December 2, 2004 was a pretty good day for Steve Ballmer. On that day, the 49-year-old CEO of Microsoft received a dividend check worth $1.2 billion. Bill Gates, co-founder and Chairman of Microsoft at the time also got a big check. He collected more money in dividends than most people could earn in a thousand lifetimes — nearly $3.4 billion. If you think these two men received these checks because they were Microsoft executives who owned a lot of company stock, you’re right… but only partially. #-ad_banner-#There’s another reason they got this massive payday… a reason that could bring you… Read More

December 2, 2004 was a pretty good day for Steve Ballmer. On that day, the 49-year-old CEO of Microsoft received a dividend check worth $1.2 billion. Bill Gates, co-founder and Chairman of Microsoft at the time also got a big check. He collected more money in dividends than most people could earn in a thousand lifetimes — nearly $3.4 billion. If you think these two men received these checks because they were Microsoft executives who owned a lot of company stock, you’re right… but only partially. #-ad_banner-#There’s another reason they got this massive payday… a reason that could bring you thousands of dollars in 2014. As you know, most dividend-paying stocks pay quarterly. Occasionally, you’ll find a stock that pays monthly. To most investors, that’s as good as income investing gets. But what the majority of investors don’t realize is this: The stocks that give you the most potential for low-risk, high yields of 10% or more are from companies that have boatloads of cash and a history of paying special dividends. In fact, it’s entirely possible to collect 9 years of quarterly dividend payments (or more) in just one day by investing in dividend payers like this, which I’ll… Read More

Corporate America’s “wealth giveaway” continues.  #-ad_banner-#Ever since America’s largest corporations hunkered down and began hoarding unprecedented amounts of cash to protect themselves in the aftermath of the 2008 financial crisis, investors have been hounding companies to put that money to work. Fortunately for investors, companies have responded. But not in the way you might expect. You see, rather than putting their cash to work through expanding product lines, opening more stores and investing for growth, many large companies have been rewarding shareholders through record amounts of dividends and share repurchases. For the most part, this is good news for… Read More

Corporate America’s “wealth giveaway” continues.  #-ad_banner-#Ever since America’s largest corporations hunkered down and began hoarding unprecedented amounts of cash to protect themselves in the aftermath of the 2008 financial crisis, investors have been hounding companies to put that money to work. Fortunately for investors, companies have responded. But not in the way you might expect. You see, rather than putting their cash to work through expanding product lines, opening more stores and investing for growth, many large companies have been rewarding shareholders through record amounts of dividends and share repurchases. For the most part, this is good news for investors. But there’s a hidden element to share about buybacks that you need to be aware of… because behind the scenes some companies are actually using this effective tool to erode shareholder wealth. Let me explain… As we’ve pointed out several times in StreetAuthority Daily (here and here), share buybacks are clearly in style. Corporate America uses this technique to boost stock value to reward shareholders, and it is being favored even above dividends. In fact, since 2009, the largest 500 companies in America have increased buyback spending by 245% — compared to just 60% growth in dividend payouts since… Read More

With the market getting knocked around more this year, investors are understandably on edge. #-ad_banner-#A recent American Association of Individual Investors (AAII) survey found the highest level of investor pessimism in nearly a year, with 38% of respondents saying they were bearish and 31% being bullish. The last time bears outnumbered bulls by such a margin was in late August 2013, according to the AAII. But why shouldn’t investors be in a sour mood, with global tensions risings and widespread calls for a market correction? These are just the sorts of things that can take the wind out of the… Read More

With the market getting knocked around more this year, investors are understandably on edge. #-ad_banner-#A recent American Association of Individual Investors (AAII) survey found the highest level of investor pessimism in nearly a year, with 38% of respondents saying they were bearish and 31% being bullish. The last time bears outnumbered bulls by such a margin was in late August 2013, according to the AAII. But why shouldn’t investors be in a sour mood, with global tensions risings and widespread calls for a market correction? These are just the sorts of things that can take the wind out of the market’s sails. Nobody needs that, especially retirees. With the market and economy so iffy, how are they supposed to generate the equity returns necessary to sustain them during a phase of their lives that could last many years, even decades? Of course, they’ll need reliable dividend-paying stocks, but now more than ever it’s crucial not to pay too much for such investments. Because if there is a big correction, the loss of principle on overpriced shares will be all that much greater — and retirees certainly don’t need that, either. What they do need are stocks with generous, reliable payouts… Read More

Albert Einstein called it “the most powerful force in the universe.” He ought to know. The modern world’s most celebrated intellect was referring to the concept of compounding — the practice of earning money on what you have already earned. Fortunately, you don’t need to be an Einstein to understand why compounding has also been called an investor’s best friend — or to see how you can profit from it. #-ad_banner-#Stop me if you’ve heard this one: In ancient Greece there was a merchant — let’s call him Demetrios —… Read More

Albert Einstein called it “the most powerful force in the universe.” He ought to know. The modern world’s most celebrated intellect was referring to the concept of compounding — the practice of earning money on what you have already earned. Fortunately, you don’t need to be an Einstein to understand why compounding has also been called an investor’s best friend — or to see how you can profit from it. #-ad_banner-#Stop me if you’ve heard this one: In ancient Greece there was a merchant — let’s call him Demetrios — who had a reputation as a savvy money-handler. An acquaintance brought over a wagon-load of drachmas (coins variously estimated to be worth about $0.19 apiece) and asked Demetrios to put the money in a trust and invest it for 2,000 years. Demetrios kept all of his acquaintance’s money as commission, save for a single 19-cent drachma, which he invested in an Athenian bond paying 3% annually. After 2,000 years of reinvesting the returns from the 3% payout, according to the math, that drachma would have grown in value to be worth more than all the… Read More

In 2013, Warren Buffett’s holding company, Berkshire Hathaway (NYSE: BRK-B), collected over $4 billion in “tax-free dividends.” These weren’t distributions from tax-exempt securities like municipal bonds. The dividends I’m talking about came from big, blue-chip companies like International Business Machines (NYSE: IBM) and United Parcel Service (NYSE: UPS). Now to be fair, these distributions weren’t dividends in the traditional sense. Buffett didn’t see any extra money in his bank account because of them. #-ad_banner-#​But don’t be fooled. Even though he didn’t get any cash, it doesn’t mean those… Read More

In 2013, Warren Buffett’s holding company, Berkshire Hathaway (NYSE: BRK-B), collected over $4 billion in “tax-free dividends.” These weren’t distributions from tax-exempt securities like municipal bonds. The dividends I’m talking about came from big, blue-chip companies like International Business Machines (NYSE: IBM) and United Parcel Service (NYSE: UPS). Now to be fair, these distributions weren’t dividends in the traditional sense. Buffett didn’t see any extra money in his bank account because of them. #-ad_banner-#​But don’t be fooled. Even though he didn’t get any cash, it doesn’t mean those payments weren’t beneficial. In fact, each time Buffett’s holdings paid one of these tax-free dividends, the value of that stock went up — regardless of whether its share price increased or not… That’s because these tax-free dividends I’m talking about are actually better known as share buybacks. We call it a “tax-free dividend” because each time a company buys back shares, your stake in that company becomes more valuable due to the declining number of shares outstanding. The value you get from that transaction, is tax-free. Read More

Companies that have recently declared their first-ever dividend may be one of the best investing barometers in existence. At least that’s how Peter Hodson, a former hedge fund guru at Sprott Asset Management, feels. In fact, after more than 25 years in the investment management industry, he swears by it. There’s some logic to all this.  A company doesn’t have to pay dividends, it chooses to. And if a company that has never made payments before suddenly decides to start, then it’s probably a profitable company whose underlying business fundamentals are strengthening. Read More

Companies that have recently declared their first-ever dividend may be one of the best investing barometers in existence. At least that’s how Peter Hodson, a former hedge fund guru at Sprott Asset Management, feels. In fact, after more than 25 years in the investment management industry, he swears by it. There’s some logic to all this.  A company doesn’t have to pay dividends, it chooses to. And if a company that has never made payments before suddenly decides to start, then it’s probably a profitable company whose underlying business fundamentals are strengthening. No sensible management team will commit to millions in recurring obligations if the prospect of future cash generation looks iffy.  That’s true with any dividend increase, but particularly the first one. Anybody can make their 50th or 60th monthly mortgage payment without much thought. It’s buying the house and committing to the first monthly payment that takes some number-crunching and forecasting.  In much the same way, a company doesn’t enter into a new dividend without a confident outlook. Now, there are some skeptics… Read More

For a number of companies, especially those that are counted among the S&P Dividend Aristocrats, boosting the dividend is annual ritual. And dividend fever is now spreading, as many companies and industries that would never have thought of offering up a yield in the past are now doing so.  #-ad_banner-#Thanks to a steady economy and more predictable cash flows, you’ll now find dividends popping up in unusual places, and these three firms show the way. A look at their financial statements suggests that they may become among the most robust dividend boosters of the coming decade. Read More

For a number of companies, especially those that are counted among the S&P Dividend Aristocrats, boosting the dividend is annual ritual. And dividend fever is now spreading, as many companies and industries that would never have thought of offering up a yield in the past are now doing so.  #-ad_banner-#Thanks to a steady economy and more predictable cash flows, you’ll now find dividends popping up in unusual places, and these three firms show the way. A look at their financial statements suggests that they may become among the most robust dividend boosters of the coming decade. 1.    Delta Airlines (NYSE: DAL) The airline industry has been through so many booms and busts that dividends were never even an option. One bad year could erase many years of positive cash flow, and such bad years have often led to bankruptcy. But times have changed.  The world’s top airline carriers have established a predictable market, characterized by stable pricing, full planes, and stronger balance sheets. Back in 2011, I noted that Delta Airlines was establishing an unprecedented level of capital planning prudence, and was poised to rewrite the industry rulebook. Read More

Today we want to tell you about a stock that many of our subscribers are probably sick of hearing about. That’s OK… because as long as this company remains a “no brainer” investment, we’ll continue singing its praises. To put it simply, this stock has something for everyone. It’s no wonder then, that three different StreetAuthority publications have recommended it over the years — and still do. While there are no guarantees in investing, when three StreetAuthority experts recommend a stock, it’s a good sign that you should pay attention. Besides, it’s not like we’ve been beating the drum on… Read More

Today we want to tell you about a stock that many of our subscribers are probably sick of hearing about. That’s OK… because as long as this company remains a “no brainer” investment, we’ll continue singing its praises. To put it simply, this stock has something for everyone. It’s no wonder then, that three different StreetAuthority publications have recommended it over the years — and still do. While there are no guarantees in investing, when three StreetAuthority experts recommend a stock, it’s a good sign that you should pay attention. Besides, it’s not like we’ve been beating the drum on this stock for years and it hasn’t done anything. In fact, if you listened to StreetAuthority co-founder Paul Tracy when he first recommended this company back in 2011, you could be sitting on a total return of 102%. And the good news is we think there are still gains to be had. The stock I’m referring to is $172 billion computer chip giant Intel Corporation (Nasdaq: INTC). What’s remarkable about this company is that it’s been quietly doing everything right for years — yet up until a few months ago, many investors had written it off as a behemoth in… Read More

Last week, we saw a massive broader market sell-off that, in part, appeared to be a reaction to stronger economic activity. This included 4% GDP growth in the second quarter and strong labor market data. These reports added to concerns that the Federal Reserve will allow interest rates to rise sooner than expected. As economic activity picks up, the danger of inflation also rises — and the Fed’s primary weapon against inflation is higher interest rates. After a period of near-zero rates, an uptick in Treasury yields could cause a significant shock to the system and trigger a flight out… Read More

Last week, we saw a massive broader market sell-off that, in part, appeared to be a reaction to stronger economic activity. This included 4% GDP growth in the second quarter and strong labor market data. These reports added to concerns that the Federal Reserve will allow interest rates to rise sooner than expected. As economic activity picks up, the danger of inflation also rises — and the Fed’s primary weapon against inflation is higher interest rates. After a period of near-zero rates, an uptick in Treasury yields could cause a significant shock to the system and trigger a flight out of equities and into higher-yielding fixed-income products. #-ad_banner-#Of course, there is a tremendous amount of uncertainty in the market right now as the Fed’s future path is in question and the economic recovery is anything but certain. Several Fed officials have indicated that any rate hike will probably not occur until late 2015, but it’s always a good idea to be prepared. The big question for us is how the new environment will affect our ability to generate income selling puts. And the answer may be a lot more exciting than you anticipate. Key Factors for Options Pricing Our income… Read More

I have been a huge fan of real estate investment trusts (REITs) and master limited partnerships (MLPs) since I began investing. These tax-advantaged entities avoid paying corporate-level taxes as long as they pass on a certain level of income or fulfill other requirements. #-ad_banner-#There’s certainly been no shortage of interest in these and other income-producing investments over the past few years. But these days, some income-producing investments are looking a little risky. Shares of consumer staples and utility companies are trading at multiples well above their historical averages. Many have been warning of frothiness in the market for junk-rated debt… Read More

I have been a huge fan of real estate investment trusts (REITs) and master limited partnerships (MLPs) since I began investing. These tax-advantaged entities avoid paying corporate-level taxes as long as they pass on a certain level of income or fulfill other requirements. #-ad_banner-#There’s certainly been no shortage of interest in these and other income-producing investments over the past few years. But these days, some income-producing investments are looking a little risky. Shares of consumer staples and utility companies are trading at multiples well above their historical averages. Many have been warning of frothiness in the market for junk-rated debt and bank loans. But even those groups may be a better bet than a new yield structure that recently caught my eye. This new type of income-producing company is getting a lot of attention from dividend investors — but might not be all it’s cracked up to be.  The alternative energy industry (such as solar power and hydroelectric) hasn’t been able to use the MLP structure like traditional energy companies. Yield-hungry investors, eager for the income they see in MLPs and the growth in alternative energy, have been disappointed, but the Yieldco has stepped in to fill the gap. (My… Read More