Category: Fundamental


How to Find the Highest Dividend Paying Stocks

Filed Under: Fundamental by Bill — Comments Off
June 29, 2010

Investing in the highest dividend paying stocks has its advantages and disadvantages. The high yields can provide a nice stream of income that can help supplement ones income. On the other hand, stocks with high yields tend to carry a much higher risk.

Whether you are looking to capitalize on high yields or want to know which dividend stocks to avoid, there are several ways to search for them. Investors can use the following criteria to help them identify the highest dividend paying stocks.

  1. High Dividend Payout Ratio – Companies with a high dividend payout ratio (over 60% – 70%) usually makeup the highest dividend paying stocks. While most blue chip stocks keep their payout ratios (the amount of earnings used to payout the dividend) less than 50%, the highest dividend paying stocks are above that mark. Instead of using earnings for growing the organization, these companies increase their payout which drives up the dividend yield.
  2. Income Trusts – Income trusts operate exactly how they are named. Most of the highest dividend paying stocks come from either real estate income trusts (REITs) or from energy trusts. Both types of trusts operate with a vision of maximizing shareholder dividends and payout accordingly.
  3. Monthly Dividends – The highest dividend paying stocks normally distribute their payments each month instead of quarterly or annually. The majority of these companies have very high payout ratios with a main focus on providing income to shareholders. As a result, the companies choose to pay their dividends more frequently on a monthly basis.

Final Thoughts

Chasing the highest dividend stocks can prove to be a risky venture if an investor does not realize the limitations of these kinds of investments. Including a few of these types of investments, however does help an investor balance their portfolio and add a steady stream of income.

Searching for certain characteristics can help locate a group of the highest dividend paying stocks which can then be further analyzed. Look for stocks that pay monthly dividends as a starting point. In addition, investors can find high yield investments from income trusts as well as looking for companies with a high dividend payout ratio.

Building a solid portfolio of blue chip companies with a few high dividend paying stocks mixed in will certainly perform above expectations overtime.

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Examining High Return Investments

Filed Under: Fundamental by Bill — Comments Off
June 29, 2010

High Return Investments involve a higher risk factor. This becomes an important point to consider since the profits you make must justify the risk factor involved.  These risks could be market risk, government policy risk, credit risk or something else also.

It is a good idea to consult a professional when you are considering high return investments. Since there is a high risk factor involved, it’s very important to choose someone with excellent capability of managing your hard earned money. The market is all about evaluating numbers and it’s of prime importance that the person you hire has the skill it needs to generate growth and profit from these numbers. Only the best trained and experienced people can understand these confusing market situations to achieve capital growth while managing the factor of risk well.

Just like the person you choose to help you get high returns from your stock market investing, it is also very important to choose the correct investments for you. One of the very popular investment methods is Mutual Funds. Though, these do not usually give you more than a 10-15% profit whereas, the downside swings could be as much as 30%. Hence, the risk involved is much larger in proportion to the profits guaranteed.

Real Estate has, however, proved itself to be one of the best high return investment methods. The ratio between risk and reward is balanced and most of the times, a profit is guaranteed if you choose the location carefully. Another similar high return investment is in purchasing land. This can give you profits similar to real estate or even larger at times. Land is a limited resource and has fast become the best investment method. Specially, in areas where lands are being developed fast, there is scope of making spectacular profits. Hence, investing in real estate or even purchasing land has a lesser risk factor involved than mutual funds and gives you a guarantee of much higher profits. Most times you make double the returns than you invested and sometimes even more. The very simple trick is to invest wisely and always keep in mind the perfect location.

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People Should Not Overlook The Risk In Stocks

Filed Under: Fundamental by Bill — Comments Off
June 28, 2010

The stock market is intimidating for someone who is thinking about buying stocks for the first time. There are so many terms that are confusing and you really need to learn a lot before you start buying stocks and investing your hard earned money.

The stock market is a place where people have made millions. But it is also a place where people have lost their life fortunes as well. Unlike investing in Treasury bills or bank CD’s, stock carry risk and you need to understand and be able to accept that risk. If you know you are going to need the money you have to invest, it is best to stay away from stocks.

The real risk that exists in the market was clearly evident to everyone a couple of years ago when the Dow was almost cut in half in a matter of months. People all over the country lost their retirement money and now find themselves having to work way past 60 just to survive. Older workers are having to fight to hold on to jobs they don’t really want just because they lost so much in the market.

Stock investing is, therefore, not for anyone who cannot stomach risk. Your holdings will go up and down everyday and if you cannot handle that, then you need to be in something a little safer. You can get FDIC insurance with most interest bearing investments but you don’t have that with stocks. In exchange for the lack of any security though, you have the chance for much greater gains.

Anyone buying stocks for the first time should do it gradually until they get the hang of it. You will never be able to learn all you need to know in a short time and you should proceed carefully and cautiously while you learn how the market works. Stocks go up and down based solely on people’s perceptions of their value so it is something that is hard to wrap your head around. You should not expect to be able to learn everything right away and know that it may take you many years before you are comfortable investing in stocks.

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Finding Yield In A Low-Return Environment

Filed Under: Fundamental by Bill — Comments Off
March 18, 2010

It happens every time interest rates hover in the basement:  investors hungry for income search for creative (and usually risky) ways to get more yield in their portfolio.  Many of the traditional havens of income-oriented investors (like financial stocks and real estate) have been hit hard.  Nonetheless, it’s still possible to earn a decent yield in today’s market with investment bonds rates so low.

Reaching For Yield

FDIC Insured CD’s usually aren’t the first thing that comes to mind when you think of “high yield,” but it’s still possible to find a decent-yielding CD, and CD’s do have certain advantages not shared by many other investments (such as FDIC insurance).  The key to finding the highest interest CD is to use website like Bankrate.com or BestCashCow.com to scour the internet for deals nationwide so you are no longer limited by what your local banks are offering.

Municipal bonds are another oft-overlooked investment.  The best municipal bonds are save and currently pay taxable-equivalent yields significantly above what U.S. treasury bonds are currently paying.  It is true that some states, such as California, are in dire financial straits and are in danger of defaulting on their bonds, but most states are still relatively healthy, and diversification can help minimize these default risks.

Real Estate Investment Trusts (REITS) are perennial favorites of income investors, and thanks to massive losses in the real estate bust, now sport a reasonable yield.  Most REIT experts would like to see them yielding in the 6-7% range, but the mid 4′s are a far cry better than the lows seen at the peak of the real estate bubble.  REIT dividends also have the advantage of rising with inflation over long periods of time.

Financial Stocks are risky, no doubt about that.  But the banks who managed to survive the crisis are likely to benefit tremendously from the industry consolidation.  Wells Fargo, for example, got Wachovia for an absurdly-low price.  Risk-tolerant investors will likely be richly rewarded for picking through the wreckage of the financial sector.  This is probably best done through a mutual fund or ETF, though.

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