Tuesday, July 31, 2007
There are some top notch companies on this list that would make any dividend investor proud to own them.
The Div Guy Owns Shares of BAC, PFE, GE, JNJ, PEP, PG and WWY
There are two very positive stories on iStar Financial (SFI) which is a commercial lender. See my old post on SFI for details about the company and why I like them.
The first story from Reuters reports SFI has increased net income for the most recent quarter and is raising it's 2007 earning forecast.
The second article is from Motley Fool and talks about how SFI has done a good job of managing their loans but is guilty by association with other lenders that are not performing well. They also mention SFI is a Motley Fool Income Investor recommendation.
The Div Guy Owns Shares of SFI
The average 401(k) retirement account rose for the fourth consecutive year in 2006. Propelled by strong stock market returns, the average 401(k) account increased 17 percent in 2006, according to cheap jordans free shipping the annual update of the EBRI/ICI 401(k) database. The EBRI/ICI analysis is based on the largest compilation of data on participants in 401(k) plans, which now are the primary retirement savings vehicle for the vast majority of working Americans covered by retirement plans.
Monday, July 30, 2007
This is income I plan to grow to replace my work income over the next 15 years. I am adding regularly each month to my stock portfolio. My plan is to grow this amount to over $40K and then have the ability to work part time or full time at the job of my choosing. I am continuing to fund my Roth IRA as well and plan to use the Roth and Rollover IRAs to cover the rest of my retirement needs.
I do not want to have to work at a fast food restaurant or grocery store at the age of 70 because I didn't have a retirement plan. Think about that while you are pondering your next need versus want purchase dilemma.
Also Bank of America (BAC) should be on the list with it's recent dividend increase. BAC now has a yield of 5.4%.
The Div Guy owns shares of ACAS, AYR, SFI, HRP and BAC.
Sunday, July 29, 2007
The man in the article Blades must not have a wife as I don't see how he would have any time to spend with his family and train for Ironman Distance Triathlons.
There is even a list of sample model portfolios for different time frames as well.
Saturday, July 28, 2007
What is a tax holiday?
Many states across the country are offering tax free purchases on back to school items such as clothing, shoes, computers and school supplies during the month of August.
Here is a link to a list of state tax holidays and the items that will be tax exempt in your state. Happy shopping.
Friday, July 27, 2007
Employee Benefit Research Institute has a website called Choose To Save. You have to check out my new favorite Superhero $avingsman. I love the green tights and the red shorts.
This site has some good clips on saving for retirement as well as the adventures of $avingsman and his battles with evildoers such as Credit Card Guy and Mr. Unexpected.
The site also have a program to calculate how much you need to save for retirement. Enjoy
Thursday, July 26, 2007
These videos are great for people just starting to save for retirement and for those who have not taken retirement savings to heart. Take a look at the clips called It's Your Responsibility, How Big a Nest Egg? and Life is Unpredictable. The clip on Life is Unpredictable will get you thinking about retirement as it profiles an MBA who at 60 gets laid off and has a very small nest egg.
Also here is a link to my favorite retirement planning calculator on Bloomberg.
Wednesday, July 25, 2007
The US bank sector has not done well this year but solid well diversified companies will continue to generate revenue and be well positioned when the US banking markets improves.
The Div Guy owns shares of BAC.
A Perfect Storm in the Banking Sector
Banks traditionally make money from borrowing at low short term rates and lending at high long term rates. The current high short term rates and a flat yield curve are hurting bank profits because this spread allows for very low profit margins on loans.
Another factor in the decreased revenue of banks is the decrease in the number of new homes loans. With the tighter lending practices, fewer borrows are able to qualify for loans. We have moved from a period of very loose lending practices to very strict. In the past few years, there were many ways a borrower could get an easy loan such as no verification of income loans, interest only loans and low starting rate loans. This meant just about anyone could get a loan for any amount they wanted. Today the banks have tightened their lending practices making them very restrictive and this has decreased the number of people who qualify for loans.
Banks are also receiving less money in mortgage origination fees. The slow down in the housing market has more homes on the market and fewer homes selling. People who typically are ready to move to up to a nicer house are having trouble selling their existing homes. Banks loose out on both of these transactions that would have produced fees for the banks.
It looks like it’s a bad time to be a banker. I love to buy stocks on sale but there are few banks I like at this time. I just have trouble figuring out how local banks will make money by adding branches with less business to go around. I haven’t gone into a bank is several years so I might not be the best person to judge the banking industry.
The silver lining, some larger banks with commercial lending and investment related income are still doing well. I would look to purchase bank stocks that have a well diversified mix of consumer, commercial and investment products as well as geographical diversification. Some of the banks to research further are Bank of America (BAC), Barclay's (BCS) and Citigroup (C).
The Div Guy owns shares of BAC and C.
Tuesday, July 24, 2007
Proponents of doomsday scenarios focus on the baby boom as a demographic aberration; once the boomers retire, society's savings supposedly will disappear. But our increased longevity, and our reduced security, are each trends that will endure. They have fostered a culture of saving that is here to stay.
Another story is from Paul Farrell of MarketWatch who talks about how the increased debt funding of the war is hurting our global credit standing.
Thursday, July 19, 2007
A very interesting article on Yahoo Finance from the Wall Street Journal about how Asset Allocation Funds can help investor from themselves.
Also Stockpickr has a list of the 10 Top Yielding Stocks of Warren Buffet .
Wednesday, July 18, 2007
There are two types of balanced funds; Lifestyle Funds and LifeCycle Funds.
Lifestyle funds offer a stable mix of stocks, bonds and cash to invest based on your risk tolerance. There are many companies that offer these funds such as Fidelity, T. Rowe Price and Vanguard. I am going to use Vanguard Funds as an example because they offer a diversified line up of funds and offer the lowest expenses on any other fund company. Vanguard offers 4 Lifestyle funds which they call “LifeStrategy Funds”. All the investor has to do is match up their risk tolerance with one of the 4 funds. The 4 are Growth Fund, Moderate Growth Fund, Conservative Growth Fund and Income Fund.
Let’s take a closer look at the Vanguard LifeStategy Growth Fund. LifeStrategy Growth offers a mix of approximately 85% stocks, 10% bonds and 5% cash. The fund is for investors who are investing for longer than 5 years, looking for maximum long-term growth of capital and can accept significant fluctuations in price. I think everyone wants maximum long-term growth but in order to get that growth there will be some ups and downs along the way. The big question is what would you do if the market drops 20% in value in a couple of days. If you answer is sell and move to cash, you need to select a more conservative fund. Most investors will need to move their money to a more conservative Lifestyle funds as they get closer to their retirement goal.
The next type of balanced funds are LifeCycle Funds. LifeCyle Fund investors choose a fund that meets your retirement date otherwise know at target date. Vanguard has funds ranging from Target Retirement 2005 to Target Retirement 2050. The investment assumes everyone with that retirement date has the same risk tolerance and the fund will investment more conservatively as the investor gets closer to retirement. Five years after the Target Retirement date the fund will convert to the Vanguard Retirement Income Fund.
This makes the selection of a retirement fund a one step process and much easier than selecting individual funds. Also the LifeCycle funds will adjust the mix of investments as you get closer to retirement. The funds offer a mix of different stock and bond assets such as international stocks and inflation indexed bonds.
The same advantage of simplicity can be a disadvantage if you like to have control over you portfolio allocations. A disadvantage of the target fund is when you reach your target you are shifted into Retirement Income which at this time has about 30% stocks, an amount many financial planners should be closer to 50%.
If you are looking for an easy way to manage your funds, LifeStyle and LifeCyle will make your retirement planning simple. For people wanting more control and flexibility with their assets, may want to invest in individual funds. Part 3 will address individual mutual fund selection.
The Div Guy owns shares of Vanguard LifeStrategy Growth Fund.
This happened last night and I have been emailing them to find out why. I haven't heard why they locked the site but I am back in business.
I will post the second part on asset allocation tonight.
Tuesday, July 17, 2007
Stocks, which are ownership interests in companies have the greatest long term returns. Over the long-term, stocks have historically returned around 10%. Stocks are also the most volatile of the group meaning you are likely to have more ups and downs in the stock market.
Bonds are loans to companies or governments. Historically bonds have returned 6% over long periods of time and have been less volatile than stocks. Bonds provide a steady stream of income and also when combined with stocks help to reduce the volatility of your portfolio.
Cash Investments are short term securities such as money market funds, US Treasury Bill and other bank products. Cash investments are designed to have a stable value and pay interest on the balance. Long term rates have been similar to the rate of inflation which has averaged a little over 3%.
Keep in mind, your investments need to beat inflation in order to create long term growth of your assets combined with additional investments.
The two most important aspects in determining your individual asset allocation are your risk tolerance and time horizon.
Time Horizon The greater the amount of time of the investment, the better the ability to withstand price volatility of your investment. This means the longer your time horizon the better your chances are to use stocks to reach your long-term goals.
Risk Tolerance This is your ability to handle fluctuation in the stock and bond markets. This is also sometimes called your sleep factor. If the stock market drops 10% or 20% what is your first reaction? If your first reaction is to sell, you may have too much invested in stocks. Each person is going to have a different risk tolerance and this will change as you get closer to your goal.
Lets use an example to illustrate the process of asset allocation. Before we can start, we need to have a clear goal in order match the assets to that goal. We have a person who is wanting to save for retirement with 35 years until retirement so we would say this person has a long-term time horizon.
Lets also assume this person has been investing for a few years and is comfortable with the fluctuations of the stock and bond markets.
This person will have stocks be the largest asset in their retirement account followed by a small percentage of bonds and and even smaller amount of cash for the rest of the portfolio. Again keep in mind someone who is very risk tolerant may have 100% stocks in their portfolio while another person will have half stocks and half bonds.
I will follow with Part 2 discussing mutual funds to select for an easy approach to asset allocation and Part 3 will talk about individual fund selection.
Monday, July 16, 2007
SmartMoney has a good article about the recent stock purchases by some of the great investors.
Yahoo Finance has an article from Stockpickr.com titled "The highest yielding stocks held by Warren Buffett and George Soros".
Sunday, July 15, 2007
Company Profile DSX is a Greek shipping company specializing in transporting dry bulk cargoes such as iron ore, coal, grains and other materials. DSX has 13 Panamax ships and 3 Capesize in current service. They have 3 Capesize on order with the first to be ready in November 2007 and the other two in 2Q of 2010. DSX completed an initial public offering of common stock on March 23, 2005.
Management Objectives Managements objective is to manage and expand its fleet in a manner that will enable DSX to pay attractive dividends and enhance shareholder value. To accomplish this objective, DSX intends to pursue highly focused business strategies, including: continuing to operate a high quality fleet; strategically expanding the size of our fleet; pursuing an appropriate balance of short-term and long-term time charters; maintaining a strong balance sheet with low leverage; and maintaining low cost, highly efficient operations.
Fundamentals and Prospects Sales for DSX have grown at 66% the past 3 years and Earnings Per Share (EPS) have grown by 30% for the past 3 years but slowed over the last two. The current dividend rate for DSX is 7.69%. One thing to note, DSX has a negative Free Cash Flow but looks like it will turning positive in the next couple of quarters.
The real measure to examine at is the Baltic Dry Index (BDI) which is an average of rates for shipping various dry goods on specified routes. The BDI average for Panamax cheap jordans ships went from 34,610 on January 2, 2007 to 59,050 on July 13, 2007. The big reason for the increase in the rates can be explained by China as it is importing huge amounts of grains and raw materials. This is a good sign for the economy as the BDI is a leading indicator but it also could signal higher interest rates and commodity prices. The Panamax BDI rate is on the DSX website under their Fleet Employment
Conclusion This is a risky dividend stock but if the demand for raw material from China and the world keep increasing, the rate for hiring a dry bulk ship will keep increasing as well. I see the demand for raw materials increasing for the rest of the year so I rate DSX a buy but be very careful of the BDI.
The Div Guy owns shares of DSX
Citibank was offering a new eSavings account that had to be linked to a checking account. So I moved both my checking and savings account to Citibank. The eSaving account was paying 5% and I opened up an interest checking account that was paying around 1%.
Strike One Everything was going well the site was easy enough to use and then they lowered the eSavings rate to 4.75%. Not long after that they lower the rate again to 4.5%. This was at a time when most of the other top online savings account were paying 5%. I am not too thrilled with Citibank.
Strike Two I notice they are offer a 6 month CD that is paying 5% so I decided to move most of my saving to a CD. I entered the transfer from my saving to the CD online. To make a long story short the money never made to the CD and it took a few weeks to get this resolved with customer service. I finally decided I didn't want the hassle of getting the CD.
Strike Three While I was messing around with customer service about the CD, Citibank comes out with a new saving account called Ultimate Savings that is paying 5%. You would think Citibank would send an email or contact me through my bank my online account to let me know about the account. Not once did anyone at Citibank contact me or tell me about this new account even when I was going through customer service issues.
That was the final straw, I closed out my Citibank account. I searched BankRate for a new account and have opened a checking and savings account with EverBank. EverBank currently has a promotional rate of 6% on checking and savings accounts. The rates after the promotion will be 3.45% for checking and 4.89 for savings. I have also opened a saving account with FNBO Direct which has a promotional rate of 6% until 9/28/07. The rate at FNBO Direct before the promotion was 5.25%. Happy banking.
The Div Guy unfortunately owns shares of Citigroup which runs Citibank.
Saturday, July 14, 2007
The first is an article about General Electric (GE) and it's recent earnings from Kiplinger's Stock Watch.
Here is an article looking at four undervalued dividend stocks using a stock screen based on Peter Lynch, John Neff and James O'Shaughnessy. Forbes has Four Financials Fit for the Masters.
Next is Paul Farrell's Lazy Portfolio second quarter update on MarketWatch. Paul monitors some simple to use asset allocation models.
First a definition of ETF's. An ETF is a group of stocks similar to a mutual except ETF's are traded on the stock exchange like other company stock. Most ETF's are based on a stock index such as the S&P 500.
The number of Dividend ETF's has been exploding with more coming to market each month. One of the oldest is iShares Dow Jones Select Dividend Index (DVY) from Barclays. DVY was started in 2003 and most Dividend ETF's can thank the Jobs and Growth Tax Relief Reconciliation Act of 2003 for their popularity. This tax act was signed into law in May of 2003 and lower the tax rate on dividends to 15%. REIT's and foreign company dividends were excluded from the lower tax rate of this law.
Here are links to some popular Dividend ETF's
DTN WisdomTree Dividend Top 100
FDL First Trust Morningstar Dividend Leaders
VIG Vanguard Dividend Appreciation
VYM Vanguard High Dividend Yield
PEY Powershares High Yield Dividend Achievers
AGD Alpine Total Dynamic Dividend Fund
Here are links to some of the major providers of ETF's.
Good luck on your search for dividend income.
The Div Guy does not own any ETF's.
Friday, July 13, 2007
There are three types of plans.
The first is a DRIP which is the most restrictive and only allows you to reinvest your dividends, typically at no additional charge. This plan does not allow you to make any additional purchases or make your first purchase and you must own shares of the stock before you can join the plan. You must purchase your first share with a broker and then move it to the transfer agent for that particular company. Check with the brokerage firm on the cost to transfer a share of stock to a DRIP before you make a purchase. Citigroup (C) is one such DRIP.
Another type of DRIP allows you to reinvest your dividends and make additional purchases of shares on a regular basis. These plans require you to own one or more shares of the stock before joining the plan. This again means you must purchase a share of the stock from a broker and move it to the transfer agent. Examples of this type of Plan our Johnson & Johnson (JNJ).
The third type of plan is called a DRIP and Direct Purchase Plan (DPP) / Direct Stock Purchase Plan (DSPP). These plans allow you to make your first payment directly with the plan and avoid using a broker altogether. These plans also allow you to reinvest your dividends as well as making additional purchases of shares. An Example of this type of plan is ExxonMobil (XOM).
You can start most DRIP's by purchasing one share of stock or a small lump sum investment. Most DRIPs offer a low cost alternative to purchasing shares through a broker and are a cost effective way to build a diversified dividend portfolio. Most DRIPs only charge a nominal fee to purchase additional shares. DRIPs are a great way to dollar cost average into a stock and help novice investors develop a long term investment horizon.
Investors must track their cost of shares to be used to calculate capital gains tax when shares are sold. You have little control over the date of purchase or sale transaction. Some DRIPs allow for purchases on only one or two set days a month while others offer more regular investments dates.
DRIPs to Consider
DRIPs requiring share purchase
Johnson & Johnson (JNJ)
JNJ Transfer Agent Computershare
WWY Transfer Agent Computershare
PEP Transfer Agent Bank of New York
Direct Purchase Plan DRIPs
PFE Transfer Agent Computershare
General Electric (GE)
GE Transfer Agent Bank of New York
XOM Transfer Agent Computershare
Bank of America (BAC)
BAC Transfer Agent Computershare
IBM Transfer Agent Computershare
MCD Transfer Agent Computershare
Newell Rubbermaid (NWL)
NWL Transfer Agent Computershare
Additional information on DRIPs and purchasing your first share
Basic Tax Info on DRIPs
Bank of New York
The Div Guy owns shares of C, JNJ, XOM, WWY, PEP, PFE, GE, BAC and NWL
Thursday, July 12, 2007
You just need to provide a few inputs such as what percentage of your current income you would like at retirement, rate of return before and after retirement. You can also play with the retirement age to see what it will take to retire 5 years earlier.
I know it may be a long time to retirement for many, but it’s fun to think about the possibilities for retirement. I also like to think about my future work options such as part-time employment and being able to travel a few months a year. A person can dream.
I like to run the calculator with an 8% investment return before and after retirement, exclude Social Security and select 100% of income at retirement. Click on “View Report” to see a nice chart showing your expected retirement balances.
Let me know what you think about this calculator and let me know if anyone has another calculator they like to use.
Wednesday, July 11, 2007
Things I like about SFI They are more fiscally conservative and use less leverage than most of their peers in the industry, dividend yield of over 7%, they have increased their dividend over 5% annually for 5 years in a row and they have increased diversification to other financial markets for better risk-adjusted returns.
Some Negatives They have increased exposure to more risky residential lending, an increase in interest rates could slow down the commercial real estate market and there will most likely be additional bad news out of the subprime lending industry.
There could be some more dips in the coming months and it is hard to say when the bottom will hit for the REIT market but long term investors will find some great bargains this year. Dividend and Value Investors may want to start accumulating shares of SFI on these dips. I just love a sale.
The Div Guy owns shares of SFI.
Tuesday, July 10, 2007
Retro Air Jordan Shoes Store,Offer Authentic Cheap Jordans,Women Jordans For Sale,Kids Jordan Shoes, Discount Price With Fast Shipping
Cost I have made 26 trades since I have opened my account with Zecco and I have paid zero in commission. I have made 25 buys and 1 sell. I did have to pay $.04 in fees associated with the sell order. Comparing the Zecco account with Scottrade, I have saved $182!
Flexibility in trading I love the ability to make small purchases to help create a well diversified portfolio with a limited amount of assets. I can use dividends from a couple of my large stocks to make purchases into new holdings, again allowing to diversify my portfolio at no cost.
Ease of use Once you are logged into the Trading Center there is a simple to use Stock Order Entry. You enter the stock symbol, buy or sell and the number of shares. It also allows limit orders on this same entry form.
Trading Tools There are limited trading tools to help with additional financial analysis of stocks. Zecco does offer Motley Fools “CAPS” for what that is worth.
In those days, if I say that our opponents often get into trouble, then you should not be surprised. Jordan will have this ability, and his battle with the feeling is cheap jordans online just fantastic, and we can learn a lot from each other. When Eddie's on the court, you feel there is a general exist. On the pitch, a team always needs a can inspire everyone who received us, and Eddie is like a. " In addition to a brilliant college basketball career, but Jordan has also played in seven NBA seasons. In 1982, he also won a championship in the Los Angeles Lakers. Jordan also know little about this city, but still here coaching, playing, win. Eddie's career has been repeating this sort of thing, then in Philadelphia, he will continue this brilliant yet
Customer Service The customer service I have received has been satisfactory. I had a question which I submitted via email that was answered the next day. I also transferred stocks from Scottrade via ACAT and the cheap jordan shoes process was very smooth and took about two weeks. I also enjoy the ACH bank transfers to and from my Zecco account. Scottrade does not offer ACH transfers out of your account.
Overall I have to say I have been very pleased with my Zecco account. I would recommend Zecco to anyone wanting to lower their cost of trading. Happy Trading.
The Div Guy has not been compensated for this post.
Monday, July 9, 2007
Here is a no-load fund family with the smallest starting balance I could find. The AARP Mutual Funds allow you to open an account with a single investment of $100. Additions to the account can be made at any time with a minimum of $25. You can also set up an account with $25 if you also sign up for monthly contributions of $25.
I believe just about anyone could afford to start an account with the AARP Funds. I can hear people now "You may be an old fart , but I'm not 50!". Anyone who is a US Resident and has a Social Security number can invest in the funds. There are no minimum balance fees and a $10 fee for IRA accounts
Some other great things about the funds: they offer 4 index funds and a money market, they are managed (sub-advised) by State Street Global Advisors, they have low expenses capped at .50% and you can sign up right online.
I think even most young adults with or without debt issues should give this a try. Take a look at the AARP Aggressive Fund as it has a nice balanced portfolio including some international exposure. So quit whining about your credit score and start an account today! You can ask me later what to do when you get several thousand dollars in the account. Wishing you good health.
The Div Guy is not associated with or compensated by AARP Funds. I did open two UGMA accounts with AARP Funds for my children.
Sunday, July 8, 2007
I wrote in my last post about the REIT HRP that I recently purchased and some of the reasons I selected the stock. I wanted to go into a little more detail on my investment style. I like to buy stocks that are out of favor or have been beaten up by the markets. Many times psychological factors will depress the price of the stock. I look for companies that have a solid business plan and good financials. Something I also look for in the stocks I purchase is a high dividend yield. If I am going to be buying an out of favor stock I want to be paid while I wait for the markets to come around.
REIT's are a case in point. There has been a lot of negative news about the housing markets. Take your pick from sub prime lending woes, the down turn in home building stocks, the decline in housing prices across the US and bad earnings reports from some REIT's. I purchased HRP at about a 20% discount to its high for the year and with a 8% dividend yield. I will be paid 8% to wait a year or so for the stock and REIT market to improve. There is the possibility that the dividend could be lowered if earnings continue to decline. I am confident enough in their conservative mix of properties along with their ability to increase rental rates at renewal time.
To summarize my stock style, I would say I am a value or contrarian investor that like to paid a good dividend. I am not that worried if I don't beat the market every year. My goal is create a stock portfolio that will pay me 8-10% in dividends a year. I recently read a book with a similar investment style as my own. The book is "The Single Best Investment/ Creating Wealth with Dividend Growth" by Lowell Miller.
Individual stock selection is a very personal decision and different styles work better for other investors. I will write about some of my other holdings in future posts.
I have to say I have been very happy with my Zecco brokerage account. I love the ability to take small positions in stocks and paying zero in commission. I have to admit that I was charged 4 cents to sell one stock but that sure beats $7 dollars to buy or sell.
Health note: Ran 12 miles today weight 180. Note to self, don't eat so much this week so the long run next week will be easier
Saturday, July 7, 2007
HRP owns and leases commercial and industrial properties across the US and leased industrial land in Hawaii. HRP was hurt by lower investment gains and higher financing costs than the previous year in their most recent quarterly report. Their occupancy rates have stayed high and rental rates on renewed leases continues to rise.
I like HRP because it is trading at a 20% discount from the yearly high, the stock is currently paying an 8% dividend yield and has paid dividends since 1987. Also a recent Wall Street Journal story reported US office rents increased 3.1% for the second quarter of 2007 due to limited space and strong economic fundamentals in most major markets. This confirms HRP statements of higher lease renewal rates.
A couple of negatives are dividend taxation and lack of yearly dividend increases. REIT dividends are mostly taxed at ordinary tax rates instead of the 15% rate for most stocks. Also HRP has had only a couple of dividend increases over the past 5 years.
The Div Guy owns shares of HRP.
Friday, July 6, 2007
I started my career in the mutual fund industry in the late 80's and spent over a decade in the industry. I have most of my assets in index funds. I have also started creating a taxable brokerage account of dividend paying stocks. I have also started some Dividend Reinvestment Plans (DRIPs) as well. I plan on growing these accounts to help me jordans for sale replace my income in the next twenty years. The information I give about stocks and mutual funds is not intented as financial advice and I am not a financial professional. If you are interested in some of the mutual funds and stocks I talk about, do your own reseach. I have bought stocks that have gone down in price but so has Warren Buffett and Peter Lynch.
Here is some personal information. I am in my mid 40's married to a great woman and we have two young children. I was born in the Boston area and we moved to the midwest a couple of years ago. We own our house (no mortgage) and have no debt. So this is the start.