As we near the upcoming holiday weekend (markets are closed
Monday in honor of Memorial Day), we may start to see the daily
trading volume begin to wane. We may also see less of the
sensationalist headlines coming out of the business media, which
knows a portion of its audience is either on vacation or has
mentally checked out for the week already.
In the meantime, we remain vigilant in our research regarding
the names we currently have on our
Best Dividend Stocks List
, as well as some non-recommended names that could be ripe for
Looking at today's big movers, some key earnings reports played
a key role in the overall market action. On the upside, results
spurred buying in PVH Corp (
), Costco (
), and Hewlett-Packard (
). On the flipside, investors were looking for the exits on shares
of Tiffany & Co. (
). HJ Heinz (
) ended down a bit on their latest report, but
the company did announce a 7.3% dividend hike.
Elsewhere, Wall Street analyst upgrades helped lift stocks like PPG
) and Capital One Financial (
Positive Social Security Trend Developing
According to a new report from the Urban Institute, those taking
Social Security benefits fell a second consecutive year in 2011, to
27% of the number eligible. That's down from a take-up rate of 31%
in 2009. The Social Security program allows recipients to take
reduced payments as early as age 62, but provides full benefits
around age 66 and increases payouts for those who wait up to age
70. Each year a recipient delays taking payments, the monthly
benefit rises by about 8%. That means the person who begins
collecting, say, $1,000 a month at age 62 would have been able to
collect around $1,700 a month had they waited eight years.
Delaying Social Security payments is one of my favorite ways for
retirees and near-retirees to get the most of the system. Keep in
mind that taking benefits at age 62 locks in payments that are only
75 percent of what you'd receive at the retirement age of 66.
Delaying benefits at age 66 will raise them by 8 percent a year
until age 70, after which benefits do not increase with age. This
strategy, along with staying in the workforce as long as possible,
could help maximize your income in your later years.
If you are already retired, you need to use a smart strategy
regarding the money you withdraw from your accounts to cover
everyday living expenses. Many financial advisors tend to use a 4%
annual withdrawal rate when discussing retirement savings
withdrawals. With this approach, investors withdraw 4% of their
retirement balance in the first year of retirement, or let's say
$20,000 from a $500K portfolio. The dollar amount of the withdrawal
could be adjusted each year to keep up with inflation. So whether
you are deriving income from dividend-paying stocks, bonds, bank
CDs, or other sources, you can at least have a starting point (4%
withdrawal rate) to factor from.
Doing the bare minimum (for example, saving a set amount each
month to invest, but never pushing harder to raise the amount you
invest over time) will likely leave many short of an enjoyable
period later in life. Some may think that their current financial
obligations will eventually wind down, and then they'll really
begin to stockpile away money for their golden years. Unfortunately
that is almost never the case. Too many unforeseen events can
happen (divorce, a family death, getting laid off, etc.), and you
can't afford to lollygag when you could be doing more - all the
while still enjoying life's finer moments as well.
Building wealth requires you to aside funds and invest them in
income-producing assets (dividend-paying stocks is our immediate
focus, but it can be investing into growing your business even
more, or buying a property that can be cash-flow positive). If you
are already retired, it may mean coming back in the work force
part-time to ease the amount of money you are withdrawing from your
savings (if you are unable to work because of a disability, there
can be work you do from home possibly) or not being gun-shy when it
comes to staying active as an investor. Regardless, taking charge
of your financial profile is paramount to getting the most out of
your later years.
Investing is Easy When You Have Trusted Sources
Plenty of people rely on professional help these days when it
comes to their finances, and there's nothing wrong with that. The
trouble begins when investors listen to advice from wholly
unqualified people like family members, friends, business
colleagues, etc. I doubt the Facebook (
) IPO will be the talk of many individuals next gathering,
following the fervor and disappointment that followed with the
Search "Facebook" on our site
and you will see numerous articles we wrote on the concerns we had
with Facebook as an investment for the retail investor.
One of our biggest goals at Dividend.com is to make it easy for
investors to develop a simple, conservative approach to investing.
I often stress the importance of creating numerous income streams,
and quality dividend paying stocks are a key element of that
strategy. Once you have an online brokerage account set up at any
of the well-known firms and you have access to our industry-leading
Best Dividend Stocks List
, your job becomes pretty easy.
The dividend concept has worked for a long time and will
continue to do so. But if you take a more manic approach to your
investing, your long-term results will almost certainly suffer.
Focus on putting your capital to work regularly in the
highest-quality names, and investing becomes pretty simple.
New MLP Report Just Released!
The Essentials of Investing in MLPs
, we outline the do's and don'ts of investing in high-yield Master
Limited Partnerships (MLPs). Our exclusive new MLP report outlines
everything you need to know about these popular high-yield
- Understanding their unique company structure
- What you absolutely need to know about their special tax
- Why MLPs may not be suitable for retirement accounts
- How to find the best high-yield partnerships
- …and much more!
Head to the
page to download this brand new report today!
25 Years of Dividend-Increasing Stocks
We recently updated our list of dividend stocks that have been
paying out dividends for 25 years or more. Be sure to check out
the latest list of names here
Dividends Really Matter
Financial blog DailyReckoning.com recently took a look at the
difference dividend payouts made in the overall return investors
saw throughout the prior decades. Here are some of the
- The Nasdaq is down 28% since the end of 1999. Even the "blue
chip" S&P 500 stocks are down 15% during that time frame…until
you add back those "boring" dividends. With dividends included, the
S&P 500′s 15% loss flips to a 6% gain.
- Without dividends, the S&P 500 index would have produced a
loss for the 25 long years from August 1929 to August 1954. Then
again, without dividends, the S&P 500 produced a 5% loss during
the 13 years from September 1961 to September 1974. But with
dividends included, the S&P's loss became a 46% gain.
- Over the course of the last half-century, dividends have
contributed more than half of the stock market's total return -
56%, to be exact.
Of course, you can't discuss the potency of dividend investing
without making mention of how awesome compound returns are. I can't
stress enough the power of compound interest: you take a small
amount of money and turn it into a large amount over time. Finding
the right companies at the right price points which not only grow
earnings, but also grow their dividend payouts as well!
New Watchlist Article Out Today
Be sure to check out our weekly Top 50 High-Yield Watchlist
Names post that is out today, exclusively for
members. This list gives readers a good idea of what stocks we're
watching behind the scenes here for potential upgrades.
Go Beyond This Newsletter
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Best Dividend Stocks List
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"Dividend Capture" trading strategy, but long-term investors can
use it to keep track of impending payouts. Just visit our
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Thanks for reading, and I'll see you tomorrow!
Be sure to visit our complete recommended list of the
Best Dividend Stocks
, as well as a detailed explanation of
our ratings system here