payments

Understand How To Choose Your Dividend Stock Picks Wisely

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What Type Of Companies Pay Dividends?

To find good dividend stock picks, look for a long, solid history of the company.

When you look for things like this, you are doing a type of research called fundamental analysis. Fundamental analysis is basically the study of a company’s fundamentals.

The other type of stock search is called technical analysis. This is mainly the study of a company’s price chart. But don’t worry, for dividend stock investing, you wont need to learn any technicals.

Companies that are steadily growing or rapidly growing are less likely to pay dividends. These companies are wise stock investments for the long term, just not for dividends. When a company is growing, it is wise for the company to re-invest they’re earnings back into themselves.

Larger companies often do offer dividends. This is sometimes taken as a sign that the company has exhausted all it’s options for growth. It can also be taken as a sign that the company has faith in it’s future.

Getting The Most For Your Money

When choosing your stock picks, it may seem obvious that you would want to choose the one with the greatest return on your investment, right? For now, lets just say yes.

Another important thing to look for is dividend growth.

This is when the dividends paid out increase at a certain percentage over time. So, like most investment strategies that I have discussed in previous articles, you must decide what is best for you. Higher payout now or higher payout later?

Picking The Perfect Payment Schedule… Five Times Fast

As well as looking at the above two factors when determining your dividend stock picks, you should also consider how often dividends are paid out.

Often dividends are paid out a few times a year. Some companies also surprise they’re investors with extra payouts.

Not As Easy As 123

There are a few more things I would like to discuss with you when choosing your dividend stock picks. From there, you should be armed with enough information to get started.

I have skimmed over a few important things to look at when choosing you dividend stock picks. It may seem all fine and dandy up till now. But, heres the nitty gritty of it.

Will I Actually Get My Dividend Payment?

As I said before, high dividend-paying stocks are more attractive. But, there is a flip side to that.

Let me start by saying, it would be wise to choose a stock that will be paying dividends on a consistent basis in the foreseeable future.

When a stock is paying very high dividends, this should throw up a red flag. You should be aware that this company has a better chance of missing a few payments throughout the year (this would be scary) than a company that is conservative with they’re payments.

When a company misses a promised payment, this damages the trust in the company. Think about it, you want your money, right?

This trust may take years to gain back. Companies know that. So, the good ones try extra hard to manage they’re money wisely in order to continue paying dividends on a scheduled basis. Thus, building they’re shareholders’ faith.

This is why often, steady companies that look promising don’t pay such high dividends. So, take the good with the bad and find a cozy medium that works for you.

July ’08 Credit Card Spending Post

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After our little trip this week, we got back to a pile of email and bills all that required attention. This included the regular credit card bill from our bank. Well, it’s good news/bad news time! The good news I didn’t pay any additional charges on my card apart from the statements as my card was paid off in-full last time. The bad news is that some business related expenses all appeared on the card. So here goes:

1. The A/C for our office was causing us a lot of bother: it was noisy, ineffective (except when there were few people in the room), old and expensive to run (probably was the piece of equipment that used the MOST power in our office). Thanks to a freak power outage, though, the outside unit was fried about three or four weeks ago, and wouldn’t start. So time to replace it! That’s when we bought a large Daikin replacement unit. The actual unit was an Inverter unit that is supposed to be more energy efficient as well as much quieter and should save us quite a bit of $$$ on electricity costs. Daikin claim

“…A Daikin Inverter has a more advanced technology that operates differently. It works like the accelerator of a car, gently increasing or decreasing power. It reaches the desired temperature quicker and steadily maintains it without wild fluctuations. That means uninterrupted comfort and significant savings on running costs.”

Total cost was NT$53,800 (plus installation fee of NT$1800 paid to the engineers). In fact, the total cost of air-conditioning for our business seems to be about the largest capital expense that we face and can easily top NT$250,000 for new machines. Thankfully, we purchased systems ‘as we went’ rather than laid out that money upfront! However, we have to replace a machine almost every 12-16 months as the older ones just wear out. Some of the expense of the purchase will be recouped through lower electricity bills, fortunately.

2. Paypal charges amounted to NT$7,752 for hosting. As you may remember I was using Dreamhost for all of my sites. Apart from being foolish, it was also getting expensive and Dreamhost wasn’t able to provide stable uptimes for such sites, so I transferred three sites to other hosting arrangements courtesy of Bluehost, Hostmonster and Bluefur. That way I could monitor performance across each site, isolate the sites from one hosting failure, and trim some of my hosting expenses. The results have been positive: ALL of my sites now seem more stable, even those still hosted on Dreamhost.

3. Other minor bills include my own cellphone bill (NT$376) and our regular life insurance payments (NT$2000).

That’s it. The total bill is NT$63,928 for July 2008. Quite the biggest in a few years! That’s for sure.

drip, drip, drip – wealth accumulation is silent!

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Drip, drip, drip! Is that the sound of rainwater dripping from the guttering? Or is that the sound of your wealth dripping gradually into your account?

We’ve owned a number of different assets and asset classes over the last fifteen year: property, a business, stocks, mutual funds, bonds, bank accounts, etc.. and each of them has prospered over that time in the same fashion – Drip, drip, drip!

In Taiwan, house property is measured per ping. A ping is generally the size of a traditional Japanese tatami mat. Since we purchased our house, we’ve seen our house value increase about 50% or more per ping in seven years. In addition, we were fortunate enough to be able to buy an additional car park. More than that, we’ve spent the last seven years paying down our mortgage slowly. All of these have resulted in a net increase in our equity stake in our house to approaching 60% from the initial 20% at outset. But all of this has been achieved quietly, regularly, and opportunely.

Our business, too, rarely has much excitement, though the students making progress and developing mastery of a complex linguistic system is thrillling. As a business, the mechanics are silent: counting the bills, updating the accounts, paying the bills and taxes, figuring out our profit margin (if there is any!), and so on. There is little hype compared to working for an Internet giant, like Google.

Stocks and mutual funds, too, move up and down silently. They pay (usually) dividends that are paid quarterly into your account. There is little fuss, excitement or pzzazz over the payments, profits, or losses. The numbers just sit there mocking you if you are doing badly, teasing you if you are doing well.

Bonds, CDs and bank accounts pay interest in similar ways: you go into the bank, update your passbook, check your account or renew your CD, and suddenly the interest payments are there. Silently. Mechanically.

There are no whooshing sounds, no zaps of lightening, no cheering or clapping: just the sound of footsteps to the banking machine to pay the regular payments, and to take care of the other regular details. It’s the silent wealth effect. It’s a lot less glamorous, less fun, less attention seeking than winning at Las Vegas on the poker table, getting a jackpot at Atlantic City on the slots, or winning the Lottery.

Which would you rather have – the drip, drip, drip or the heavy thunderstorm of wealth building?