Are You Ready for a Financial Emergency?

You never know when a financial emergency will strike. Whether you lose your job, experience the fallout from a market setback, end up in the hospital, or a natural disaster comes calling, a financial emergency is never fun. And, of course, it can leave your money situation in a shambles.

If you want your finances to survive as best they can in the face of a financial emergency, you need to prepare ahead of time. Here are some ways to prepare for a financial emergency:

Build Your Emergency Fund

One of the essentials to being ready is having an emergency fund. Your emergency fund can help you through when you need help paying bills, buying food, or for other purposes. Create an adequate emergency fund, you will likely have what you need to get by.

Get Your Finances in Order

You stand a better chance of weathering financial disaster if your money is set to rights. Take some time now to fix your finances, and get everything in order. Know what credit card numbers to call if they are lost or stolen, know where your insurance information is, and make sure you know which bank accounts and investments accounts are accessible.

Keep important information in a safe place. One of the best places to keep important documents, such as birth certificates, investment account information, insurance policies, passports, and emergency credit cards is a waterproof fire safe. A small one can be especially helpful, since it’s easy to just grab it go.

Build Up Home Food Storage

Another good idea to prepare for financial emergencies is to build up home food storage. If you have food at home, you won’t be as vulnerable if you lose your job. You will need less money to buy food if you already have what you need. Additionally, food storage can come in handy in a pinch during a natural disaster or similar emergency.

Other important items to have ready include a 72-hour kit that you can take with you for food, water, and First Aid, as well as extra blankets, alternative heat or fuel, and other emergency preparedness items. You never know when a financial emergency will coincide with some other type of emergency, and you should be ready to provide for yourself in your home, as well as be ready to evacuate if necessary.

Now is the time to prepare for financial emergencies that can arise at any time. Carefully build your emergency fund and prepare in other ways for an emergency. If you start now, and build up a little bit at a time, you will have a better chance of making it through almost any financial emergency life offers.

REITs Perform Well in 2012, Dividend News from EBF, GAZP, SHLM.O

So far in 2012, Real Estate Investment Trusts have performed well. Indeed, REITs are getting a boost, with solid returns and competitive dividends. Right now, the Market Vectors Mortgage REIT Income ETF (MORT) is seeing some solid gains, up 10% on the year.

So far, it appears that REITs are beating the market. REITs are desirable because their legal structure requires them to pay a large amount of their profits back to shareholders, usually in the form of dividends. The result is that it’s possible to invest in real estate, earn a monthly income, and not need a huge amount of capital to actually buy property. Right now, two REITs of note include CYS, which specializes in residential pass-through certificates, and MFA, which focuses on mortgage-backed securities.

Dividend Increases: EBF, SHLM.O, and Possibly GAZP

REITs aren’t the only dividend investments getting some play this week. More dividend increases have been announced. Ennis, Inc. (EBF) is planning to raise its quarterly dividend to $0.175 per share. This represents an increase of 12.9%, and brings the yield up to 4.5%. A. Schulman (SHLM.O) is also raising its dividend. The new payout will be $0.19 per share, representing an increase of 12%. This follows a dividend increase made in October 2011 of around 10%.

Eyes are also on state controlled Russian natural gas giant Gazprom. Right now, GAZP offers a payout of 9.29 rubles per share. However, profits during 2011 were higher than expected. And, with energy a hot commodity right now, it wouldn’t be surprising to see more profits in store for Gazprom. So, while nothing official has been announced about a dividend increase, there is speculation that GAZP will boost the payout, since its dividend is based on a percentage of profits (25%), and not a set figure.

Moving forward, there should be plenty for dividend investors to consider in terms of possibilities. Many companies are paying dividends and raising dividends, and as the economy picks up and profits increase, there could be more dividend increases.

The 10 Highest Rated Nasdaq Dividend Stocks

Nasdaq stocks are not known for paying dividends.  When we think of the Nasdaq we tend to think of high growth tech stocks.  The truth is that over 250 of the 2700 stocks which trade on the Nasdaq Exchange have a dividend yield of 3% or more.  We used the DSO rating to find the best dividend stocks on this exchange.

1. Elmira Savings Bank (ESBK)

DSO Rating: 99.  Elmira Savings Bank is a federally charted savings bank in the US. ESBK has a dividend yield of 4.4% and a 5 year dividend growth rate of 7.1%.  The company has a 3 year net income growth rate of 32% and a payout ratio of 46%. The stock is up 18% in the last 12 months.  The only thing keeping ESBK from having a perfect score is that it has only 2 years of consecutive dividend increases.

2. Community Trust Bancorp (CTBI)

DSO Rating: 98.  Community Trust Bancorp is a commercial and personal bank. CTBI has a dividend yield of 3.9% and a payout ratio of 48%.  The company has a 3 year net income growth rate of 19% and a 5 year dividend growth rate of 3.2%.  The stock is up 17% in the last 12 months.  While we would like to see the dividend growth rate higher, the 32 years of consecutive dividend increases helps this stock receive the 98 point rating.

3. Molex, Inc. (MOLXA)

DSO Rating: 98.  Molex is an electronic connector manufacture that sells electronic components. MOLXA has a dividend yield of 3.3% and a payout ratio of 47%.  The company has a 3 year net income growth rate of 11.5% and a very strong 5 year dividend growth rate of 25.5%.  The company only has 2 years of consecutive dividend increases.

4. Southside Bancshares (SBSI)

DSO Rating: 98.  Southside Bancshares is the holding company for Southside Bank which is a Texas state bank. SBSI has a dividend yield of 3.2% and a payout ratio of just 29%.  The company has a 5 year dividend growth rate of 14.5% and has increased its dividend for 2 years.  The 3 year net income growth rate is 33% and the stock is up 12% in the last 12 months.

5. Maxim Integrated Products (MXIM)

DSO Rating: 98.  Maxim Integrated Products develops and sells mixed-signal analog circuits.  Maxim has a dividend yield of 3% and a 5 year dividend growth rate of 12%. They have a 3 year net income growth rate of 15.4% and a payout ratio of 53%.  The stock is up 19% in the last 12 months and the company has increased its dividend for 9 consecutive years.  A higher yield would give the stock a higher rating.

6. Wayside Technology Group (WSTG)

DSO Rating: 96.  Wayside Technology Group is an IT company that resells hardware and software.  WSTG has a dividend yield of 4.5% and a 5 year dividend growth rate of 3.4%.  Their 3 year net income growth rate is 20% and their payout ratio is 53%.  The company has raised its dividend for 2 year and the stock is up 8% in the last 12 months.  We would like to see at least a 10% return and a higher dividend growth rate before rating this stock higher.

7. National Bankshares (NKSH)

DSO Rating: 96.  National Bankshares is holding company with subsidiaries that offer commercial and personal banking services. NKSH has a dividend yield of 3.3% and a 5 year dividend growth rate of 6.5%. Their 3 year net income growth rate is 9% and the payout ratio is 40%. The stock is up just 8% in the last 12 months but the company has increased its dividend for 17 years.

8. First Capital, Inc. (FCAP)

DSO Rating: 96. First Capital is a holding company of First Federal Bank which has its primary business in residential mortgages and is a member of the Federal Home Loan Bank System. FCAP has a dividend yield of 3.6% and a 5 year dividend growth rate of 5.6%. The stock is up 32% in the last 12 months and the company has increased its dividend for 12 consecutive years.

9. Northwest Bancshares Inc (NWBI)

DSO Rating: 92.  Northwest Bancshares is a savings and loan company.  NWBI has a dividend yield of 3.5% and a 5 year dividend growth rate of 6.69%. The company has a 3 year net income growth rate of 10% and a payout ratio of 67% which is a bit higher than we like to see.  The stock is up 8% in the last 12 months and the company has raised its dividend for 2 consecutive years. They just started paying dividends in 2010.

10. Arrow Financial Corporation (AROW)

DSO Rating: 92.  Arrow Financial Corporation is holding company for an insurance and REIT subsidiary.  AROW has a dividend yield of 4% and a 5 year dividend growth rate of 3.23%.  The 3 year net income growth rate is 2.3% and the payout ratio is 52%.  The stock is up only up 6.4% in the last 12 months but the company has increased its dividend for 18 years.  While the yield is solid on Arrow, we would like to see improved income growth rates and faster dividend growth to help drive the stock price higher.

Other Top Nasdaq Dividend Stocks

The DSO rating system relies on dividend fundamentals and past performance as key drivers for the ratings.  Two other stocks that we like on the Nasdaq that didn’t make the list because their yields are under 3% are Intel (INTC) and Microsoft (MSFT).  We believe both of these stocks have solid dividend fundamentals and promising upside potential over the next 12 months.  (We are currently long MSFT).

Which are your favorite Nasdaq Dividend-Paying Stocks?

Are You Prepared for Another Market Setback?

When it comes to the markets, many investors feel as though the current state of affairs is going to last forever. However, this is not the case. In the short term, volatility is a reality. Plus, when it seems like nothing will stop a market from rising, that’s about the time when a crash comes in to wreak havoc with your portfolio.

It doesn’t have to be like that, though. How you respond to a market crash has a great deal to do with your attitude. It’s important that you prepare for what’s next. Even if you think that things are going to keep getting better, you still need to shore up your finances. Here are some things to keep in mind:

1. Are You Properly Diversified?

One of the things that you have to remember is that you can reduce your exposure to risk and falling markets if you are properly diversified. Diversification can help you do well when the markets are struggling because you have other investments that do well in such a climate. Look for ways to diversify your holdings to prepare for the possibility of a market setback.

2. Do You Have an Emergency Fund?

Following basically good financial principles is important when it comes to being ready for anything. One of these principles is building an emergency fund. You want to have a good emergency fund available. If your dividend income is cut due to market and economic conditions, you’ll need to make up the difference. An emergency fund is a must, since it can back you up as you wait for your portfolio to recover.

3. Do You Have Ready Cash to Make Purchases?

Another important thing is to be ready to take advantage of the situation. While many people live in fear of a market setback, others see these occasional market crashes and drops as a way to get ahead. It’s possible to pick up bargain investments. You can get more bang for your buck when you buy investments when they are “on sale.” If you think that the market is heading for a setback, freeing up some money can be a good idea. This way, you have some capital available to take advantage of any opportunities.

Bottom Line

The important thing, though, is that you are ready. Plan ahead. During the good times, you need to prepare. Live within your means, and prepare for setbacks. Market crashes are a reality, and that means that you need to be prepared for them.

More Dividend Increases: AAPL, HBNC, RMS

Let’s not pretend that we don’t know what the biggest dividend news is this week. All anyone can talk about right now is Apple. Finally, Apple has announced that it will pay a dividend. Speculation about a dividend began shortly after the death of Steve Jobs, who was solidly against paying a dividend.

Now, though, AAPL is joining the ranks of dividend stocks. Some of the analysts are surprised at the relatively low dividend yield, but that doesn’t change the fact that a dividend is being paid. The news has been greeted with a great deal of enthusiasm, and many dividend investors are adjusting their strategies and portfolios to include AAPL.

Other dividend news is also being released this week:

  • Horizon Bancorp (HBNC): Like many other banks, HBNC is announcing a dividend increase. The new payout is 13 cents per share, up from 12 cents per share. Many banks are raising dividends right now, since stress tests are over, and profits are rolling in. This comes after last month’s agreement for Horizon Bancorp to acquire Heartland Bancshares Inc.
  • Hermes International (RMS): This French company just announced that it will be raising its dividend by 2 euros per share. The company just sold some of its interest in another firm, and that has resulted in profits that the company is passing on to others.

The interest in dividends appears to continue, and it seems as though dividend stocks will continue to rise in popularity. Companies are looking for ways to attract more investors, and dividend payouts is one way to do that — even during times of continued economic uncertainty. As long as companies are profitable, and have the cash to pay dividends, and as long as investors are anxious to reward companies for doing so, it is likely like that the popularity of dividend paying stocks will continue to rise.

Apple Announces Plans To Pay A Dividend

Finally, it is official; Apple is a dividend paying stock.  We have been waiting for this moment for a long time.  Let me just say up front that we have owned Apple stock for a few years and we plan on continuing to do so for many more years.

Apple announced Monday morning, March 19th, that they will pay a quarterly dividend of $2.65 per share giving it an annual dividend of $10.60.  The dividend is expected to be initiated in July, 2012.  As of today that gives the stock a yield of 1.8%.  Tim Cook (CEO) said that the company would periodically review the dividend and consider making increases which leaves us optimistic that the dividend will grow.  As long as EPS continues to grow as it has been we fully expect that the dividend will go higher.

Apple Dividend Fundamentals

EPS estimates for Apple in 2012 are between $43 and $47 per share.  Assuming an EPS of $45, Apple would have a payout ratio of just 23.5%.  By comparison Microsoft has a payout ratio of 26% and IBM’s payout ratio is 23%.

While a dividend yield of 1.8% is hardly something to get excited about the news does open the door for more funds to add Apple to their portfolio which may help drive up the stock price.  If Apple hits any of the price targets set by analysts its yield will drop dramatically (due to stock price increase). We can only hope that the company will grow the dividend to maintain the yield or improve it.

AAPL has a P/E ratio of 16.67 with a one year forward P/E ratio of 12.11.  Apple’s earnings per share grew by over 110% in the 2011 Q4 results that were announced in January.

What Tim Cook Said

Tim Cook did address the idea of a stock split on the conference call Monday morning.  He said that it was currently not in the best interest of shareholders but they will continue to review it in the future.  It sounds like management at Apple will not be considering a stock split anytime soon.  Tim Cook did say that Apple is very optimistic about the future and has many new products in the pipeline.  He said that the dividend will have no impact on innovation at Apple which remains a top priority.  The $10B buyback that will start in 2013 is relatively insignificant and will be used to replenish shares that are issued to employees.

Analyst Expectations

Apple has seen numerous upgrades in the last 6 months.  Below we have listed its most recently published upgrades along with the price targets. We are very bullish on the stock but it is always good to get investment firm analysis.

Currently 39 Investment firms are covering Apple. 34 have it rated as a strong buy, 3 a moderate buy and 2 a hold. Here are a few notable upgrades we found in March of this year. Price targets just seem to keep going higher.

March 19th
Hefferman Capital, Price Target: $800

March 16th, 2012
Following the iPad 3 Release…
Oppenheimer, Price Target: $700
UBS, Price Target: $675
ISI Group, Price Target: $650

March 15th
Morgan Stanley, Price Target: $720
Katy Huberty believe that $720 is just the base price target and that Apple could reach $960 in 2013.

March 7th
Zacks, Price Target: $654

Top Performing Dividend Paying Stocks

There is no doubt that the stock market is off to a great start in 2012.  The S&P 500 is up 11.5%, The Dow is up 8.47% and the Nasdaq index is up 17.3%.  Of course the Nasdaq has benefited from Apple’s great run.  I hope that you have benefited from these recent gains.

While these gains are good what we really care about is the performance of high yield dividend stocks.  We sorted through these our lists of stocks to find those that are outperforming in 2012.  It turns out that over 800 stocks with yields over 2% are up 10% or more so far this year.  That was surprising.  We eliminated stocks with dividend cuts in the last year from this top performers list.

Company Symbol Industry Yield YTD Return
Bon-Ton Stores Inc BONT Department Stores 2.32 157.27
Whirlpool Corporation WHR Electronics 2.54 67.17
Globus Maritime Ltd. GLBS Shipping & Ports 12.12 64.43
Seagate Technology STX Data Storage 2.97 63.6
Tessco Technologies TESS Electronics 2.62 53.26
M.D.C. Holdings, Inc. MDC Construction 3.76 52.41
Aixtron SE NA AIXG Semiconductor 3.12 50.79
Hot Topic, Inc. HOTT Apparel Stores 2.83 50.68
Homeowners Choice HCII Insurance 3.99 50.31
Janus Capital Group JNS Asset Management 2.13 49.45
Transocean Ltd RIG Oil & Gas Drilling 5.63 48.29
Technical Comm. TCCO Communications 3.54 47.92
Pennsylvania REIT PEI REIT – Retail 3.95 47.03
Barclays PLC BCS Banks – Global 2.41 45.47

Don’t Have the Money to Invest? Here’s How to Find It

Many people know that they should invest. After all, careful investing is one of the ways to best grow wealth – especially if you expect to retire with any sort of comfort and success. However, even with the knowledge that investing can be a good way to build wealth, many people fail to put their money to work for them. One of the excuses is that they don’t have the money to invest.

The Truth: You Don’t Need A Lot of Money to Invest

Many people think that they need a large amount of capital to invest. However, this just isn’t true. Many online brokers will let you start investing with as little as $25. In fact, there are even some that don’t even require a minimum to open an account. You can start with a small amount of money and invest a little each month.

Indeed, one of the tools you use as you invest is dollar cost averaging. You invest the same amount of money each month, and use it to buy however many shares you can. Partial shares can be bought, so if you invest $25 a month, and a share costs $50, you will get half a share. (Of course, if the price drops, your $25 will go further.)

When you realize how little it takes to start investing, you will find that you can build wealth over time, and take advantage of the compound interest associated with investing.

How to Find Extra Money to Invest

If you are interested in investing, but you really feel like you don’t have the money to invest regularly, you should reconsider your position. Realize that you are probably wasting money each month. Here are some ways to find the money to invest:

  • Cut back on unnecessary expenses: Evaluate your monthly expenses, and look for ways to cut back. What are you buying that you don’t need? Be honest, and cut back on a few expenses.
  • Increase your efficiency: Whether you are improving the efficiency of your energy use, or whether you are increasing the efficiency at which you work, improved efficiency can result in savings. Reduce your power bill, and spend less by improving your efficiency when you drive, and you could end up with more money to invest.
  • Make it automatic: It’s easy to spend money when you have it readily accessible. Make your investing automatic, either having the money withheld from your paycheck, or setting up an automatic transfer from your bank account. That way, you’ll be investing without thinking about it, and you’ll adjust your regular spending to compensate.
  • Find ways to earn more money: It doesn’t have to be all about spending less. You can also earn more. Consider starting a side hustle, or doing side jobs. Earn extra money each month and then invest it.

You don’t have to be rich to start investing. With some planning, and a visit to the right online broker, you can start investing with a small amount of money and watch it grow.

S&P 500 Dividend Payments Rise, Banks Increase Dividends: JPM, WFC, USB, AXP

S&P 500 dividend payments are on the rise. With investors clamoring for a share of the profits, and with companies seeing plenty of cash after years of hoarding due to the recession, it looks like some companies are ready to return some of their profits to shareholders.

But the real bump to the S&P dividend payments is coming from banks. The results of the recent stress tests are helping encourage banks to increase dividends, since the Federal Reserve has said that they are stable enough. Even though some banks, like Citi (C), haven’t been approved for dividend increases, there are a few others ready to boost their payouts.

Bank Dividend Increases Announced: JPM, WFC, USB, AXP

Major banks are ready to boost their dividend payouts, and are even in instigating stock buybacks in some cases. Here are some of the results of the exuberance experienced by banks due to the release of the stress test information:

  • JPMorgan Chase (JPM): Not only did JPM boost its dividend payout to 30 cents per share, but the bank is also planning to buy back about $12 billion in stock during 2012.
  • Wells Fargo (WFC): Wells Fargo upped its dividend by 10 cents a share, increase it to 22 cents a share.
  • US Bancorp (USB): After passing the stress test, USB announced that it will raise its payout to 19.5 cents, an increase of 7 cents a share.
  • American Express (AXP): The major credit card issuer is also increasing its payout, raising the payout by 2 cents a share, bringing the dividend up to 20 cents a share.

While these aren’t huge increases, they are nevertheless encouraging. And other banks, like Citi (C) and Bank of America (BAC), are hoping that some sort of approval will be granted for increasing their dividends at some point in the near future. Otherwise, they won’t be able to compete with banks that do offer dividend increases.

Chris Johnson’s Favorite Dividend Stocks for a Recovering Market

I usually keep CNBC on while I’m working during the day and yesterday I overheard a commentator saying one of my favorite things to hear, “We like dividend paying stocks.”

The analyst being interviewed was Chris Johnson, chief investment strategist for Johnson Research Group and Director of research JK Investment group.  He has over 20 years of experience specializing in technical sentiment analysis and options strategies.

Johnson believes the market is in the 2nd of 4 stages.  The first stage is when the market bottoms out which has already passed.  The 2nd stage is where the recovery has begun but investors are skeptical.  The 3rd and 4th stages are where the market accelerates to point where value investors start to sell off stocks and take profits.  So naturally Johnson thinks now is a great time to be putting money to work.  He also cited the all of the investment capital that still remains on the sidelines.  He is expecting much of it to flow into equities later this year.

Towards the end of the interview Johnson highlighted a few of his best dividend picks.

Cincinnati Financial Corp (CINF)

Cincinnati Financial has a dividend yield of 4.6% and a 5 year dividend growth rate of 3.74%.  The company has increased its dividend for 51 consecutive years.  CINF is up 18% in 2012 and Mr. Johnson believes it has further to go.

Coca-Cola Company (KO)

Johnson sited Coke and the next company on the list, McDonalds because he favors consumer staple companies with growth and solid dividend yields. KO has a dividend yield of 2.7% and a payout ratio of 51%. It has increased its dividend for 49 consecutive years and has a 5 year dividend growth rate of 8.6% which gives it a DSO rating of 98/100.

McDonald’s (MCD)

McDonald’s had disappointing February sales numbers which drove the stock down a little in the last few days but Johnson still believes in the stock for its growth. MCD has a dividend yield of 2.7% and a 5 year dividend growth rate of 24.8%. It has a payout ratio of 50% and is one of the top rated stocks on our safe dividend list. Other global consumer brands that are similar to Coke and McDonald’s include Pepsi (PEP) and Kellogg (K).

Ross Stores (ROST)

Ross Stores has a very low dividend yield of just .8% which means it doesn’t make any list on our site but the company has demonstrated a commitment to increasing the dividend. It has raised the dividend for 17 consecutive years and has a 3 year dividend growth rate of 11% and a 5 year dividend growth rate of 16.6%. ROST has a very low payout ratio of 17%.

Costco Wholesale (COST)

Who doesn’t like shopping at Costco? I know I’m there all the time. Costco is another low yielding stock where the company at least appears to be committed to increasing the dividend. COST has a dividend yield of just 1.1%, with a 5 year dividend growth rate of 14.4% and a payout ratio of 29%. Costco has raised its dividend for 7 consecutive years.

If you are interested you can watch the full CNBC interview here.