With the stock markets in turmoil it is always good to make sure you are taking the correct basic financial steps. Here is a classic article from Knight Kiplinger about the secrets to a prosperous life. Eight Keys to Financial Security

Key 1: Invest in yourself
Your own earning power -- rooted in your education and job skills -- is the most valuable asset you'll ever own, and it can't be wiped out in a market crash. Keep your earning power growing through continuous education, training and personal development. If you work in a field prone to periodic layoffs or falling earnings, think about a career change, especially if there's something else you've always dreamed of doing.

Key 2: Protect yourself and your loved ones
Before you acquire any financial assets, make sure you have enough insurance against life's big risks -- serious illness, disability and early death. Most people, young families in particular, are woefully underinsured, especially for disability. When an emergency arises, you and your family will never regret having "wasted" all those annual premiums on insurance you "don't need."

Key 3: Borrow sparingly
Use credit only to purchase things of lasting value: a home, education, maybe a car. Pay cash for everything else such as clothing, travel, entertainment and furniture. Even better, take advantage of the credit card company's free 30-day loan by charging responsibly and paying off the bill in full every month. Do you know anyone who got into big financial trouble because they didn't borrow enough money? I don't.

Key 4: Pay yourself first
If you feel you never have any money "left over" for investing after you pay all your bills, try reversing the bill-paying process. Make the first check you write each month a deposit to your mutual fund, money market or brokerage account. Then pay all your regular monthly bills, finishing up with the credit card bill. If you're having trouble paying that last bill, trim your discretionary spending -- but keep paying yourself first.

Key 5: Don't go for the home run
In investing, as in baseball, those who swing for the fences do hit the occasional home run. But they strike out a lot too, and their lifetime batting average -- average annual total return -- suffers accordingly. So shy away from highly volatile stocks, Initial Public Offerings (IPOs), buying on margin and commodity trading. Don't try to time markets, because no one does it consistently well. Use dollar-cost averaging to invest regularly in markets good, bad and lackluster. Have the patience to wait out the occasional (and inevitable) bear markets.

Key 6: Diversify, diversify, diversify
When tech stocks were flying high in the late '90s, safer investments like bonds, CDs and less-volatile blue-chip stocks were derided as sissy stuff. Diversification was considered boring. But successful investors have always known that any one class of assets -- stocks, real estate, bonds, cash -- will have its day in the doghouse and its day in the sun. That's why you've got to own all of them, in a mix that's right for your age, income, family responsibilities and tolerance for risk.

Key 7: Live simply today for a more comfortable tomorrow
Deferred gratification is no fun, but it's the only way I know to fund your long-term goals -- college for your kids or grandkids, that vacation home you've always wanted, early retirement, a generous bequest to your alma mater. Take a close look at your current lifestyle, and if you see a lot of spending that is dispensable, consider it found money for the bigger dreams in your life.

Key 8: Give generously to create a better world
Your own financial security depends far more than you may think on the financial, physical and spiritual health of others in your community, our nation, our world. When you share your good fortune by donating your money, time and talent to charity, you help create a stronger economy and a healthier, safer world.

So give generously to education, your church, social-service agencies, the arts, medical research -- whatever you value most. It feels wonderful, it's the ultimate in enlightened self-interest and it's the right thing to do.

I wanted to update my offer to new potential Zecco customers as I have sent out 3 referrals today on Zecco accounts. I will give you $32.50 for opening a Zecco Trading account and you will get a free book and 10 free trades a month courtesy of Zecco. Zecco offers 10 free stock trades per month once you fund your account with a minimum $2500 in equity and/or cash. You only pay $4.50 per trade after your 10 free trades that month.

How do I do this? Zecco has just increased the referral bonus from $50 to $65 for each referral that opens up and funds a new account and I will split the bonus with you.

Zecco has been operating for over two years and I have been using Zecco for over a year now. I have to say I have been very pleased with my Zecco account and would recommend Zecco to anyone who wants to save money on stock trades. If you are skeptical, open an account and purchase as little as one share to see how it works.

Send an email to me at thedivguy at gmail.com and I will send you a referral link. Once you fund your account with $2,500 send me another email and then I will personally send you $32.50 to your Paypal account once I am paid by Zecco. I have paid out $75 in bonuses over the past couple of months.

Zacks.com has a recent write up on Johnson & Johnson (JNJ) by Brian Marckx, CFA. J&J Fairly Earns Its Premium

A number of Johnson & Johnson, Inc. (NYSE: JNJ - News) products are expected to experience declining sales, slowing revenue growth in the next few years relative to 2007. Incremental earnings growth will come in the form of improving margins and share buybacks. Investment in J&J offers consistency, reliability, and perhaps safety in this volatile market. We consider the name a core holding.

Johnson & Johnson currently trades at 15.6x our 2008 EPS estimate of $4.52, somewhat richer than the large-cap pharmaceutical industry average of 13.6x. Historically, J&J has sold at a premium to the S&P 500 and pharmaceuticals. As such, we believe the current price makes J&J stock worth considering as a long-term investment and a core large-cap pharmaceutical holding. We believe the stock is correctly priced, and should post in-line returns over the next six-to-nine months.

We have established a price target of $75 per share, yielding 6% upside before dividend. Our $75 price target implies a P/E multiple of 16.6x our 2008 EPS estimate of $4.52. Although at the current price we believe the shares are fairly valued, we view a price around $65 as an attractive point to begin accumulating the stock.

Jason Napodano, CFA, contributed to the report.

S&P also has a 5 Star Strong Buy rating on JNJ with a 12 month target price of $76.

Disclosure: The Div Guy owns shares of JNJ at the time of this post.

Yesterday was a very tough day in the market. It takes quite a bit of resolve to stay put with stock investing. Pat Dorsey has a very good article on the long term benefit of investing in solid dividend stocks. Blue chips: Fundamentals will help them bounce back

For many years, investors took it on faith that a portfolio of big blue-chip stocks - chockfull of familiar names like General Electric and Coca-Cola - was the surest path to investing success.

Why get cute with complicated stuff like foreign equities or small-cap shares when you could invest in well-known, industry-leading companies, sleep well at night and watch your portfolio steadily grow?

Obviously, that faith has been shaken recently because blue-chip shares just haven't appreciated. Over the past decade, Standard & Poor's 500 index has returned a mere 3.7% a year. You'd have to go back to the end of the 1970s bear market - or to the late 30s, as the Great Depression was winding down - to find a worse 10-year stretch for blue-chip stocks.

Is it time to throw in the towel on these once heralded shares? I don't think so because the reason they're struggling has nothing to do with declining American competitiveness or the dawn of the "Asian century," to name a couple of theories. It has to do with a short-term change in investors' mood, which won't last forever.

I think of investing in simple terms. When companies do well, so should their shares - eventually. And when businesses suffer, the stocks will too. Eventually.

What moves stock prices

In my view, there are really only three drivers of equity market returns:

You can make money based on a company's growing earnings, which will ultimately be reflected in its share price. You can make money if the company pays out a portion of its profits directly to you in the form of cash dividends. And you can make money if the market decides, for whatever reason, that it is willing to pay more for those earnings than in the past.

Of course, this also means you could lose money if investors don't want to pay that much for profits anymore. This last variable, called valuations, is the x factor at work here.

In the long run, it is a company's profit growth and dividends - which Vanguard founder John Bogle describes as your investment returns - that matter most. In fact, Bogle analyzed stocks in the 20th century and found that 9.8 percentage points of their 10.4% annual returns were because of earnings and dividends.

But while investment returns are key over time, a drop in valuations can significantly cut into your gains in the short term, as you've no doubt discovered.

Over the past decade, for example, the S&P's annual investment returns were a respectable 6.8%. But the market's price/earnings ratio, a key measure of valuations, fell from a frothy 29 to 21.

This change - which Bogle refers to as speculative returns - effectively reduced blue-hip stock performance by 3.1 percentage points a year. By contrast, in the prior 10 years, P/Es shot up from 12 to 29, adding to your investment gains.

The mood of the market

Why do P/E ratios change so much? Interest rates certainly play a part, but the big reason is that there are simply times when people get more or less excited about owning a particular group of stocks.

Can I predict with certainty when this momentum will change? No. But history tells us that at some point enthusiasm becomes euphoria, or negativity becomes depression - and the cycle reverses.

In the meantime, think of it this way: You're taking far less risk buying blue chips at 21 times earnings - or lower - than you were at 29 times earnings in 1998. The fact is, there is a lot of value among U.S. large-caps right now, which you won't see by looking solely at stock charts.

Take General Electric, arguably the bluest of blue chips. Over more than a decade, GE has increased earnings per share 10.4% annually, with an average dividend yield of about 2.2%. But the stock has returned only about 2.5% annually as its P/E plunged from a lofty 36 in 1998 to 13.

There's a vocal contingent on Wall Street that assumes if the stock hasn't done well, there must be something wrong with GE. The reality is, GE's shares have stunk because they were just so expensive in 1998.

In contrast to the stock, GE the company has been performing rather well. Earnings have increased at a nice clip over the past decade, and profit margins are substantially higher. Add in a healthy 4% yield and the shares look quite attractive.

Ultimately, that's what makes a stock appealing - profits and dividends, not the mere fact that a stock's price happens to be rising at the moment.

Disclosure: The Div Guy owns share of GE at the time of this post.

Robert Powell of MarketWatch has a very good story on international stock investing. He takes a look at 10 international stocks that trade on U.S. exchanges and hold promise for long time growth. Ten international stock that will set you up for the long haul.

"If you look at who really gets rich in the world it is usually people who purchase the right businesses and hold those businesses for many years," David Winters, manager of the three-year old Wintergreen Fund, told the MorningstarAdvisor newsletter in June.

At $14 trillion, the U.S. market represented about 44% of the world's $32 trillion in stock-market value at the end of August, according to Russell Indexes. But that means the rest of the world's markets combined eclipse the U.S. stock market. And Winters -- whose fund does own stock in Buffett's Berkshire Hathaway Inc. (BRKA) -- is of the mind that the best investment opportunities are outside the U.S.

Indeed, after several years of standout performance, international stocks have taken a much tougher drubbing this year so far than their U.S. counterparts. The average world-stock mutual fund lost almost 19% through August, versus a 10% decline for diversified U.S. funds, according to fund researcher Lipper Inc. The downturn abroad, particularly in Europe, may have been one reason that Buffett -- the quintessential bargain buyer -- took a European "shopping tour" in May.

In talking with money managers and other experts, here are 10 international stocks, ranked by market value, that trade on U.S. exchanges and hold promise for those with a long time horizon looking to invest in different parts of the world, in different industries:

1. Nestle
John Dessauer, editor of Investor's World for more than three decades, knows a thing or two about long-term holdings. His top pick is Nestle SA (NSRGY) , the world's largest food and drink company. Famous for its Nescafe instant coffee, Purina cat food, and KitKat candy bars, the company has about $100 billion in sales. "This is one stock that you can buy now and hold till you retire or keep forever," he said. Long a Dessauer favorite, it's even more so now, he said. The company recently discovered, quite by accident he says, a way to process food that would be permissible for Muslims, which number 1.4 billion worldwide. Members of the world's second largest religion have strict dietary laws that prohibit the use of lard and gelatin, for instance. "This could be a huge business for the company," he said.

2. Total
Brad Durham, managing director of Emerging Portfolio Fund Research, said one of his favorite international stocks to hold for the long-term is France-based oil giant Total SA (TOT). Standard & Poor's has a "buy" recommendation on Total. According to S&P, Total is favored for its low-cost exploration and production capabilities, and for restructuring of its refining and distribution business. Total also recently entered a joint-venture with Russia's Gazprom to develop a major Russian gas field, and is investing substantially in new petrochemical plants in Qatar and South Korea.

3. GlaxoSmithKline
Dessauer considers GlaxoSmithKline Plc (GSK) , which recently appointed Andrew Witty as its chief executive, on the verge of a major turnaround. Witty, who maintains an office by the employee cafeteria, has set a new direction for the firm, focusing less on blockbuster drugs and more on developing an array of products that are "collectively more reliable than blockbusters," Dessauer said. Equally important, he says Glaxo, which sells its products in 140 countries already, should benefit from selling its vaccines in emerging markets.

4. Sanofi-Aventis
Justin Fuller, manager of Morningstar's Ultimate Stock-Picker's Portfolio, recently examined which stocks held by Berkshire Hathaway are also highly rated by the Chicago-based investment research firm. That parsing turned up 13 stocks, the only international representative being Sanofi-Aventis (SNY) , which develops and markets pharmaceuticals for cancer, heart disease, central nervous system disorders and diabetes and makes vaccines. The company derives two-thirds of its revenues from outside the U.S. and its biggest revenue generator is Lovenox, which represents about 9% of total sales. According to Morningstar analyst Damien Conover, Sanofi-Aventis has a strong lineup of new drugs in the pipeline that should offset weakness from its drugs that are losing patents. Most recently, the company reported that sales grew 5% year over year, led by growth in long-acting insulin Lantus. The company is in the midst of a restructuring initiative and Morningstar has put a $50-a-share fair-market value on the stock.

5. Nokia
Dessauer and S&P both give a "buy" rating to Nokia Corp. (NOK) the world's largest maker of mobile phones. According to Dessauer, the Finland-based company is a "no brainer" investment. He says the company's share of the mobile phone market in countries such as China and India is growing rapidly, plus it's paying around a 3.5% dividend at the moment. Nokia does face headwinds from slow growth for handset telephone units and competition for high-end devices, S&P said. But S&P said in a mid-July research report that "strong market share, a diverse portfolio and broad geographical exposure represent key strengths."

6. Anglo American
S&P also has a "strong buy" recommendation on London-based mining giant Anglo American Plc (AAUK) . Anglo American is poised to benefit from consolidation in the mining industry and rising global demand for industrial metals, according to a recent S&P research report. "Economic growth in China and India will raise demand for durable goods and the metals used to manufacture them," S&P said. Anglo American intends to increase investment in iron ore, nickel, copper and metallurgical coal, which should boost sales and profits, S&P noted. The research firm in mid-August set a $41-a-share price target for the stock over the next 12 months, which hinges on the prices of coal and copper gaining in 2009. DeBeers, the world's largest producers of rough diamonds, is 45% owned by Anglo American. That company stands to benefit as China's middle class grows, Winters was recently quoted as saying.

7. Potash Corp. of Saskatchewan
Potash Corp. (POT) , which is the world's largest producer of the fertilizer potash, has been on a roller coaster ride of late what with the recent and dramatic rise and fall in crop prices. But Potash, which controls 22% of the world's global capacity, stands to benefit handsomely over the long term as current trends play out.Population growth in rapidly developing economies such as Asia, India and South America combined with the growing use of agricultural products for energy suggest increased demand for potash. "Proper fertilizer use will be critical to produce enough food for a growing global population from a finite land base," Morningstar wrote in a recent report.

8. Teva Pharmaceutical Industries
Another S&P "strong buy" recommendation is Teva Pharmaceutical Industries Ltd. (TEVA) , which manufactures generic drugs, an area of health care that S&P expects will boom as countries attempt to hold the line on drug spending. Teva has the largest generic lineup of its peers, with 149 generic drug applications awaiting U.S. Food and Drug Administration approval as of late July. S&P analysts also praise Teva's "strengthening presence" in the U.S. and Eastern and Central Europe.

9. Philips Electronics
Another Dessauer favorite is riding the green wave. Based in Amsterdam, Philips Electronics N.V. (PHG) is best known for selling electronics such as coffee machines and magnetic-resonance imaging systems.Now, however, Dessauer says the company has designs on becoming the world's leading maker of energy efficient light bulbs. According to a Morningstar report, with its recent acquisition of The Genlyte Group, a provider of light-emitting diodes (LED), Philips became the biggest lighting firm in the United States. The firm aims to use Genlyte's relationship with U.S.-based distributors and retailers to increase sales of LED lighting, which use far less power than incandescent lights and last as long as 10 years, Morningstar says.

10. Jardine Matheson Holdings
Jardine Matheson Holdings (JMHLY) , which is based in Hong Kong, is among Wintergreen Fund's largest holdings. Founded as a trading company in China in 1832, Jardine is a Fortune Global 500 company focused principally on Asia. Its businesses comprise a combination of cash-generating activities and long-term property assets, including Jardine Pacific, Jardine Motors Group, Jardine Lloyd Thompson, Mandarin Oriental, Jardine Cycle & Carriage and Astra International. "Jardine is a good way to participate in the demographics boom of China and Asia," notes a report on stock-research Web site GuruFocus.com. "As the U.S., European, and Japanese work force ages, the Chinese work force is going to be in its peak producing years... Jardine offers a way to invest in China by a company that has been doing business there for about 170, run by British management."

Disclosure: The Div Guy owns shares of GSK at the time of this post.

I realize some investors out there may be interested in investing in dividend stocks but may not be ready to purchase their own stocks and manage their own portfolio. Additionally some investors may not have the time or want to select their own stocks but want the benefits of investing in dividend stocks. Exchange Traded Funds (ETF's) are a great way way for investors to participate in stocks but not have the burden of selecting individual stocks.

First a definition of ETF's. An ETF is a group of stocks similar to a mutual fund 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.

ETF’s provide more flexibility since you can trade them on the stock market any time during the day. Low costs are another advantage of ETFs because their expenses are typically lower than mutual funds including index funds.

To get the maximum cost saving with ETF, look at using a low cost or no cost broker such as Zecco Trading. Even with low fees, brokerage commissions can seriously erode ETF costs when investing small sums of money.

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 lowered 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.
Barclays iShares
Vanguard
Powershares
WisdomTree

Disclosure: The Div Guy does not own any ETFs at the time of this post but I do own Shares of Barclays (BCS) which is the creator of iShares ETFs.

My Annualized Dividend Income increased to $9,909 from $9,523 for the month of August. This means my dividend stocks will pay $9,909 in dividends over the next 12 months. I am closing in on my updated 2008 goal of $10,200 in yearly dividend income. I made additional purchases to our dividend stocks this month and I also used a 0% credit card offer for additional purchases. The updated income amount includes dividend increases paid in August by Kinder Morgan Energy Partners (KMP), Duke Energy (DUK) and Spectra Energy (SE).

Most of my stocks are held in my Zecco Trading account and the rest are DRIPs. The dividends from my stocks are reinvested but I am keeping track of the amount of income I could receive once I retire.

As of the end of August our Net Worth increased to $776,899 from $776,405 for the month which is a .06% increase.

The breakout is as follows:
ASSETS
Retirement Accounts $371,669
Taxable Accounts $121,018
Cash $43,659
Home $205,000
Cars $14,500
Personal Property $3,000
Kids 529 Accounts $25,053


DEBT
Credit Card $7,000

Here is the summary for the month:

Our Net Worth increased ever so slightly for the month of August but it was an increase. I once again made additional purchases to our dividend stocks this month but I also used a 0% credit card offer for additional purchases. You can click on my Net Worth graph on the right to see the changes in each category from the previous month. I continued funding our Roth IRA's this month. I am keeping a high level of cash that I will use to fully fund our Roth IRAs for 2008 and 2009. I also have a savings account to fund the replacement of my wife's car in a couple of years. This is the first time in a while that I have a credit card debt but I will pay the card off in 12 months with no interest.

I will post my Dividend Income Update on Wednesday.

I have always been interested in saving money as a young kid and I had a savings account growing up. After I graduated from college, I moved to Boston, MA and started working in the mutual fund industry where I combined my savings skills with mutual fund investing. I remember my first mutual fund purchase was the Scudder Global Fund in the late eighties. I later ended up working for Scudder funds and started to form my early investment plan which was to save as much for retirement in my 401(k) as I could afford.

My wife and I married in 1994 with a couple of thousands dollars in cash and about $26K in my 401(k) plan. This is how we started out and we worked together to set some goals for our investing. We started tracking our net worth for the first time in June 1999 and we had a net worth of $264,751. I then started tracking our net worth twice a year at the end of June and December using an Excel spreadsheet.

These days I enter our net worth each month on NetworthIQ. This is a great site to see how you compare to your peers and you can tell as little or as much about yourself as you like. You can compare your net worth to others by income, age, state and many others factors. Tracking ones net worth each month might be a little too much but it is fun to see how it has changed from the previous month. You can take a look at our net worth graph to see how we are doing.

I now have a more formal plan to determine how much we will need at retirement which I update at the end of each year. I currently use the Retirement Planner on Bloomberg to give me an idea of what I need to save each year and how much I will need to have at retirement age. I am on track to retire at age 61 with $2M in retirement assets including mutual funds and stocks. I assume a rate of return of 8% for before and during retirement as well contributing 20% of our income each year and 3% salary increases.

One of my additional goals is to have $40,000 in income from my dividend stocks in my taxable account at retirement. I started building a dividend portfolio using different investing styles several years ago to create extra income. I now have a solid portfolio of dividend stocks that provides over $9,900 a year in income which I will grown to provide extra income in retirement.

One of my favorite expressions about investing is that retirement investing is an experiment that we each will take on and we will only know the final results when we reach retirement. So let's hope this dividend investment experiment works out well. And remember, it's hard to achieve your goals without a solid plan of action in place.