Doesn’t sound very fair, does it? If you’re a football fan, you want one of those choices to be the Packers (6-0) and if you’re buying a car, you want one of those choices to be a new car with a warranty. This is common sense, right? If you have to pick a winner in anything, you don’t want to choose from a list of proven losers.
If you have a company sponsored 401(k) plan as your main retirement vehicle, you probably remember choosing from a list of funds and since you’re not in the business of picking mutual funds, the only thing you knew was that you should get a mix of funds.

You can know a winning football team by looking at their record and you know a winning mutual fund by looking at their past returns relative to an index like the S&P 500 but either of those tell the whole story. Mutual funds are complicated and the bottom line is this: You aren’t always offered the best investments. Your company is giving you a very limited choice of funds to choose from and the choice you’re making isn’t much different than the football teams or the cars above.

You Can Fix That!

Here’s what you do. First, you ask your company if they allow for a self-directed plan. A self-directed plan is one where they set up a retirement account at a brokerage of their choosing. In order to meet Federal and state reporting requirements they have to have access to your account so you are stuck using the brokerage they choose.

Second, they probably won’t allow all of your funds to be self-directed. Maybe 50% give or take a little bit. Last, they may charge you a yearly fee of $50 to as much as $300. This seems like a hefty amount in order to do your own work but compared to the big time fees you’re paying in those sub-par mutual funds, you may still come out ahead without looking at performance by choosing products with a low maintenance fee.

Once you do that, find a wealth management advisor to help you. You can do one of two things: You can pay them a flat fee for an annual or semi-annual look at your account or you can pay them for ongoing management of the funds. They will typically charge 2% of your portfolio balance if you prefer ongoing management.
In the end, a self-directed plan managed by somebody with the flexibility to control the fees associated with the products will not only save you money, they will be able to lock in much better rates of return because of the large, diverse range of products available to them.

Bottom Line

You don’t have to keep all of your funds stuck in those losing 401(k) funds. A portion of your money can be self-managed allowing you the flexibility to make a lot more money and retire comfortably.

A solid income portfolio will be have a balance of growth, income and safe dividend stocks.

Growth Stocks

We define high growth dividend stocks as those that have a 5 year dividend growth average and a 3 year net income growth rate of 10% or more. There are over 1200 stocks that pay dividends but only 35 stocks meet this criteria and have a dividend yield of 3% or higher. High growth dividends are one of the best investments because both the yield and the dividend growth drive up the stock price. The board has shown commitment to the dividend by increasing it each year which in turn drives up the stock price.

Three of our favorite high growth dividend stocks are: CTL, RCI, and CALM. Each have a 5 year dividend growth rate over 60%.

Receiving a dividend payment is good but every investor also wants to see their investment increase in value. Stocks with high dividend growth are usually the best dividend stocks provide capital appreciation as well as steady income.

Monthly Income

Monthly paying dividend stocks have many benefits that make them attractive to income investors:

1. You get paid faster
2. Your shares compound faster
3. You can evaluate the strength of the dividend more often

I like consistency and it feels good to see my favorite dividend payers hitting their mark each month. When we review dividend stocks we like to see solid dividend growth that compliments a dividend yield of 5% or more. If you can find a company that is trading with a yield that is higher than it’s 5 year average and has solid growth in their business then it could be time to buy.

Our 5 highest rated monthly dividend funds are: PGP, GGN, AGD, PHT, and CRT.

Safe Investments

Nothing can protect you from a stock losing it’s value. Stocks go up and they go down. Sometimes it’s because the company’s fundamentals are failing and sometimes it’s because the global or local economy are tanking like in 2008 and August of 2011.

Every good portfolio manager researches their stocks to stay on top of their investments. As Jim Cramer likes to say “Do your homework.”

While no investment is safe from reducing in value, there are some stocks that have a long track record of paying their dividend. There is an elite group of elite stocks called dividend aristocrats that have increased their dividend for 25 years or more.

These stocks are often the best investment for anyone looking for fixed income along with capital appreciation. And as all dividend stocks do, they provide a hedge against inflation. Safe and consistent may seem boring but when your are investing a fickle market boring can be a good thing. Capital preservation is always priority number one.

Two of our favorite safe dividend payers are: MCD and JNJ.

1. ConocoPhillips Dividend Stock Analysis: If you are looking for a solid analysis of ConocoPhillips, consider this offering from The Dividend Pig. You can learn more about the history of this dividend stock, and get a feel for what might be in the future.
2. The Chinese Black Swan: An interesting look at China, from Value Walk. China could be in a tough place — a place that might be leading to economic collapse. Is there more debt in China than we’ve been led to believe?
3. The Safety of Short Term Bonds — Part 2: Learn more about short term bonds. Dividend Ninja offers an analysis of short term bonds, and their relative safety to other types of investment, as well as a look at what has been driving the current bond prices.
4. Components of Investment Risk: Oblivious Investor provides some insight into the components of risk. This guest post is from Neal Frankle at Wealth Pilgrim, and provides great insight into what we view as investment risk.
5. How To Build a 6 Figure Income Dividend Portfolio with $600 per month: The Dividend Guy offers some ideas about how you can build an income portfolio. A great analysis of how to make a plan for a dividend portfolio that results in good retirement earnings.
6. Step 7: Finish Big: Another great look at building a dividend portfolio from Dividend Monk. Learn some tips for building a portfolio that can help you improve your ability to earn income, and build for the future.
7. What Is A Dividend?: Find out more about dividends. It’s a basic analysis of dividends, and Dividend Mantra offers some help in providing a way for you to get a bit of a brush up on dividends.

SuperDividend ETF Debuted

Global X unveiled the SuperDividend ETF (SDIV), a fund based on the Solactive Global SuperDividend Index, provided by company with its headquarters in Germany. The fund consists of 100 companies, equally weighted. The companies included are notable because they are among the ranks of the equities with the highest dividend yields in the world. The idea is that you can take advantage of dividend stocks from around the world with help from this ETF. You can use this ETF to help you earn monthly income from some of the highest dividend yielders. The annual fund operating expense on SDIV is 0.79%.

Dividend Stocks to Prove Good Investments 10 Years Down the Road

Even with the Dow below 12,000 today, some people aren’t concerned with the short-term hiccups in the stock market. Indeed, CNBC reports that Laurence Fink, the CEO of BlackRock, thinks that dividend stocks will prove to be a better investment in the next 10 years than bonds. Fink suggests that now is the time to buy large-cap global stocks offering dividends.

Common Theme: Global Dividend Stocks

This week’s common theme seemed to be global dividend stocks. A little diversity away from U.S. investments is being encouraged, and this can be accomplished with global stocks. The fact that there are a number of high quality dividend paying stocks originating in other countries is likely to be a draw as well.

So, even with the depressing stock market performance this week, there might be hope for the future. Especially if you are interested in using global dividend stocks to help you out.

1. Investment Advice From an Unusual Source: When looking for solid investment advice, you have to be willing to keep your eyes open. Dividend Partisan offers a look at how you can learn from even the unlikeliest of sources. The key is to always be willing to learn.
2. Why Do We Think We Are So Good A Investors?: Before you can be successful, you need to honestly evaluate your investment ability. The Dividend Guy looks at the emotions behind how we perceive ourselves as investors.
3. Step 6: Start Small: As you begin investing, you might not want to take on more than you can handle. Indeed, the Dividend Monk encourages you to start small. This is a great article and part of a series on building a successful dividend portfolio.
4. How to buy your first index trackers: Ready to get started with index tracking? Monevator provides you with a helpful guide. After you read this post, you will be ready to get start; it’s even a good refresher for the seasoned investor.
5. Investing For Income: A basic look at how you can invest for income. Buy Like Buffett breaks it down and gives you an overview of your options for building an income portfolio.
6. Valuation-Informed Indexing #43: The Most Important Number in Stock Investing: As you figure out which numbers to pay attention to as you invest, it’s important to keep a few basics in mind. ValueWalk takes a look at long-term market timing. It’s an interesting concept that can help you over the long haul.
7. Vanguard Wellington: Is it a Good Fund?: Using an example from real life, Oblivious Investor illustrates how to evaluate a fund. This is a great resource that can help you evaluate future purchases.

Dividend Investment is an important part of every investors portfolio.  As the market conditions have recently weakened there has been an increased interest in finding the best dividend stocks.  Here are some answers that many investors are looking for as they seek out dividends.

Common Questions

What is a dividend yield
How do dividends get paid
When do dividends get paid

His three main points are that dividend stocks provide:
1.  Steady income that can be reinvested into the stock
2.  Downside protection against a decreasing stock price
3.  Stable stock ownership preventing you from trying to actively trade your stocks

During these difficult times in the market Dividend Investment has started to draw more attention than ever before.   Click on the play button below to watch the entire 2 minute video.

investing, Dividend Investment