Saving and Building Wealth with Dividends
** LEGAL DISCLAIMER **
This is my opinion, please always consult the assistance of certified professionals
Unless you live in a bubble you are aware of how bad savings and interest rates have become. Our economy unfortunately is struggling and from the number of businesses closing their doors locally and going out of business nationally , I think we have some time before it comes back. There is no magic bullet here so it is time to dig in and get frugal and get smart. One thing I have always been a believer in is investing in equities, especially those carrying a dividend.
For example one may invest in Citigroup. You may say that’s not a good idea, the credit crunch, new laws, especially one being considered that would force banks to put a lot of their high risk investment vehicles back on the books which made this mess, our reasons not to invest. However, I say they are low, and low is a good time to buy. Citigroup has a new CEO Pandit. I have been reading about him and the restructuring he is doing inside of Citigroup and it sounds good. Plus, you get a 5.80% yield on the stock at its current price of $21.84.
Then there is AT&T. A solid 4% yield at its current price of $38.78. Or Verizon, 4.5% yield at its current price of $37.36. Yahoo has a good tool for screening stocks, Yahoo Stock Screener . If you are looking for other good yields, I used a stock price greater than $5 but less than $50. I also, set it for a yield greater than 5%. You can filter further by adding P/E or other variables to narrow the search. As always do your research, as a good yield is not indicative of a good stock. The DOW components are good for delivering solid yields and stable stocks as they are larger , mature , companies.
And the biggest yield in the DOW right now is Bank of America. You are netting over 8% at its current price. I don’t think that will last so it might be a good time to scoop up some shares. It has $335 billion in cash and is trading near its current book value of $31.21.
Obviously you need to do your homework and assess your own tolerance for risk. But if you want to stay in front of inflation and make your money work for you these good be a start. The nice thing about stock with a good yield is that you not only get the dividends, but the potential appreciation of principal ( cost of the stock ) . In the long run these are very powerful financial tools that good help you achieve or exceed your monetary goals. GOOD LUCK !!!
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