Right now corporate America has a huge problem on its hands. I’m not talking about another banking crisis, real estate crash, or hedge fund manager running a Ponzi scheme… And I’m not talking about any sort of ominous regulations being handed down by the U.S. government, either. I’m not even talking about the growing levels of debt being accumulated by Uncle Sam each and every day — not to mention the lack of progress from our leaders in Washington in finding a solution to fix it. Actually, the “problem” I’m about to tell you about is really a once-in-a-lifetime investing… Read More

Right now corporate America has a huge problem on its hands. I’m not talking about another banking crisis, real estate crash, or hedge fund manager running a Ponzi scheme… And I’m not talking about any sort of ominous regulations being handed down by the U.S. government, either. I’m not even talking about the growing levels of debt being accumulated by Uncle Sam each and every day — not to mention the lack of progress from our leaders in Washington in finding a solution to fix it. Actually, the “problem” I’m about to tell you about is really a once-in-a-lifetime investing opportunity. The problem? #-ad_banner-#Corporate America has spent the last few years hoarding money like it was going out of style, effectively creating what I call a “Dividend Vault.” Why?  Companies have seen the same problems you and I have over the years — a mounting debt crisis, gridlock in Washington, a dot-com bubble burst from the early 2000s, a devastating real estate bubble burst a few years later, two recessions…  They continued to face these challenges year after year. But instead of sitting still with future uncertainties, they took action. That’s why for the past 12 years, they’ve been adding… Read More

There is no question that one of the safest and surest ways to build long-term wealth in the stock market is through dividend reinvestment. This reinvestment allows for a form of interest compounding to take place that builds up the portfolio’s value over time. #-ad_banner-#While this makes perfect investing sense, there is more to it than simply buying high-dividend stocks. I learned this the hard way, but my experience helped me to develop an easy three-step method to determine the best dividend-paying stocks for a dividend reinvestment portfolio. First, here’s what happened to me. I bought Sandridge Mississippian Trust (NYSE:… Read More

There is no question that one of the safest and surest ways to build long-term wealth in the stock market is through dividend reinvestment. This reinvestment allows for a form of interest compounding to take place that builds up the portfolio’s value over time. #-ad_banner-#While this makes perfect investing sense, there is more to it than simply buying high-dividend stocks. I learned this the hard way, but my experience helped me to develop an easy three-step method to determine the best dividend-paying stocks for a dividend reinvestment portfolio. First, here’s what happened to me. I bought Sandridge Mississippian Trust (NYSE: SDT), an oil and gas royalty-earning company that pays a tremendous dividend, in February 2013 at $14. At the time of my purchase, the dividend yield was around 10%. The yield is now over 20% — yet I lost money on the investment. SDT has dropped 50% over the past year, to its current trading range near $7. My buy decision was based purely on the high dividend yield, nothing else. What I failed to take into consideration is the fact that yield is a function of the stock price. With everything else being equal, the lower the share price,… Read More

For investors that count on dividend payments to cover their living expenses, the prospect of a dividend cut can create real headaches. That’s why some investors own only the income-producing stocks that have never cut their dividend. It’s easy to find such companies. Product planners at Standard & Poor’s track a group of these steady Eddies in a category called Dividend Aristocrats. These are companies that have raised their dividend for at least 25 straight years. Right now, there are 55 companies that hold that distinction, as all of them managed to boost their payouts —… Read More

For investors that count on dividend payments to cover their living expenses, the prospect of a dividend cut can create real headaches. That’s why some investors own only the income-producing stocks that have never cut their dividend. It’s easy to find such companies. Product planners at Standard & Poor’s track a group of these steady Eddies in a category called Dividend Aristocrats. These are companies that have raised their dividend for at least 25 straight years. Right now, there are 55 companies that hold that distinction, as all of them managed to boost their payouts — even during the economic meltdown of 2008 and 2009. #-ad_banner-#To be sure, some of these Aristocrats haven’t showered a great deal of attention on their dividends in recent years. Take steelmaker Nucor (NYSE: NUE) as an example. Nucor’s dividend stood at $1.44 in 2010 and has risen exactly one penny every year since. It’s almost as if the dividend hikes are a mere token gesture as a way to maintain the Aristocrat status. As we’ve noted here at StreetAuthority on a number of occasions in the past year, investors can no longer focus simply on a dividend yield but must… Read More

Let’s be frank for a minute. After the pain and suffering caused by the global financial crisis, not to mention the losses many investors experienced, a lot of people still feel disillusioned with Wall Street. Maybe you’re one of them. I don’t blame you if that’s the case. After all, the crisis we experienced wasn’t some unpredictable market anomaly that was entirely unpreventable.  It was a house of cards built by large banks, risky traders and short-sighted government policies that came crashing down on our heads. And while some of the culprits have paid the price for their… Read More

Let’s be frank for a minute. After the pain and suffering caused by the global financial crisis, not to mention the losses many investors experienced, a lot of people still feel disillusioned with Wall Street. Maybe you’re one of them. I don’t blame you if that’s the case. After all, the crisis we experienced wasn’t some unpredictable market anomaly that was entirely unpreventable.  It was a house of cards built by large banks, risky traders and short-sighted government policies that came crashing down on our heads. And while some of the culprits have paid the price for their mistakes (Lehman Brothers, Bernie Madoff… to name a few), others got away largely scot-free.  #-ad_banner-#But if you’re one of the many investors who has used this painful experience as an excuse to sit out of the market, my advice to you is stop. It’s one of the worst mistakes you could make with your portfolio. In fact, I would argue that if the events of the financial crisis taught us anything, it’s how incredibly important it is for individual investors to take charge of their own portfolios. Now, many investors are doing just that. They’re doing their homework, looking for… Read More

In today’s world of high-frequency, short-term trading, many funds have sprung up that take positions based purely on statistics and for mere seconds (or less) at a time. Fundamentals get thrown out of the window; long-term appreciation and dividends are often never considered. #-ad_banner-#Traditional long/short hedge funds are still generating impressive returns using tried-and-true methods, however. Heavy research into valuation and commitment to investment ideas over a greater horizon will never go out of style. This type of investing mantra is suitable for the great majority of investors as well. Getting a peek into that research can be done each… Read More

In today’s world of high-frequency, short-term trading, many funds have sprung up that take positions based purely on statistics and for mere seconds (or less) at a time. Fundamentals get thrown out of the window; long-term appreciation and dividends are often never considered. #-ad_banner-#Traditional long/short hedge funds are still generating impressive returns using tried-and-true methods, however. Heavy research into valuation and commitment to investment ideas over a greater horizon will never go out of style. This type of investing mantra is suitable for the great majority of investors as well. Getting a peek into that research can be done each quarter when funds release their long positions in a filing called a Form 13F. While 13F data has its pros and cons, following managers who have demonstrated performance over a long-term horizon can lead to profitable investments. Warren Buffett, esteemed investor, founder and the largest stakeholder of Berkshire Hathaway (NYSE: BRK), is the polar opposite of a short-term trader. The Oracle of Omaha is a legendary buy-and-hold investor, which is why his filings can be so insightful. I’ve pored over Berkshire Hathaway’s 13Fs spanning the last 12 quarters with a few criteria in mind. First, find big-cap stocks that have… Read More

I recently put a hole through the knee of my favorite pair of blue jeans. I can’t say I was too surprised. I think I’ve had them for more than five years. Out of curiosity, I surfed online to investigate the latest styles. I was tickled to see pants tapered at the ankle are all the rage, much like the 1980s fashion. Less than 10 years ago, flared leg pants were in, mimicking the bell-bottoms of the 1960s. I don’t try to keep up with the latest trend. Buying something that ends up at the bottom of my closet within… Read More

I recently put a hole through the knee of my favorite pair of blue jeans. I can’t say I was too surprised. I think I’ve had them for more than five years. Out of curiosity, I surfed online to investigate the latest styles. I was tickled to see pants tapered at the ankle are all the rage, much like the 1980s fashion. Less than 10 years ago, flared leg pants were in, mimicking the bell-bottoms of the 1960s. I don’t try to keep up with the latest trend. Buying something that ends up at the bottom of my closet within a year’s time goes against my frugal nature. #-ad_banner-#And some trends just don’t suit my needs. For instance, how would I even begin to wear tapered-leg pants with cowboy boots? My worn-out jeans will eventually be replaced by an identical pair of Levi’s boot-cut jeans — a classic that has suited me for decades.  The stock market is a little like the fashion world. There are always competing tensions between form and function. And this year, both forces got their due.  Take for instance Clorox (NYSE: CLX). Normally, the consumer staples company is a stable holding. It’s considered to be… Read More

For some investors, mid-cap stocks, which can be found in the S&P 400 Mid-Cap Index, are the “Goldilocks” of the stock market. They aren’t so big that they can’t quickly adjust to changing industry dynamics. And they aren’t so small that they suffer the extreme revenue swings from the economy’s ebbs and flows. #-ad_banner-#Most mid-cap companies have been in operation for decades, and their relative maturity enables them to generate prodigious free cash flow (FCF). That figure, which equates to operating cash flow, minus capital expenditures, is a crucial determinant in one of our favorite investment angles: Total Yield. Read More

For some investors, mid-cap stocks, which can be found in the S&P 400 Mid-Cap Index, are the “Goldilocks” of the stock market. They aren’t so big that they can’t quickly adjust to changing industry dynamics. And they aren’t so small that they suffer the extreme revenue swings from the economy’s ebbs and flows. #-ad_banner-#Most mid-cap companies have been in operation for decades, and their relative maturity enables them to generate prodigious free cash flow (FCF). That figure, which equates to operating cash flow, minus capital expenditures, is a crucial determinant in one of our favorite investment angles: Total Yield. In recent months, we’ve been highlighting the virtue of companies that are able to lavishly reward investors with a combination of dividends, share buybacks and debt reductions. Simply put, these companies can only deliver the goods of they have the free cash flow to support it. High free cash flow is important for another reason: A company’s FCF yield can be directly compared to the yield you’ll get on other investments, such as CDs, Treasury bills, or annuities. Those products usually offer up small yields, these days, below 3%. In contrast, a few dozen mid-cap stocks offer FCF yields that… Read More

I like that the market tends to get wrapped up in the biggest or hottest stocks in each industry. It often means the crowd is overlooking smaller or lesser-known names with as much or more investment potential and a lot less risk. #-ad_banner-#So if the market wants to obsess over Tesla (Nasdaq: TSLA), Facebook (Nasdaq: FB), Twitter (NYSE: TWTR) and other hot names that are vastly overpriced, it’s fine by me. It sets the stage for more value-oriented investors to make a killing on less-celebrated companies that have been quietly churning out profits and dividends for years. One such firm,… Read More

I like that the market tends to get wrapped up in the biggest or hottest stocks in each industry. It often means the crowd is overlooking smaller or lesser-known names with as much or more investment potential and a lot less risk. #-ad_banner-#So if the market wants to obsess over Tesla (Nasdaq: TSLA), Facebook (Nasdaq: FB), Twitter (NYSE: TWTR) and other hot names that are vastly overpriced, it’s fine by me. It sets the stage for more value-oriented investors to make a killing on less-celebrated companies that have been quietly churning out profits and dividends for years. One such firm, which describes itself as a commercial lines insurer focusing on liability coverage for businesses, governments and institutions, has raised its dividend 33 years in a row. That’s since 1981, back when President Ronald Reagan was in his first term. The company’s current dividend of $0.73 per share is good for a 4.6% yield based on a recent stock price of $15.75. So you know I’m not talking about any of the big insurers you always hear about like American International Group (NYSE: AIG), MetLife (NYSE: MET), Allstate (NYSE: ALL), or Travelers (NYSE: TRV). None of them yield anywhere near 4.6%. Read More

Oil and gas has always been a high-stakes game. But recent circumstances have created a wonderfully simple and promising backdoor investment into the infamously fickle industry — without all that extra risk. Thanks to multiple factors, including newer technologies in crude oil extraction, the United States is on the track to independence in the energy market, expected to continue drastically decreasing imports in the sector in the near future.  The obvious implication of this news is that stock in American oil producers has serious upside. But history screams at us that oil is far from a sure thing, and it’s… Read More

Oil and gas has always been a high-stakes game. But recent circumstances have created a wonderfully simple and promising backdoor investment into the infamously fickle industry — without all that extra risk. Thanks to multiple factors, including newer technologies in crude oil extraction, the United States is on the track to independence in the energy market, expected to continue drastically decreasing imports in the sector in the near future.  The obvious implication of this news is that stock in American oil producers has serious upside. But history screams at us that oil is far from a sure thing, and it’s hard to trust such an inconsistent sector.  This brings us to the stealthy, more stable play on the situation. This increasing domestic crude oil supply in the U.S. is bound to put stress on a system that has been merely a supplement to Middle Eastern imports for years. The capacity of the pipelines in place to transport all this crude oil is far too small to handle distribution alone during this rise in stateside production, and the federal government has decided not to build any more of them. This presents one particular avenue with a chance to bust into America’s… Read More

The market is obsessed with fast-growing companies. And you can’t blame it really. All things equal, everyone would rather invest in a business that is thriving and expanding rather than one that is stagnant or deteriorating. Even if you’re not a growth investor per se, you have to appreciate a company whose products or services are really catching on. Because if sales are rising, then so are profits. At least, that’s what’s supposed to happen. But it doesn’t always work out that way. #-ad_banner-#Take online retailer Overstock.com (Nasdaq: OSTK). Back in 2003, the company took in $239 million in sales,… Read More

The market is obsessed with fast-growing companies. And you can’t blame it really. All things equal, everyone would rather invest in a business that is thriving and expanding rather than one that is stagnant or deteriorating. Even if you’re not a growth investor per se, you have to appreciate a company whose products or services are really catching on. Because if sales are rising, then so are profits. At least, that’s what’s supposed to happen. But it doesn’t always work out that way. #-ad_banner-#Take online retailer Overstock.com (Nasdaq: OSTK). Back in 2003, the company took in $239 million in sales, but fell just short of breakeven and lost $12 million. Flash forward to 2008 and revenues had climbed to $834 million. But net income that year was almost the same, actually a little worse, negative $13 million. Revenues rose by $595 million (149%) over that five-year period. But remarkably, not a single dollar of the extra half-billion in sales made it to the bottom line. How is that possible? Well, cost of goods sold increased from $213 million to $691 million. As a percentage of sales, that’s a modest improvement from 89% to 83%. Still, it only left a gross… Read More