It was as much a surprise to StreetAuthority’s co-founder as it was to us. As an experiment, he tried to build a personal portfolio of dividend paying stocks to see if he could get 30 dividend checks in a month. But he achieved far more than the joy of receiving dividends every day. And all he did was simply enroll his securities in an automatic reinvestment program through an online brokerage account.  And before long, our little experiment was beating the market. Of course we were familiar with the power of the compounding growth of dividend reinvestment. As you can… Read More

It was as much a surprise to StreetAuthority’s co-founder as it was to us. As an experiment, he tried to build a personal portfolio of dividend paying stocks to see if he could get 30 dividend checks in a month. But he achieved far more than the joy of receiving dividends every day. And all he did was simply enroll his securities in an automatic reinvestment program through an online brokerage account.  And before long, our little experiment was beating the market. Of course we were familiar with the power of the compounding growth of dividend reinvestment. As you can see from the chart below, if you invested $20,000 in securities paying a 7% yield, after 10 years your portfolio would be worth $39,343 with reinvested dividends. And if your holdings happened to boost their dividends by just 5% annually — something even giant blue chip AT&T (NYSE: T) has been able to beat — your portfolio would be sitting at $46,475. That’s an increase of 132.4%. And that’s assuming zero capital gains. That isn’t bad, especially when you consider the S&P 500 Index lost 26.5% in the ten-year period ended in 2009. But the income part of… Read More

Even with the market setting new highs day after day, we haven’t really seen the kind of celebratory mood that should come with such record-breaking performances. Don’t get me wrong, it’s great to see stocks rallying. In the past 12 months alone, defying skeptics, the S&P 500 index added some 18.7%, including dividends. The S&P’s annual return is impressive, but it’s still lagging behind the Nasdaq Composite’s 29%, and the blue-chip Dow Industrials, which returned 22% the past year. And this is on top of an already-strong showing, which became the second-longest bull market on record as of last May. Read More

Even with the market setting new highs day after day, we haven’t really seen the kind of celebratory mood that should come with such record-breaking performances. Don’t get me wrong, it’s great to see stocks rallying. In the past 12 months alone, defying skeptics, the S&P 500 index added some 18.7%, including dividends. The S&P’s annual return is impressive, but it’s still lagging behind the Nasdaq Composite’s 29%, and the blue-chip Dow Industrials, which returned 22% the past year. And this is on top of an already-strong showing, which became the second-longest bull market on record as of last May. Still, judging by the emails I’ve been getting, many investors are nervous. It’s not surprising that the memory of the last bear market is still fresh in the minds of many investors. After all, it’s only been eight years since the S&P 500 bottomed (along with many retirement accounts). And that crash came soon after the dot-com crash at the turn of the century. The investors who needed that money the most — recent retirees and those who were about to retire — suffered immensely through these two downturns. It’s quite possible that the stress of these two bear markets… Read More

It’s not hard to find quality income-producing stocks. Nearly every investor out there can screen for stocks based on dividend yields. However, there is far more to successful income investing than buying high-yielding dividend payers.  Many times, the highest yielding stocks are also the least reliable. Remember, the yield is inversely proportional to the share price. In other words, the lower the share price moves, the higher the yield (assuming the dividend payment stays the same). Therefore, high-yielding stocks may only provide the high yields due to a plunging stock price. Investors must now look beyond dividends for income. Stock… Read More

It’s not hard to find quality income-producing stocks. Nearly every investor out there can screen for stocks based on dividend yields. However, there is far more to successful income investing than buying high-yielding dividend payers.  Many times, the highest yielding stocks are also the least reliable. Remember, the yield is inversely proportional to the share price. In other words, the lower the share price moves, the higher the yield (assuming the dividend payment stays the same). Therefore, high-yielding stocks may only provide the high yields due to a plunging stock price. Investors must now look beyond dividends for income. Stock buybacks have become a popular way for companies to give excess cash back to investors.  Buybacks, or share repurchase programs, are a viable alternative for savvy investors. The trick is to find companies with long term buyback plans that also have growth catalysts. This combination is the key to finding ideal income stocks. Here are three income stocks with high growth potential over the long term. Today’s disconnect between revenue and share price make these stocks a welcome anomaly.  3 Income-Producing Stocks With Strong Buyback Plans 1. American International Group (NYSE: AIG)  This nearly $60 billion global insurance company… Read More

Do you ever wonder why investors get so worked up about rising interest rates? Well, the most obvious answer is that higher rates will elevate corporate borrowing costs, which can bite into profits. But there is an even more fundamental reason.  At the end of the day, we only invest… Read More

I knew it couldn’t last forever. From April 24 through May 8, the S&P 500 went 10 straight trading sessions going no lower than 2,379 and no higher than 2,401. That’s an ultra-narrow band of just 22 points.  So in two full weeks, the index didn’t fluctuate up or down by so much as 1%. According to Factset Research, this has only happened 10 times in the past four decades.  But there are no guarantees in the investment world, and I knew volatility would return. Without a doubt, I knew we’d eventually see one of those crazy days where the… Read More

I knew it couldn’t last forever. From April 24 through May 8, the S&P 500 went 10 straight trading sessions going no lower than 2,379 and no higher than 2,401. That’s an ultra-narrow band of just 22 points.  So in two full weeks, the index didn’t fluctuate up or down by so much as 1%. According to Factset Research, this has only happened 10 times in the past four decades.  But there are no guarantees in the investment world, and I knew volatility would return. Without a doubt, I knew we’d eventually see one of those crazy days where the Dow Jones Industrial Average swings up or down by a few hundred points.  That day was this past Wednesday, May 17. Both the Dow and S&P 500 lost 1.8%, their worst losses since September 2016. The news had every investor checking the financial sites to see how high (or low) our portfolio holdings were trading.  But we don’t have to resign ourselves to living with this type of volatility. Stay Out Of “Sensitive” Stocks You’ve probably noticed that on “up” days when most stocks are in the green, some holdings always seem to ride a little bit higher than… Read More

I love dividend stocks, but income investors face an inherent disadvantage against growth investors, one that costs them tens of thousands over decades of investing. The disadvantage comes from the regular taxation of your dividend earnings. Each year, Uncle Sam takes his cut of your hard-earned dividend payments. Since part of the returns of dividend stocks is lost each year, you lose the power of compounding seen in investments that aren’t taxed until sold. An investor in a dividend stock paying a 7% yield annually would see a $10,000 investment grow to $51,276 over 30 years, assuming reinvested dividends and… Read More

I love dividend stocks, but income investors face an inherent disadvantage against growth investors, one that costs them tens of thousands over decades of investing. The disadvantage comes from the regular taxation of your dividend earnings. Each year, Uncle Sam takes his cut of your hard-earned dividend payments. Since part of the returns of dividend stocks is lost each year, you lose the power of compounding seen in investments that aren’t taxed until sold. An investor in a dividend stock paying a 7% yield annually would see a $10,000 investment grow to $51,276 over 30 years, assuming reinvested dividends and a 20% rate on qualified dividends.  An investor putting $10,000 in a stock with a 7% price return but no dividend would see the investment grow to $60,898 over the same period (after adjusting for the one-time capital gains tax). The dividend investor has lost nearly $10,000 to the annual tax burden. There’s one way to save this money and get the most out of your dividend investments — by holding high-yield stocks in a tax-advantaged retirement account like an IRA.  Sharing Your Dividend Income With Uncle Sam Qualified dividend payments, paid when the investment is held for at… Read More

I have to admit, this past Wednesday gave me a bit of a jolt.  All of the major indices were down sharply, as investors began to get nervous about news from Washington D.C. The S&P 500 suffered its largest one-day drop since September. Meanwhile, the Dow Jones Industrial Average lost 1.78% and the Nasdaq gave up 2.57%. All of a sudden, it seemed, investors were waking up from a haze of complacency. After all, prior to Wednesday, volatility in S&P 500 options (measured by the VIX) had reached a 24-year low. That’s usually a sign that the market is about… Read More

I have to admit, this past Wednesday gave me a bit of a jolt.  All of the major indices were down sharply, as investors began to get nervous about news from Washington D.C. The S&P 500 suffered its largest one-day drop since September. Meanwhile, the Dow Jones Industrial Average lost 1.78% and the Nasdaq gave up 2.57%. All of a sudden, it seemed, investors were waking up from a haze of complacency. After all, prior to Wednesday, volatility in S&P 500 options (measured by the VIX) had reached a 24-year low. That’s usually a sign that the market is about to crash. Would this be the day the shoe finally dropped and marked the end of the bull market?  Interestingly, the catalyst for Wednesday’s drop wasn’t from any revelations from Washington about tax policy, infrastructure spending, or the like. Rather, it was because of new reports about President Trump, the Russians, the FBI and the like.  I won’t get into further details — chances are, you’ve already formed your own opinions. But if you’re like me, you’re waiting until more information comes out before forming any judgments. Yes, things could get ugly — more bad news could come out that… Read More

The hacker group known as Shadow Brokers publicly released a set of tools on the social network platform Medium in April. Called EternalBlue and EternalRomance, the tools allow hackers backdoor access for remote control of infected computers.  While the market hasn’t reacted to the news of the release, Sean Dillon of cybersecurity firm RiskSense Inc. told Bloomberg that these tools are “10-times worse” than recent viruses like the Heartbleed bug that infected computers at Yahoo and Amazon.  We’re talking about government-quality hacking tools — and they’ve just been spammed out to every hacker with an internet connection.  Dillon says the… Read More

The hacker group known as Shadow Brokers publicly released a set of tools on the social network platform Medium in April. Called EternalBlue and EternalRomance, the tools allow hackers backdoor access for remote control of infected computers.  While the market hasn’t reacted to the news of the release, Sean Dillon of cybersecurity firm RiskSense Inc. told Bloomberg that these tools are “10-times worse” than recent viruses like the Heartbleed bug that infected computers at Yahoo and Amazon.  We’re talking about government-quality hacking tools — and they’ve just been spammed out to every hacker with an internet connection.  Dillon says the tools are, “the kind of thing [security analysts] see used very rarely on very special, covert cybermissions.” He’s already found computers infected in dozens of clients from startups, government agencies and Fortune 100 companies. That means it’s only a matter of time before reports of large-scale and sophisticated cyberattacks start flooding the news. When it happens, expect a pop in the shares of cybersecurity companies. Cybercrime Headline Risks Move To Red Alert Corporate America prepared for years against the potential for hacker threats related to the Y2K bug. Headlines screamed warnings in 2014 for dangers related to the Heartbleed… Read More

I’ve looked at bond inventories (bonds for sale by various firms all along the street) on, more or less, a daily basis for the past 20 years. It’s a habit. It doesn’t necessarily mean I’m going to buy something. The main purpose of the exercise is to get a feel for the bond market that goes beyond looking at where Treasury bond yields are for that particular day. I see what investors are willing to pay for bonds based on multiple factors, the most important being yield and safety. In recent years, it seems that most investors have been more… Read More

I’ve looked at bond inventories (bonds for sale by various firms all along the street) on, more or less, a daily basis for the past 20 years. It’s a habit. It doesn’t necessarily mean I’m going to buy something. The main purpose of the exercise is to get a feel for the bond market that goes beyond looking at where Treasury bond yields are for that particular day. I see what investors are willing to pay for bonds based on multiple factors, the most important being yield and safety. In recent years, it seems that most investors have been more concerned with quality and capital preservation than yield. That’s no surprise in light of the volatility financial markets have experienced since the Financial Crisis of 2008. Accommodative Federal Reserve policy and investor fear have kept rates at historical lows for nearly a decade. But now that’s changing — albeit slowly. The unexpected election of Donald Trump, while inspiring a tangible rally in stocks, has sparked an upward movement in bond yields (prices go down) due to anticipated inflationary pressure from possible infrastructure spending and tighter foreign trade policy. The Federal Reserve gradually shifting away from its zero-rate federal… Read More

The more things change, the more they stay the same. We are undergoing tremendous changes in government, the tax system, and even in our lives. Everything seems to be getting faster. Even the stock market is not immune to the rapid-fire changes taking place. Despite the all the changes, the one thing that remains the same is the process of identifying the best dividend stocks. It’s a straightforward and consistent formula that is not affected by high-frequency trading, computer algorithms, or any of the other newfangled trading strategies. When it comes to identifying the… Read More

The more things change, the more they stay the same. We are undergoing tremendous changes in government, the tax system, and even in our lives. Everything seems to be getting faster. Even the stock market is not immune to the rapid-fire changes taking place. Despite the all the changes, the one thing that remains the same is the process of identifying the best dividend stocks. It’s a straightforward and consistent formula that is not affected by high-frequency trading, computer algorithms, or any of the other newfangled trading strategies. When it comes to identifying the best dividend stocks of 2017, the same criteria that have worked for decades can be used. It doesn’t matter who the President is, the state of the economy, or even how high or low the Dow moves. If you have not started on your path to creating a passive income from the stock market, don’t worry, it’s not too late. Even during this year’s craziest days, you can still find incredible value and reliable income. Identifying Quality Income Stocks The first sign of a top-notch dividend-payer is consistency in paying dividends. Earning a… Read More