Best of the Week
Most Popular
1.BrExit House Prices Crash, Flat or Rally? UK Housing Market Affordability Crisis - Nadeem_Walayat
2.Stocks Bull Market Climbs Wall of Worry, Bubble? When Will it End? - Nadeem_Walayat
3.Gold Price Is Now On Its Way To All-Time Highs - Hubert_Moolman
4.Deutche Bank Stock Price Crash - The EU Has Problems Far Beyond the Brexit - Harry_Dent
5.UK interest Rate PANIC CUT! As Banks Prepare to Steal Customer Deposits - Nadeem_Walayat
6.Gold and Silver Bull Phase 1 : Final Impulse Dead Ahead - Plunger
7.Central Bankers Fighting An Unprecedented Global Economic Slowdown - Gordon_T_Long
8.Putin Hacking Hillary for Trump, Russia's Manchurian Candidate? - Nadeem_Walayat
9.Stock Market Insiders Are Secretly Selling, Cycle Top Next Month - Chris_Vermeulen
10.Gold Sector - Is it time to Back up the Truck? – Mortgage the Farm? - Peter_Degraaf
Free Silver
Last 7 days
Theresa May Instructs Police, NHS Gp's, Public Sector To Stop Racial Discrimination in Service Delivery - 28th Aug 16
Ignore Yellen and Buy the Dip in Precious Metals - 27th Aug 16
SPX Downtrend Should be Underway - 27th Aug 16
Unraveling the Secular Economic Stagnation Story - 27th Aug 16
The Precious Metals Sector and the Fed. . . - 27th Aug 16
Stock Market - All Is Calm, All Is Not Right - 27th Aug 16
Gold Junior Stocks Q2 2016 Fundamentals - 26th Aug 16
Buy Gold’s August Dip? Gold’s Monthly Sweet Spot In September - 26th Aug 16
The IMF’s Internal Audit Reveals Its Incompetence and Massive Rule Breaking - 26th Aug 16
Commodities Are the Best Bargain Now—Here’s What to Buy - 26th Aug 16
Why I Left Canada and Became A Citizen of the Dominican Republic - 26th Aug 16
The GLD vs GOLD - 26th Aug 16
Can Stocks Survive Without Stimulus? - 25th Aug 16
Why Putin Might Be on His Way Out - 25th Aug 16
Bond Guru Gary Shilling - The Bond Market Rally of a Lifetime - 25th Aug 16
A Zombie Financial System, Black Swans and a Gold Share Correction - 25th Aug 16
OPEC’s Output Freeze: What Has Changed Since Doha? - 25th Aug 16
Merkel Prepares For a Deliberate Crisis While White House Plans For a Disastrous Succession - 24th Aug 16
Suspicious Reversal in Gold Price - 23rd Aug 16
If Trump Can’t Pull Off a Victory, Expect a Civil War - 23rd Aug 16
Ceding ICANN and Internet Control to Globalists - 23rd Aug 16
How to Spot an Oversold Stock Market - 23rd Aug 16
Gerald Celente Sees Worst Market Crash, New Military Conflict, Gold Spike to $2,000/oz - 23rd Aug 16
EU Olympics Medals Table Propaganda Includes BrExit Britain - 22nd Aug 16
BrExit Win's Britain Olympics Success Freedom Dividend, Economy Next - 22nd Aug 16
Stock Market Top Forming, but Slowly - 22nd Aug 16
(Really) Alternative Banking Systems - 22nd Aug 16
Vauxhall Zafira Fires - Second Recall Issued - Inspection Before Bursting into Flames? - 21st Aug 16
Will the Stock Market Bubble Pop Regardless if the FED Never Raises Rates? - 21st Aug 16
US Government Spending - 3 Big Stories Not Being Covered – Part III - 21st Aug 16
Silver Analysis - 20th Aug 16
SPX New Highs, Correction Next? - 20th Aug 16
Housing Bubble - The Marginal Buyer Holds The Pin That Pops Every Asset Bubble - 20th Aug 16
Gold Miners Q2 2016 Fundamentals - 19th Aug 16
Which Price Ratio Matters Most in a Fiat Ponzi? - 19th Aug 16
Big Policies, Bigger Failures - 19th Aug 16
Higher Crude Oil’s Prices and USD/CAD - 19th Aug 16
Here’s Why You Should Look for Dividend Stocks and How - 19th Aug 16
Deglobalization Already Underway — 4 Technologies That Will Speed It Up - 19th Aug 16
These 6 Charts Show Why the Average American Is Fed Up - 18th Aug 16
SPX Easing Lower - 18th Aug 16
Low / Negative Interst Rate’s Legacy - 18th Aug 16
The 45th Anniversary of The Most Destructive Event In Modern Monetary History - 18th Aug 16
USDU - An Important Perspective on the US Dollar - 17th Aug 16
SPX Completes Wave 1 Decline - 17th Aug 16
How to Quickly Spot Common Fibonacci Ratios on a Chart - 17th Aug 16
When Does a Forecast Become a Trade? - 17th Aug 16
Kondratiev Wave - The Financial Winter Is Nearing! - 17th Aug 16
Learn "The 4 Best Elliott Waves to Trade -- and How to Trade Them" - 16th Aug 16
Stock Market Bears Turning Bullish At New All Time Highs - Time to Get Worried? - 15th Aug 16
Job Seekers Sacrificed to the Inflation Gods - 15th Aug 16
A Look At Commodities and Financial Markets Trading Week Ahead - 15th Aug 16
Stock Market New Top Forming? - 15th Aug 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

How to Trade Elliott Waves

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

© 2005-2016 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

Catching a Falling Financial Knife