Monday, July 29, 2013

What stocks are cheap right now?

With the market's prolonged rally I am looking to see what has not ran up as much.  I have found a few companies for my watch list.  There are some $100+ stocks I'd like to add to my holdings or amount of shares I own, but are quite expensive. 

I kind of wish companies like MCD or MMM would split around here and I would do my best to get more shares of these high quality and innovative companies as they will likely continue to go back higher after giving you twice as many shares. 

I like the income that my BDC's and REIT's give me (mostly every single month) and have small stakes in many high quality quarterly payers.  I am continuing to look for value in the market and to broadly diversify my holdings and income plays.

Any investment ideas or suggestions are welcome!

Sunday, July 21, 2013

One investment that worked

When reading through the investor relations part of McDonald's website I came across this a few years back and it has been updated since then.  Imagine 100 shares turning into this sum.  Since the current dividend is $0.77 for each share right now that would make every quarterly dividend $57,257.20 in your pocket.  Not to mention they will likely raise the dividend in the December quarter.  The stock is also around $100 so it is likely worth $800K-$1 million more then it was at the end of 2012.

It is not easy to time these investments or to know which will be the next one to make you rich.  If it were everyone would be doing it.  It may not be as realistic to most when they see it, but it is truly amazing how much success early investors in the golden arches would have had by now.  The best way to build wealth is to diversify and keep adding to high quality companies with wide moats at attractive prices.  This is one of many investments that if were in early, at the right time and price you could be very wealthy after holding several years.  This is one stock I will be comfortable holding onto for a long time to come.

Do you own McDonald's?  Do you think the growth can continue?

Disclosure: Long MCD 

Saturday, July 20, 2013

DRIP vs Cash Dividends

For all the dividend investors out there do you DRIP (dividend reinvestment plans) or take the cash and use it as you see fit?  As a relatively young person I tend to DRIP everything and accumulate more shares in stable companies.  As I receive many different monthly and quarterly dividends it compounds nicely by adding more shares. As long as the dividend stays constant or is raised the next month or quarter depending on payment frequency I will then receive more income from each investment.

Market data suggests that dividend stocks are much more stable and consist of the majority of gains in the stock market's history.  I have heard how things can become overvalued and why people prefer to use the cash for more undervalued stocks and respect that philosophy as well.  Unless you are living off the income and retired it seems that reinvesting into the market one way or another is the best option for building more wealth.

What do you think is the best strategy?  Do you DRIP, take the cash and run, or a combination of both?

What type of investor are you?

This is my first post and thought I'd ask what type of investor you are.

I am very interested in the stock market and like to research investing. Unfortunately not many people generally have knowledge or are interested in the stock market. Many people I have met have worked their whole life, but never paid attention to their investments or retirement planning.

The world of investments is complex and there are many different investment strategies and goals varying from person to person. Some are scared away by the normal up and down swings of the market and quit altogether. Others see it as an opportunity to make money. Which way is the most consistent way to make money? You can buy more shares of a penny stock or cheap investment and lose it all just as easy. You can buy less shares of a great business and use compounding to make a large sum over several years. There is ongoing debate between which are better mutual funds or individual stocks. Then there are bonds, ETF's, Options, Futures, and FOREX. There is no shortage of choices and opportunities to be involved in the markets as a speculator.

I have found dividends to be of the most stable and predictable way of making money longer term. I am sure you can make a lot on momentum stocks and options with taking more risk. I love watching dividends hit my account and do not know why people try to say they are too boring and not for anyone, but older people or retirees. By reading and studying about company's financial history through their websites, annual reports, and several investment blogs you can make a reasonable prediction on how they will perform into the future. This strategy has worked for a lot of people, but you must stay diversified as well. Having several high performing stocks that pay you to own a piece of their business is a great way to be involved in the market. Just in case one goes bad and cuts the dividend, others with rising payouts can quickly offset it. You can focus on which ones are most attractively priced within an overall market and buy what you choose. There is a tool some use called dollar cost averaging where you buy same amount of $ worth of shares no matter the price and as it fluctuates it will buy you more or less shares depending on the price.

What type of investor are you? Do you follow Warren Buffett or Benjamin Graham principles? Are you speculative or one who is too scared you will gamble away all your money?