Dividend

When I was in my twenties, I cared very little about my financial future… I was interested in the money I was making now! I wanted to buy a new car, get a better apartment, maybe get married, have kids – all the things we are raised in the United States to want for ourselves. Saving money for when I was older was not on my list of things to accomplish before I turned 30!

But, my father – who is a Southern Baptist pastor – taught me two things about money for which I shall be eternally grateful. The first is to make sure that I tithe. It’s a biblical principal of giving back. The Bible teaches that we are to give a tenth of our earnings back to the original source (God) with a grateful heart. Those monies allow His work to continue, and allow the church or other charitable organization to help others who might not have as much as I do be able to provide food, shelter or health care for their families.

My heart has been lifted so many times, as I have learned how I have helped families through giving to some fund to help send a child to an expensive hospital thousands of miles away for specialized medical care, or providing food for a needy family, or nice clothes for a single mother who needs to go apply for a job to help her children. Tithing – giving back – is not just good for those in need, but, it fulfills a need within each of us to be a part of something bigger than ourselves. The return on investment is immense – not just in monetary value to our society and culture, but in emotional and social benefits as well.

The second financial advice my father gave me was to invest. At the time, I didn’t have a lot of money to invest. My work in radio as a disk jockey was not an extremely profitable one in rural Mississippi. But, still, I placed another 10 percent of my income into a safe annuity at the time. $25 a week isn’t a lot of money, but, with sheltered investments in high, moderate and low risk opportunities, what started out as a $1,300 a year contribution in 1988 continues to grow – even in this down economy.

Thirteen hundred dollars a year has grown, and my investments have both increased in amount and types of investments. But, I keep that annuity in place. It’s a reminder of why I invest… and of the truth my father taught me. “Put the money in, leave it in, don’t ever touch it, and let it grow,” he told me. “If you’ll do that,” he said, “when you have to take it out, you’ll be very happy you did.”

He was so very correct!

Next year, I turn 50. I’m nowhere near retirement. But, if I wanted to, I could! My measly $25 a week contribution increased to about $75 a week before I started investing into other vehicles. When I began to diversify, I continued to keep that annuity investment going… but, back at the $25 a week level.

There have been times, I was tempted to just pull that annuity out and spend it, re-invest it, or just get it out of that account. Resistance to temptation is very difficult at times… especially after the government’s housing finance debacle that led to the 2008 collapse. I was tempted to pull all of my investments out and just bury them in jars in the backyard. The interest rate might have been even better, especially if I had planted trees nearby those jars!

But, I kept investing. In that annuity, and money markets, and other retirement funds. Still, that annuity fund I began at age 23 provides for me the security my wife and I need to know that we’ll be ok today, and in the future. It will provide for us the funds we need to survive – and to thrive! Today, my investments are above seven digits in value – because I followed my dad’s advice. Put it in. Keep putting it in. And never take it out, until the day you retire.

Companies involved in consumer staples are some of the strongest and most stable companies that one could invest in. They sell products such as beverages, cleaning products, personal care products, food, prescription drugs, and other products that are used on a daily basis by people all over the world. Not only are the products that the companies sell stable sources of business, but the stocks themselves are generally stable. The stocks are usually less volatile than other industries such as technology and financial services, meaning that you have fewer violent swings up and down. Additionally they usually pay safe dividends that grow their payouts over time, especially when the dividends are reinvested.

While consumer staples usually have lower dividend yields, they are typically less risky investments than other forms of equity. Additionally, consumer staples usually make up your core holdings, stocks that you are less likely to sell, meaning that over time the dividends will be able to compound and provide a nice source of income to reinvest, or ultimately live off of during retirement.

Below are 10 consumer staples stocks (that also pay dividends) to consider. Remember that you should always consult with a financial advisor concerning investments.

Procter and Gamble (PG)

Proctor and Gamble is the quintessential consumer staples company. It has massive exposure domestically and abroad. 23 of P&G;’s brands have more than $1 billion in sales annually including Crest toothpaste, Tide detergent, Duracell, and Pampers. The company has manufacturing sites across the US and the world, and is always developing new products for domestic, developed, and emerging markets. The stock currently yields around 3.4% and has increased its dividend 55 years in a row.

Kellogg’s (K)

When you think of Kellogg’s, you usually think of breakfast food. The company’s portfolio includes cereals such as Frosted Flakes and Raisin Bran, snack bars such as Nutri-Grain and FiberPlus, and other foods including Cheez-It and Eggo Waffles. While the company’s performance is strongly affected by the prices of different grains, the popularity of its brands could allow the company to raise prices if necessary. The company currently has a dividend yield of 3.2%.

Coca Cola (KO)

You likely do not need a description of what this company does. Chances are this global beverage giant has sold you a product sometime in the last week. In the last year the company has had more than $42 billion in sales and the stock currently has a dividend yield of 2.8%.

PepsiCo (PEP)

You may be asking yourself why I have both Coca Cola and Pepsi on the same list. First of all, they are both very strong companies that pay stable dividends. But additionally, Pepsi’s business is different in ways other than the taste of their products. Besides their iconic soft drinks, the company also sells Lay’s potato chips and Gatorade, creating a diverse portfolio of products. The stock currently has a dividend yield of 3.3%.

Johnson and Johnson (JNJ)

While the company has taken a hit to its reputation lately with a string of product recalls, the core products of Johnson and Johnson are still profitable and growing. The company has a diverse mix of prescription drugs, medical devices, and over-the-counter products such as Listerine, Band-Aid, Tylenol and Benadryl. JNJ stock currently has a dividend yield of 3.6%.

Novartis (NVS)

Novartis is the second healthcare company on the list of dividend payers. It has a strong business in pharmaceuticals, vaccines, and other products such as Benefiber and Theraflu. This Swiss company currently has a dividend yield of approximately 4%, however it only pays out one dividend per year (albeit much larger than most).

Kimberley-Clark (KMB)

Kimberley-Clark is primarily a paper-based consumer products company. Its brands include Kleenex, Huggies (diapers), Cottonelle, and Viva paper towels. It has a very stable business and currently has a dividend yield of around 4.3%.

B&G; Foods (BGS)

B and G Foods is by far the smallest company on the list, with a market cap of less than $1 billion. But it still has a large portfolio of strong food products including Cream of Wheat and Ortega. The company currently has a yield of 4.9%.

Philip Morris International (PM)

Philip Morris is definitely a controversial pick. It is an international tobacco company (no exposure to the US) with brands such as Marlboro and Virginia Slims. Globally, regulations are generally behind US tobacco regulations, but it is still something to consider. Personally you may also have a problem with the ethics of profiting off of something that harms people (I certainly do and choose not to own the company). If you can see passed the ethics issues though, the stock has a yield of 3.8% and is a serious play on international growth.

Colgate-Palmolive (CL)

Colgate-Palmolive is the final consumer staples stock on the list. Its brands include Colgate, Palmolive, and Softsoap. Like its competitor Procter and Gamble, it has a noteworthy exposure to emerging markets. The company has a dividend yield of around 2.7% and has raised its dividend payout for 47 years in a row.

Consumer staples companies offer a safer and more stable way to invest in the stock market. They have diverse products that are used worldwide by billions of people, most with exposure to emerging markets. They also have strong dividends to reinvest and ultimately serve as a source of income.

Full disclosure: I am currently long Procter and Gamble. I have no intent to initiate new positions in the companies listed above in the next 72 hours. Always consult a financial advisor when it comes to investing.

Most investor’s greatest fear is taking a financial loss. Dividend investing can be one of the easiest and most reliable ways to achieve long term growth. In fact, any dividend paying stock holding actually grows in two different ways. First, the fluctuations of the stock market, and second, the periodic payouts offered by the company.
Nearly all dividend paying companies are large organizations with a long-standing history of increased value. In fact, nearly all major banks offer dividend payouts, as well as many natural resource organizations. This protects you from any major losses in the long-term.

The real power of dividend investing comes with the compound growth when re-investing your payouts. Eventually you actually own shares that were paid for by simply owning your original shares.

For example, if you buy 100 shares of Company A for $10, and they pay a quarterly dividend of 1 percent, you would be able to use the earnings to purchase one additional share of that stock. Without any further investments, your next dividend payout would result in an additional one share, plus a fraction. Over the long term, this eventually means you will have many more shares, resulting in much larger payouts.

As you can see this is not a get rich quick investing strategy since this will take many years to create a substantial amount of money. This kind of investing is meant to be used over a long time, usually twenty years or more. The reason that this type of investing is important is because of it low risk and ability to always make money. As with all investing though this should not be your only investment, as the saying goes “never put all of your eggs in one basket”. This is true even to this investment, this should only be one part of your portfolio.

For those just entering the stock market, investing their hard-earned money in a publicly traded company can be a scary proposition. The fear of how well the stock will perform and the prospect of losing money can tie a new investor’s stomach in knots, which is not entirely a bad thing. It is better for a new investor to enter the market a little apprehensive than to come in and just start throwing money around without a clue about what they are doing. While there is no way to totally take all the risk out of investing in the market, there are some conservative strategies for new as well as seasoned investors that can reduce some of the risks involved in investing in the stock market. One strategy that has worked well for many investors is dividend trading, which is simply buying stocks that pay a dividend per share to investors.

Dividend investing does not take all the risk out of investing, but should the share price of a certain stock drop, the investor still has the dividend coming from the stock. To some traders dividend investing may appear to be a boring strategy, however for those who prefer to invest and not just trade, it is exciting to see the dividends add up in their account. Some dividend stocks may seem to move sideways, with very little price fluctuation, but with every dividend payment, an investor’s cost basis for the security goes down by the amount of the dividend. Over time, a stable performing dividend stock could pay for itself through the dividend revenue produced.

Dividend investing is not a get rich plan, nor is it entirely failsafe, but it is a strategy that when implemented properly can help an investor increase his bottom line over the long term.

For many single parents, budgeting for family expenses can be quite challenging. When adding in investments for retirement, many single parents simply give up as they are strained to find the right way to invest scarce money. If you are a single parent who is considering the start to your investments and retirement planning, then you may want to consider the advantages to dividend investing.

Source of Income
Stocks that provide a solid return on your investment will typically provide a source of income by also paying out a quarterly, or semi-annual, dividend. If you invest in a company that has good foundation fundamentals, you can expect the stock price to rise which is a great way to invest for retirement. But, for single parents, the additional advantage comes by way of dividend payments which you can either use for re-investing or, even better, utilize as a source of income.

Good Return On Investment
Most companies that pay out semi-annual or quarterly dividends are companies with a good financial foundation and, typically, can weather through bad economic times or bad news that affects their industry. In the long term, and beyond your passive return by dividends, these types of stocks will rise in share price and provide retirement savings.

Beat Inflation
Dividend stocks, by their very nature, also beat out inflation rates. With inflation rates typically averaging around 3 percent each year, a stock that not only provides a rise in share price, but also pays out a dividend greater than inflation, will yield a good return on your investment. In comparison, stocks that do not pay out dividends may not rise in price easily and, by not paying dividends, it is feasible that you would miss the opportunity to obtain passive income.

As a single parent, if you find there are daily challenges in your ability to budget and save for financial emergencies, consider investing in dividend stocks. Based on these advantages alone, the dividend stock provides a great financial tool for families during stressed economic times. As always, consult your financial planner before making any decision to investment in stocks, bonds, or any other financial vehicle.

Through stock market investments, it is possible to collect thousands of dollars in dividend payments each year. With this money, you can pay bills, purchase big-ticket items, or reinvest cash back into the market to generate additional wealth. To plan your budget, it is critical that you become familiar with the concept of dividend yield. A dividend yield is similar to an interest rate, as it calculates an expected amount of investment income upon a principal sum.

How to Calculate Dividend Yield: Define Dividends

Corporations generally pay out dividends out of business profits on a quarterly basis. You must buy and hold shares of stock prior to and through the ex-dividend date in order to receive dividends on the next payable date. The dividend payable date usually falls one month after the ex-dividend date. For dividend quotes and scheduling information, you will visit a corporation’s official website and click on its investor relations tab.

How to Calculate Dividend Yield: Calculations

Again, a dividend yield is similar to an interest rate, as it gauges the amount of income that you can expect to generate from one lump sum. To calculate dividend yield, you will divide a corporation’s expected annual dividend by its current share price and take that number as a percentage. For example, Oil Company X pays out a $1.25 quarterly dividend while trading at $100 per share. The $1.25 quarterly dividend translates into an expected $5 per share annual dividend ($1.25 x 4 = $5). The $100 stock therefore features a 5 percent dividend yield ($5 / $100 = 5 percent). You would therefore expect to collect $50 in dividends over the next year, if you were to make a $1,000 investment into Oil Company X.

How to Calculate Dividend Yield: Company Type

Larger companies within established industries, such as utilities, banking, oil, and tobacco, are likely to offer higher dividend yields. These firms operate with fewer growth opportunities — so investors typically prefer that larger portions of profits are returned in the form of dividends. Alternatively, small companies that operate within cutting edge software, biotechnology, and semiconductor fields will pay minimal dividends, if any. These companies are more likely to reinvest the majority of profits back into their respective businesses to finance growth through equipment purchases and research and development expenses.

How to Calculate Dividend Yield: Warning

Contrary to bond interest, a corporation is not legally obligated to pay out dividends. Quoted dividend payments and yields may therefore never materialize, if the corporation were to fall into financial distress. As a common shareholder, you are last in line, and will receive dividends after interest is paid on bonds and also after preferred shareholders collect dividends. Be advised that an abnormally high dividend yield may signal a looming corporate bankruptcy. A weak, collapsing stock price does translate into an artificially high dividend yield. Prior to bankruptcy, a corporation will eliminate its dividend altogether.