Life is good!
I’m looking forward to a new regimen of frugality, which should allow me some free capital to continue purchasing high-quality dividend growth stocks at attractive valuations. However, while I believe I’ve got the savings side figured out, the stock market isn’t giving me a lot of opportunity right now. Perhaps I picked a great time to move up North and take a quick break from buying stocks?
The Dow Jones Industrial Average is coming up on 17,000 points – I remember when 12,000 seemed a little crazy. And while that number is irrelevant without some kind of valuation, the Shiller P/E ratio stands above 26 right now. I consider the Shiller P/E ratio a general “check on the weather” – a tool to gauge the broader market’s valuation. Now, while I don’t care for valuing the entire market – a fruitless and impossible exercise – I consider it useful to get a general idea on how far my dollars might go. And since the median Shiller P/E ratio is about 16 going back more than 100 years, we can probably assume that stocks in aggregate are pricey.
However, I value companies individually since that’s how I buy my stocks, so I’ll be looking for individual opportunities that make sense over the next week or two. I hope we get cheaper prices, which would open up even more opportunities. But I’ll take what’s there. Since I’m investing for the next 20-30 years, a slight change in the valuation of stocks doesn’t really make a big difference anyhow. Time is on my side in that regard, and has the power to overcome slightly expensive stocks.
In the meantime, I’ve got some interesting articles that I wanted to share with you readers. I’ve been spending more time than ever reading lately, so it’s a pleasure to share some material. I hope you all have a great weekend, enjoy the weather, and be safe. As always, thank you for the support!
Below, you’ll find a short list of articles I’ve recently read and enjoyed. I hope you do as well!
How much do you need to earn to be happy?
Yahoo Finance recently ran a piece on a poll they conducted, asking people how much money they think they’d need to earn to be happy, and how much they’d need to feel rich. These articles are usually just fodder; however, this one was interesting in that they specifically pointed out that it’s not necessarily how much you earn, but rather how much you save that could lead to financial security. I’ve noticed that since I first started my journey back in 2010 that mainstream media has been picking up on this basic financial truth more and more lately. Hallelujah!
Baxter International (BAX) Dividend Stock Analysis
Dividend Growth Investor took a look at Baxter International (BAX) recently, and concluded that it appeared to be a solid company trading for an attractive price. Couldn’t agree more, as it’s currently high on my watch list for a potential purchase this month. Solid numbers, and the split could lead to very interesting results over the next year or so.
A Wealth Poem – Recited by Guy on The Road
J. Money shared this wonderful poem, describing how wealth is a bucket. I really enjoyed this! I also feel the same – people focus too much on the spigot, ignoring the hole in the bottom of the bucket. While the spigot is important to building wealth, the size of the hole will determine how much wealth you keep over time. Good stuff.
Housing ‘crappy investment’: ‘Shark Tank’ Pro
Kevin O’Leary – an entertaining and boisterous businessman and investor, of which I’m a fan – was recently on CNBC discussing how he believes real estate will be a bad investment over the next 10 years or so due to rising interest rates, stagnating prices, transaction costs, maintenance, and taxes. He believes most, especially young people, will be better off renting and plowing their excess capital into the markets, with 50% in stocks and 50% in bonds. His comment on being a vampire is typical O’Leary, and very funny. However, I think Kudlow made a great point on how real estate is an asset that should be considered based on your local market. For instance, homes are routinely sold in my area for $50k. In San Francisco that might buy you a closet. As always, an entertaining discussion.
Don’t Cut The Legs Off Your Successful Investments
Tim compared some wonderful companies against the S&P 500, and reminded us why it’s oftentimes a good idea to let winners continue to win. If you’re invested in a group of great companies that continue to reward you with rising dividends on the back of increasing profits, it’s generally best to shut up, sit tight, and let those businesses do what they do best.
Dividend Update – May 2014
Passive Income Pursuit earned $244 in totally passive income this past month. Just another solid step toward financial independence. Good stuff!
Give Yourself the Gift of Not Worrying About Money
MMM put together this great post, and it couldn’t have come at a better time for me. I recently decided to give myself the gift of not worrying about money, focusing now on writing and inspiring instead of pure income. It’s a wonderful feeling to wake up every day and now that I’m working on things that bring me joy and genuinely make the world a better place. And knowing that, in the end, I’ll most likely be alright melts the anxiety away. Of course, one has to have a little money in the bank in order to stop worrying about it, but that’s why I’ve been working so incredibly hard over the last five years. And the hard work isn’t over yet, as I’m actually “working” more hours than ever, even if it isn’t actual work to me.
Growth Update: May 2014
My Dividend Growth shares his progress over the month of May, and everything continues to fire on all cylinders. He’s setting new records for dividend income and portfolio value. Success begets success, and he’s off to a great start!
Monthly Dividend Income: May 2014
Starting From Zero also hit a record for dividend income in May. By the time he’s my age he’ll be far ahead of where I’m at now, and very likely will have the ability to retire in his 30s, if he so chooses. It’s wonderful to build options and flexibility for your future self.
Dividend Income Update – May 2014
DivHut had a very solid month of dividend income, with over $170 lining his pockets with no work on his part. The joys of being a dividend growth investor!
May 2014 Passive Income
And on the other end of the spectrum, you have My Dividend Pipeline, who received more than $850 in total passive income for the past month. Incredible stuff, and it takes a lot of time, patience, and persistence to do this. Rewards are there for those who work hard and stay consistent.
Best 2014 Dividend Stock Pick Returns – I’m Still Ahead
The Dividend Guy reviews his stock picks for the year, and he’s beating his benchmark by a pretty wide margin. Always nice to have some reassurance that you know what you’re doing!
June Buy: AT&T (T) or Verizon (VZ)
Dividend & Whisky is considering investing in one of the two telecommunications giants, and appears to be leaning slightly towards AT&T Inc. (T) right now. I think both T and Verizon Communications Inc. (VZ) offer solid yield in this market, but I also believe that growth will be limited going forward. I have small positions in both, and don’t plan to make either one a major core holding.
How to inspire change
Finally, we have an inspirational post from Richard Branson that talks about how personal stories can inspire change for the good in the world. I hold that same view, and this blog is my representation of that belief. I’m sharing my personal experience in a story format, which basically shows you that if someone like me can walk the path to financial independence, then it’s certainly possible for you to as well. And I hope to continue inspiring everyone out there in the process.
Full Disclosure: Long BAX, T, and VZ.
Thanks for reading.
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