I am honored to host my second edition of the Festival of Stocks. Special thanks to George at Fat Pitch Financials for giving me this opportunity. Here are this week’s submissions that I selected for this edition. Take a look and enjoy!Once you are done reading through don’t forget to Subscribe to my Feed .
The Dividend Guy presents Dividend Stock Wednesday: The Home Depot (HD-NYSE) posted at The Dividend Guy Blog.
Michael presents VIX and Put/Call Ratio - Sentiment Indicators posted at Online Stock Trading Stock Trading Online.
Jorge H. presents Have We Hit the Bottom? posted at My Adventures into The Street.
Dorian Wales presents How to Avoid Crippling Your Retirement Funds posted at The Personal Financier.
Frank Vertin presents Buy an S&P 500 Index Fund with Low Costs posted at NO LOAD INDEX FUND.
Middle Class Millionaire presents Facebook Worth 15 Billion? posted at Middle Class Millionaire.
Dividends4Life presents Dividend ETFs Feel The Pain posted at Dividends4Life.
Barb A. Ryan presents Your Family Financial Planning posted at Pasadena Financial Planner.
Richard M. Rothschild presents The Best Mutual Funds Have NO Sales Loads and NO 12b-1 Fees posted at Best No Load Funds.
Enoch Ko presents Understanding the subprime financial crisis: Lessons on value investing and personal finance posted at Enoch Ko's Blog.
Praveen presents Bought Visa (V) This Morning, Part 2 posted at My Simple Trading System.
American Dividend Investor presents DRIPS posted at American Dividend Investor.
Mike Price presents Overstock's Turn posted at Value Investing, and a Few Cigar Butts.
debbie presents Not Enough Money to Invest? Join or Start an Investment Club » American Consumer News posted at American Consumer News.
FIRE Finance presents Three Good Habits of Successful Retirees posted at http://firefinance.blogspot.com/ posted at Bankaholic.
Ray presents List Of the Best Online Discount Brokers posted at Money Blue Book.
Heather Johnson presents 10 Satisfying Stock Stories for When You’re Feeling Unsatisfied with your Stocks Stock Market Beat posted at Stock Market Beat.
Moneywise presents Largest mutual funds and their expenses posted at The Real Returns.
nickel presents Investment Insights: Timing the Stock Market posted at fivecentnickel.com.
That concludes this edition. Submit your blog article to the next edition of festival of stocks using our carnival submission form. Past posts and future hosts can be found on our Festival of Stocks Index Page.
Monday, March 31, 2008
Festival of Stocks #82
Saturday, March 29, 2008
The Bottom is in
After hitting a low at $126.07 on March 17, SPY has bounced off strongly off those lows. Coincidentally the March lows for the ETF were pretty close to the January 22nd lows at $126. This created a chart formation which most technical analysts out there refer to as a double bottom, which is bullish for stocks.
The second catalyst that made me a big believer that the bottom is in was an article, published in the WSJ, called "Stocks Tarnished By 'Lost Decade'".
Initially, after reading the title, I decided that US stocks have been a terrible performer over the past 10 years. I wished I had bought emerging market funds or commodities ten years ago. But then I remembered that such major headlines always come at major market bottoms. Typically when headlines scream bull or bear a good contrarian strategy is to run in the opposite way.
For example, in August 1979 a famous headline “The Death of Equities” marked a bottom in the US stock market. The S&P 500 rallied over 40% until 1983, when another headline “Rebirth of equities” appeared.
Thus, as long as the SPY does not close below $126, I would be bullish on the stock market. In addition to that, I believe that US stocks would outperform most if not all of the asset classes which it has been outperformed by over the past decade. This includes international stocks, emerging markets and even commodities.
For the past 137 years, US stocks’ annual returns have been negative only 37 times. If history is any guide, I would expect stocks to keep rising 73% of the time. In addition, the average annual gain after a losing year was 11.73% versus a 9.98% return after a winning year.
Related Articles
- SPY at a crossroads
- Diversification Matters
- Dividend Stocks Watchlist
- Dollar Cost Averaging
Friday, March 28, 2008
Clorox (CLX) Dividend Analysis
The Clorox Company manufactures and markets a range of consumer products.
It is a dividend aristocrat as well as a component of the S&P 500 index. Over the past 10 years this dividend growth stock has delivered an annual average total return of 7.20 % to its shareholders. At the same time company has managed to deliver an impressive 13.40% average annual increase in its EPS.
Thursday, March 27, 2008
Diversification Matters
Last week Bear Stearns was bought by JP Morgan Chase for about $10/share. The stock has traded as high as 170 last year. Investors lost a ton of money in this stock. Employees were hard hit as well, as they own a combines % of the company through ESOP.
A review from over two million investors portfolios in a major US online brokerage, found that nearly one-third held more than 20% of their assets in just one stock. Imagine if they are invested in the next WorldCom or Enron?
There are four types of portfolio diversification in order to decrease overall risk, without sacrificing the potential rewards.
The first one is to diversify across asset classes. Each individual needs to find the appropriate asset mix of stocks, bonds, cash, real-estate and other asset classes in order to achieve the best rewards for the risk taken. During the 2000-2002 bear market, investors in the S&P 500 index fund lost 9% in 2000, in 12% 2001 and 22% in 2002. Adding a simple 20% allocation of bonds to the portfolio would have decreased the losses to 3.3%, 8.75% and 14.40% respectively.
The second strategy is to diversify within asset classes. For example stocks are broken down into:
Large Cap Growth
Large Cap Value
Mid-Cap Growth
Mid-Cap Value
Small-Cap Growth
Small-Cap Value
International Emerging Markets
International Developed Markets
There are several types of bond investments as well. These include:
Corporate Bonds
Municipal Bonds
International Bonds
Mortgage-Backed Securities
Zero-Coupon Bonds
High-Yield Bonds
T-Bonds
Short-Term Bonds
An investor who had all of their assets in Nasdaq Stocks at the top of the dot-com bubble would have been much better off if they had invested in other asset classes. An easy way to diversify within asset classes is by buying low-cost Mutual Funds or Exchange-Traded-Funds.
Diversifying across Time is a third strategy to minimize investment risk. Although Dollar-Cost Averaging does reduce investment returns in a given short-term period (DCA) ,it reduces the risk of investing all of your funds in an underperforming asset class at the top. This increases the probability that investors would actually stick to their asset class allocation even in uncertain markets.
Diversifying across strategies is fourth way to reduce risk
Although most investors would be better off with a proper stock/bond index fund allocation adding an active strategy could reduce risk in tough times. An example of that could be investing in dividend stocks like the dividend aristocrats for example. Other types of strategies include ( but are not limited to ) selling covered calls, investing in Dogs of the Dow.
Related Articles
- Dividend Stocks Watchlist
- Dollar Cost Averaging
- Long-Term returns of the S&P High Yield Dividend Aristocrats
- The pros and cons of selling covered calls on dividend paying stocks
Wednesday, March 26, 2008
FDO Dividend Analysis
Family Dollar Stores, Inc. operates a chain of neighborhood retail discount stores in the United States. It offers general merchandise in four categories: consumables, home products, apparel and accessories, and seasonal and electronics.
Family Dollar Stores is a dividend aristocrat as well as a component of the S&P 500 index. Over the past 10 years this dividend growth stock has delivered an annual average total return of 4.50 % to its shareholders. After peaking at 44 in late 2003 though, the stock has gone nowhere for four years.
Tuesday, March 25, 2008
Carnival of Money Stories #52
Welcome to the 52nd edition of the Carnival of Money Stories! This carnival is designed to share personal financial and money related stories - an experience you had, what you learned, how you grew, or anything else that tells your story.
This week there are over 20 excellent entries. Each of the entries this week is very good, and I recommend taking the time to read each of them.
General
NtJS presents How Are You Going To Pay For This Baby, Ma'am? posted at not the jet set blog.
Becky presents We Got Rid of Our Escrow Account! posted at Family and Finances.
Moneyshaker presents US Economy Going South? posted at Adventures in Money Making, saying “A depressing look at the hardships that American families are now facing. But there's no recession, right!”
paidtwice presents It’s Only Five Cents More posted at I've Paid For This Twice Already....
Silicon Valley Blogger presents his personal story on how he has saved money in Slashing Our Budget By 25%: Our Latest Frugal Moves posted at The Digerati Life.
David presents Despite Lower Rate, Why I Love Saving With ING posted at Money Under 30.
Faron Benoit presents My Dad – Frugal, Generous and my Hero posted at Financial Learn.
BeThisWay presents Turning Phone Service Lemons Into Satisfying Lemonade posted at Are You Going To Be This Way The Rest of The Time I Know You?.
KCLau presents his article on acquiring financial security and how to increase or protect finances, Financial Security: How you feel it? posted at KCLau's Money Tips.
Business
SJ Yee presents Time Management for Lazy People posted at Personal Development for the Book Smart, saying,” Time is Money. Here’s a detailed summary of the key concepts in the time management lecture by Randy Pausch… You can skim through it to get the points you need…”
Steve Oliphant presents Discover how to accept all major credit cards on your website with these simple steps. posted at Steve Oliphant's Musings.
Charlotte Babb presents I?m taking the 2% solution to Internet Success! posted at Charlotte's Babblings.
Charles H. Green presents Great Moments in Self-Regulation: Financial Planners and CFP Board posted at Trust Matters, saying “When my financial planner gipped me I went to the professional society. Even after I won a court case they wouldn't tell me if they'd done anything about it.”
Credit
Ray presents How To Avoid A 0% Balance Transfer Mistake posted at Money Blue Book.
Net Worth
MoneyNing presents Simplest Way to Wealth posted at Personal Finance Blog by Money Ning.
Investing
Dividend Growth Investor presents The case for dividend investing in retirement posted at Create Rising Passive Income From Dividend Paying Stocks.
Passive Income Investor presents Investing in Lazard World Dividend & Income Fund? posted at LIVING OFF DIVIDENDS, saying “A look at an ETF that's yielding 25% in dividends”.
Ryan Taylor presents My Biggest Financial Mistake posted at Millionaire Money Habits saying “How I broke some of my own money rules, and did an incredibly stupid thing and lost a lot of money taking a big risk.”
Other
Bryce presents Kid's Allowance posted at Save and Conquer, saying that giving his son an allowance is the first step to teaching him money management.
Madison presents Our Dumbest Purchase Ever posted at My Dollar Plan.
Finance Girl presents Confessions of a Former Bank Teller posted at Finance Gets Personal saying “here's a post about banking, from the perspective of the bank teller.”
Betsy Teutsch presents What Would You Do? Common Sense vs. Right posted at Money Changes Things, saying “When my credit card failed to charge me for a hotel room paid for with their bonus points, was it right or wrong not to point out their computer system's error? What would you do? “
Helen Anderson presents 5 Reasons Why the Federal Reserve is a Failure! at Best CD (Certificate of Deposit) Rates, Money Market Rates, High Interest Accounts posted at Bankaholic.
FMF presents Help a Reader: Separated Mom Needs Advice posted at Free Money Finance saying “The story of a separated mom -- and lots of advice for her.”
PT presents Get Rid of Your Escrow Account like Becky from FamilyandFinances.com posted at Prime Time Money.
The Happy Rock presents MBA Complete - Was It Worth It? posted at The Happy Rock.
Thanks! I hope everyone enjoyed this edition of the Carnival of Money Stories! Thanks to everyone who participated in this week’s edition. If you would like to participate in the next edition, you can submit your blog article the carnival submission form. Past posts and future hosts can be found on the blog carnival index page
Monday, March 24, 2008
Wal-Mart Dividend Analysis
Wal-Mart Stores, Inc. operates retail stores in various formats worldwide. It operates through three segments: Wal-Mart Stores, Sam's Club, and International.
The company is a dividend aristocrat as well as a major component of the S&P 500 and Dow Jones Industrials indexes. Over the past 10 years this dividend growth stock has delivered an annual average total return of 10.50 % to its shareholders. The majority of the gains came in the late 1990’s. After peaking at 70.25 in late 1999 though, the stock has gone nowhere for 8 years.
At the same time company has managed to deliver an impressive 16% average annual increase in its EPS. 
Disclosure: I own shares of WMT
Friday, March 21, 2008
Dividend Growth Stocks Watchlist
The two lists that I am concentrating right now are the S&P 500 Dividend Aristocrats and the S&P High Yield Dividend Aristocrats Index.
I created custom watch lists in Yahoo! Finance in order to summarize the two groups of dividend achievers by a variety of criteria such as Symbol, Yield, P/E , Div/Shr, Last Price,EPS (ttm) ,PEG Ratio ,Dividend Payout, 5 year dividend growth rate.
What I did was first exclude any stocks which had a dividend payout ratio of more than 50%. That gives me some reasonable assurance that the company is less likely to cut its dividends. I also look at P/E ratios, since I do not want to overpay for a company. Anything with a P/E of over 20 is out of my watchlist.
I also look for the PEG ratio but just to find stocks which might be expensive in terms of their growth prospects.
A third thing that I look for is a dividend yield of at least 2%, which is a little bit over than the current yield of 2.00% that SPY is rewarding its shareholders.
The last but not least criteria that I screen for is the 5 dividend growth ratio. I am looking for an average annual dividend growth of at least 5% over the past 5 years. The reason why I selected dividend growth in the end is because I want to decrease to a minimum the rush to buy a stock that simply increased its dividend for whatever reason, whose fundamentals cannot support any significant further increases in the dividend payments.
Based off of this screen, here is my stock lists that I follow :
I would continue screening for potential stocks to add to my buy watchlist on a monthly basis. I might add or remove stocks from my watchlist depending on how undervalued/overvalued I perceive them to be. If I stock in which I have a position drops off my buy watchlist, I would keep holding it, but I won’t be adding to that position until the technical’s and the fundamentals match my criteria.
Thursday, March 20, 2008
3M dividend analysis
3M Company, together with its subsidiaries, operates as a diversified technology company worldwide. It operates in six segments: Industrial and Transportation; Health Care; Display and Graphics; Consumer and Office; Safety, Security, and Protection Services; and Electro and Communications.
It is a dividend aristocrat as well as a major component of the S&P 500 and Dow Jones Industrials indexes. Over the past 10 years this dividend growth stock has delivered an annual average total return of 11.20% to its shareholders. The company has managed to deliver an impressive 17.90% average annual increase in its EPS through organic growth and share buybacks. Management has consistently bought back 1.2% of outstanding shares each year for the past 10 years, spending a little over $9.9 billion in the process.
Wednesday, March 19, 2008
The case for dividend investing in retirement
At the start of the new millennium, about 12% of the U.S. population was over 65 years old. According to the U.S. Census Bureau, the baby boom segment of the population is expected to rise over the next two decades and approach 42% by 2030.
Investors who are approaching retirement are typically sold a wide array of fixed income investments like bonds, bond funds, annuities and many other fixed income instruments. Those solutions do provide dependable income but with one significant drawback though– they don’t account for the eroding value of inflation. Even a modest 3% annual inflation rate corresponds to a 24% decline in purchasing power after 9 years.
As the first wave of baby boomers reaches the age of retirement in 2006, they are likely to shift their investment focus to unearned, investment income. While this will not happen overnight, the demographic trends are notable and could drive a major demand shift towards dividend-paying stocks – and consequently, the potential for price appreciation. Dividends have historically accounted to 40% of the total stock returns over the past 80 years.
If a retiree holds a diversified portfolio of stocks which have the ability to grow their dividend payments over time, they would be well prepared for retirement. They should be focusing on stocks with high yields and ability to grow dividends; stocks with average yields but with above average dividend growth and some domestic and foreign index funds for diversification.
There are several dividend ETF’s out there. The ones, geared towards dividend income growth include the PFM PHJ PEY and SDY. With yields of around 3% - 4% and the potential for dividend growth and capital appreciation, retirees could stop worrying about finances and start worrying on the lifestyle changes that retirement brings to them.
Here’s a list of potential ETF’s to consider ( and yields)
PEY 5.4%
PHJ 2.19%
PFM 2.11%
SDY 3.77%
XLU 2.91%
IYR 4.58%
Tuesday, March 18, 2008
Five Year Dividend Growth Rates for the High-Yield Dividend Aristocrats
I wanted to check how the dividend growth stocks in the S&P High Yield Dividend Aristocrats List compared to one another in terms of their five year dividend growth rates. The data is taken from Yahoo finance, except for the dividend growth rates, which were taken from dividendinvestor.com website.
Monday, March 17, 2008
Procter & Gamble Dividend Analysis
The Procter & Gamble Company (P&G), together with its subsidiaries, provides branded consumer goods products. The company operates through three global business units (GBU): Beauty, Health and Well-Being, and Household Care.
It is a dividend aristocrat as well as a major component of the S&P 500 and Dow Jones Industrials indexes. Over the past 10 years this dividend growth stock has delivered an annual average total return of 9.30 % to its shareholders. The company has managed to deliver an impressive 11.50% average annual increase in its EPS.
Disclosure: I own shares of PG
Saturday, March 15, 2008
Ten Things to Know About Dividends:
1. In general, a company can choose to initiate, suspend, raise, or lower its dividend at any time. Dividends are not guaranteed.
2. However, as cash payments, dividends are non-refundable. Unrealized capital gains can disappear if a stock falls, but the minute a dividend is deposited into your brokerage account, it’s yours to keep.
3. Dividends are one of only two ways you can make money from stocks without losing ownership.
4. Dividends are usually paid in quarterly installments.
5. Some companies also issue “special” one-time dividends. For example, if a company sells off a portion of its business, it might choose to distribute the proceeds to investors.
6. A stock’s indicated dividend (also known as the “current dividend”) is the amount an investor should receive over the next year. For example, if a stock currently pays a quarterly dividend of $0.25 a share, its indicated dividend is $1 a share. Special dividends are not included in the indicated dividend.
7. Investors will often talk about a stock’s yield. The concept is similar to bond yields – i.e. yield is equal to the annual regular dividend payment divided by the stock’s current price. A yield is always expressed as a percentage. For example, a $10 stock that pays an annual dividend of $1 a share has a 10% yield.
8. Unlike earnings or sales, a dividend is not an abstract accounting construct. A company only has two choices: pay the dividend or don’t. This is an important fact: If a company doesn’t have the money, it cannot cover its dividend.
9. Historically, stocks that pay dividends are less volatile and have weathered bad markets better than their peers that don’t pay dividends. For example, in 2002 – the worst year for stocks in decades – the S&P 500 fell 23%. Dividend payers in the S&P 500 only lost 11% while nonpayers fell 30%!
10. As part of the Jobs and Growth Tax Relief Reconciliation Act of 2003, the tax rate on most stock dividend payments was lowered. For most people, the tax rate on qualified dividends is now 15%. An extension, signed in May 2006, guarantees this rate through 2010.
Friday, March 14, 2008
Sherwin-Williams Company Dividend Analysis
The Sherwin-Williams Company engages in the manufacture, distribution, and sale of paints, coatings, and related products to professional, industrial, commercial, and retail customers primarily in North and South America. It operates in three segments: Paint Stores, Consumer, and Global.
Wednesday, March 12, 2008
Dividend Increases in February
Several Dividend Aristocrats have increased their dividends in February. The companies are:
From this list, the only company that fits my fundamental criteria is SHW, which has a one year dividend growth rate of 11.11%.
Expected dividend increases in March
Based off historical information from this spreadsheet, I would expect that the following companies increase their dividend in March: APD, CB, SNV, and WMT. These dividend aristocrats have last increased their dividend payments in March 2007. Upon a closer examination of the dividend growth stock behavior of the 60 dividend aristocrats, it seems that every month there is at least one company that raises its dividend. It’s nice to get a pay raise every month. The only dividend growth stock that has consistently increased its dividend twice in one year since 2003 is STT- State Street.
Tuesday, March 11, 2008
Anheuser-Busch Dividend Analysis
Anheuser-Busch Companies, Inc., through its subsidiaries, engages in the production and distribution of beer. The company operates in four segments: Domestic Beer, International Beer, Packaging, and Entertainment.
It is a dividend aristocrat as well as a major component of the S&P 500 index. Over the past 10 years this dividend growth stock has delivered an annual average total return of 12.40% to its shareholders. The company has managed to deliver an impressive 9.60% average annual increase in its EPS through organic growth and share buybacks. Management has consistently bought back 3% of outstanding shares each year for the past 10 years, spending a little over $12.5 billion in the process. Without the buybacks the growth in EPS would have been 6.60% annually.
Monday, March 10, 2008
SPY at a crossroads
The stock market has been in a downtrend ever since we hit an all-time-high of $157.52 back on October 11, 2007. This downtrend is characterized by consecutive lower highs and lower lows in the stock market index. Once SPY broke down below their December lows of $139.92, the price has been unable to exceed that level for the majority of the past two months. The rally off January lows for the SPY was capped right at the December lows. Currently the ETF is rapidly approaching its January lows at $126. A break below that level will bring more downside action for SPY and will signal an official bear market. A break below January lows could easily cause a drop to at least $116 - $118 in the SPY. If we do not experience a closing price of below $126 though, it is likely that we would have a double bottom formation from which the market can start building the next bull market.
So what should an investor do if we break below $126? A winning strategy since July 2007 has been to stay in cash rather than be invested in equities. Investors could spread their purchases rather than invest all at once using dollar cost averaging. This strategy is most effective during markets like the one we are in nowadays. Investors could also temporarily increase their fixed income allocation in order to be fully prepared for the decline in prices. Once we get a capitulation from the bulls, most stocks will be selling at super attractive bargain prices and yields. Furthermore, once prices start forming higher highs and higher lows this will be a good time to be fully invested in US equities again. If you do not have time to watch the market every day though, there are many other ways for you to react to event in the current market.
A different strategy could be to simply ignore all the short-term market fluctuations and focus on the big picture. By spreading your risk among many industries and not investing all your money at once, you will be better off than the average Joe investor in 2008. Furthermore by investing in dividend growth stocks you will be paid to actually own the shares- and your dividend income will likely increase at the same time. When prices fluctuate wildly the only stable thing for investors is their monthly/quarterly dividend check. Buying stocks when nobody likes equities is one of the best contrarian strategies out there. So go out there, do your homework and stay invested. Good things will happen to you.
Friday, March 7, 2008
Five Year Dividend Growth Rates for Dividend Aristocrats
I wanted to check how the dividend growth stocks in the S&P Dividend Aristocrats List compared to one another in terms of their five year dividend growth rates. The data is taken from Yahoo finance, except for the dividend growth rates, which were taken from dividendinvestor.
You can access the spreadsheet from here.
Relevant Articles:
Thursday, March 6, 2008
Dividend Analysis of M&T Bank Corporation (MTB)
M&T Bank Corporation operates as the holding company for M&T Bank and M&T Bank, National Association, which provide commercial and retail banking services to individuals, corporations and other businesses, and institutions.
It is a dividend aristocrat as well as a component of the S&P 500 index. Over the past 10 years this dividend growth stock has delivered an average total return of 10.10% annually to its shareholders. The stock price has fallen in 2007 along with other financial issues. If the fundamental financial position does not deteriorate significantly, the company should be able to weather the crisis.
The company has managed to deliver an impressive 10.56% average annual increase in its EPS.
The ROE has been in a 10%-15% range for our study period, which is also an impressive number.
Annual dividend payments have increased over the past 10 years by an average of 24.21% annually, which is above the growth in EPS. A 24% growth in dividends translates into the dividend payment doubling every three years. If we look at historical data, going as far back as 1991, MTB has actually managed to double its dividend payments every four years on average .
If we invested $100,000 in MTB on December 31, 1997 we would have bought 2151 shares. Your quarterly dividend income would have been $172.08 in February 1998. If you kept reinvesting the dividends though instead of spending them, your quarterly dividend income would have risen to $1732.50 by December 2007 and you would be expecting to collect $1747.20 in dividend income in February 2008. For a period of 10 years, your quarterly dividend income has increased by an impressive 775 %. If you reinvested it though, your quarterly dividend income would have increased by an even more impressive 915%.
The dividend payout has been in a steady uptrend over the past 10 years, rising from less than 15% in 1998 to over 43% in 2007. Based off this, I believe that future dividend growth might be lower than the 24% achieved in prior years as the payout crosses 50% and that it would be limited to the ability of the company to increase its EPS.
I believe that the company is a bargain at current levels with its low P/E at 13, attractive dividend yield of 3.50% and payout of less than 50%.
Related Articles:
Wednesday, March 5, 2008
Buying a house for $10? Where’s the catch?
I was watching CNBC over the weekend and I saw a paid advertisement about investing in foreclosed properties, where investors have supposedly bought houses for less than $1000. It did grab my attention, until I turned off the TV and thought that this is too good to be true.
I did some searching on the web and found an interesting article on people who are supposedly cashing in on foreclosures on CNN’s website. What was particularly interesting to me though, was a calculation about a couple who bought a house in 1998 for just $10. Currently the house was appraised at $250,000. This sounds like a big return on investment, doesn’t it?
Actually there’s always a catch with such “extraordinary deals”. When Mary Krawiec and Mark Peabody scooped up a nine-unit Victorian in Troy, N.Y, they had to do 9 renovations. At the time of the publication they had renovated 4 of the unit and had 5 more to go. They had to pay $2000 for a water bill including previous owner’s debts, replace the cracked rubber roof for $3,500, install new carpets, patch and paint wll and ceilings. They also had to renovate bathrooms; kitchens put new boilers and install special order thermal pane windows. The total expenses to data plus all the projected expenses totaled slightly over $71,000. CNN calculated the profit (rents minus taxes, insurance, utilities) at $52,000, which represented an annualized 27% return on investment, which definitely beats the stock market over the same period.
Forecloses have been on the rise across USA for over a year now. One might be able to scoop up properties at what might seem as bargain prices, but there’s always a catch – there is a very high possibility that the previous inhabitants of the house are behind on utilities, property taxes. In addition they might not leave the house in a perfect condition but in a very bad one because of their desperation. As usual, my advice is always to do your own due diligence before investing any money in anything.
Tuesday, March 4, 2008
Analysis of General Electric
General Electric Company (GE) operates as a technology, media, and financial services company worldwide.
It is a dividend aristocrat as well as a major component in Dow Jones Industrials and S&P 500 indexes. Over the past 10 years this dividend growth stock has delivered an average total return of 6.50% annually to its shareholders. The stock price has yet to recover from its 2000 highs though. The company has managed to deliver an impressive 10.24% average annual increase in its EPS.
The ROE has been in a decline over our study period, falling from a high of 24% to a low of 15% in 2006 before recovering below 20% in 2007.
Annual dividend payments have increased over the past 10 years by an average of 12.38% annually, which is slightly above the growth in EPS. A 12% growth in dividends translates into the dividend payment doubling every 6 years. If we look at historical data, going as far back as 1976, GE has actually managed to double its dividend payments every six years.
If we invested $100,000 in GE on December 31, 1997 we would have bought 4089 shares. Your first quarterly check would have yielded $408.90 in dividend income in March 1998. If you kept reinvesting the dividends though instead of spending them, your quarterly dividend income would have risen to $1561.47 by December 2007 and you would be expecting to collect $1574.49 in dividend income in February 2008. For a period of 10 years, your quarterly dividend income has increased by 210 %. If you reinvested it though, your quarterly dividend income would have increased by 281.87%.
Although the payout has been over 50% for the past several years, I like the company’s low P/E ratio at 15 and the above average dividend yield of 3.60%. 
Related Articles:
Monday, March 3, 2008
Dividend Growth Investor Hosts the 78th Festival of Stocks
I am honored to host my first edition of Festival of Stocks. Special thanks to George at Fat Pitch Financials for giving me this opportunity. Here are this week’s submissions that I selected for this edition. Take a look and enjoy!
Once you are done reading through don’t forget to Subscribe to my Feed .
George presents Consistent Cash Creators, Part 2: Linear vs. Exponential Growth posted at Fat Pitch Financials.
The Dividend Guy presents Dividend Stock Wednesday: Automatic Data Processing (ADP-NYSE) posted at The Dividend Guy Blog.
Dividends4Life presents My Dirty Little Secret posted at Dividends4Life. Having his house referred to as "his single largest asset" always grated him. It usually was because the people that made that statement usually were trying to sell him something he really didn't want.
Nate Tobik presents Do software companies have moats? posted at Stock Value Finder.
American Dividend Investor presents his analysis of Citigroup posted at American Dividend Investor.
Alex G presents Is Monsanto worth more than Home Depot? posted at Contrarian Value Investing.
John Crenshaw presents Pay Off Mortgage Tips posted at Truthful Lending Mortgage, Refinance Advice. There's been quite a bit of debate lately over whether or not you should pay off your mortgage or invest any extra money. This article explores the different mortgage payoff methods and will help you decide which, if any, are right for you.
Tyler presents How Not To Make Money In Stocks Guaranteed! posted at Dividend Money.
Steve Alexander presents Cherokee Inc - Store Brands To Go posted at MagicDiligence - Optimizing Joel Greenblatts Value Stock Investing Strategy, saying that Cherokee is an incredibly profitable small cap paying a 9% dividend yield.
Jose DeJesus MD presents Improve Investment and Financial Results - Simplify and Conquer posted at Physician Entrepreneur.
Dorian Wales presents Inflation Rearing Its Ugly Head posted at The Personal Financier.
FIRE Finance presents Tax FREE Money Market Mutual Funds! posted at FIRE Finance.
Thomas Ott presents EMCOR Group Inc. (EME) posted at Neural Market Trends .
Rocko presents Stock Market Downside Bets posted at Days Of A Neophyte Mathematician.
debbie presents Gold: A Bad Investment » American Consumer News posted at American Consumer News.
Vlada Kynsky presents StockWeb: Tech stocks technically posted at StockWeb.
Raymond presents The Best Online Discount Investment Brokers posted at Money Blue Book.
Super Saver presents 2/25/08 Stock Purchase Update - Trimming The Portfolio posted at My Wealth Builder.
Michael Bass presents The Economics of Gold Investments posted at Debt Prison, saying that the real question is whether a discretionary paper currency managed by Central Bankers perform can perform as well a gold standard.
Silicon Valley Blogger presents Beat The Average Investor's Returns With The Simplest Investment Portfolio posted at The Digerati Life.
KcLau presents Credit Cards: From Foes to Friends posted at KCLau's Money Tips. His article is discussing what a credit card is all about and how one can avoid credit card debts. It also touches on how one can actually make money from his credit cards.
That concludes this edition. Submit your blog article to the next edition of festival of stocks using our carnival submission form. Past posts and future hosts can be found on our Festival of Stocks Index Page.
