Some Favorite Quotes

Dave Ramsey's column, Saturday July 18th, on teaching your kids about responsible spending, "If there are video games or music that you feel are inappropriate, then they don't get to buy that stuff-period. If they put trash, filth and nastiness into their minds and spirits, they're going to become trashy filthy and nasty."

From the Motley Fools column of the same date under Ask the Fool: "Strong dividend paying stocks can turbocharge your portfolio. In, "The Future for Investors" (Crown Business, $27.50), Jeremy Siegel reports that an investment in the 10 highest yielding of the 100 largest S&P 500 stocks would have returned more than 15.7% annually from 1957 to 2003, turning a $10,000 investment into more than $8 million. Compare that with an annual gain of 11.2% for the overall S&P 500."

Recent Stock Trades

Decided to sell Copano Energy (CPNO) for a profit of 27%, with earnings down I am concerned about their ability to maintain their dividend payments. I will be reinvesting a portion of the proceeds from the sale of Copano in ConAgra Inc. (CAG). Their earnings per share of $2.15 per share is more than sufficient to maintain, and possibly increase, their dividend of 76 cents a share, which represents a 4% yield on the current price per share. While energy use may be declining in the current economy, people still have to eat, so upping my stake in ConAgra looks like the way to go.

For my IRA account, I'm adding more shares of AT&T (T). While their dividend payout of $1.64 represents 76% of earnings, I feel that their dividend is in little danger of being cut. AT&T is a long term holding in my personal portfolio as well.

My stake in Regency Energy Partners (RGNC) is doing well. It is up nearly 20% since my initial investment. Their dividend payout is around 62% of earnings, so I'll probably hang for the dividends unless the unless the price goes up over 20%. In that case, I would take the gain, since I initially bought the shares of the energy partnerships for short term gains. We'll see how that plays out.

Should Michael Vick Be Reinstated With The NFL

Now that Michael Vick has served his time, there's a lot of talk going around about whether or not he should be reinstated with the NFL. At first, like a lot of others, I thought no. He had his chance and he screwed up, so why should he be allowed back? But then I started thinking about my own brush with the law and how it has affected my life. I have a felony conviction from over 20 years ago. Something I'm not proud of, I committed embezzlement. Nothing on the scale of Bernard Madoff or the Enron people, but I took the money and I had to pay. I learned my lesson, served my time and am still being punished to this day. Even though I was a model prisoner by any one's standards and haven't had so much as a parking ticket since my release, the fact that I was convicted keeps me from getting a decent job. The point is, if I feel it's wrong for people to judge me, over something that happened over 20 years ago, then why should I judge Michael Vick? I hope he is reinstated. He has done his time, hopefully he's learned his lesson and will stay out of trouble.

The real question is, if nobody is willing to give convicted felons a job, then what are they supposed to do? Return to a life of crime? I don't want to be a criminal, obviously I was no good at it. I just want to get a decent job and lead a productive life. I'm sure that Michael Vick is thinking the same thing. He did something stupid, did his time, now he just wants to get on with his life.

Dividend Stock Investing Is Far From Dead

Dividend stock investing has been an attractive investment strategy for several reasons. They provide you with a real return immediately, in the form of dividend payouts as opposed to growth stocks, which only provide profits when you sell. Increasing dividend payouts, offer the shareholder a hedge against inflation not provided by non dividend paying stocks. Shareholders are able to choose what to do with dividend cash, paying bills, adding to cash savings, reinvesting in stock or whatever strikes their fancy. Now that so many weak dividend paying companies have either cut or eliminated their payouts entirely, it might seem as though dividend investing is no longer a viable strategy. On the contrary, getting rid of the weaker dividend payers has made the stronger companies even more apparent, making it easier to build a solid dividend portfolio. In fact, with stock prices well off last year's highs, dreadfully low interest rates, dividend yields higher than they've been in years, now is an excellent time to load up on the best dividend stocks.

Some things to keep in mind when searching for dividend stocks:

Look for stocks with above-average dividend yields (currently 2.25%). I personally shoot for around 6 to 8% yields, higher risk yes, but potentially much higher returns. You will also want to make sure the company generates enough free cash flow to maintain and possibly increase its dividend, otherwise it's doubtful they will continue payouts. While it's no guarantee of future returns, it's also beneficial to look for companies with a long history of increasing its payouts in proportion to earnings growth. If the company is growing earnings it should be rewarding shareholders with increases in dividend payments. In order to accomplish all of the above, you would definitely want any prospective investment to have a solid balance sheet. If they are carrying too much debt and are unable to repay creditors, they will not be able to pay you.

So even though we've seen drastic cuts in payouts, from some dividend stocks and others who have eliminated their dividends entirely, now is really a good time to be a dividend stock investor. Far from being a dead investment strategy, it may prove to be one of the best strategies going forward.

Citigroup: Again With Executive Pay!!!

The "New York Times" reported that Citigroup has decided to raise employees base pay to avoid the flack over year end bonuses. Some employees will see as much as a 50% increase in salaries. The Obama administration was caught off guard once again, since they seem to know nothing about Citi's plans. In my opinion, we should think twice about supporting people in the next election, who seem to be so fast and loose with the taxpayers' money.

On Monday, banking analyst Meredith Whitney recommended Goldman Sachs [GS 149.75 0.31 (+0.21%), which represents a shift in her more recent bearish position on financials. Now there seems to be some concern over executives with GS selling shares (close to $7 million worth) during the time they were benefiting from TARP loans. I'm not especially concerned over this, since they managed to keep the company from going under, which is more than can be said for other overpaid bank executives.

I don't plan on investing in Citigroup or GS, but if I were, it would be Goldman Sachs which, as far as I'm concerned, is obviously a much better managed company.

RICHDAD: Investors: Don't Be Average

Just read a fantastic article from my favorite author, Robert Kyosaki, who wrote and published the Rich Dad Poor Dad series of books. He has some interesting things to say about the current economic crisis and what real investors should be doing now. You can read his blog post at:

RICHDAD: Investors: Don't Be Average


I've read most of Mr. Kyosaki's books and they have been most helpful in shaping my philosophy about investing and making money. My favorite, "Rich Dad, Poor Dad", really changed the way I viewed money and set me off on an entirely different approach to building personal wealth. I consider his books a Must Read.

Merck and Schering Plough Merger

It has been an uneventful week in the stock market. Although I'm pretty pleased with the merger agreement going forward with Merck and Schering Plough. I own shares in both companies and stand to get some cash, $10.50 per share plus .5767 shares of the New Merck for each share of Schering Plough I own. I like the mergers where I get cash, cash is almost always good. Since I bought both stocks when prices were low, I should come out ahead on the deal. Plus the new company anticipates continuing Merck's current dividend payout. So that's the bright spot for the week.

Made some changes to the appearance of my blog, trying to encourage more visitors, I think it's a big improvement. Be the first to sign up as a follower of my blog!!!

News affecting the economy was not particularly good this week. Obama's approval rating is slipping over bailout programs and lack of results. Warren Buffett thinks we need another stimulus package, although I'm a huge fan, I disagree with him on that one. And the jobless rate continues to rise. While it all seems a little overwhelming at times, we just have to keep in mind it won't last forever. Things will eventually gravitate back towards the norm.