Making the case for dividend stocks with a high payout ratio

By: IS
Date posted: 09.02.2010 (4:00 am) | Write a Comment

As regular readers know, every month we post the top dividend stocks from the S&P500. Then, a few days later we send out a newsletter (you can sign up for it free) which takes a deeper look into those stocks in order to get not the highest dividend stock but the one that shows the most promise in terms of long term passive income. That generally implies a healthy company (financially) that is growing its dividend and can afford it. One of the criterias that we also use is the payout ratio which we decided to spend more time looking into today.

What is a payout ratio?

The payout ratio is a fairly simple concept, it represents the portion of earnings that is paid out to shareholders. The calculation is quite simply:

Payout Ratio = Dividend per share / Earnings per share

For example, a company that makes a profit of 2$ per share every year and pays out 1$ of dividends would have a 50% payout ratio.

Why you would want a low ratio

Conventional wisdom implies that you would look for a company with a very low payout ratio. Why? Because as you can imagine, a company that has a high payout ratio could very well be unable to continue offering its high dividends. It is non sustainable for a company to pay more out through dividends than what it actually generates. When that happens there are 2 options. Either diminish the dividend or increase earnings, both of which are challenging.

Because of that we have used the payout ratio in a very simple manner in our search for the top dividend stocks; setting a maximum “acceptable” payout ratio that we apply to take out non qualifying stocks.

Why you actually might want a high ratio

All of that being said, there are corporate finance theories that suggest you might not want to have a very low ratio either. One of the advantages of a high ratio is that its puts more pressure on managers to increase their earnings in order to be able to pay and increase the dividends. Such pressure has often been proved to generate better results in the end. It is psychological but it tends to help managers focus on increasing earnings and dividends.

Think about it for a second.. Do you tend to spend more when you have 10,000$ in your bank account (whenever that happens) or when you have a couple hundred dollars? Chances are that when you go shopping, you are much more inclined to spend with a big balance in your account. It is the same thing with companies that are only accumulating big cash piles. They often are less careful with spending which in the end hurts shareholders. A lot of research has been done over the years to prove this theory.

Another reason would be that a company that pays out most of its earnings will be able to make you profit a lot more when they increase those profits. A 50% increase in profits over the years could very well mean a 30-40% dividend increase as well if the ratio is maintained.

It is all about a balance

Like everything else, it is not black or white. You surely do not want a company that is unable to sustain its dividend payout and payout growth but you also want to look for a company that can be as efficient as possible. I will be trying out a few different numbers in the next few months to see what kind of results it generates. Be sure to sign up for our weekly newsletter if you want to find out more.

Examples

These stocks, all solid, consistent dividend payers all pay between 50% and 75% of their earnings out in dividends:

Pitner Bowes Inc (PBI)
Bemis Co Inc (BMS)
Coca-Cola (KO)
Eli Lilly (LLY)

There are many others…

So which do you prefer?

Would you be looking for a stock that pays a tiny portion out of their revenues or a larger chunk?

More on this topic (What's this?)
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Read more on Dividends, Payout ratio at Wikinvest

Quick news – September 1 2010

By: IS
Date posted: 09.01.2010 (5:11 pm) | Write a Comment

Tech news: (concern the stocks we follow)

Apple (AAPL) announced a new multiplayer Game Center, a new touch only Ipod touch, a new Itunes version, a tv box that uses Netflix (NFLX) for movie streaming, tv rentals are now available through Itunes

Best return:     Netflix (NFLX) +7,48%

Worst return:   Shanda Interactive (SNDA)

Top 100 Dividend Stocks – September 2010

By: IS
Date posted: 09.01.2010 (4:00 am) | Write a Comment

It is that time again, time to look at the top US dividend stocks. We’ve done this in past months and it’s been gaining popularity every time as many are like us, trying to build passive income through a dividend portfolio. The same stock is back on top of the rankings, although there are some challengers and I would expect things to change in the near future. That being said, I think many other criteria need to be considered when picking dividend stocks and that is why I will be narrowing down the list later this week for our mailing list members. If you are interested in finding out what are top dividend stock picks are, simply join our mailing list it’s free! I expect to send it out later this week.

What to look for

Last month, we were looking for stocks that have been able to grow their dividend payouts for many many years which yielded some interesting results. This time we will simply be looking at which companies show the most promise in terms of profitability which should help them raise dividend payouts in the future.

In terms of dividend yield only, the top yield is once again held by Frontiers Communications Corp which currently yields close to 10%. The easiest thing to notice is that FTR pays more in dividends than it makes in earnings. No doubt, they will not be able to keep it up. Here is the chart:

We will be filtering out the top 100 list to find the ones that fit all of these criteria! In the meantime, here is the list!

TickerNamePriceDividend YieldReturn MTDPayout RatioEx-Date
FTRFrontier Communications Corp7.739.71.18256.689/7/2010
WINWindstream Corp11.5358.671.18129.429/28/2010
CTLCenturyLink Inc36.168.021.52108.889/2/2010
PBIPitney Bowes Inc19.247.59-19.7468.9411/17/2010
RRDRR Donnelley & Sons Co15.1456.87-8.86N/A11/10/2010
MOAltria Group Inc22.326.810.7285.49/13/2010
RAIReynolds American Inc54.546.6-5.67104.999/8/2010
VZVerizon Communications Inc29.516.441.55145.5110/6/2010
TAT&T Inc27.036.224.277.6510/6/2010
FEFirstEnergy Corp36.536.02-1.766.611/3/2010
POMPepco Holdings Inc17.956.026.15101.289/8/2010
HCNHealth Care REIT Inc45.946.012.93222.1511/5/2010
CINFCincinnati Financial Corp26.686-3.1659.039/20/2010
LOLorillard Inc76.015.921.1766.5611/29/2010
LLYEli Lilly & Co33.565.84-4.4749.7311/10/2010
PGNProgress Energy Inc42.915.781.982.7710/8/2010
DUKDuke Energy Corp17.195.71.97114.3411/10/2010
QQwest Communications International Inc5.655.66-0.1883.389/8/2010
LEGLeggett & Platt Inc19.175.63-8.01137.849/13/2010
TEGIntegrys Energy Group Inc48.455.613.74N/A11/24/2010
PLDProLogis10.855.531.37N/A11/12/2010
AEEAmeren Corp28.075.4910.6455.239/7/2010
NINiSource Inc17.345.315.09109.5610/27/2010
HCPHCP Inc35.225.280.6716.0711/4/2010
PNWPinnacle West Capital Corp39.855.274.62258.9910/29/2010
CNPCenterPoint Energy Inc14.795.275.3474.6211/10/2010
HCBKHudson City Bancorp Inc11.5255.21-6.0754.711/3/2010
EXCExelon Corp40.725.16-1.4151.2911/10/2010
PPLPPL Corp27.165.15-0.48116.559/8/2010
EDConsolidated Edison Inc47.535.014.3774.7711/15/2010
PAYXPaychex Inc24.894.98-4.2393.9410/29/2010
SOSouthern Co36.694.963.8583.3210/28/2010
MCHPMicrochip Technology Inc27.694.95-7.9911511/9/2010
SESpectra Energy Corp20.344.92-177.2211/10/2010
BMYBristol-Myers Squibb Co26.084.914.6577.849/29/2010
PBCTPeople's United Financial Inc12.724.88-8.09201.1910/29/2010
PCLPlum Creek Timber Co Inc34.474.87-2.78116.5311/12/2010
SCGSCANA Corp39.034.871.8865.969/8/2010
TETECO Energy Inc16.884.864.6179.8511/10/2010
DTEDTE Energy Co46.854.781.4965.69/16/2010
AEPAmerican Electric Power Co Inc35.414.74-0.4455.6511/8/2010
HRBH&R Block Inc12.854.67-18.0541.099/8/2010
FIIFederated Investors Inc20.854.6-0.6549.7911/5/2010
XELXcel Energy Inc22.314.531.4664.999/21/2010
PFEPfizer Inc15.934.527.3657.0611/3/2010
PMPhilip Morris International Inc51.444.510.7868.49/24/2010
GASNicor Inc42.294.4-3.4362.589/28/2010
NYXNYSE Euronext27.744.33-4.25142.479/13/2010
MRKMerck & Co Inc35.164.322.0327.899/13/2010
OKEOneok Inc42.914.29-7.7856.5610/27/2010
PEGPublic Service Enterprise Group Inc31.964.29-2.8642.279/7/2010
KIMKimco Realty Corp14.914.29-1.06N/A10/1/2010
DDominion Resources Inc/VA42.764.282.9180.6711/24/2010
VTRVentas Inc50.514.24-0.41161.449/8/2010
MWVMeadWestvaco Corp21.764.23-9.1869.7811/23/2010
ETREntergy Corp78.844.212.7846.8611/10/2010
COPConocoPhillips52.434.2-5.0558.310/28/2010
KMBKimberly-Clark Corp64.44.10.4453.019/8/2010
DDEI du Pont de Nemours & Co40.774.021.2685.6211/10/2010
JCPJC Penney Co Inc204-18.874.5410/6/2010
NUENucor Corp36.783.92-6.03N/A9/28/2010
GPCGenuine Parts Co41.933.91-2.163.829/8/2010
PCGPG&E Corp46.763.895.3241.649/28/2010
HNZHJ Heinz Co46.243.893.9658.049/20/2010
CVXChevron Corp74.163.88-1.7950.5511/16/2010
KFTKraft Foods Inc29.953.872.5356.779/28/2010
WMWaste Management Inc33.093.81-2.5357.249/2/2010
JNJJohnson & Johnson57.023.79-0.9243.4211/19/2010
EIXEdison International33.753.731.8147.419/28/2010
NEENextEra Energy Inc53.733.723.747.3311/24/2010
CAGConAgra Foods Inc21.593.71-8.0546.8210/27/2010
SYYSysco Corp27.493.64-11.2449.689/29/2010
LMTLockheed Martin Corp69.523.62-6.6630.0311/29/2010
SVUSUPERVALU Inc9.723.6-13.0732.8211/29/2010
MATMattel Inc20.993.57-0.851.3211/24/2010
ABTAbbott Laboratories49.343.570.5343.0910/13/2010
KLACKLA-Tencor Corp28.013.57-10.848.2411/12/2010
INTCIntel Corp17.723.56-13.3371.2311/3/2010
NUNortheast Utilities28.973.544.9949.3311/30/2010
ADPAutomatic Data Processing Inc38.613.52-6.4555.999/8/2010
NOCNorthrop Grumman Corp54.123.47-6.9134.2711/26/2010
MOLXMolex Inc17.653.46-10.45137.899/28/2010
RTNRaytheon Co43.923.42-5.0824.7410/4/2010
MHPMcGraw-Hill Cos Inc/The27.653.4-9.1539.411/22/2010
HDHome Depot Inc27.813.4-1.6358.2111/30/2010
VFCVF Corp70.623.4-10.9856.729/8/2010
AVBAvalonBay Communities Inc105.223.390.12366.949/24/2010
CLXClorox Co64.823.39-0.0947.6910/26/2010
MMCMarsh & McLennan Cos Inc23.723.370.85183.710/6/2010
ETNEaton Corp69.483.34-10.887.2111/4/2010
PPGPPG Industries Inc65.833.34-4.49104.4711/8/2010
GEGeneral Electric Co14.483.31-10.1762.159/16/2010
ITWIllinois Tool Works Inc41.263.3-5.1564.029/28/2010
MROMarathon Oil Corp30.493.28-8.1557.3511/15/2010
MTBM&T Bank Corp85.643.27-1.149511/29/2010
CEGConstellation Energy Group Inc29.333.27-7.184.339/8/2010
KKellogg Co49.683.260.0845.0511/30/2010
PSAPublic Storage98.023.26-0.160.619/13/2010
PGProcter & Gamble Co/The59.673.23-2.4448.8410/20/2010
VNOVornado Realty Trust81.063.21-1.33N/A11/8/2010

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More on this topic (What's this?)
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Top 50 ETF’s – September 2010 edition

By: IS
Date posted: 08.31.2010 (4:22 pm) | Write a Comment

In what turned out to be the worst month of August in over a decade, bear ETF’s, funds that are built in order to profit from market downturns were at the top of the ranks. These funds and especially the leveraged short ones dominated the charts with Direxion and Proshares sharing the lead.

The other successful bet was the long treasury (TMF) which is essentially the same bet as a poor performance of the equity markets usually translates into strong performance of the treasuries.

Other bets that did well are:

-Short oil (DTO)
-Long Gold Miners (GDXJ)
-Long Global Carbon (GRN)

The one big surprise for me was not seeing a volatility ETF make the top 50 as they usually perform very well in such difficult environments.

And a few other commoditiy plays also did very well. Will these be winners in September? Difficult to say but most of the winners in August are still down for the year.

Without further wait, here are the top 50 ETF’s in August 2010:

TickerNameMarket CapPriceReturn YTDFees1Y ReturnReturn MTD
SOXSDirexion Daily Semiconductors Bear 3x Shares $8,770,043.00 $43.85N/A0.95N/A32.588
FAZDirexion Daily Financial Bear 3X Shares $1,017,564,000.00 $16.73(12.25)0.95-25.44823.372
TMFDirexion Daily 30-Year Treasury Bull 3X $30,228,000.00 $54.9672.230.9538.96721.884
SRTYProShares UltraPro Short Russell2000 $33,900,050.00 $56.50N/A0.95N/A20.721
TZADirexion Daily Small Cap Bear 3X Shares $788,917,600.00 $38.41(22.31)0.95-45.71220.516
SSGProShares UltraShort Semiconductors $37,107,000.00 $20.629.360.95-14.22120.413
TYPDirexion Daily Technology Bear 3X Shares $59,407,510.00 $49.1010.110.95-32.51119.895
SKFProShares UltraShort Financials $627,354,000.00 $22.98(3.80)0.95-11.73816.55
SJHProShares UltraShort Russell2000 Value $15,893,550.00 $23.55(11.08)0.95-28.15915.444
UBTProShares Ultra 20+ Year Treasury $15,553,600.00 $103.69N/A0.95N/A14.762
SDDProShares UltraShort SmallCap600 $28,632,000.00 $23.86(9.72)0.95-28.27414.443
BXDDBarclays ETN+short D Leveraged ETN Linked to S&P 500 $3,223,060.00 $55.5715.53N/AN/A14.033
TWMProShares UltraShort Russell2000 $651,168,000.00 $22.61(10.52)0.95-28.42213.953
SMDDProShares UltraPro Short MidCap400 $5,845,058.00 $58.45N/A0.95N/A13.874
SIJProShares UltraShort Industrials $14,742,000.00 $21.84(10.77)0.95-31.13313.791
KRSProShares Short KBW Regional Banking $26,509,080.00 $75.74N/A0.95N/A13.617
SQQQProShares UltraPro Short QQQ $49,027,570.00 $65.37N/A0.95N/A13.566
REWProShares UltraShort Technology $30,084,000.00 $25.0710.260.95-19.45313.499
SKKProShares UltraShort Russell2000 Growth $25,963,500.00 $18.22(9.15)0.95-28.4413.425
SPXUProShares UltraPro Short S&P 500 $401,037,000.00 $35.49(1.98)0.95-28.5613.093
BGZDirexion Daily Large Cap Bear 3X Shares $343,406,300.00 $16.47(3.85)0.95-30.76612.826
DTOPowerShares DB Crude Oil Double Short ETN $71,247,000.00 $83.8218.490.755.8212.615
ZROZPIMCO 25+ Year Zero Coupon US Treasury Index Fund $45,970,000.00 $91.9434.360.15N/A12.338
GDXJMarket Vectors Junior Gold Miners ETF $1,272,763,000.00 $30.3416.320.59N/A12.261
EDVVanguard Extended Duration Treasury ETF $176,562,000.00 $103.8632.970.1419.46411.673
MWNDirexion Daily Mid Cap Bear 3x Shares $26,509,420.00 $19.28(22.06)0.95-47.34211.603
GRNiPath Global Carbon ETN $4,260,000.00 $28.4023.130.750.39211.392
SDOWProShares UltraPro Short Dow30 $34,507,270.00 $69.01N/A0.95N/A11.172
SMKProShares UltraShort MSCI Mexico Investable Market $4,692,003.00 $23.46(11.01)0.95-39.32211.143
FCGSDirexion Daily Natural Gas Related Bear 2X Shares $4,533,045.00 $45.33N/A0.95N/A11.092
AGQProShares Ultra Silver $172,107,900.00 $66.2014.120.9539.36510.98
LHBDirexion Daily Latin America Bear 3X Shares $6,603,033.00 $33.02(17.86)0.95N/A10.976
ERYDirexion Daily Energy Bear 3X Shares $42,088,190.00 $57.661.600.95-31.37710.554
BALiPath Dow Jones-UBS Cotton Subindex Total Return Callable ETN $12,614,610.00 $42.2613.680.7540.71310.554
TYDDirexion Daily 10-Year Treasury Bull 3X $6,661,000.00 $66.6142.590.9531.87610.525
JJTiPath Dow Jones-UBS Tin Subindex Total Return ETN $11,058,750.00 $49.1528.060.7561.26210.41
SCOProShares UltraShort DJ-UBS Crude Oil $52,227,720.00 $16.0711.580.95-4.93110.282
GDXMarket Vectors - Gold Miners ETF $6,998,919,000.00 $53.6114.950.5332.51810.162
DPKDirexion Daily Developed Markets Bear 3X Shares $22,583,500.00 $14.57(4.37)0.95-25.3449.971
EDZDirexion Daily Emerging Markets Bear 3X Shares $133,935,400.00 $38.38(21.88)0.95-57.3529.525
DGPPowerShares DB Gold Double Long ETN $458,094,000.00 $33.5624.550.7558.3939.438
UGLProShares Ultra Gold $197,806,800.00 $55.7222.460.9556.6419.404
QIDProShares UltraShort QQQ $1,092,052,000.00 $18.91(1.16)0.95-25.8189.292
BXDCBarclays ETN+short C Leveraged ETN Linked to S&P 500 $4,834,953.00 $71.6310.28N/AN/A9.133
RSWRydex Inverse 2x S&P 500 ETF $114,720,000.00 $57.361.610.71-17.0019.044
MZZProShares UltraShort MidCap400 $40,992,000.00 $19.52(11.90)0.95-30.3298.888
BZQProShares UltraShort MSCI Brazil $36,712,520.00 $22.25(1.17)0.95-47.9778.845
SDSProShares UltraShort S&P500 $3,877,681,000.00 $35.341.060.91-17.4748.784
SILGlobal X Silver Miners ETF $71,046,920.00 $15.97N/AN/AN/A8.715
SJFProShares UltraShort Russell1000 Value $7,521,000.00 $50.14(3.57)0.95-19.7128.553

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Quick news – August 31 2010

By: IS
Date posted: 08.31.2010 (2:55 pm) | Write a Comment

Tech news: (concern the stocks we follow)

Apple (AAPL) is said to be about to announce that it will include a Netflix (NFLX) service in its next tv box
AOL (AOL) just acquired mobile firm  “Rally up”
Rackspace (RAX) was cut to “hold” by Benchmark
Staples announced it would soon be selling the Amazon (AMZN) Kindle in its stores
Google (GOOG) released a “smart sorter” in its Gmail section that performs “smart” email sorting
Google (GOOG) & AP reached a distribution deal

Best return:    Quinstreet (QNST) +2,19%

Worst return:    Research in Motion (RIMM) -6,02%

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Getting ready to short Travelzoo (TZOO)

By: IS
Date posted: 08.31.2010 (7:01 am) | Write a Comment

Have you taken a look at the charts of travel internet company Travelzoo (TZOO) in the past few days? Not as crazy as investors in 3Par or other acquisition targets but it remains impressive to see how much the stock has gained in recent action.

Monday I could not open a new trade because I still have 5 live trades but one stock that was discussed in the Premium Newsletter last weekend was Travelzoo. I would not go short a stock that gained over 25% in a couple of days to a avoid being against such strong momentum but it would certainly make sense to strongly consider shorting the stock when things will calm down a little. I have shorted Travelzoo against Priceline earlier this year with great success mostly because valuations were not consistent with a stock that has not generated that much growth in recent years. So why does it trade so high? Because for some investors Travelzoo shareholders are easily excitable.

It happened again

The odd thing about the recent rise is that there wasn’t anything “material” behind it. The main factor that contributed to Travelzoo’s rise was an announcement that it would start offering a “Groupon” like service. What is Groupon? It has been at the centre of a lot of hype in recent weeks as it gains a lot of traction similar to what Facebook & Twitter experienced after a few months. You can visit the website if you’ve never heard of it but basically it gives out coupons targetted to where users live. The concept is simple but brilliant and has been generating copycats everywhere.

Travelzoo will certainly be able to generate business by using the concept but will it be enough to justify a 25% increase? Not likely I would say. They do have millions of emails and will certainly put effort into getting more info about the subscribers such as the city they live in, but so do competitors such as Expedia (EXPE) and Priceline (PCLN)

More on this topic (What's this?) Read more on Travelzoo at Wikinvest

Apple (AAPL) shareholders, consider buying insurance on Steve Jobs

By: IS
Date posted: 08.31.2010 (4:00 am) | Write a Comment

Hedging any investment, when it is not too expensive is certainly a very attractive proposition. There are conventional ways of doing so, through options for example, but also less conventional ways.

In case you did not follow this news, HP (HPQ), the giant pc/printer company suffered a huge loss in recent weeks when the board fired Mark Huard because of a sexual harassment complaint. The board has been accused of acting too quickly without putting enough effort into finding out what had really happened. To this day, many aspects of the dismissal remain unclear but what is clear is that:

-Both Huard and the board made important mistakes
-Shareholders are the ones that assumed the biggest loss

Just take a look at the chart of HPQ in the days following Huard’s firing:

Why did the stock suffer so much after losing just one guy? Because Huard had been at the head of HP during a great turnaround and has been seen as crucial in the recovery of the tech company. Now, can you tell me of the one company where the CEO stepping down would draw a major loss for shareholders? Steve Jobs from Apple comes out heads and shoulders above everyone else. Not only is he seen as the man who rescued the company a decade or so ago. Jobs also did have major involvment in the launch of huge hits such as the Ipod, Iphone and the recent launch of the Ipad. If you recall,  the stock became very volatile 1-2 years ago when rumors surfaced that Jobs was still suffering from health problems and might not be able to continue his work at Apple.

Can you imagine if Steve Jobs did have to quit his job at Apple?

No matter what the reason, it’s easy to imagine several billions of market cap being wiped out in the hours following such an announcement and if you have a portion of your retirement fund stacked with Apple shares, it might be something you should consider protecting from… but how?

Insurance?

I was wondering if buying life insurance on Steve Jobs would be possible for the average shareholder. Wikipedia seems to indicate that it’s a possibility. Turns out it’s not. You can read about it and a funny story regarding life insurance bought on strangers here. There might be some local laws that permit such a purchase? If so, please let me know.

Another option might be looking into making such a wager through event trading on a site like InTrade.

Any other ideas?

Of course, this article is a bit of an exageration as it’s probably not worthwhile to actually get insurance on such an event from non-conventional sources but I thought it was an interesting idea and could certainly

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Quick news – August 30 2010

By: IS
Date posted: 08.30.2010 (7:55 pm) | Write a Comment

Tech news: (concern the stocks we follow)

Google (GOOG) acquired socialdeck
Google (GOOG) has acquired Angstro a startup social network

Best return:   Travelzoo (TZOO) +2,23%



Worst return:   Dice Holdings (DHX) -8,85%

HP (HPQ) & Dell (DELL) playing high stakes poker over 3Par (PAR)

By: IS
Date posted: 08.30.2010 (4:00 am) | Write a Comment

I often get questions when takeover bids are made. “If BHP made an offer to buy Potash for 130$ per share, why would the stock move to $150?

I think we got the perfect example to explain why. It all started when Dell (DELL) made an offer for a little known company, 3Par (PAR). It offered 18$ per share, a very generous offer considering that PAR’s stock was worth less than 10$. You can imagine what happened. 3Par management accepted the offer and it went through, right? Wrong in fact. They did accept the offer but there was speculation that Oracle would make a bid of its own as tech companies with loads of cash look for growth opportunities. A stock that receives an offer for X dollars might move higher simply because investors expect another, higher bid to be made by either the same company or a competitor.

Turns out that HP (HPQ) was the one to make the move as it made a counter-offer for 24$ per share, a big premium over Dell’s offer. And that is when PAR shareholders understood they had the best position of all… their shares were being auctioned off between two tech giants, Dell and HP.

Since that day, both companies have bids, counter-bids and it is still unclear how things will end. On Friday, Dell made another big raise, making an offer of 27$ per share, which HP raised a couple of hours later when it offered 30$. Where will this all end? Unclear but the stock traded over 32$ on Friday fueling speculation that the bidding is not over just yet.

How high could it go?

It’s difficult to say as both companies are already paying a premium of over 200% at this point and while they do have lots of free cash, at some point you would think that one of them will give up. What is clear is that the big winner here will not be Dell or HP but rather 3Par shareholders with a return of over 200% in a couple of weeks. And if anyone was short 3Par? Well as we discussed last week, shorting a stock that is an acquisition target can be costly, especially when the stock goes up so much. Luckily, on such a small stock, there were probably very very few short sellers!

More on this topic (What's this?)
What's Wrong with Dell?
Read more on Dell, 3par, Hewlett-Packard at Wikinvest

Carnival of Financial Planning 08-27-2010

By: IS
Date posted: 08.28.2010 (5:22 am) | Write a Comment

Carnival of Financial Planning 08-27-2010

Best Personal Financial Planning and Personal Investment
Articles this Week from Personal Finance Blogs

Carnival of Financial Planning – Edition #155 – August 27, 2010

Welcome to the August 27, 2010 Edition #155 of the Carnival of Financial Planning.

The Carnival of Financial Planning takes a long-term view of personal financial planning for individuals and families. We focus on efficient and sustainable personal financial planning practices that can lead to lifetime financial security.

This edition is arranged by subject heading, so that you can browse efficiently.

Enjoy!

The Skilled
Investor
, Editor

Budgeting and Economics

Roshawn Watson presents Economists Blame ME for the Slow Recovery posted at Watson Inc, saying, “We are responsible with our money, yet instead of admiration (or even understanding), these efforts garner contempt as the frugal once again get the blame for dismal economic activity.”

Faith Allen presents How to Do Monthly Financial Budget Planning with Excel | eHow.com posted at FaithAllen, saying, “A monthly financial budget is so important because every person or household needs to be in charge of their own finances.”

Joe Plemon presents The Real Estate Bubble: What Happened and What Can We Learn From It? posted at Personal Finance By The Book, saying, “Understanding how the real estate bubble inflated and popped may help us spot other financial bubbles before they pop.”

Roshawn Watson presents Why Is Debt Really Decreasing? posted at Watson Inc, saying, “In the first quarter of 2008, our debt to disposable income peaked at a staggering 131%. This means for every dollar we earned, we spent $1.31. As of March, our debt as a share of our annual income is presently 122%. If you think this change indicates that we have collectively been so scarred by the “Great Recession” that we are now behaving fiscally responsible, think again. There is a surprising and sad reason why our debt has gone down. Hint, it has nothing to do with frugality.”

Craig Ford presents Start a Budget and Open the Door to a Debt Free Life posted at Money Help For Christians, saying, “A budget is the first step towards a debt free life.”

Mike @ Green Panda presents The $7.27 Mistake Plus Ways To Avoid It posted at Green Panda Treehouse, saying, “How to make the most out of your money when going out.”

Alex Foster presents 10 Reasons Why the Strength of the Dollar Matters posted at AF Capital Management, LLC, saying, “The pros and cons of a strong US Dollar.”

The Skilled Investor presents Save More Money posted at Personal Finance Strategy, saying, “Budgeting and self-control in consumption is far more important than clever investing. Expenditure control and budgeting works, while “clever” investing usually is counter-productive.”

Estate Planning

Jacob A. Irwin presents Creating A Will and Testament And Interesting Bequests From The Past posted at My Money Blog – Personal Finance and Investing, saying, “A look at a quick and free way to generate a personal will and several interesting bequests for how people through history have dictated that their estate’s funds should be utilized after they have passed on.”

Financial Planning

Dividend Tree presents Building Core Competency for Long Term Survival posted at Dividend Tree, saying, “whether it is running a business or individuals investment portfolio, it is important to build a core competency for long term sustainability. In my case, I focus on good quality companies that consistently pay or have potential to pay growing dividends over time.

Kristine McKinley presents Questions to Ask When Looking for a Financial Planner posted at Beacon Financial Advisors – Kristine McKinley – Fee only financial planning – Lee’s Summit, Kansas City, Blue Springs, Independence, saying, “Many people hire financial planners to help them meet their financial goals. Whether you are a beginner investor with very little experience or whether you have a good knowledge and understanding of financial planning topics, a financial planner can be a valuable asset when planning for your financial goals.”

Sustainable Life Blog presents Prioritizing Goals? posted at Sustainable Life Blog, saying, “Wondering where to turn when starting to attack debt? Here’s a quick guide on how to help you prioritize your goals.”

Ryan @ MFN presents What to Do With an Enlistment Bonus posted at The Military Wallet, saying, “What should you use a large cash bonus for? Pay down debt, invest, spend?”

David presents 5 Rules To Establish Before Co-Signing posted at Credit Card Offers IQ, saying, “Don’t take co-signing lightly!”

Aaron presents The Difference Between A Signature and PIN Transaction posted at Prepaidcards123.

Frank Knight presents Roth IRAFinancial Software posted at Financial Freedom Plan, saying, “Whether to invest in a Roth IRA or Roth 401k versus their traditional retirement account alternatives is one of the most complex personal financial decisions. Roth accounts do not make sense financially for most people. They are a good deal, for a minority, but you need to do the analysis.”

MoneyNing presents Money Matters, But Money Isn’t Everything posted at Money Ning, saying, “Money isn’t everything even though it matters a great deal!”

Larry Russell presents No Load Mutual Funds posted at Top Index Mutual Funds, saying, “Superior past performance has simply not been shown to be a reliable predictor of superior future performance. However, low costs can lead you to the best mutual funds.

jim presents Review Your Credit Reports Every Year posted at Identity Theft Wall.

One Family presents Stock Portfolio and Watch List Updates for August 2010 posted at One Family’s Blog, saying, “An investment portfolio update targeted to generate income while beating inflation to support a financially independent frugal lifestyle.”

Financing a Home

Jeff Rose, CFP presents Should You Upgrade to a Larger Home? posted at Jeff Rose, saying, “In many markets, home owners are looking at homes in the next price range up as good buys, since foreclosures and a slow market are resulting in good deals. But, as tempting as it is to upgrade to a larger home, is it really a good idea? Here are some things to consider before upgrading to a larger home:”

Rob presents 3 Things to Avoid When Buying a Home posted at Two Wise Acres, saying, “Avoid these 3 costly credit mistakes when buying or refinancing a home.”

Financing Education

mike presents 8 Things You Need to Know About Withdrawing Money From Your RESP Account posted at Mike, saying, “RESP withdrawal rules for Canadians.”

Ryan @ CML presents Where to Open a Coverdell ESA Plan posted at Cash Money Life, saying, “Coverdell ESAs are a college savings account that have great tax advantages. This info can help you find a great place to open your Coverdell ESA.”

Mark Macaluso presents 50 Financial Aid Posts Every Parent Should Read posted at Masters In Accounting, saying, “If you’re the parent of a sophomore or junior in high school, you know the trek down the road of financial planning for your child’s college career has already begun. Getting into college in the U.S. is more competitive than ever, whether you’re looking at Ivy League schools or top state universities. With that, the cost of tuition, residence and books are also rising, making financial aid a crucial step for many families.”

Health Care

Glory Scott presents Six Months Later: Top 10 Updates on Healthcare Reform and Implementation posted at Master Of Health Administration, saying, “The controversy surrounding healthcare reform was significant. This article discusses what has actually changed in the last six months.”

Income

Consumer Boomer presents 9 Quick Tips In Planning For a Job Loss posted at Consumer Boomer, saying, “No matter how secure you think your job is, how old you are, or how long you have been in your current position you should have a contingency plan for job loss”

MoneyNing presents 15 Ways to Earn Extra Money posted at Money Ning, saying, “There are lots of ways to make more money. Here are 15 to start you off.”

Investing

FMF presents Making the Most of Tax-Advantaged Accounts posted at Free Money Finance, saying, “One way to make your money work harder is to invest using tax-advantaged accounts.”

Dividend Tree presents Dividend Investing and Businesses with Moat posted at Dividend Tree, saying, “In general, companies with moats in their business are very good dividend growth providers. However, the opposite may not be true.”

Jeff Rose, CFP presents Teaching Yourself How to Invest in a Downward Economy posted at Jeff Rose, saying, “Teaching yourself to invest in a downward economy is about un-learning bad lessons you might have absorbed.Panicked investors tend to irrationally dump valuable securities during down markets, creating opportunities for savvier investors.”

Consumer Boomer presents What You need to Know about Stock Market Volatility posted at Consumer Boomer, saying, “Basing your long-term investment decisions on the panic of the current moment can be detrimental. Over time, stock market volatility usually smooths out. If you can make a levelheaded plan and stick to it, you are more likely to see success in your portfolio.”

Intelligent Speculator presents Of course Amazon (AMZN) results are terrible!! Blame Apple (AAPL) posted at Intelligent Speculator, saying, “Amazon isn’t doing so well with the iPad now out in the market.”

freefrombroke presents Why Invest In Stocks posted at Free From Broke, saying, “Stocks certainly get their press don’t they? But these days the press isn’t always good. Still, stocks are a great place to put long-term investing money.”

Silicon Valley Blogger presents Want To Day Trade? Try Paper Trading First posted at The Digerati Life, saying, “Thanks!”

2 Cents presents Why the Economy Most Certainly IS Relevant to Investing posted at Balance Junkie, saying, “This article offers a rebuttal to a recent post claiming that the economy is irrelevant to investing.”

Alexander presents Big GE And Its Big Dividend posted at Dividend Stocks, saying, “One of America’s oldest and most prestigious companies has become an accidental high yielder. See why GE’s dividend makes it a stock to watch.”

Zach Scheidt presents Solar Selloff Close To Exhaustion? posted at ZachStocks, saying, “Solar stocks are off sharply due to Euro-Zone concerns. Trina Solar could end up being an exceptional value if earnings remain somewhat stable and management is able to calm investor fears.”

FMF presents The Basics of Asset Allocation posted at Free Money Finance, saying, “One key to making your investment return as high as possible is to set and manage your asset allocation appropriately.”

The Financial Blogger presents Best 50 Canadian Dividend Stocks posted at The Financial Blogger, saying, “With the plethora of dividend stocks out there, here are the best 50 canadian dividend stock picks.”

Frank Vertin presents Top Index Funds posted at Noload Mutual Fund, saying, “Top ten no load index funds that track the Standard and Poors 500 composite index in terms of lowest costs.

Frank Knight presents Municipal Bond Financial Software, posted at Personal Finance Software, saying, “Municipal bond investments and your state and federal marginal income tax rates: Some investors hold municipal bonds in an attempt to reduce their tax burden. This article discusses the relationships between tax-exempt municipal bonds, bond market returns, marginal tax rates, and investment asset tax location.”

Tomas Escent presents Stock Trading Automation posted at Nerds on Wall Street

Steve Alexander presents Gainful Employment Rules Ignore Demographic Realities – MagicDiligence posted at MagicDiligence – Optimizing Joel Greenblatts Value Stock Strategy, saying, “Gainful employment rules recently proposed by the Department of Education are intended to weed out the poor actors in for-profit education. But the DoE’s own data suggests they will just limit educational opportunities for low-income students.”

Super Saver presents Investment Focus – Dividend Paying Stocks posted at My Wealth Builder, saying, “As we move money back into the stock market, one area of focus will be large cap, dividend paying stocks.”

Super Saver presents Faith in our Long Term Future posted at My Wealth Builder, saying, “I still believe it is right to have faith in the historical long term returns of the stock market.”

Praveen presents Caveat Emptor: If An Investment or Opportunity Appears Too Good To Be True, Beware! posted at My Simple Trading System, saying, “Beware of investment opportunities that seem to be too good to be true.”

Dividends4Life presents 8 Dividend Stock Delivering Good News posted at Dividends Value, saying, “If you closely follow the daily financial news as presented by the mainstream media, it is easy become jaded and start believing that there isn’t any good news out there. Don’t be confused by the noise. There are still many great companies committed to generating superior returns and rewarding their shareholder by increasing cash dividends.”

The Skilled Investor presents Market Timing posted at Investment Portfolio Management, saying, “Always stay invested to earn risk premiums. You must have your money invested and at risk to get risk premium returns. Jumping out and in or “timing the markets” doesn’t work.”

Mike Piper presents TIPS vs. Nominal Treasury Bonds posted at The Oblivious Investor, saying, “When does it make sense to use inflation-protected bonds, and when does it make sense to use the traditional nominal Treasury bonds?”

Tushar Mathur
presents Can’t Control the Markets? Try controlling the Costs posted at Everything Finance, saying, “The financial markets are prone to unpredictable periods of turbulence. That can make investing feel a bit like a roller-coaster ride. The disappointing results may have left you feeling concerned over your financial future. You’re not alone.”

Managing Debt

Silicon Valley Blogger presents No Credit Credit Cards: Are Prepaid or Secured Cards The Way To Go? posted at The Digerati Life, saying, “One way to build up credit is by using secured cards or prepaid debit cards.”

The Smarter Wallet presents Are Debt Counseling Services The Way To Debt Relief? posted at The Smarter Wallet, saying, “On debt counseling services.”

Learn Save Invest presents 5 Steps To Debt Reduction posted at Learn Save Invest, saying, “Here are 5 tips you need to master in order to reduce your debts.”

Tim Chen presents Chase Sapphire Preferred Card Review | Is the 25k Point Bonus Worth It? posted at NerdWallet Blog – Credit Card Watch, saying, “Chase is now offering the Sapphire Preferred credit card in addition to the normal Chase Sapphire card. The main difference is that Sapphire Preferred has an $85 annual fee (waived the first year), while Sapphire does not. What’s the catch? Is it worth it?”

Big Cajun Man presents Found Money Trap posted at Canadian Personal Finance Blog, saying, “Found money should go on debt no matter what!”

Miscellaneous

Joe Plemon presents How to Partner Without Creating a Partnership posted at Personal Finance By The Book, saying, “Not all partnerships are bad, but these two wanted a way to partner without actually forming a partnership. This post tells their progress to date.”

Joe Plemon presents Should You File That Insurance Claim? posted at Personal Finance By The Book, saying, “There are times when filing a legitimate claim can earn you a penalty from your insurance company.”

nissim ziv presents How Do You Handle Pressure and Stress? Interview Question/Answer posted at Job Interview Guide, saying, “A typical interview is a mixed bag of queries. Some questions may be related to your work experience, while others might be related to how you carry your day to work, and yet others might be related to whether you would be able to cope and handle the stress of a routine working day.”

Pasadena Financial Planner
presents Vanguard Investment Performance posted at Top Mutual Fund, saying, “Compares Vanguard’s actively managed mutual funds and Vanguard’s passively managed index mutual funds. Vanguard investors should read and understand this study.”

Mike @ Green Panda presents Stop Waiting For The Big Idea posted at Green Panda Treehouse, saying, “Just thinking about the next big thing might just be a complete waste of time. Take that step towards your goals.”

Joe Plemon presents This Family Paid Cash For Their Car; You Can Too! posted at Personal Finance By The Book, saying, “A story about some friends who are excited about paying cash for their car. Turns out they are doing lots of things right.”

Retirement Planning

Jeff Rose, CFP presents Taking The Lump Sum Option On Your Pension: Should or Shouldn’t You? posted at Jeff Rose, saying, “Soon-to-be retirees have some major decisions to make regarding how their retirement funds will be distributed once they are no longer in the workforce.”

Consumer Boomer presents ETFs VS Mutual Funds-Choosing The Best Investment for Retirement posted at Consumer Boomer, saying, “Mutual funds do have their limits and can be costly in overhead. Investors looking for other options for their monies may want to consider ETFs.”

PT presents A Secure, Tax-Advantaged Retirement Tool: Discover Bank’s IRA CD posted at Prime Time Money, saying, “This unique certificate of deposit product from Discover Bank gives you financial security (FDIC insured) and is inside of an IRA, making it tax-advantaged.”

Jules Wells presents Retirement Calculator-Retirement Savings Software, posted at Retirement Financial Planning, saying, “This article helps you understand the trade-offs between traditional and Roth tax-advantaged retirement plan contributions, including Roth 401k and IRA retirement plans. It helps with the 2010 Roth conversion decision.”

Bucksome presents Are Younger Generations Better Prepared than Boomers for Retirement? posted at Buck$ome Boomer’s Journey to Retirement, saying, “Since baby boomers grew up expecting pensions and good times, are younger generations more prepared to save for retirement?”

Larry Russell presents Roth IRA Conversions posted at Best Financial
Planning Software
, saying, “Trying to decide about a traditional IRA to Roth IRA conversion without first having a comprehensive lifetime financial plan in place makes absolutely no sense. Without such a plan, you cannot figure out whether or not you are likely to achieve the tax savings in retirement that would warrant paying higher taxes now.”

Neal Frankle presents Best Investments for Retirement Income posted at Wealth Pilgrim: Money Management Advice, Financial Stess Management, Addiction Recovery Plan & Resources, saying, “If you’re looking for the best investments for retirement income, you’re not alone. With interest rates so low, lots of folks are asking themselves the same question.”

Risk Management and Insurance

Big Cajun Man presents Self Insured Company Disability Plans posted at Canadian Personal Finance Blog, saying, “Sometimes insurance is not as safe as you might think (in Canada at least)”

Savings

Ryan @ MFN presents Military Savings Deposit Program (SDP) posted at The Military Wallet, saying, “The Savings Deposit Program is a government sponsored savings account that guarantees 10% return on interest for deployed military members.”

Madison DuPaix presents Money Market Accounts vs Savings Accounts posted at My Dollar Plan, saying, “This is a great breakdown of two different short-term savings vehicles.”

Joe Plemon presents You CAN Afford That Baby – Ten Money Saving Tips posted at Personal Finance By The Book, saying, “I want to assure you that you can afford to bring that baby into this world even if you aren’t sitting on a huge nest egg. These ten tips will help.”

Susan Howe presents 16 Ways to Eat Healthy While Keeping it Cheap posted at Get Rich Slowly, saying, “Here are sixteen ways to eat more healthy while keeping it cheap.”

KCLau presents Are You Rich in Internal Assets? posted at KCLau’s Money Tips, saying, “pay attention to the internal assets”

Taxes

Paul Williams presents Can’t Pay Taxes Owed? How to Settle or Resolve Taxes Due posted at Provident Planning, saying, “What are your options when you can’t pay the taxes you owe? This article outlines the choices you have and helps you determine which ones you may qualify for.”

Hussein Sumar presents Tax
Saving Tips for IRA Investors – After Tax Contributions (Basis), Income in Respect of Descendent, 10% Excess Tax & Substantially Equal Periodic Payments (SEPPs)
posted at Roth IRA, saying, “Thousands of IRA investors miss out on important tax benefits each year because they are not familiar with the Tax Act and laws. Others make crucial errors when filing their tax returns. For instance, IRA investors may pay taxes on monies that should have been tax free or pay excise taxes on IRA distributions when these distributions should be free of tax. Our aim in this article is to highlight some IRA tax laws and how you can benefit from them.”

Financial Freedom Plan presents Roth IRA ConversionFinancial Software, posted at My Financial Freedom, saying, “The Roth tax optimization puzzle for asset conversions, as well as for annual Roth contributions during working years, is one of the most complex decisions that the ridiculously complex US taxation and retirement planning system forces upon individuals.”

Intelligent Speculator presents Please do not let the Bush tax cuts expire posted at Intelligent Speculator, saying, “It may be easier to take the popular position and have the Bush tax cuts expire, but I personally think otherwise.”

That concludes this edition. Submit your blog article to the next edition of Carnival of Financial Planning using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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