DRIP stands for Dividend Re-Investment Plan. It is the corner stone of Dividend Investing as it allows your portfolio to re-invest the dividends and provide compound growth for your investments. No hypothetical compound growth from markets either since you can look at it just like you would when you look at interest. You can extrapolate what you would earn 5 or 10 years from now and you can even throw in some dividend increase as well. The different is in the tax rate.
Related: The Magic of Compound Growth
DRIP have done wonders to my accounts. My dividends grow by approximately 10% annually without adding any extra capital. The shares bought plus the dividend growth are all at work.
DRIP Account Options
Company or Full DRIP Plan
Company DRIP plans or Full DRIP plans are usually managed by a transfer agent such as Computershare or CST Trust Company. There are
Continue reading How To Setup DRIP Accounts?
Part of my Dividend Stock Research series, I have been going through some techniques to narrow down on pertinent dividend stocks. However, one key question when you have narrowed down on a stock is to decide when to buy. Along the same line, when should you sell is a good question.
Buy & Sell Moments
In my opinion, there are 4 different buy and sell moments. The condition for one of those moments can vary but we tend to execute our trades in such manners.
Initiate a Position
This moment is usually when you decide to make your first purchase. The rule of thumb is that you should not buy when the stock is trading at 52-week high. I have to admit though that I have broken that rule. A good moment is to wait for the price to pull back from its 52-week by 10% or more. What do you do when the stock is trading at the bottom of its 52-week range? Potash (POT) comes to mind
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Some employers decide to offer their employees the incentive of stock options as a form of employee compensation, and while this may seem like a good option at first glance, there are actually quite a few issues with it. Find out why employers might choose employee stock options as incentives and why they probably shouldn’t. Check out Etrade today to find out more about your own online trading possibilities.
The Pros of Employee Stock Options
There are a number of benefits of offering employee stock options. However, it’s important to keep in mind that these may not outweigh the consequences of offering them. Check out some of the benefits of employee stock options here.
Employee Tax Flexibility
Stock options offer employees tax flexibility, as they can choose when they exercise their stock options and, thus, time when they are liable for income taxes associated with investing in these stock options.
An Affordable Incentive
When companies are looking for incentives for
Continue reading The Problems With Stock Options As Employee Compensation
Many people believe that the stock market is akin to gambling away your hard earned cash, however, with just a little knowledge and forethought into the subject, it is easy to cut down the risk and create a winning portfolio that pays great dividends. Take a look at our five top tips when researching your possible investments and you’re sure to reap the benefits and avoid becoming a sceptical investor.
Revenue, Earnings and Cash Flow One of the easiest ways to research your stock is to keep an eye on the parent company. Simply put, companies with decreasing revenue are best avoided, or at least treated with care, whereas those with increasing revenue create a solid stock foundation for you to build upon in the future.
Earnings per Share and PE Ratio The earnings per share (EPS) of a company refers to how many shares of outstanding stock the company hold and how much the company pays out
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On Thursday November 7, 2013 Twitter became a public company, and its share price skyrocketed. The initial share price was set at $26 but closed at $44.90 on its first trading day, a 73% increase! Should you go out and buy shares in Twitter now? The short answer is, no.
At today’s price of $41.75 a share the company is valued at $22.7 billion. Is Twitter really worth $22 billion? This 7 year old company has yet to be profitable but investors have driven up the stock price by over 60% in 12 days. Telus (T) which is profitable and has been around for over 100 years is currently valued at $23 billion. Personally I don’t believe Twitter is worth $22.7 billion today. I know Telus and Twitter are operating in different industries, but as an example let’s take a look at both businesses strictly from a financial perspective:
This recent bull market has gotten many predicting a drop these days. What’s interesting is that I was listening to Cramer’s Mad Money this week where he talked about how institutional investors are now working for their year end bonuses. Some have made it and playing it safe, those that have not, are going for the hail maries. That means, with their buying powers, they can really shuffle the cards for some entry and exit points. Their volumes alone can trigger warnings …
However, Carl Icahn had a different perspective on the current valuations. Many have seen higher EPS but not because the earnings are better but due to companies buying back shares. With low interest rates, it would appear that Icahn sees a mirage in the recent earnings and questions the sustainability of the earnings.
As usual, I am going to ignore both and stick to my dividend approach.
Not an exciting month on the dividend front. I will make $415.68 this month. As usual, I DRIP
Continue reading Dividend Income – November 2013
The experience of others often provides great insight into the goals we are pursuing. This is as just as true with forex as it is any other discipline. Several great traders and financial minds have walked these paths already. Below you will find a brief collection of some of their most poignant thoughts on a variety of subjects related to finance and trading.
Warren Buffet Quote
“Rule Number 1: Never lose money. Rule Number 2: Never forget Rule Number 1.” – Warren Buffet
No article like this would be complete without a contribution from Mr. Warren Buffet. Mr. Buffet is heralded as one of the most successful investors ever and is an inspiration to many would-be traders because of his ingenuity and humility. This billionaire has not only made an unprecedented amount of money in the financial game but has pledged to give a majority of it away to charity after he passes.
His quote is fairly self-explanatory but encapsulates
Continue reading 4 Famous Quotes From Famous Traders
It seems that having access to credit would be a good thing but too much credit is not actually in your favor if you need to get a loan or a credit card. Even if your credit has no outstanding balance, just having too much credit doesn’t play in your favor. I know for a fact as I was sitting down with a banking officer at a bank just recently.
I Closed a $90K Line of Credit
In my frugal ways to move away from monthly bank fees, I have been getting setup at another financial institution and to manage my bill payments during the transition, I wanted a line of credit of $10K. I already had nearly $150K in credit through my other financial institutions through my home equity line of credit and that was preventing me from opening the LOC. I was puzzled but the banking officer was showing me what reducing my access to credit would do in their system.
As it turns out, it’s not
Continue reading Too Much Credit Can Hurt You
Let me start by saying that the book idea is great and it’s not full of math, theories and history. It’s simply a rule book and more specifically a book about money rules. You know I have been discussing that saving is really important. In my opinion, it’s equally important as investing when you are building your wealth and this book just goes over 261 rules to help you manage your money individually and as couples.
Sample of Money Rules
Each rule in the book Money Rules is about 1 to 3 pages with some very good details explaining the rules and providing some context to put the rules in perspective for your situation. The rules are split amongst a number of financial areas such as:
- Reality Bites
- Finding Balance
- Cash Management
- Smart Shopping
Below are some rules I picked that resonate with me or that I can use to make my own decision.
Continue reading Money Rules Book Review
In all my years of investing, nothing has grown my portfolio more than my savings. I have done well with a couple of accounts over the past 4 years but that’s mostly due to the market crash of late 2008. Instead of fleeing the markets, I jumped in with both feet and picked up many stocks on a fire sale. I am, however, conscious of those performance reasons and as such I have continued to focus on saving what I can to grow my wealth. Saving plays a big part in my wealth building strategy.
The best saving you can do is to pay yourself first. Take 10% and put it away and never touch it. Do what you can to avoid touching it. Temptation may be there, but if you touch it, you have to start over and time is crucial!
I put 10% of my gross income in our company defined contribution plan and my employer gives me a 50% matching contribution so that’s
Continue reading Your Savings Ability is Your Golden Goose