Best of the Week
Most Popular
1.Will UK Interest Rate Rises Crash House Prices? - Nadeem_Walayat
2.Full on Crash Alert for Major World Stock Markets... - Clive_Maund
3.Gold And Silver Market Bottoming? Big Rally Imminent? Reality Check Says NO - Michael_Noonan
4.The Coming Silver Price Rally Will Outperform All Previous Ones - Hubert_Moolman
5.The Trigger For The Upcoming Stock Crash - Harry_Dent
6.Imploding Department Store Results - James_Quinn
7.Dr. Copper is Speaking, are you Listening? ... - Rambus_Chartology
8.Pandemonium in the Stock Market, Dow falls 1,000 points in a week - EWI
9.Asia's Whirling Dervish of Devaluations Has Encircled China's Exports - Keith_Hilden
10.China Weakens the Yuan; Rattles Global Stock and Financial Markets - Gary_Dorsch
Last 5 days
This Stock Market VIX Chart Should Blow Your Mind - 3rd Sept 15
Eurodystopia: A Future Divided - 3rd Sept 15
Stock Market Prepares for the Next Decline - 3rd Sept 15
Europe Rethinks the Schengen Agreement - 3rd Sept 15
BP Oil Company Moves past Mistakes But Still Feeling Price Pinch - 3rd Sept 15
EU Migration Crisis and Population Density, Why Cameron is Right, England Really is Full - 3rd Sept 15
Stock Market Return to Crisis: Things Keep Getting Worse - 3rd Sept 15
Dow Theory Stock Market Sell Signal Examined - 3rd Sept 15
How OPEC’s Attempt to Save Face Affects the Crude Oil Market - 3rd Sept 15
Crude Oil Price Forecast 2015 and 2016 - Video - 3rd Sept 15
The Real Threat from China’s Stock Market Crash - 2nd Sept 15
How Our “Mixed Economy” Created These Mixed-Up Markets - 2nd Sept 15
'Gravity' Is Returning to Stocks and Bond Markets - 2nd Sept 15
OPEC Divorce And Self-Destruction Thanks To Saudi Crude Oil Strategy? - 1st Sept 15
The Beginning Of A New Financial / Stock Market Cycle - 1st Sept 15
Three Things Every Master Trader Knows About Trading Options - 1st Sept 15
Chinese Yuan Revolution? - 1st Sept 15
Take Advantage of Record-High Auto Sales… Before This Bubble Bursts - 1st Sept 15
Pondering Hitler's Legacy - 1st Sept 15
Mainstream Media Goes Berserk - 1st Sept 15
Your Decisive Stock Market Plan to Follow Whilst Most Investors Shiver With Fear - 1st Sept 15
Are There Stock and Financial Markets Investing Opportunities For The Remainder Of 2015 - 1st Sept 15
Crude Oil Price Forecast 2015 and 2016 - 1st Sept 15
REPO Window Hidden $Trillion QE Monthly Volume - 31st Aug 15
Silver and Warnings From Exponential Markets - 31st Aug 15
Stock Market Calls Fed’s Bluff - 31st Aug 15
Why Some ETFs Led the Stock Markets Down Last Week - 31st Aug 15
Stock Market Collapse - Take The Opportunity To Bail Before It’s Too Late! - 31st Aug 15
The Most Important Market Chart on The Planet - 31st Aug 15
Stock Market 50% Retracement - 31st Aug 15
Stock Market Crash Red Alert for 2nd Downwave... - 31st Aug 15
Independant Scotland 1 Year on, UK Civil War If the SNP Fanatics Had Succeeded - 30th Aug 15
Gold’s 7 Point Broadening Top - 30th Aug 15
The Day the Stock Market Shook the Earth: Takeaways From the Dow’s 1,000-Point Drop - 30th Aug 15
Gold Price Rally Marked by Short Covering - 30th Aug 15
Aging Stocks Bull Market - 29th Aug 15
Economic Destabilization, Financial Meltdown and the Rigging of the Shanghai Stock Market? - 29th Aug 15
The Stocks You Should Be Buying After the Market Drop - 29th Aug 15
How I Learned to Stop Worrying and Love Market Fluctuations - 28th Aug 15
China's Yuan Devaluation: Why It Was "Expected" - 28th Aug 15
Stocks Go Nuts But the Question Remains – Will the Rally Stick? - 28th Aug 15
Fed’s Stock Market Levitation is Failing - 28th Aug 15
The Eight Energy Systems Driving The Stock Market Rout - 28th Aug 15
Silver Sold, then Squeezed - 28th Aug 15
U.S. Economic Fundamentals 'Look Good' - Bullard of St. Louis Fed - 28th Aug 15
Stock Market Margin Calls Mount - 28th Aug 15
Einstein, Physics, Gold and The Formula To End Economic Decay - 28th Aug 15
The 10 Best Stocks for Options Trading Plays in This Market - 28th Aug 15
Economics of a Stock Market Crash - 28th Aug 15
Currency Wars Detonate; Gold Refuses to Budge - 28th Aug 15
UK Immigration Crisis Hits New Record, Trending Towards Becoming a Catastrophe - 28th Aug 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Global Stocks Slide

What Stocks Albert Einstein Would Invest in Today

Companies / Investing 2012 Nov 27, 2012 - 03:33 AM GMT

By: Investment_U

Companies

Alexander Green writes: Albert Einstein wasn’t famous as an investor. He was a genius who revolutionized theoretical physics. But if he were alive today, it’s pretty clear what he would be doing with his money. And you should be doing it, too.


Let me explain…

It’s a truism that when times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

This is exactly the opposite of what they should be doing, of course.

But today you have a great opportunity to both limit risk and generate superb returns in your stock portfolio with – stifle that yawn – stodgy, old dividend-paying stocks. These investments aren’t nearly as boring as you may think. And in the decade ahead, their returns are likely to be outstanding.

The Basics of Dividend-Paying Stocks

Let’s start with the basics. Dividend yields are a company’s annualized payment divided by its share price. When share prices fall – as many have over the last month – yields rise.

It still astonishes me that investors are willing to lend money to the U.S. Treasury for the next 10 years at less than 2%. What a terrible bet, one that virtually guarantees a negative, real (i.e. after inflation) return over the next decade.

A far better bet is a diversified portfolio of dividend-paying stocks. Understand that, over the long run, stock market performance is tied to economic growth. And – news flash – the growth outlook in the developed world today isn’t exactly torrid.

Understand furthermore that over the eight decades through 2010, dividends contributed 44% of the stock market’s return, according to Fidelity Investments. Sometimes it was much more. During the 1970s, for example, dividends generated 71% of returns.

Dividend stocks today represent an unusual opportunity. U.S. corporations are sitting on $2 trillion in cash, a record amount. More S&P 500 companies have initiated or raised dividends this year through August than during the same period in any of the last seven years. And there’s plenty of room for more increases. Payments are less than one third of profits, a historic low.

If you’re a growth-oriented investor, you probably don’t think much about dividends. You’re interested in doubling or tripling your money. And with a bit of patience, you can.

The Historical Returns of Dividend-Paying Stocks

Analysts often talk about the lost decade, how stocks have essentially returned nothing since the market highs in the spring of 2000. But the story has been very different with dividend-paying stocks.

Over the past decade – with dividends reinvested:

  • Oil producer Chevron Corp. (NYSE: CVX) has returned 200%.
  • Altria Group (NYSE: MO), the U.S. tobacco giant, has returned more than 300%.
  • Even musty old Con Edison (NYSE: ED) – a utility that was born 23 years before Thomas Edison – has returned 130% over the period.

Today there are plenty of blue-chip stocks with decent (and growing) dividends attached. Consider Johnson & Johnson (NYSE: JNJ), Procter & Gamble (NYSE: PG), Exxon Mobil (NYSE: XOM), AT&T (NYSE: T), Merck (NYSE: MRK), or Verizon (NYSE: VZ).

Or, for a more-diversified approach, plunk for a few shares of PowerShares Dividend Achievers Portfolio (NYSE: PFM), the Vanguard High Dividend Yield ETF (NYSE: VYM), or the WisdomTree Total Dividend Fund (NYSE: DTD).

Dividend stocks alone won’t generate a mouth-watering return. But dividends will rise over time – and surprising things happen when you reinvest them. Picture a snowball rolling downhill.

Albert Einstein understood this. As he observed, money compounding “is the most powerful force in the universe.”

Good Investing,

Alex

Source : http://www.investmentu.com/2012/November/what-albert-einstein-would-invest-in-today.html

by Alexander Green , Oxford Club Investment Director Chairman, Investment

http://www.investmentu.com

Copyright © 1999 - 2012 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Biggest Debt Bomb in History