I've been obsessed with dividend-paying stocks since the sixth grade. I'm not sure exactly what inspired me -- it could have been the movie “Wall Street” or the popular T.V. show character Alex P. Keaton (played by Michael J. Fox) -- but one day I came home from school and said I wanted to buy five shares of IBM with my savings.

In 1999, I began working for Jono Steinberg’s Individual Investor Group, where I wrote a regular investment column.

Later, I spent five years at Standard & Poor’s editing the company’s flagship investment newsletter, The Outlook. During that time, I also penned my first finance book, The Standard & Poor’s Guide for the New Investor. It was published by McGraw-Hill in 2003, and translated into Chinese a year later.

These days, I tell investors about my favorite dividend-paying stocks in my monthly newsletter, Dividend Superstars. I also edit Weiss Research's daily e-zine, Money & Markets.

On December 23, I wrote an article for Money&Markets that talked about a possible suspension of required minimum distributions for retirees.

Well, on that very same day, and off most investors' radar screens, that legislation did pass.

What this means is that anyone over age 70 1/2 does not have to withdraw money from their retirement accounts in 2009. 

What's the reasoning? Well, Congress doesn't want to force people to have to cash out while investments are down and out. 

That's great ... and it's even better for anyone who'd rather leave their money in tax-sheltered accounts no matter what the markets are doing! 

I suggest you take advantage of this temporary reprieve if possible.
   

The year got off to a strong start. In fact, it was the fourth best opening day for stocks (as measured by the S&P 500) ever.

No, that doesn't mean a heck of a lot. But it is worth noting that January is typically a good indicator for stock performance over the entire year:

According to S&P, 60 out of 80 January results have correctly predicted the market's action for the entire 12-month period!

Clearly, we shouldn't base our investment strategies on this little tidbit. But it is a nice thing to keep in the back of your mind.

This week, Pfizer announced that it would not be raising its dividend for the first time in 42 years.

Look at the stock’s current yield and you’ll see why. Heck, the very fact that they’re going to maintain that payment is pretty good, don’t you think?

Sure, they could have tossed a penny onto the payment just to keep the record intact, but I’m not going to be too hard on them with everything going on in the markets.

So am I still positive on the company? Yes.

I was at my in-laws' house in Delaware this past weekend, reading their local paper. One of the stories was about Sussex County's pension fund (again, the Sussex County in DE, not NJ).

According to the story (couldn't find it online), the county decided to put the majority of its new money into cash for the coming year. Then they would wait for signs that the market was coming back before putting those funds into stocks.

When a government official questioned the decision, asking if the county wasn't running the risk of missing out on market upside, the plan adviser said he didn't believe in "market timing."  

Well, from the article, it sounded to me like that's exactly what the pension fund is doing!

Putting new money into CDs and waiting for a market rebound? Talk about selling low and buying high!

If you're truly against market timing, you simply allocate your funds based on a set strategy year after year. Then rebalance at appropriate intervals.

It amazes me to hear institutional money managers making such fundamentally wrong decisions. And if I were a Sussex County employee, I'd be questioning this investment strategy.

The good news is these stories demonstrate two things:

First, fear remains at inordinately high levels, even from professional money managers.

Second, a lot of cash is going to sit on the sidelines and then pour into markets once we see signs of "stability."

Both items are good news for investors getting into stocks now. 

 

I love how we finally have official word that the country is in recession. Gee, thanks NBER!

In case you missed it, the National Bureau of Economic Research’s Business Cycle Dating Committee, the most widely-followed experts on the subject just determined that the U.S. economy ended its 73-month-long period of expansion in December 2007.

Coincidentally, that's the same month I published an issue of Dividend Superstars titled "New Year, New Recession? What to Expect in 2008!”

In that story, I said it was very likely that the U.S. would see contracting GDP no matter how low the Fed pushed interest rates.

It only took a year for the NBER to confirm what we already knew by simply looking around our own neighborhoods.

Predictably, the markets sold off on the "news" (probably just an excuse to unwind the profits racked up last week).

But in my mind, we are already a year into this recession now. The market has gotten killed already. We should never forget that markets anticipate both contractions AND recoveries ...

Yet again, I have found a new favorite TV commerical. I saw it for the first time last night. It's from GM, and it talks about how they really want to hook me up with a cheap loan on a new car. It goes on and on about my financing options (I only saw it once so I can't give you more specifics).

Does anyone else find it ironic that the company is running ads like this while begging Congress for a massive loan to stay afloat?

Look, I realize that the company has to keep trying to entice consumers onto its floors (and out of their shell-shocked foxholes).

Still, the commercial is just one more painful reminder of the automaker bailout fiasco.

I mean, these guys were behind the industry curve for years. They produced inferior products. They threw caution to the wind. And now, like just about everyone else, they want more public money to "help them survive."

Personally, I'd rather see us give money to innovative American car companies like Tesla. At least they're looking ahead and trying to innovate. If anything can save the U.S. auto industry, it's companies like that.

But if you're still in the market for a new pickup now that gas is pulling back, by all means take advantage of those cheap GM loans while you can. Just be sure and discount the value of any warranty that comes with the vehicle! 

Bad news: American Capital Strategies has also fallen victim to the credit crunch and has decided to suspend its dividend payments.

Obviously, I am extremely disappointed by the news. ACAS has been my favorite high-yield play in the financial sector, and one of the companies that looked best positioned to capitalize on temporary weakness in the credit markets.

The company's long history of dividend payments also supported my belief that it would continue paying its investors through thick and thin.

I'm still confident that the company will go on to pay out nice dividends in the future. But for now, they think preserving cash is the right approach. Fair enough.

I will provide a complete update on ACAS in the next issue of Dividend Superstars ...

These are certainly the wildest markets I've ever seen -- I mean, the Dow is regularly swinging 1,000 points!

And it seems as though someone is always asking me, "What do you think of the market today?"

My response is this: "I try not to think of the market in terms of days."

Maybe it's a cliche, but it's how I really feel. Sure, I pay attention to what's happening every single day ... but I never assume that I can figure out the market's move TOMORROW.

If you want to dabble with some market timing, be my guest ... there is certainly plenty of money to be made on both sides with this kind of volatility.

But for your core income portfolio, my suggested strategy is unchanged: Hold your core income stocks AND hedges that cushion the short-term downside.

I am as disappointed to see Bank of America's dividend cut as anyone. The stock is one of the only financial positions in the Dividend Superstars portfolio, and I thought the company would honor its promise to keep its payout at least stable through the current crisis.

I was wrong. Circumstances -- which sure include the pending MER acquisition and the ongoing credit crunch -- forced a 50% reduction in the company's dividend.

For some perspective, this marks the first year since 1978 that BAC didn't INCREASE its payment.

The company was also the second-largest payer in the S&P 500. After the cut, it remains the 5th largest payer.

I don't think it's a good idea to sell the shares into weakness on the news. But I will be providing a complete update on the company, and what I recommend doing given the latest news, in the next issue of Dividend Superstars.

I just got the latest dividend stats from S&P, and they're grim. Six companies -- basically all the financials that went under in September -- cost investors $3.8 billion in dividends. So far in 2008, a full 30 financial comapnies have decreased their payments, leading to $24.1 billion in missed dividends.

On the positive side, 14 companies increased their dividends last month. What's more, dividend-paying stocks continue to outperform their non-paying brethren.

So, in my book, it's still the right strategy to buy and hold the best dividend-paying stocks out there. Not only will they continue paying you through the market turbulence, but they should also preserve more of your investment capital in the process.

I'm here in Bangkok, and outside my window a bunch of construction guys are hammering away at yet another skyscraper's foundation. And around the world, stocks are getting hammered with equal fury.

I can't say I'm all that worried.

From my vantage point, crises come and go. The banging and clanging seems huge when you're right in the middle of it. Then some time passes, and it's on to the next phase of construction, one that ultimately leads to yet another more impressive rise.
 
When will the financial crisis end? Nobody knows. 

But looking out of my window and watching new buildings go up all around Bangkok, some built on the same sites that were abandoned during the Asian financial crisis, is that all the hammering happening today will result in new growth and prosperity down the line. 

To further highlight a point I've been hammering home -- namely, that plenty of companies continue to pay out nice dividends -- take a look at Cablevision's recent announcement ...

In an effort to shore up investor confidence and reward current shareholders, the cable operator will BEGIN paying a dividend starting this September.

Nice!

Well, I was absolutely amazed by what I saw in Tamarindo over the last week. Not only were more roads paved, but prices for condos and houses have absolutely skyrocketed from my last visit in 2004.

Want examples? How about condos for $700K, $800K, even $1.5 million ... yes, U.S. dollars. It's ironic ... the roads leading to some of these places are still dirt with mud-filled holes ... but I guess it's the age-old "build it and they will come" philosophy.

One of my favorite images, which I didn't get to photograph, was a flatbed truck loaded with Sub Zero fridges (the $5K-10K variety) rambling up the muddy path in front of our house.

I'll have more on what I saw in CR over the next few days, including in my Money & Markets column tomorrow.

Just a heads up that I will be traveling virtually non-stop for the next month, including visits to three different continents taking me everywhere from Costa Rica to Switzerland to Thailand.

I can't guarantee that I will always have access to a solid Internet connection, but I will be doing my best to bring you updates from my stops ... including photos of anything interesting I see along the way -- whether investment related or not.

It will be great to see exactly what's happening around the world right now ... whether Europe really is slowing down ... how quickly Asia is still growing ... and whether or not Latin America's roads are improving as much as people say they are.

All in all, it's going to be a real adventure, and I want you along for the ride. So stay tuned! 
 

 

Amazingly, Fannie Mae lost another couple billion in the second quarter (2.3 to be exact) and reiterated news about its dividend getting slashed from $0.35 to $0.05.
 
I guess it's true what they say -- "a billion here, a billion there, pretty soon you're talking real money." 

We are still being told that these GSEs will be able to withstand the credit conditions, but clearly things are not getting better yet. And the implications for housing are 100% negative.

So stay tuned!
      

Forgive me for posting about a subject only somewhat related to currencies, commodities and investments, but I just had to vent somewhere.

Last night, I was watching Comedy Central while my wife was sleeping beside me. All of the sudden, I see a commercial that features the World Trade Center and starts talking about a new commemorative currency that is "a silvery tribute to all that were lost on that fateful day”.

Seriously. That's what the commercial said. I have never laughed so hard at anything on Comedy Central. In fact, I laughed so hard that I woke up my wife. And when I say I laughed, I mean I laughed in a "this is the most pathetic thing I have ever seen" kind of way. In a "what has our world come to kind of way." In a "there's nothing else to do but laugh" kind of way.

Look, I was in the World Trade Center when the first plane hit. And while I won't go into details, suffice it to say that I was there and I have friends who lost friends and relatives that day. So this whole thing insults me. Period.  

Never mind that the currency is silver leaf -- i.e. about $0.10 worth of silver).

Ignore the fact that it is cheesy beyond belief -- face value of $20 on one side but the other has two denominations -- $9 on one side and $11 on the other for a total of $20 ("first time two separate numbers have been used to add up to full face value").

Instead, consider that this currency is "legal Liberian tender." That's right. It's minted by a private party and is supposedly legal tender in Liberia. You know, that small African country that has been a hotbed of civil war and government mismanagement.

It's certainly a sign of the times when a flimsy foreign currency tied to such a place is hawked on TV as a lasting memorial to one of the biggest events that ever took place on U.S. soil. 

(I refuse to link to the commercial or the website because that would amount to free promotion.)

If only Washington was this enterprising, maybe they'd get the value of the greenback heading in the right direction as a reminder to the world of what real financial strength and resiliency is all about. With or without a picture of the WTC on it. 
 

According to Standard & Poor's, the second quarter saw the greatest number of dividend cuts in 18 years.

The firm also reduced its expected 2008 dividend payment on the S&P 500 index from $30.80 to $28.85. Last year, the number was $27.73. So while it's still forward motion, it's the lowest increase since 2002.

While that's grim news, as I've been pointing out here, not all firms are cutting ... in fact, some are RAISING their payments.

Heck, seven stocks in the Dividend Superstars portfolio made payments in July. And not one holding has reduced its dividend. So there are plenty of places to find solid, reliable yields ... you just have to do a little legwork.

Well, it's always nice to get a little positive news in this market, and today drug store chain CVS delivered some. The company announced that it's boosting its quarterly dividend by 15%.

It's interesting, and encouraging, to hear a retailer making this kind of announcement. It demonstrates, once again, that individual companies are able to continue delivering results no matter what's happening on a larger scale.

An old friend of mine over at S&P, Howard Silverblatt, just sent over some market stats for the month of June. Man, they weren't pretty.

Overall, it was the worst June for the broad-market S&P 500 since 1930.

Only 66 issues gained in price and six members lost more than 40% of their value.

And the index lost 8.6%, the biggest decline since September 2002, amounting to a little more than a trillion dollars in market shrinkage.

Ouch!