Weekend Reading – July 23, 2011

With the markets gyrating back and forth like an angry bull, it’s easy to get a queasy stomach. I’m not too worried, as the fluctuating market prices of my equities only hold weight when I buy and sell. The dividends, however, continue to land in my brokerage account for reinvestment. I love cash. Cash is king, and it shows that the company paying that dividend has cash as well. Remember, falling prices on equities provide an opportunity to invest at a favorable valuation.

Enough about all that. It’s the weekend. Time to relax and enjoy time away from the endless rat race.

Here are some excellent articles from fellow dividend growth investors, frugalists and personal finance bloggers from the past week.

Aflac (AFL) Dividend Stock Analysis
Dividend  Growth Investor analyzes Aflac, a company I’ve written about a few times lately. He is bullish on the stock and states he added to his position recently. I’m also bullish, but careful. I think it’s trading at very favorable valuations for a long-term position, but it’s European bond holdings and the Japanese disaster loom heavily. It is a stock I’m currently looking at.

2011-Q2 Performance Review
D4L gives us a look at his portfolio’s second quarter performance and also a look at his asset allocation. His dividend income is absolutely huge and, as always, very inspiring. When I start receiving this type of passive income I’ll probably be pretty close to leaving the rat race behind and enjoying a frugal and slow-paced life. That’s probably 10 or more years down the road.

Dividend Income – July 2011
The Passive Income Earner updates us on his dividend income from the month of July. Good stuff, and it seems that he is on track to hit $5k in dividends for the year of 2011. I’m very far behind, as I just started a year ago…but it is great to see others’ success and provides a benchmark. PIE is doing a fantastic job here.

Why Quarterly Earnings Are The Worst Thing To Ever Happened To Stocks
Buy Like Buffett shows us why ignoring long-term performance in exchange for reaching short-term results is a bad strategy. I completely agree and the best management teams will always trade beating quarterly earnings estimates for long-term shareholder returns.

6 Strong Companies with Double Digit Dividend Growth
Dividend Monk highlights a list of stocks that have had double digit dividend growth over the last 5 years. A venerable list of companies, and one that includes a couple on my watchlist (AFL, COP). All the stocks on this list would make pretty good investments, of varying degree.

The Dividend Payout Ratio
Dividend Ninja explains the payout ratio, which is what percentage of earnings a company pays out in the form of dividends. It is a prime ratio that a lot of dividend investors use to make investment decisions. I personally prefer a payout ratio right around 40-50%. Any higher and it could indicate that a dividend might be in trouble, and any lower might indicate a company is too stingy with its earnings. There are always exceptions to this, as this is just a generalization.

PepsiCo PEP Dividend Stock Analysis
The Dividend Guy analyzes PepsiCo, one of my holdings. I’m generally bullish on Pepsi, and its recent dip might provide me an opportunity to increase my holdings at a level just above my cost basis. I don’t think Pepsi will provide outsized gains, and it’s relatively fairly valued…but I think it’s a solid core holding with a dominant position in the snack food category.

June 2011 Dividend Income Update
My Own Advisor provides us an update on his dividend income. He is on track for dividend income of around $5k for the year, along very similar lines of The Passive Income Earner. Good stuff here, and I’m hoping within a few years to be earning this type of passive income. Keep up the good work!

Cash Rich Companies: Time To Increase Dividends
Dividend Stocks Online shows us the different investments available between growth companies and dividend companies. I obviously invest in the latter, and prefer when management returns a portion of earnings back to me so I can reinvest as I see fit.

The mental prison of being poor
Jacob compares being frugal to being poor. Interesting comparison that shows you the power of attitude and motivation. Staying on track with your goals is extremely important. It’s always one day at a time.


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