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Yet another Federal Reserve meeting is now behind us, and I’m wondering why I even bother to read the releases anymore.
After all, Bernanke & Co. pretty much say the same thing month in and month out now — namely, that they’re going to “keep rates low for an extended time.”
I mean, really!
It’s obvious that Washington is dead set against those of us who use money conservatively and try to save for our own futures …
They’re doing everything in their power to make us follow their spendthrift ways …
And because of their actions, it’s darn near impossible to get a decent yield from a savings account, money market, or certificate of deposit.
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Meanwhile, as I mentioned a few weeks ago, college costs are rising by 6 percent a year … so a CD yielding 1 percent a year isn’t going to build my daughter’s college fund very much.
Health care expenses are soaring even faster, so my parents certainly aren’t going to fund their retirements on bonds paying 2 percent or 3 percent a year.
Plus, other necessary items that affect every one of us — including energy and food — continue rising sharply, too.
Clearly, none of that is too important to the Federal Reserve right now.
And clearly, we are on our own when it comes to finding new sources of investment income that will pay us more than “minimum wage.”
Fortunately, Dividend Stocks Continue to
Provide Yields You Can Actually Live On!
As I’ve noted in these pages recently, there are still stable, well-known companies that are paying out 5 percent, 7 percent or more a year in dividends.
It’s comforting to know that there are still some income investments that operate outside Washington’s influence on interest rates … and that some firms are still willing to “put their money where their mouth is.”
No, their businesses might not be exciting by today’s standards. Mentioning their names might not impress your friends. They’re not always discussed on CNBC or in the headlines of your local newspaper, either.
But who cares!
It’s not about impressing other people. It’s about making sure you have enough investment income to keep pace with life’s rising costs.
Like one of my old mentors used to say, “Investing should be as exciting as watching paint dry.”
In fact, when it comes to making investments, you should be looking to do three things …
First, have a reasonable chance that you won’t lose money on your initial investment.
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An old Wall Street saying is that investors should care more about a return OF their principal than a return ON their principal. Yet how many people really think about risk very much? A small percentage.
In contrast, I worry quite a lot about whether my investments will be around a couple years from now, and whether they’ll survive economic downdrafts.
Sure, I take the occasional bigger risk here and there … especially when I believe the potential reward is worth it … but I always want most of my portfolio in conservative investments.
And as I’ve pointed out before, many dividend stocks certainly fit the bill when it comes to downside protection.
Second, secure yourself a solid immediate income stream.
The way I see it, you should expect your investments to start paying you back right away.
Hey, you’re risking your money so you deserve steady, immediate returns. That money can then be used how you see fit — either to fund your needs right now or to be reinvested for even greater profits down the line.
Right now, most bonds, CDs, money market funds and savings accounts absolutely will not give you steady immediate returns other than token amounts.
Third, set yourself up for capital gains down the line.
Make no mistake: I still want my investments to rise in value over time, too … but only after my risk and income requirements have been satisfied.
Again, CDs and money markets don’t offer you any upside. And while bonds can rise in value, I see a lot more downside risk at this point in the interest rate cycle.
So you can see why I continue to pound the table for conservative companies paying out steady dividends.
They weather stock market downturns, recessions, and other economic calamities. They kick of regular income checks through thick and thin. Plus, their share prices steadily gain ground over time, too.
With Washington doing everything in its power to force savers to either take on risk or starve, it’s nice to know that there’s still a group of income investments that Bernanke and his Fed buddies can’t keep down.
And if you haven’t taken a look at some of the dividend stocks that are still available at fair prices right now, I urge you to do so today.
Best wishes,
Nilus
P.S. You can learn all about my current favorites in the latest issue of Dividend Superstars, which is going to press this Friday. Get on board today and you’ll pay just $69 for a whole year’s worth of issues!
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Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Nilus Mattive, Claus Vogt, Ron Rowland, Michael Larson and Bryan Rich. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Andrea Baumwald, John Burke, Marci Campbell, Amy Carlino, Selene Ceballo, Amber Dakar, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.
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