For over five decades, the underpinning of everything I have written has been a foundation of dividends. It has served me well, and if you have followed my advice, it has served you well too. Shortly after the dotcom bust, I wrote a segment titled, “Make Dividends Your Ally.” In it, I said: Regarding dividends, corporate directors have deluded themselves for many years in two ways. First, they have been too concerned about double taxation. Many investors don’t care about double taxation because they are (1) saving in tax-deferred accounts or (2) need the dividend income in retirement. … [Read more...]
Why Vanguard is too Big: Part II
Short-term noise is an investor’s worst enemy. As if it’s not hard enough to set an appropriate course, you have the constant barrage of information that can make you feel uneasy. Times are changing. That’s a fact. Take a look at the S&P 500 or Vanguard’s Index 500 or some other ETF. Today, seven stocks account for 26% of the index, while not one of them trades at less than 33x earnings. You have read here that the stock market has dropped by 33% three times already this century. Doesn’t it make sense that the chances of that happening again become more likely when only seven … [Read more...]
Are You Prepared? A Long, Cold Winter for Stocks is Nothing New
The stock market/Wall Street has made a full recovery from March, but it certainly doesn’t feel that way on Main Street. The 10-year treasury pays you peanuts and that’s about what local businesses have earned compared to pre-virus. Why will they stay in business, especially in cooler New England when outside dining is basically gone for the winter? Cities like Boston that depend on sports/entertainment/dining are not coming back this season. In times like these, you can be your own barber—you can handle a bad haircut—but will you be your own investment counselor … [Read more...]
You’re Telling Me about 8% and Pickleball
If you’re thinking about retirement or investing in some high yield real estate deal, don’t. Because as soon as you run a few scenarios grounded in reality and not “pie in the sky” dreams, you quickly realize losing income and principle are grave mistakes you don’t recover from, ever. In my conversations with investors, I hear it all. You wouldn’t believe some of the dividend yields I’m told are out there, ranging from eight to twenty percent. Good luck with that. When the government offers ten-year treasuries with an annual yield of 0.66%, it’s time for a reality check. “But,” you … [Read more...]
Don’t Follow Europe into Banning Bank Dividends
At The Financial Times, Greg Baer makes the case against banning bank dividends. He writes: Leaving aside its putative benefits, a blanket dividend ban imposed outside the current regulatory framework would come with a substantial cost. It would make it difficult for investors to value banks, and thereby make them decidedly less investable. Investors might logically prefer companies whose boards of directors retain authority to maximise value for shareholders, so long as all regulatory requirements are met. This would continue a worrisome trend. The market value of US banks, relative to … [Read more...]
An Alternative Approach to Investing when Markets are Down
In 2008, when investing seemed like an exercise in futility to many investors, I explained an alternative approach. This approach has worked for me now for over five decades. I learned this method from the teachings of Ben Graham, and have successfully employed it my entire career. Here’s what I wrote: Concentrate on Shares, Not Price... The stocks and funds you own pay you dividends based on the number of shares you own, not on the price of those shares. Unless you are fortunate enough to be Gandalf redux, it is likely that the price of most of the shares you own in 2008 is down hard, to … [Read more...]
This Keeps You in the Game in Times Like These
Coronavirus Infects Stock Market: Part XXXIV Your takeaway from my chart below, where stocks did nothing for a generation is, dividends—as in d-i-v-i-d-e-n-d-s. In the chart below, they’re not included. It’s a simple price chart. Remember, if you’re receiving dividends—like rent on an income property—you’re being paid to be in the market. Price isn’t much of a concern. You don’t live or die by the price of a property year to year. It’s the initial price you pay and rents that bring home the bacon. Relying on fluctuations in prices is speculating, not investing. Take a look at Young … [Read more...]
Dividend “Suspensions” Not Dividend Cuts Coming Fast
The liberal electronic and print media will shortly be howling – with cartoon-size bold headlines – about dividend cuts. We just began the second quarter of the year. Third-quarter earnings reports will, thanks to the lying Chinese, be breathtakingly ugly. And the media will be out in full force glomming on to disruption. Words like recession and depression will fill the media channels. Greedy and grasping stockbrokers will be out, in full-scale hyena mode, yelling, "sell, sell, sell." Serious, long-term, compound interest focused mavens will follow my lead by engaging in a quiet, … [Read more...]
A Bird in the Bush is Worth Two in the Hand
Yeah, you read that right. In today’s stock market where tall tales can ignite a speculative frenzy in individual names reminiscent of the dotcom bubble, companies that return cash to shareholders have been eschewed. Generating revenue and profits and paying dividends is apparently out of fashion in 2020. The chart below shows the YTD performance of three different groups in the Russell 1000 index (largest 1000 stocks). The first group is the highest 50% of dividend payers not counting companies that don’t pay dividends. The second group is the bottom 50% of dividend payers not counting … [Read more...]
Best of Young Research 2019: Dividend Investing
Below are five of Young Research’s most popular dividend investing posts of 2019. When Dividends Pay You to be Patient Young Research's Retirement Compounders® Investment Program Procter & Gamble (PG) Stock: The Only True Dividend King The Highest Yielding S&P 500 Stocks Dividends Then and Now Are the Answer … [Read more...]
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