Tuesday, October 25, 2011

Boring Terms We Need To Know: Dividend Payout Ratio

The second term in our "Boring Terms We Need to Know" series is dividend payout ratio. Dividend payout ratio is an important statistic that we need to be aware of and use when analyzing a dividend stock.  If you found Yield on Cost to be fairly easy to grasp, then you'll have no problems understanding dividend payout ratio.

Dividend payout ratio is simply the percentage of a company's earnings that is paid out to its investors in the form of dividends.  The ratio is easy to find on Yahoo Finance.  Just go to the a stock's quote page, click on "Key Statistics" link and search for "Payout Ratio".  Here is an easy example if you want to figure out the ratio on your own.

Thursday, October 20, 2011

Banking Stocks Presenting Dividend Values

Four years ago you would be hard pressed to put together a dividend portfolio without owning a few banks. In fact, the financial sector of the S&P 500 Index paid $51 billion in dividends to shareholders in 2007. Everyone is well aware of the major financial meltdown that occurred soon after causing many banks to cut or even suspend their dividends. By 2010, the financial sector was only responsible for about $19 billion in dividends, a drop of 62%.
Despite the dark cloud that still resides over banks today, there are positive signs that would lead one to believe a rebound could be near. 

Wednesday, October 12, 2011

Roth IRA + Dividend Stocks = Awesome!

How many of you are aware of what a Roth IRA is all about?  How many of you are actively investing and maxing out your Roth IRA?  My guess is very, very few... and if that is the case well, pardon me, but you're crazy!  Perhaps you think taxes won't be as high when you retire as they are now (ha!).  Maybe you enjoy paying taxes and feel the government will spend your tax dollars efficiently and intelligently (Commie!).  

Ok, most likely you don't fully understand the benefits and you'd rather spend your money on other things you feel are more important today.  Well hopefully a recent article that I had published on Seeking Alpha will change your mind... Read On

Tuesday, October 4, 2011

What Einstein Would Invest In Today

From time-to-time I plan to repost articles I find on the web that apply to our investment strategy. Below is one of those I found enjoyable and applicable.

Albert Einstein wasn’t famous as an investor. He was a genius who revolutionized theoretical physics. But if he were alive today, it’s pretty clear what he would be doing with his money. And you should be doing it, too. Let me explain… It’s a truism that when times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk. This is exactly the opposite of what they should be doing, of course.

But today you have a great opportunity to both limit risk and generate superb returns in your stock portfolio with – stifle that yawn – stodgy, old dividend-paying stocks. These investments aren’t nearly as boring as you may think. And in the decade ahead, their returns are likely to be outstanding. Dividend stocks alone won’t generate a mouth-watering return. But dividends will rise over time – and surprising things happen when you reinvest them. Picture a snowball rolling down hill. Albert Einstein understood this. As he observed, money compounding “is the most powerful force in the universe.”  Read More