This week’s AAII Weekly Digest highlights these “must-read” AAII articles:
Though certainly not as sizeable a contributor so far in the 21st century, over time, dividend income and its reinvestment has comprised a significant portion of long-term stock gains. Even better, over the long term, dividend-paying stocks have delivered relatively better total-return performance than non-dividend-payers and generally have done so with lower volatility. While not quite the Holy Grail, higher returns, relatively lower risk and generous income can make for quite a powerful combination no matter the direction of interest rates.
A low interest rate environment has helped to fuel a run-up in the prices of dividend-paying stocks. Lowell Miller is known for his disciplined, dividend-focused investment strategies. Miller advocates that investors establish a strategy that relies on common sense, with reasonable, achievable goals. Miller seeks out high-quality stocks trading with high current dividend yields that offer high growth of dividends. This article outlines 12 characteristics Miller looks for in a dividend-paying company and stock.
Corporate bond investors need to look beyond yield and focus on “the four Cs of bond analysis”: the issuer’s character, capacity, collateral and conditions. This article is from 2011 and the performance data has not been updated. However, the insights into bond analysis that it provides are timeless.
Dividend-paying stocks may not offer as much capital appreciation potential as higher growth, non-dividend-paying stocks, but they tend to offer some downside protection when the market swoons. There are at least two elements that contribute to the downside protection. The obvious element is the regular quarterly cash dividend that investors receive from dividend-paying stocks. Read this AAII Blog post to learn about the second.
Our Member Question for this week is:
How much could the typical healthy married couple, retiring this year at age 65, covered by Medicare, expect to spend on out-of-pocket costs for health care throughout retirement (in today’s dollars)?
Vote to answer this week’s Special Question: What steps have you taken to defray potential medical costs while in retirement?
Last Week’s Results:
The New York Stock Exchange plans to impose a news embargo for listed companies in the minutes after the market’s 4 p.m. (Eastern) close. The move is a bid to protect NYSE’s closing auctions from sophisticated trading algorithms that scan English-language text in search of signals to buy or sell stocks. Do you think algorithmic trading is good or bad for the stock market? (Choose the one answer that best matches your opinion.)
Poll results are as of 9 a.m. (Central) on Monday. 1,415 respondents.
In an attempt to limit the impact of fast-trading robots, the New York Stock Exchange (NYSE) is imposing a news embargo for listed companies in the minutes after the market’s 4 p.m. (Eastern) close. The move is a bid to protect NYSE’s closing auctions from sophisticated trading algorithms that scan English-language text in search of signals to buy or sell stocks. The auctions determine the end-of-day price for thousands of NYSE-listed stocks. This week’s reader survey and special question asked whether algorithmic trading helps or hurts the stock market. Read this AAII Blog post to see the results.
Dividend reinvestment plans have long been popular among shareholders interested in reinvesting dividends at a low cost. There are several advantages for investors who participate in these plans: Dividend payments are put to work, transaction costs are eliminated or held to a minimum and the additional shares are purchased gradually over time. This guide to direct purchase and dividend reinvestment plans, available exclusively to AAII members, highlights some of the best AAII has to offer. It highlights two different types of dividend reinvestment plans and how they work.