No one cares more about your hard-earned money than you do.  The professionals, be they your bank or insurance company, may make you some money but if they fail they are unlikely to suffer. If you want to protect your hard-earned cash, you will have to get involved and take matters into your own hands. The internet has made it possible to get the information that was previously only available to professionals. Investing in stocks is now relatively easy and you can check out companies simply by going to the financial sites and getting the information and advice you need.

If you stick to blue chip companies, your returns may be lower than those from small companies but your risk will be less and you will still participate in the ongoing economy.  More product variety and wider market coverage as well as deeper pockets make large companies safer and able to withstand unexpected events.

Just about every finance house as well as the press and news media cover large companies so you are likely to get to know what is going on and be able to take action in good time.

You can set limits on both the down and upside, in order to discard laggards and to take profits at the top end. You should also keep at least 20% to 30% of your investment capital in cash to be ready for any unforeseen opportunities. Avoid buying and selling just because a share price has changed.

You should list your holdings in a spreadsheet and record prices so that you can follow performance in absolute and comparative terms. You could even write a monthly report to yourself stating why you bought each line, in order to check that your reasons are still valid.  Record and analyze any deviations from expectations just as you would do if you were running a business. That way you can fine-tune your actions for the coming month.

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It is best to invest in a sector where you have direct knowledge or one where information is easily attainable. You should also consider the company you work for because you should have a good idea of its prospects.  Key data on each company such as the price to earnings ratio and the earnings per share as well as debt and dividends should help form your investment decisions.

Government changes, new tax and spending policies, interest rate changes, inflation, currencies, raw materials, and world events all have an impact on stocks. Floods, hurricanes or earthquakes will affect insurance companies.  You need to do your homework and check on companies’ financial strength, the management, market potential, past performance, new products, competition and their leadership position within their sector.

If you wish to benefit from growth in emerging markets then you have two possibilities. You find either a unit trust or mutual fund specialising in them, or you select a company that is trading in these markets and you ride piggyback.  

Technology companies are very exciting but also risky.  Do not buy at very high prices with respect to their potential earnings and end up paying for the progress out of your own pocket. 

If you don’t want the bother of managing your own portfolio and you prefer to use financial advisors, make sure that their priorities are your priorities. You still need to follow up and check their performance.

Just consider your holdings as an orchard where you pluck the fruit. If a tree falls ill, you take it out and plant a new one.

Originally published here.

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John C. George

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14 Foreign Blue Chip Stocks With 5%+ Dividends

 

The Fed model compares the forward earnings yield of the stock market with 10-year government bond yields.  The model assumes that investors view stocks and bonds as competing assets and will purchase whichever asset has a higher yield, according to an article in Quarterly Review of Economics and Finance May 2009 issue.

 

Income investors will always be in a dilemma over whether to purchase fixed income securities such as bonds, or to buy stocks with competitive yields. Companies that pay generous dividends tend to perform well in an era of mild inflation.

 

More than half of the total global stock market capitalization is outside of US borders.  The reason to have foreign dividend-paying stocks is for income and growth from economies globally, especially in an environment that features a weakening US dollar.

 

14 ADRs With 5%+ Dividends

 

Prospective foreign companies often come to the US for financing, and that means a greater number of investment opportunities for income investors in ADRs.  I went over all foreign companies listed on US exchanges (NASDAQ and NYSE). The following are ADRs with dividends higher than 5%, market caps greater than $1 billion, and forward P/E lower than 15:

 

 

Name (Symbol)

Forward P/E (1yr)

Yield

Market Cap

MAGYAR TELEKOM (MTA)

10

19%

4.17B

ENERSIS S A (ENI)

13

11%

637.41B

TELECOM CP N Z (NZT)

13

10%

2.05B

Partner Comm (PTNR)

3

8%

2.94B

DEUTSCHE TELE AG ADS (DT)

13

7%

68.09B

CPFL ENERGIA SA ADS (CPL)

13

7%

9.94B

FRANCE TELECOM ADS (FTE)

10

6%

70.66B

HELLENIC TELE ADS (OTE)

9

6%

7.74B

BP PLC (BP)

9

6%

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180.71B

ECOPETROL SA (EC)

15

6%

52.17B

MOBILE TELSYS OJSC (MBT)

10

5%

18.84B

TOTAL S.A. (TOT)

9

5%

142.22B

PORTUGAL TELECM SGPS (PT)

14

5%

11.07B

TELEFONICA SA (TEF)

10

5%

132.75B

 

Not surprisingly, these companies are either in the telecom sector or energy related industries. They yield plenty, and many have some solid fundamentals to vouch for as well.

 

Telecom

The US telecom market is mature with very little growth out there.  However, there are still more opportunities for foreign telecom companies, especially in emerging markets.

 

Magyar Telekom (MTA) provides telecommunication services in Hungary and internationally.  Partner Communications (PTNR) operates a mobile telecommunications network in Israel.  Hellenic Telecommunications (OTE) is a telecommunications services provider in Greece, Albania, Bulgaria, and Romania.

 

Mobile Telesystems (MBT), the Russian mobile telecom company, became a mobile/land-line provider this week with the purchase of COMSTAR-UTS.  This gives it an entry into broadband – one of the country’s underdeveloped markets.  Russia has vast stores of oil and gold, the world’s 3rd largest currency reserves, and a relatively low net debt-to-GDP ratio.

 

Telecom Corp. of New Zealand Ltd. (NZT), Deutsche Telekom (DT), FRANCE TELECOM (FTE) and Telefonica SA (TEF) are all in developed markets.  Portugal Telecom (PT) is investing heavily in a fiber network and TV service in Portugal and in 3G & 3.5G technology in Brazil.

 

Utilities/Energy

 

Enersis S.A. (ENI) engages in electric power generation in Argentina, Brazil, Chile, Colombia, and Peru.  CPFL Energia S.A (CPL) serves residential, industrial, and commercial customers in Brazil.  Ecopetrol S.A. (EC) is a crude oil and gas giant in Columbia.

 

Main International ETFs With 5%+ Dividends

 

Name (Symbol)

Yield

WISDOMTREE EX-FINL (DOO)

12%

WISDOMTREE PACFC EQ (DNH)

10%

WISDOMTREE DEFA (DTH)

9%

WISDOMTREE PAC TTL (DND)

9%

WISDOMTREE EUR TDIV (DEB)

8%

WISDOMTREE INTL LC (DOL)

8%

WISDOMTREE DEFA (DWM)

7%

WISDOM TR EM MKT (DEM)

7%

VANGRD EUROPEAN ETF (VGK)

6%

 

Conclusion

 

An investor who missed the 10 best performance days out of 110,000 trading days would have had a portfolio that was 69% less valuable than a passive portfolio.  Avoiding the 10 worst days would have resulted in a portfolio that was 337% more valuable than a passive investment, according to an article titled “Black Swans in Emerging Markets” in Journal of Investing Summer 2009 issue.

 

When a crisis strikes, the people who sell first get the best price, if they can move ahead of a wave of forced sales.  If you are not a trader or can’t time the market, the best way is to find solid-yielding companies and stay invested.

 

Fundamental metrics such as P/E and dividend yields are too narrowly focused to stand alone as a single measure of a stock.  Inconsistent dividends in the past mean that the dividend yields can’t be counted on.  By combining different methods of valuation, you can get a better view of a company.

 

Disclosure: I have long position on CPL.   Data is from Yahoo Finance as of December 4, 2009.

 

To learn more about dividend investing, be sure to check out our stock trading course!

 

Originally published here.

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My Wealth.com

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