itself, depending on how you view your investment.

Waiting five decades (if not reinvested) just to get back to square one doesn’t make any sense no matter how healthy the dividend payout is.

You’ll be better served by simply taking the haircut and finding a stronger dividend stock that will deliver reliable returns.

Though it’s tempting to believe a dividend stock will fight back, it’s often quicker to make up for a loss in a good stock that’s on the rise than a bad stock that’s getting a dead-cat bounce.

Think of it this way: If you find a stock with a similar yield that provides the exact same performance, all you’re out is your broker fee.

When you’re down more than 50%, even the most conservative buy-and-hold investor should consider rolling the dice.

http://www.investorplace.com/2011/11/wh ... en=3879240

[winston]

The Best Place to Park Your Money in this Zero-Percent World By Dr. Steve Sjuggerud
Tuesday, November 15, 2011


You're thinking about this all wrong…

It's not just you, though. Everyone is missing it completely.

We can't "fix" everyone's thinking… But hopefully, after reading today's essay, you'll be thinking right. Then you can make some REAL money in the markets.

Let me explain what I mean…

How does 50 degrees Fahrenheit and sunny sound to you today? It probably depends on where you are…

If you're in the Florida Keys today, 50 degrees sounds terrible… It's just too cold!

But if you're in Iceland today, 50 and sunny sounds fabulous. Time to get out there! See the waterfalls and the geysers, maybe play some golf.

In the stock market, today is 50 degrees and sunny.

You see, stocks today are the best relative value they've been in as long as I have been investing. By "relative" value, I mean relative to anything else that you can put your money into these days.

It might be 50 degrees outside in the stock market. But it's below freezing just about everywhere else…

You earn zero-percent interest on money in the bank. You earn 2% if you loan your money to the government for 10 years (by buying government bonds). It's hard to find a decent place for your money.

Meanwhile, for the first time in my investing lifetime, the dividend yield on stocks is higher than the dividend yield on bonds. Take a look…

At the stock market peak back in 2000, the yield on stocks was just 1%. At the same time, the yield on bonds was 6%. So the "spread" was five percentage points in favor of bonds.

But now, just over a decade later, stocks yield more than bonds. With the exception of the extreme stock market bust in late-2008/early-2009, this has never happened before. (When it happened in 2008-2009, stocks absolutely soared soon after.)

The story gets much better. Today's dividends could go up dramatically. And the dividends are safe right now.

Right now, companies are only paying out about one-quarter of their earnings in the form of dividends. That's just half what they've paid out over the last half-century.

Since 1960, companies in the S&P 500 have paid out roughly half their earnings in the form of dividends.

So today's S&P 500 companies could comfortably double their dividend payouts to get back in line with history. (That would double their dividend yields.)

Instead of increasing their dividend payments in a world where the highest personal income tax rate will soon be 39.6% on dividends, companies are electing to do more "tax-free dividends" than ever, in the form of shareholder buybacks.

Right now, the average dividend in stocks is only 2.1%. That doesn't sound like much. But remember… we live in a zero-percent world. So 2.1% is an outstanding relative value. And with buybacks, it's even better.

Everyone else out there sees "50 degrees" in the stock market and figures they'll stay inside. They see 2% on dividends as terrible.

They're simply looking at it wrong.

Relative to just about anything you can put your money into right now, stocks in the S&P 500 are a steal. That's where you can make REAL money now.

www.dailywealth.com