Sunday, February 26, 2012
Weekend Reading - February 26, 2012
I haven't done a weekend roundup in quite a while. Time flies by fast! Working 50+ hours a week at my job, managing investments and blogging all take up a large amount of my time. Although I'm looking for a way out of spending considerable amounts of my time at my day job, blogging and investing continue to be extremely rewarding and enriching. Thanks to all of you readers out there that provide awesome commentary and tips. We're all learning from each other.
2012 has been very kind to the markets so far. The S&P 500 is up 8.6% YTD, and it's surprisingly showing no signs of abating. I, like other value investors, am anxiously awaiting a 5-10% pullback which would provide better entry prices on quality dividend growth equities. Either way, I'm going to stick to my plan and purchase what I think are the most attractively valued investment opportunities through whatever market conditions are present.
Here are some excellent articles from fellow dividend growth investors, frugalists and personal finance bloggers from the past week.
Dividend Monk announced that he's launching a newsletter. I signed up right away, as this is a fantastic service for the investment community. I'm strongly looking forward to the first newsletter in March!
Pay Down the Mortgage or Invest More? A win/win question.
MMM tackles the age old debate between directing more funds toward paying down the mortgage or using that capital for investments. A solid read, but as MMM points out if you have extra cash you're in a good spot either way.
Rent v. Owning Your Home, opportunity cost and running some numbers
jlcollinsnh discusses his recent decision to sell his house and go back to renting. It's an interesting article, and I left a lengthy comment at the end. I currently rent, and find that although I may pay a premium for the flexibility that renting offers I'm glad that I have the freedom to move quickly if employment opportunities arise or if long-term travel is viable. I think the commonly accepted wisdom that owning your own house is necessarily better than renting needs to be redefined and customized according to your individual circumstances.
My Favourite Takeaways – The Wealthy Barber Returns (Part 2 of 2)
My Own Advisor discusses some of his favorite takeaways from The Wealthy Barber Returns by David Chilton. Looks like this book provides simple and straightforward, but timeless, advice on saving, avoiding debt and achieving financial independence. You can check out My Own Advisor's first part of this series here.
PepsiCo (PEP): A Better Value than Coca Cola (KO)
Dividend Growth Investor analyzes PepsiCo (PEP) and shows why it's currently a better value than Coca-Cola (KO). I would agree here, as I currently have a much larger stake in PEP than I do KO due to PEP's relative value over the time frame I've been able to invest my excess capital into dividend growth stocks. I would love to increase my stake in KO as I feel it's one of the best managed companies in the world, it just does not provide a lot of value at current prices. However, sometimes an investor does have to pay up for quality. On the other hand, one might want to wait for a fatter pitch to allow a margin of safety.
11 High Yield Utilities With A History Of Growing Dividends
D4L lists some utilities that have a history of growing their dividends. The great thing about utilities is that you have a relatively stable source of income, as people have to heat and power their homes. The growth is likely limited with these investments, but you do typically have an opportunity to invest in stocks that provide a higher than average yield with growth in the dividend to boot. I currently do not have any utilities in my Freedom Fund, but I am looking to change that. I am interested in possibly opening a position with one of four utilities soon: AVA, UNS, DUK and SO. Of these four, I believe AVA and UNS are the best available opportunities.
5 Utilities Worth a Look
Continuing with utilities, Compounding Income listed five utilities he thinks are worth a look for investors. Of the ones he listed here, I find AVA and SO to be most opportune for me as future investments at this time. As I said above, I'm currently interested in the utility sector due to the weakness YTD, and AVA and UNS are currently on my shopping list.
The Stoic Investor updates his portfolio using Google Docs and also decides to include a lot of important information like cost basis and yield on cost. He's got a relatively concentrated portfolio, but some high quality holdings like MCD and T.
Is the RV lifestyle for Us? Or maybe explore Central America?
My Saving Style considers traveling in an RV or perhaps traveling to low-cost locales once FI is reached in this post. I'm definitely interested in one day possibly living in a low-cost place like Ecuador, the Philippines or Thailand once I'm financially independent. At that point, not only are you not going to work everyday, but you're also traveling to interesting locations and saving money over what you'd be paying to live in the U.S.
When Issuing A Dividend Can Be Dangerous
Dividend Ninja had a guest post on his site about when issuing a dividend can be dangerous. This post highlights why it's so important to invest in companies that have durable competitive advantages, low debt, lots of free cash flow that can pay the dividend with ease and sell products or services that consumers need and/or want in many different economic environments.
Get Started Dividend Investing…Today!
Six Figure Investor shows why it's important to get started investing as soon as possible if you want the power of compounding on your side. It doesn't take a lot of money to get started investing. It just takes a little capital, patience, desire and research. As SFI said, get started today! Empower yourself.
Thanks for reading.
Photo Credit: Benoit Mahe