I believe dividend growth investing is a great strategy for a long term investor. Most of the work in picking and purchasing a company is done upfront. Recently I have been asked questions about how to start investing. In the near future I will create a Getting Started page for anyone interested in stocks and dividends. Below I will discuss stocks and talk about 3 stocks that gave Skyy a pay raise this month.
Stocks in the common sense, are basically a way for companies to liquidate ownership of a company to the public in very small fractions. You have voting rights as a small owner, and claims to assets and earnings in the form of dividends.The market demand and supply determines the price of the stock. This is usually correlated to the fundamentals and technicals of the company.
For companies, it presents a way to raise more money for development and growth that is cheaper than borrowing directly from the bank.For stock owners, it presents an long term opportunity to own a company easily and receive dividends.
For speculators, hedge funds, mutual funds or day traders, they attempt to capitalize on the movements of the stock market or attempt to time the market to make more money. Most of the time higher rewards come with higher risk (YOLO). There are bargains that exist, but you have to trust yourself and do proper research to determine that. Buying low and selling high sounds simple enough, but most people actually do the opposite when they are trying to time the market (Human Nature).
Why do most rich individuals invest in stocks? Think about the inflation rate (around 2%) savings rates in banks (terrible 0.2% for savings account, 1-2% at best for a CD) compared to the stock dividends (3-4% and very liquid) and you’ll understand why stocks are a great choice for an intelligent investor or simply someone who wants to preserve his/her wealth.
Stocks are not for people who are looking to get rich quick. I’d also recommend The Intelligent Investor by Benjamin Graham.It presents a lot of practical advice from a veteran investor as opposed to a lot of the marketing noise in most investment books. In the end one must understand your investment before jumping in it.
Over the past week, there were 3 dividend companies which increased their dividends for Skyy. The companies include:
AT&T (T) provides telecommunications services in the United States and internationally. The company increased its quarterly dividend by 2% to 48 cents/share. This company has managed to boost dividends for 32 years in a row. In the past decade, AT&T has managed to increase dividends by 3.9%/year.
Realty Income (O) is a real estate investment trust. It invests in the real estate markets of the United States. The company increased its quarterly dividend to 19.10 cents/share. This company has managed to boost dividends for 21 years in a row. In the past decade, Realty Income has managed to increase dividends by 5.20%/year.
Pfizer (PFE), a biopharmaceutical company, discovers, develops, manufactures, and sells healthcare products worldwide. The company increased its quarterly dividend by 7% to 30 cents/share. This dividend paying company has managed to boost dividends for 6 years in a row. In the past decade, Pfizer has managed to increase dividends by 4%/year. The company used to be a dividend aristocrat up until early 2009, when it cut dividends to shareholders.
Since Skyy owns these three stocks, it is nice to know that her income will increase in 2016. Even after that Kinder Morgan (KMI) 75% dividend cut. Ouch
Live Long & Prosper
Full Disclosure: Long T, O, KMI and PFE