Roundup: Financial Freedom

We’re all looking for financial freedom in some form or another. One way to achieve that is through making prudent investments and sticking to your plan. If you are interested in achieving financial freedom, you can get help from these blog posts:

  1. Financial Freedom At 45: A great post on financial freedom, and how to get there. The Passive Income Earner lays out a plan for financial freedom (not necessarily retirement), and offers great insights on what you can do to be financially free.
  2. The Millionaire Teacher: Over at the Dividend Ninja, you can learn about the Millionaire Teacher author Andrew Hallam through an interview. Great insights on how to find your path to financial freedom.
  3. How To Build Wealth Wealth and Eliminate Debts: If you want to be financially free, you need to learn how to get rid of debt and build wealth. Buy Like Buffett provides you with some help in this arena. Lay the groundwork for financial freedom, thanks to these tips.
  4. How To Build A Solid Dividend Retirement Portfolio: Looking for help with financial freedom in retirement? The Dividend Guy offers you some ideas for putting together a solid portfolio. Start now, and you’ll reach financial freedom.
  5. 3 Model Portfolios to Consider: If you want to build financial freedom, you can use these model portfolios to help you on your way. Dividend Monk puts together three different portfolios for those interested in using individual stocks in their plans for financial freedom.
  6. Finding Investment Treasures in International Markets: Use this post from Value Walk to improve your chances with international markets. Diversifying to international assets can help you reach your goals of financial freedom.
  7. What Are Your Dividends For?: As part of your efforts to become financially free, you should have a plan. Dividend Mantra shares some insight into deciding what’s important to you, and using your dividends for that purpose.

What Does a Dividend Say About a Company?

Some investors, when picking stocks, like dividend paying stocks. This is because a company that pays a dividend generally had certain characteristics. These characteristics can make a company a good investment – beyond the virtues that the dividends have for income investing. Here are some of the things you can infer about a company from its dividend:

Financial Strength

One of the most important things you can learn about a company from its dividend is its strength. A company can’t pay a dividend if it doesn’t have cash. The payment of a dividend is usually an indicator that it has some cash to spare. (You do have to be careful, though; in some cases a very attractive dividend is an indication of the opposite, with a management desperate to find investors to shore up the company finances.) A regular dividend that remains stable, or increases every year (like what you see with dividend aristocrats), is usually an indication that the company knows what it’s doing financially.

Stability

A regular dividend can also indicate that the company is stable. A reasonable yield of between 3% and 6% usually means that there is a degree of stability in the company. This is especially true if the payouts have remained the same, or risen, over time. If dividends are being slashed, or if there is an erratic history of payouts, it can be an indication of instability.

Concern for Shareholders

The payment of a dividend can also signal that the company cares for the wellbeing of shareholders. This is important if you want to a company that has your financial interests at heart. Consider: There are a number of things that the company can do with that cash. Instead of putting it into some other venture, or boosting executive pay, the company is choosing to share it with shareholders. This can be a good sign – especially if you want to be a shareholder.

Picking Dividend Stocks

As you can see, even if you aren’t choosing a stock for its dividend, looking at the dividend, and the dividend history, can help you get an overall feel for the company’s likely performance. A company that pays a dividend usually has strong fundamentals, and if the dividend has remained mostly intact through market corrections and setbacks, that is an even stronger indication that your choice is likely to offer solid returns over time. Carefully consider your options, you might find that a dividend stock makes a great investment on its own – on top of providing you with regular income.

Dividend Increases: EDR, MDT, HIFS, AI

It’s been a disappointing week for stock performances, with U.S. stocks plunging. But, in the world of dividend news, things aren’t so bleak. Special dividends from LSE on its TMX bid, and special dividends as a result of the Deutsche Boerse deal to take over the NYSE, are coming to light, though. And even as the special dividends were announced, different companies announced dividend increases.

EDR, MDT, HIFS, and AI

This week, it’s all about finance and money with Education Realty Trust, Arlington Asset Investment Corp. and Hingham Institution For Savings all announced higher dividends. Medtronic also announced an increase to its dividend. The news is somewhat encouraging.

Education Realty Trust (EDR) is a REIT that specializes in college housing. The company increased its dividend by 40%. This comes after quite a few decreases in the dividend payout. For shareholders, this is a welcome change.

Arlington Asset Investment Corp (AI) invests in assets related to mortgages for the most part. However, it is not a REIT. This is the third increase the company has offered since February 2010, when AI re-instituted its dividend, after getting rid of it after the mortgage market crash. While the increase is welcome, concerns about the housing market could keep dividend increases relatively modest, like the most recent announcement of a 17% boost.

Hingham Institution For Savings (HIFS) is a savings bank that has been offering cash to shareholders in the form of dividends since 1994. The company has been fairly consistent in raising dividends, but these raises are quite smal, including the recent announcement of an increase of 4.2%. HIFS paid a special dividend in January, and that’s something to watch for in the future (although it can’t be counted on).

Medtronic (MDT) has increased its dividends each year for 34 years; this recent increase, though, is the smallest increase in more than 25 years. Medtronic has been doing reasonably well, and the company is expected to see an increase in profits as the Baby Boomers age. However, this is not enough to give shareholders a dividend hike of more than 7.8%.

Roundup: Getting Started as an Investor

Are you ready to start dividend investing? Some good advice is always needed as you get ready to invest your hard-earned cash. If you are looking for a little direction, these great posts can help you get started:

  1. How To Start Dividend Investing With Little Money: Small funds? No problem! The Passive Income Earner can help you see how you can get started with a little money. You do have options; the important thing is to get started.
  2. Susan P. Brunner Interview – Part 2: Dividend Ninja interviews an dividend investor with more than 40 years experience. Valuable insight into getting started, how to keep going and finding success. Make sure to read Part 1 as well!
  3. How to choose the best index trackers #2: Costs: As you get started, you need to know how to pick the right investments. Monevator has a great multi-part tutorial going on. This post is about looking at the costs associated with index trackers.
  4. What Is Your Biggest Financial Goal?: Before you can get started, you need to have a plan. Buy Like Buffett encourages you to consider what’s important to you, and prioritize your financial goals. That way, you can focus on what’s important.
  5. Improve Your Trading By Using Moving Averages: The Dividend Guy explains how you can boost your success at trading with the help of moving averages. A primer on moving averages, and how to use them more effectively.
  6. The Main Stages of a Bubble: As you get started, it can be tempting to chase whatever big thing is hot right now. But is it a bubble? Value Walk takes a look at the main stages of a bubble, and this post can help you avoid being caught up in one.
  7. Why I Don’t Overweight Small Cap or Value Stocks: The Oblivious Investor helps you figure out your asset allocation. A look at overweighting, and being careful as you start out as an investor.

Dividend Investing: Long Term vs. Short Term

In many cases, your investing strategy will depend on your time frame. The same is true of dividend investing. When investing in dividend stocks, you will need to consider your goals, and what you hope to accomplish with your dividend stocks. While dividend paying stocks can be good for a long term portfolio, as well as for a short term portfolio, the way you invest to get the best benefit will be different.

Long Term Dividend Investing

When it comes to long term investing, you don’t need a large amount of capital to start; dollar cost averaging works well. The important thing is to be consistent, regularly investing money. For long term dividend investing, it is also a good idea to take advantage of DRIPs. These plans will automatically reinvest your dividends so that you buy more shares of the stock. You essentially get these shares for free. These can grow your portfolio, helping you when it comes time to sell later on, for retirement or college or some other goal. You will have more shares, presumably at higher values.

If you want to use the investments for retirement, you can hold them in a tax-advantaged retirement account. That way you can avoid paying taxes on your dividend earnings until you withdraw from the account.

Short Term Dividend Investing

If you want to use the money in the short term, such as building up an income stream from dividend payments, you need to take a little different approach. If you want immediate income, you will need have a large chunk of cash to start. A large amount of capital is required to generate the payments that can result in immediate income.

However, if you have time to build up to an income stream, you can create a plan to build up your dividend portfolio. If you are looking to be able to have a good income stream in seven to 10 years, you can use a strategy similar to dollar cost averaging to build your portfolio over time. You will see your income stream from dividends grow. You can use DRIPs at the beginning to get more shares faster. As you get closer to when you expect to take advantage of your dividend income stream, you can stop using the DRIP strategy, and enjoy the advantages of having more shares – and larger dividend payments.

Dividend stocks can offer a number of opportunities for diverse time frames. Consider your goals, and carefully plan a strategy that can help you take best advantage of dividend stocks.

Dividend Approvals: BAC, NYSE, PCCW

There have been some interesting developments in terms of dividend approvals this past week. Concerns about the economic situation in the U.S., and around the world, are prompting some to worry about the possibility of stagnating dividends. The IMF recently lowered the forecast for the U.S. economy, so worries about whether or not the tenuous economic recovery can be maintained are surfacing. In such an environment, the approval of dividends can be rather encouraging.

First of all, Bank of America (BAC) was able to authorize a dividend on its Series L preferred stock. Of course, the company still isn’t being allowed to pay a dividend on its common stock, but there are hopes that things will change as the company returns to profitability. Taking Merrill Lynch and Countrywide really caused problems for the balance sheet, and BAC is scrambling to get back in a position where it can join other banks in providing the enticement of dividends.

A dividend has also been approved by the boards of the New York Stock Exchange and Deutsche Boerse. Deutsche Boerse will be purchasing the parent company of the NYSE soon, and the dividend pay out is expected to amount to a total of $904 million, providing quite the windfall for some. Each shareholder will receive a share of the holding company for each share they own, and a special dividend to go with it. Deutsche Boerse shareholders will receive more than NYSE shareholders.

Finally, Chinese company PCCW Ltd expects a higher dividend payout after it spins off a business trust. The company plans to create the business trust by spinning off its telecommunications unit. The result should provide for more cash flow — and a higher dividend. And, of course, there should be an IPO for the business trust at some time down the road, and that could mean more profits. An interesting possible opportunity for foreign investors.

Roundup: Cool Investing Ideas

If you’re like me, you’re always looking for new investing ideas. You want to be able to remain sufficiently diversified, while also pulling down great yields from solid companies. Here are some cool investing ideas from great blogs:

  1. 6 Premium Dividend Payers to Buy on Dips or Drops: Matt at Dividend Monk offers his view of different dividend stocks that you should buy on the dips. Buying on the dips, of course, means that you get more for your money. Down the road, it could really pay off.
  2. Two Stocks On My Watchlist: If you are looking for a couple of ideas for investing, Dividend Mantra shares two stocks he has on his own list. It might be worth adding them to your watchlist.
  3. The Bullish Case For Real Estate: Jacob at Value Walk believes that now might be the time to get into real estate. If you are looking for an investment, real estate might be the thing. Perhaps even dividend paying REITs might be the way to go…
  4. Small-Cap and Value Stocks (Fama French 3-Factor Model): When looking for ideas, you can use the Fama French 3-Factor Model. Mike at Oblivious Investor provides an overview of this model, and how it can be used as you look for investing ideas.
  5. Covered Call ETF High Income, Low Risk?: Mike at The Dividend Guy takes a look at the covered call ETF. If you are looking for a little something to shake things up in your portfolio, this might be just the investment for you.
  6. How to choose the best index trackers #1: Basics: Over at Monevator, The Accumulator offers some advice on choosing the best index trackers. A great primer on what it takes to find a good index tracker for your portfolio.
  7. 3 Quick Ways to Raise Funds for Your Investments: Before you can invest, you need to have money. Beating The Index provides some cool ideas for getting the money you need for your investing goals.

The Ultimate Dividend Playbook

One of the best things you can do before you start investing – in dividend stocks or anything else – is to get some solid background. Before you begin dividend investing, you should read The Ultimate Dividend Playbook by Josh Peters, CFA. Peters is the editor of Morningstar DividendInvestor, so you know that he knows what he’s talking about. If you are interested in using dividends as part of your investing plan, you can get a handle on the process with the help of the Playbook.


Peters makes use the fictional Sally to illustrate many of his points, and help you learn how dividend investing can help you. Playbook is organized logically to help you learn concepts related to dividend investing. Peters starts out by introducing the idea of using stocks to make money, providing you with a regular income stream beyond just waiting for stock prices to increase over time. Then he takes a look at value and returns, as well as helpful hints on how to choose dividend stocks. You move through the book easily, with the next concept building on what you just learned.

Playbook provides useful information on different dividend models to help you evaluate stocks, and analyzes how to use them. Peters’ preferred model, the dividend drill, is an interesting way to consider your options. However, even Peters warns about some of the drawbacks associated with this model. Sometimes the analysis can get a little dry, but most of the time the information provided is educational and practical. If you can power through some of the less entertaining parts of the book, you will come away with solid information, and a better understanding. You might even be ready to develop your own dividend investing plan.

As you continuing reading through Playbook, you will learn about managing your portfolio, as well as receive Peters’ thoughts on the future of dividends. To further break topics down into easy to understand tutorials, there are seven appendices included with the book. You can get a more focused look at dividend payments, as well as the tax issues associated with dividend investing. Then, Peters shares targeted strategies for different types of dividend stocks: banks, utilities, REITs, energy partnerships, and other dividend opportunities are explored in turn.

If you are look for an overview of dividend investing, along with actionable information that you can use to improve your financial future and build an income producing

This Week: SuperDividend ETF and Long View on Dividend Stocks

It’s been an interesting week in the world of stocks. The U.S. stock market may be tanking, but that doesn’t mean that all stocks are going to be losers. Indeed, some developments this week might be indicative of a better future for dividend stocks.

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.

Roundup: How-To and Investing Tools

Looking for some great investing tools? Look no further than some of the blog posts written during the last week. The offerings from some of the great investment blogs offer insights into how to choose better investments, as well as tools that can be used to analyze your next move:

  1. SumZero is the Best Way To See Your Competition: The Dividend Pig takes a look at SumZero, a site aimed at providing actionable investment ideas. You have to pay a fee to get access to the site’s best stuff, but you can get an in-depth, actionable article for free once a week.
  2. Dividend Yield or Growth or both?: The Passive Income Earner provides some insight into the age-old dividend investing dilemma of yield vs. growth. You also get some solid ideas for using both when deciding what to do about an investment.
  3. The Safety of Short Term Bonds: Dividend Ninja knows that bond funds are out of favor. However, if you want to add a little bond safety to your portfolio, you can employ a short term bond strategy. An interesting post.
  4. Playing With Ex-Dividend Date: The Dividend Guy offers you a tutorial on making money by playing with the ex-dividend date of your investment choice. It’s a great primer on an interesting tool that can be used to your advantage.
  5. Creating a Single Portfolio with Multiple Accounts: Oblivious Investor offers a technique that can help you simplify your investment portfolio. Even if you have multiple account, you can still manage one portfolio.
  6. Picking an index tracker out of the investing swamp: Monevator provides some helpful insight into choosing an index tracker. You can take this seemingly complex process, and make it work for you. A helpful way to find the right index tracker for you.
  7. How To Invest In International Stocks: Buy Like Buffett offers some practical advice for someone who wants diversify into foreign investments. An overview of your international stock choices.