John Bogle on “Enhanced” Index Funds – Can They Beat the Market?

Bond Basics for Individuals: A Guide to Buying and Selling While people speak of the bond market as if it were one market, in reality, there is not one central place or exchange where bonds are bought and sold. This market is so vast that its size is difficult to imagine. Overwhelmingly, this is an…

 

The Role of Leverage and Quality in Dividend Changes

Dividend increases are typically met with a positive reaction from investors, while dividend cuts are typically met with a negative reaction. Whether these changes signal positive or negative information, however, depends on the quality of the company and its leverage. Companies with low-to-moderate levels of leverage—defined as liabilities to total assets—can signal positive information by…

 

Who Gets a Dividend Payment After a Trade?

Companies distribute cash dividends to their shareholders at the discretion of the board of directors. The board of directors examines the business prospects, cash generation and cash needs to determine if they can afford to make a distribution of profit in the form of a cash dividend and how large a distribution to make. Most…

 

Investors Prefer Dividend-Paying Companies in Market Downturns

It may not be comforting, but individuals are rewarded over the long term for investing in stocks because stock prices can go up or down. Short-term market volatility and uncertainty creates a risk premium to entice investors to buy and hold stocks. It is important to note, however, that all stocks do not react equally…

 

Chasing Dividend Yield for Income: Three Reasons to Be Wary

This week’s AAII Weekly Digest highlights these “must-read” AAII articles:   Chasing Dividend Yield for Income: Three Reasons to Be Wary Relying on dividends for income is a strategy that has served investors well in the past. Who hasn’t heard of the proverbial elderly widow living off the steady stream of General Electric (GE) dividend…

 

Dividend Yield as a Valuation Measurement

Value investors are always seeking undervalued stocks to add to their portfolios while pruning those that are overvalued. However, a stock’s price doesn’t always reflect a company’s true value. The dividend yield is a useful measure of value for selecting undervalued securities and pruning overpriced stocks from your portfolio. A stock’s dividend yield is computed…

 

Screening With the Big, Safe Dividend Formula

Many investors seek income to supplement their portfolio returns while at the same time insulating themselves from market declines. In “The Little Book of Big Dividends: A Safe Formula for Guaranteed Returns” (John Wiley & Sons, 2010), Charles Carlson outlines a recipe for investment success: “Find stocks with above-average appreciation potential and safe and growing…

 

Qualified Versus Non-Qualified Dividends and Examining a Dividend’s Safety

For many investors, dividends are an excellent means of generating income for their portfolio. Depending on where you are in your investment lifecycle, you may reinvest those dividends or you use the income on various expenses. AAII Weekly Survey Question However, depending on the type of dividend being paid, you may face different tax considerations….

 

Screening for Dividend Income

This week’s AAII Weekly Digest highlights these “must-read” AAII articles:   Reinvesting Dividends The approach used in managing AAII’s Dividend Investing portfolio is to allocate proceeds received from dividend payments to cash. The cash, along with any proceeds from the sale of holdings in excess of the average size of all DI holdings, is then…

 

Insights From Conversations With Great Investors

Warren Buffett said that among the lessons he learned from Benjamin Graham was that “price is what you pay, value is what you get.” Though Buffett used the phrase in a discussion about bonds and stocks in his 2008 letter to Berkshire-Hathaway shareholders, the adage applies to many other objects. One such object is the…