Tuesday, May 31, 2011


There is an old saying in the investment world, "In May, go away," meaning cut back on stock investing in the month of May and look towards the fall for things to pick up.  While that may seem, at first blush, to be good advice, since historically the stock market tends to under perform from May through October, to me it seems a bit counter intuitive.  If you know ahead of time the stock market tends to lag during 5 months of the year, in this case June through October, wouldn't that be just the time to make or add to your long term investments?  While you may not make any quick gains from price movements, in the long run you should do well.  At least that's my theory.  I've been taking advantage of the summer months, to add to my long term dividend stocks, for quite a few years now and it has always worked out well for me.

There have been years when this strategy was ineffective, since on occasion the market has continued to rise after the month of May all the way through October, so it's not a fool proof plan.  At the same time, when the market does lag, you still have to do your research and buy quality stocks if you hope to benefit when things pick up in the fall/winter season.  Either way, if you're buying stocks at a price your comfortable with, you should come out O.K. in the end.  So rather than follow the "in May, go away" train of thought, this is when I start looking for bargains in the stock market.  With a little luck and a lot of research, sometimes you find some big winners!  (Post #350) 

Monday, May 30, 2011


This morning I broke my coupons, made up my shopping list and headed to my favorite Wal Mart Supercenter.  I had a list of 9 items total, consisting of food and personal care items.  Had coupons for everything except bread, so I saved a total of 20% or $7.25 on my total bill.  Again, this doesn't sound like much, but for the $7.25 I saved I got a sandwich loaf of wheat bread, a bottle of Ivory Aloe body wash, a bottle of Suave body wash and a 24 pack of Lipton ice tea bags.  While the coupons themselves were for 35 cents to $1 off of each of the items I purchased, the total savings paid for 4 out of the 9 items I purchased, which is a pretty good deal as far as I'm concerned.

While I may never be able to purchase $800 worth of groceries for $6, I spend a lot less time on my couponing and shopping and am very happy with the results so far.  On my way home I took advantage of a great coupon offer from Family Dollar for 10% off my total purchases there as well.  So it turned out to be a great day of shopping!  This is a learning phase for me and I'm looking forward to greater savings to come...

Sunday, May 29, 2011


Today I set out with the objective to save at least 50% overall on my purchases which included a Sonicare toothbrush as a birthday present, snack foods that would have been free or 50% off and some personal care and household cleaning products.  While this weeks' Sunday paper did not contain a coupon insert, I had a good supply of manufacturers coupons from previous editions and from Sendearnings.com's coupon section (Free sign up, see banner ad this page).  When I use the coupons I print from Sendearnings, I also get an additional 10 cents added to my account for each manufacturers coupon I redeem.

What I actually got, (since I discovered "the early bird catches the worm" and I was too late by 10:30 am), was the Sonicare, some Campbell's soup and some Listerine mouthwash.  Although I was disappointed not getting the other items, I was happy to save nearly 50% off on the Sonicare which I got for $39.99 compared to the regular price of $74.99.  I saved about 25% on the Campbell's soup and got $1 off with a manufacturers coupon on the Listerine with a $1 register rewards coupon for my next purchase for a savings of 20% on the price of the mouthwash.  I didn't quite get my 50% off total purchases, but I still did quite well, especially when you consider that on the highest ticket item I saved $35 which was a large enough savings in itself to more than pay for my other purchases.

Next time around, I'll know to head out earlier for advertised sales.  Maybe then I'll get there before they've cleared the shelves! 

Friday, May 27, 2011


O.K., so I've been on this extreme couponing kick of late and I haven't managed to get a cart load of groceries for $5 or less, but I've easily averaged a savings of 25% on my shopping trips.  I do not subscribe to multiple newspapers (in fact I get the Sunday coupon section free from a neighbor who subscribes to the local paper) yet I've still managed to build a substantial coupon collection.  I do not stockpile large amounts of grocery and household or personal care items, although I do have a couple of months worth of laundry soap and toilet paper due to recent coupon and buy one get one free deals.

The real value for me comes in the form of extra cash I'm able to divert from grocery and household items to purchasing more shares of dividend paying stocks for my investment portfolio.  Say you have a small family who spends $400 a month on grocery, personal care and household items.  If they managed to save 25% a month or $100 by using coupons and invested that money in dividend paying stocks earning an overall return of 8% a year, within 10 years they could easily have over $15,000! 

So while 25 or 50 cents off may not seem worth the trouble, would $15,000 be worth a little more effort?  I certainly think so.  While I may never get to the point of extreme couponing, the money I save through casual couponing is adding significantly to my growing retirement account.  There truly is a real big dollar value from using coupons.

Wednesday, May 25, 2011


Well Harold Camping was wrong again, the world did not end Saturday at 6 pm. as he had predicted.  Now he's moved his prediction up to October of this year, but since he's been wrong at least twice before, I'm not sure many people will be taking him seriously this time around.  Any one who's actually read the Bible should know, you don't have to look for a hidden code, since it plainly states in 1 Thessalonians 5:2 that God's day is "coming exactly as a thief in the night"  and Mark 13:32 says, "Concerning that day or the hour nobody knows, neither the angels in heaven nor the Son, but the Father."  So if the angels and God's own son do not know the day or hour, then I think it's a pretty safe bet that no one on earth can predict the end of the world with any accuracy. 

Speaking of which, this whole 2012 thing with the Mayan calendar and Nostradamus predictions can hardly be taken seriously.  Nostradamus writings are extremely vague and could be interpreted to fit just about anything.  As for the Mayans, their entire civilization became extinct.  If they were so great at predicting the future, wouldn't you think they'd have seen that coming?  I don't pretend to know when the world will end, but one thing I'm pretty certain of, it's least likely to end on any day that any of these people are predicting. 


While so many politicians would have you believe that the increase in the number of jobs in the past year is a direct result of Quantitative Easing (QE2), making it a success, a look at the numbers paints a very different story.

According to an article I read recently, the number of jobs increased by 700,000 during QE2.  Since the total cost of QE2 came to $6 billion, that works out to $850,000 per job created.  I figure I could retire quite comfortably on about a third of that amount.  So if the government had simply offered early retirement to people like myself, they could have easily freed up 2,100,000 jobs.  Now if you had 2,100,000 job openings and 2,100,000 new retirees with adequately funded retirements, not only would you create additional jobs to support the needs of the retirees, but income tax revenues would have increased since retirees would still be paying income taxes, and the government would have recouped the money spent on early retirements in the form of income taxes.  Given the fact that new hires are usually hired on at a lower pay scale than seasoned employees, it would have had the added effect of keeping inflation in check by lowering payrolls and reducing overall costs for businesses.  Private corporations and state governments do this all the time, offering early retirement as a way to reduce payroll costs.  Why not apply the same method on a national level if you're going to spend the money anyway?  Something our political leaders may need to look into.

So, QE2 Boom or Bust?  I'd have to say it's a bust.  $850,000 is way too much to pay for creating a single job and if you consider the added burden of inflation, if I had been involved in passing this legislation, I don't think I'd be so quick to pat myself on the back.    (For more on this subject, click the title above for a link to the article on Smart Money.com)

Tuesday, May 24, 2011


Just did my grocery shopping Sunday.  I planned everything out to take advantage of the sales in my local papers.  Matched up all the coupons I've collected so far to the items on my list.  I started out with a coupon for everything on my list.  Visited three stores total to get the most mileage out of my coupons.  I used the smaller coupons, under $1 at the grocery store where they double up to $1 along with my shoppers card.  Saved 28% on everything I purchased there, even though 2 items I had intended to purchase were not available locally and I had to purchase store brands instead. 

Also saved around 28% on my items purchased at my local Kmart store, although I had no coupons at all to use there.  I took advantage of their sale items for buy one get one free on snacks and saved $2 on 2 cases of Diet Pepsi by purchasing 2 cases at a time.  Picked up info on their shoppers rewards program while in the store and signed up for the program, so I'll save more on my future visits there. 

Didn't do quite as well at Wal Mart.  Still save over 20% by using coupons on sale items but I misread one of my coupons and had to add an additional item at the last minute, which lowered my total savings to around 25%.  Still, I feel my experiment in extreme shopping was a success.  While I may never get a spot on TLC's TV show, I think getting 1/4th of the items I purchased free is a pretty good deal.  As I've said before, I only use coupons on items I would purchase anyway, so I'm not stockpiling a bunch of stuff I'll never use.

My biggest savings from the whole experience comes from eating at home more often.  Since I actually have a store of groceries in the house now, I'm much less tempted to go out to eat.  According to my calculations, if buying groceries keeps me from going out to eat at least 5 times per month (which means I'll still eat out quite a bit) I'll save enough to pay for all my grocery purchases with money to spare.  Having money left over from the food budget goes directly towards debt reduction and building my investment accounts.  As a result of my savings through couponing, I've already boosted automatic monthly contributions to my investment plan by 20%.  I figure I'll be able to raise it even more as I get more organized at couponing.  It's like free money!!!

Friday, May 20, 2011


Looking for shares that pay dividends on a monthly basis?  I've found the following three which I've added to my long term investment portfolio:

1.  Calamos Convertible and High Income Fund (CHY:NYSE)
Recent price--$13.55 per share with a dividend yield of 7.53%.  They have a price to earnings of 6.4 and their current dividend of $1.02 is less than 50% of current earnings per share.

2.  iShares S&P US Preferrd Stock (PFF:NYSE ARCA)  Recent price of $40.12 with a dividend yield of 6.19%.  PFF is an exchange traded fund (ETF) heavily invested in the financial sector (over 86%).

3.  Realty Income (O:NYSE) A real estate investment trust (REIT) which invests in commercial properties with long-term leases.  They have a dividend payout of 4.90% on their recent share price of $35.41. 

All three of the issues mentioned above pay dividends every month.  If you're looking for monthly payouts, you may want to have a look for yourself.  Of course you would need to do further research to see if they fit in with your own investment plan.

Friday, May 13, 2011


Friday the 13th proved unlucky for the stocks as the markets closed lower for the week.  As for my personal portfolio, my cash balances ended up, thanks to good dividends from Clorox and a final dividend payment from British American Tobacco.  Managed to avoid the crash in commodities prices, mostly by avoiding commodities investments altogether.  Though I did auction off a collection of silver coins while the price of silver was near it's all time highs.  I've never been a coin collector and I'm kind of like Warren Buffett when it comes to gold and silver as investments.  Warren says gold is pretty to look at but not much else.  I much prefer investments that generate a steady stream of income through dividend payments over speculation in commodities prices.

According to a new report, Social Security is expected to run out of money by 2036, not good news for anyone in the U.S., but if I manage to live that long, I'll be in my mid 70's and should have enough dividend income to cover my expenses. 

Right now I'm enjoying the lower gas prices while they last.  Of course most everyone agrees that gasoline prices reach the demand destruction around $4 per gallon, so you kind of had to see it coming.  Volatility in the U.S. dollar, however, is causing price fluctuations in the oil market since oil is priced in U.S. dollars. 

I watched an interesting video on CNBC about manufacturing making a comeback in the United States.  I'd sure like to see it, but I'm a bit skeptical.  I can remember a time when factory jobs were plentiful and easy to get, now it seems they're few and far between.  I would like to see "Made in the U.S.A" make a comeback though.  What a great thing that would be!

Wednesday, May 11, 2011


With the stock market being up for the past couple of days, it is perhaps inevitable that we begin to see more headlines about a coming bear market.  Of course we all know as investors that bear markets occur, but we should not live in fear of a market correction.  Accept it as part of the investment process and realize the reality of the overall market, sometimes it's overpriced and sometimes it's undervalued, and then you begin to see the opportunities provided by bear markets.

As a dividend investor, one thing I know for sure is that dividend stocks tend to be less volatile in market corrections than growth stocks.  People are a lot less likely to sell stocks if they know they will be getting a cash payout in the near future, thus their prices tend to hold up better when the market heads south.

Another thing I've noticed in bear markets, although stock prices may decline there are many companies that remain profitable and continue to pay dividends, but with lower per share prices the yield on these stocks increase, sometimes dramatically, as their prices fall.  Granted in hard times, like we've seen in the recent past, some companies may cut dividend payments to reserve capital, but a lot of them do not.  I've found this to be a good time to pick up bargains on stocks that I've wanted to own, but thought were overpriced compared to returns. 

Some may argue that if you invest during declines it may be years before stock prices recover, which is true, there's nothing guaranteed about the stock market.  But even if that turns out to be the case, if you're investing for dividends price becomes less of an issue since you're more concerned about the payouts you receive in the form of dividends.  When stock prices do eventually recover, that's just icing on the cake. 

Sunday, May 8, 2011


No I'm not talking about some get rich quick scam, I'm talking about a dividend stock portfolio.  About 5 years ago, I switched from a strategy of investing in "growth" stocks to investing in dividend paying stocks.  Couldn't be happier with the results!

Since that time I've managed to accumulate positions in 24 stocks in my regular taxable account and 9 stocks in my IRA account.  Of the 24, three pay monthly dividends and the rest pay dividends each quarter, for a total of 120 dividend payments per year or an average of 10 per month.  In my IRA account I hold 8 stocks which pay quarterly and 1 which pays every 6 months, for a total of 34 dividend payments per year.  Combining the 2 accounts, I receive a total of 156 dividend payments a year or an average of 13 dividends per month.  Granted some payments are quite small and some I have reinvested, but think of the wealth building power of getting paid 13 times per month!!!

If all this weren't enough, I continue to add to my holdings through dividend re investments and regular monthly cash contributions to my account.  In 5 years I've managed to create a "cash machine" that continues to churn out more money month after month!  Eventually it will far surpass my earned income and I will be free to work or not to work.  What could be better than that?  (#340)

Saturday, May 7, 2011


We ended the week down a bit in the stock market, but the bright side of that, for me anyway, is my order for Chimera doesn't go through until Tuesday, so I'll be getting more shares at a lower price.  Which also means that I'll be earning a higher yield on more shares of stock, so it's making the buy a little less risky. 

Got a little over a 5% raise from work, nothing to get too excited about but it will add to the amount of money I have to invest going forward.  Starting next month I'll be adding the extra cash to my savings and investment accounts, along with the money I'm saving from using more coupons and rebates on purchases.  So that should help boost the balances in my accounts by the end of the year. 

Got some great news yesterday from the attendant where I buy gas for my car.  He told me the price of gas should be dropping by 26 cents a gallon within the next couple of days, so I'm waiting to fill up.  A drop of 26 cents a gallon should save me considerably on fuel costs.  With the money I'll be saving on gas for my car, I should be able to pay the lower electric bills for my apartment.  This time of year, the electric bills are usually a lot less since I've stopped using the heat and haven't yet had to turn on air conditioning.  My current bill is only $25, only 1/4th the $100 that I normally budget for utilities.

Thursday, May 5, 2011


I've recently been rediscovering the joys of shopping with coupons.  Back in my 20's I used coupons and rebates, almost fanatically, to stretch my hard earned dollars.  As I got older and started earning more, I kind of got away from using coupons so much.  But with the economy in the shape it's in and my own personal finances greatly reduced from a lower paying job, I've started using coupons a lot more. 

Today I planned my shopping for household and personal care supplies before I visited my local Wal Mart store and made sure I took along as many coupons as I could find for items on my shopping list.  While I'm in no danger of scoring a guest spot on the TV reality show about extreme couponers, I did save over 30% on my total bill.  I also used coupons from Sendearnings.com and will get an additional 10 cents for each coupon redeemed from their site added to my account.  Ten cents is not much, but by using coupons regularly I'm thinking it will add up to quite a bit over a years time.  Whatever it amounts too, it's basically free money!  

I need to get the oil changed on my car Sunday and will use another coupon from Sendearnings to save an additional $10 from Jiffy Lube.  The purchases I'm making with coupons are items and services I'd be purchasing anyway, so why not take advantage of the savings by using as many coupons as I can?  A dollar saved is like earning $2 because you've already paid all the taxes on the saved dollar.  Should help to build my savings and investment accounts faster than I anticipated.   

Wednesday, May 4, 2011


Since the death of Bin Laden, there seems to be much speculation about what the Pakistanis knew about his location in their country.  While a lot of Pakistani officials have come out saying they just did not know where he was, many in the U.S. and in the U.S. media seem to think there is no way they didn't know he was there and where he was staying.  While I understand the U.S. government's keeping the strike a secret, since they didn't know who, if anyone, was harboring Bin Laden, I don't think we should automatically assume the people or government of Pakistan was aware of his location. 

It has long been believed that he was hiding somewhere in the hills or mountainous region of Pakistan, but no one knew where.  So why is it so hard to believe that no one knew he was staying in the compound at Abbottobad?  There are people who live on the same floor in my apartment building that I almost never see and have very little interaction with.  I don't even know most of their names.  While I'm not necessarily anti social, I tend to mind my own business and don't get involved in my neighbor's business.  So I could definitely see where people living in a country racked with violence, Taliban forces against Pakistan government forces, would tend to mind their own business and not go looking for trouble. 

As for their intelligence agency, they may be excellent, but that doesn't mean they know everything that goes on in their country.  We have excellent law enforcement agencies in the U.S., local and state law enforcement, FBI, Secret Service and the CIA, but we also have a long list of wanted criminals who sometimes go for years without ever being caught.  So I think there's a very good case to be made that Pakistani officials simply did not know Bin Laden was there. 


I decided to sell my stake in British American Tobacco and take the profit of 34.75%.  While I believe BTI would make a good long term holding, I also own shares of PM and MO and decided to reduce my investment in the tobacco industry. 

I'm taking the money from the sale of BTI and reinvesting it in a Chimera Investment Corp. (CIM:NYSE).  CIM is a REIT with a dividend yield of 13.83% on their recent price of $4.05.  While I am aware of the risks of investing in REIT's in a market with increasing interest rates, I'm primarily seeking extra income from the higher yield on dividends (dividend income from CIM is more than twice the yield of BTI).  With CIM being much lower in price and having great financials, I'm also looking for some upside potential here.  If I do make a decent gain on share price, I would most likely pull out my initial investment and keep the remaining shares as one of my "free stocks" for the dividend payout.  Otherwise, I'll draw the dividends, monitor it closely for any ill effects from interest rates and if the price should start to decline, I'll move the money elsewhere. 

Tuesday, May 3, 2011


2011 could turn out to be a great year for investors in dividend paying stocks.  According to S & P's Howard Silverblatt, the first 4 months of dividend increases in 2011, have already surpassed total dividend increases for 2010.  Altogether, the 500 largest firms on Wall Street have increased dividend payments by nearly $21 billion so far this year, representing a massive increase in the amount of money companies are willing to part with for the benefit of shareholders. 

With the huge increases in dividends and some dividend stocks already showing terrific overall returns, 2011 could turn out to be one of the best years for dividend investors in a very long time!

Monday, May 2, 2011


Osama Bin Laden is dead and oil has dropped by $2 a barrel on hopes that his death will lead to a more stable oil supply.  They're also talking about a possible "Bin Laden Bounce" in the stock market this week.  It would be nice to see.  Wouldn't it be the height of irony though, for a man who sought to destroy the U.S. economy through terrorism and terrorist threats.  For his death to actually boost the stock market and lower oil prices in the U.S., even if only temporarily, I'd imagine it would have him spinning in his grave.