4 Dividend Stocks to Hedge Against Social Security Failure 91 comments
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“The problem with Socialism is that eventually you run out of other people’s money.”
- Margaret Thatcher
If you have followed the U.S. Social Security saga over the last several years, you know it is projected to run out of money soon. As it turns out “soon” just may be much sooner than previously expected. To make matters worse, it has been “broke” for some time, but through creative accounting that would land a private-sector CFO in jail, the government has been able to keep the appearance of solvency.
Bill Fleckenstein in a recent MSN Money article, discussed several issues facing Social Security. Here are some of the key points from his article:
- The Social Security problem is especially important because it likely will put additional pressure on the dollar and on bonds, and exacerbate the funding crisis down the road.
- At $680 billion Social Security is the nation’s biggest social program.
- As early as this year, Social Security will be transformed from an operation that’s helped finance the rest of the government for 25 years into a cash drain that will need money.
- There is no money in the Social Security Trust Fund — just IOUs from the government to itself.
- The trust fund could start running deficits in the next year. Social Security wasn’t supposed to go into the red until around 2015.
- Since 1983, when it suffered a cash crisis, Social Security has been collecting more in taxes each year than it has paid out in benefits. It has used the excess to buy the Treasury securities that go into the trust fund, reducing the Treasury’s need to raise money from investors.
- In the 1980s and 1990s, when folks worried about the budget deficit, it was reported to be lower than it would have been had the Social Security Trust Fund’s money not been going into government coffers
Do you really want to bet your retirement on a system like this? I certainly won’t. When planning for retirement, my underlying assumption is that Social Security will go broke before I ever receive a dime. Like everyone, I will need an income during my retirement years. I am currently planting the seeds for that income with high-quality dividend stocks that have a long track record of increasing their dividends each year. Below are some blue chip dividend stocks that eventually end up in most income investors’ portfolio:
Wal-Mart Stores, Inc. (WMT) – Yield: 2.11% – Analysis
The largest retailer in North America knows how to treat customers and shareholders. WMT has rewarded investors with 35 years of consecutive dividend increases.Abbott Laboratories (ABT) – Yield: 2.11% – Analysis
This drug manufacturer knows the best medicine for a sick portfolio is increased dividends. ABT has been dispensing higher dividends for 37 consecutive years.Johnson & Johnson (JNJ) – Yield: 3.23% – Analysis
For 47 consecutive years this manufacturer of health care has delighted investors with increased dividends.Procter & Gamble Co. (PG) – Yield: 3.14% – Analysis
This provider of branded consumer goods products and Dividend Aristocrat has made investors smile for 53 consecutive years with increased dividends.
As for Social Security running out of money, I think people will be paid what was promised since the government can print all the money it needs. However, what was promised may not be enough after inflation, particularly if a lot of money is printed.
Disclosure: Long ABT, JNJ, PG, WMT. See a list of all my income holdings here.
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This article has 91 comments:
You push your 4 stocks simply because you own them. For income I buy Canadian oil sands stocks and oil/gas transmission stocks that pay upwards of 10% income.
Also for income I have happily bought for years the Canadian oil sands and oil/gas transmission stocks paying upwards of 10% income very dependably.
I note you own the 4 stocks you 'randomly' chose as good income stocks.
As criticism, your comments regarding the solvency of Social Security are so far off the mark I really don't know where to begin. First of all, the bonds held by the fund were not issued by the govenments of Kosovo or Somalia, they were issued by the United States, an entity that has never defaulted on either its principal or interest obligations. (I'll simplify this for you: Real time, banks are not rescuing the Federal Government; the Federal Government is rescuing banks. Do you own a bank stock? Where did the dividend go?? I've heard, over the years that BAC was a rock-solid, take-it-to-your-grave investment) To suggest that the Feds will default on their obligations is just speculation on your part. Secondly, it is not a fund that needs to be permanently fixed. It just needs an occasional tweaking: raising the cap, raising the age, adjusting the COLA. All these things will need to be done, and indeed, have been done. It just takes political will. Third, it is not a static fund, it will receive 10's of trillions of dollars over the next thirty years of new money that will be used to partially fund benefits.
What is the solution? Raise taxes, limit benefits.
P.s. Gold??? At $900 + an ounce? I don't think so.
What does SS negative cash flow really mean, simply that we must borrow or print the deficit.
As to the integrity of US borrowing, eg Cross, true, we have paid all debts, however after Obama increases our debt over the coming decade, our US$'s will be worth far less to the lender's. So, as to the integrity of Obama's USA?? pretty thin integrity, in my opinion!!
I'm surprised at all of the concern being expressed by conservatives about federal deficits that are occurring during a sharp economic contraction while dismissing the deficits that occurred under w's watch (an economy, by the way, that was described by same as one of the greatest expansions in the modern era) I believe the talking point of that day was: "as a percentage of GNP the deficit is manageable". Federal deficit spending during the economic expansion that occurred between 2001 and 2007 masked the now-known facts that the expansion wasn't really that robust and that the two tax cuts pushed and passed by the republicans were largely ineffective as stimulants to the economy.
What to do now? Raise/initiate taxes on the "bads" (ciggies, booze, crappie, low nutritional value foods (soft drinks?), fuel-inefficient transportation) and lower Federal spending everywhere as the economy emerges from recession.
If everyone gave a little it would go a long way to resolving budget gaps.
On Aug 25 01:08 PM jack kreg wrote:
> Where are we now that economy has gone into the tank, as far as Social
> security is concerned? Author is making a good point that cash flow
> will soon go negative with declining incomes caused by this prolonged
> recession. Obama will not bring this up in a NY minute, cause he
> wants to lock in his programs requiring massive new US debts, before
> he breaks the news that SS has gone negative cash flow.
> What does SS negative cash flow really mean, simply that we must
> borrow or print the deficit.
> As to the integrity of US borrowing, eg Cross, true, we have paid
> all debts, however after Obama increases our debt over the coming
> decade, our US$'s will be worth far less to the lender's. So, as
> to the integrity of Obama's USA?? pretty thin integrity, in my opinion!!
Later, when we hit a deficit that was greater than all the gold reserves (evidently the SS Trust Fund was not large enough to pay for Vietnam, The GS, and the Moon Landing), Richard Nixon took us off of the Gold Standard, allowing our currency to float against all others, so that we would be able to expand the money supply.
Both parties have treasonously mismanaged our country. During my lifetime, we have constantly ridiculed dictators, socialists, and communists; yet, we are altogether as corrupt as they.
We have only had crisis management. There has never been an interest, or ability, to manage for the long term, for our grandchildren’s future. Ours is NOT a democracy; it is a Plutocracy!
For instance, during the last “gas crisis” of 1973, had we begun to use (CNG) Compressed Natural Gas as a truck fuel, we would not have gotten into our current dependency on foreign oil. Our environment would have been cleaner, our costs less, and the fuel would have come from the US. This is 1950s technology that works very, very well. Why don’t we use it?
We have had decades, over many administrations, to correct the SS fund. Nothing has been attempted! The United States is, in fact, bankrupt!
In our country, this is especially true for a program that serves the general public instead of just special interests and marketeers.
These are valid reasons for keeping those people in office that will protect and improve a good system, and not use it as a piggy bank to plunder , exploit and propagandize for selfserving, and political reasons.
If my memory serves, the wholesale borrowing from Social Security was initiated during the Reagan Admin. wasn't it? These were not friends or supporters of Social Security.
This same thinking and "strategery" is the same kind that turns years of surpluses into years of punishing and frightening deficits. Something , once started, can take years to turn around and usually gets much worse before it can get better.
Perhaps our chances are improved on receiving Social Security and would be enhanced, if we keep those people in office that truly believe in it , are willing to financially sustain and improve it, and keeping those people out that are trying to propagandize, and plunder it for self serving reasons, and ultimately destroy it.
Sorry, no. The SS Trust Fund is nothing more than a US Gov IOU in the US Gov's own pocket. This is neither savings nor debt; it is an unfunded promise to make future payments, but the expected payment recipient has no legal right to the funds.
You can try this at home. Each month, momentarily set aside some money for your kids' college education. Write the number in a notebook. Spend the money. Once a year, momentarily set aside extra money for interest on the notebook account value. Spend that too.
When it's time for college...what to do? The money's not really there, but the account notebook shows plenty of money, maybe even Ivy League sums. You don't actually have the money, but being a 'good' parent, you find enough money from current sources for community college. Junior has no choice, no recourse, but to suck it up.
That is the Social Security Trust Fund. Future seniors will get bare minimums (or zero) and have no recourse.
"When planning for retirement, my underlying assumption is that Social Security will go broke before I ever receive a dime." Yessir, that's exactly correct if you are under 55.
enough funds to support themselves in a long
retirement based on a 2 or 3% return.
If you only get 3% return on a million dollars you will
only generate $30,000.00 anual income. That is a
less than average income for 2 people much less
if it has to support more people.
The fact these stocks consistantly raise their dividends
is meaningless when they pay out such a low percent
of the base investment.
Gold is volatile, doesn't pay dividends and is not a suitable investment for retirement.
On Aug 25 10:41 AM ebschor wrote:
> I suggest buying and holding physical gold as a hedge against the
> failure of Social Security.
These same people not only received it, but did so for many years and died receiving it.
It is true that the program can fail, but if it failed as soon as it was forecast decades ago , it would be long gone and only a distant memory.
It IS being abused and mishandled by "some" of our politicians , no doubt, (What isn't where large pools of money are involved? Have you checked out the stealing and abuses of the Iraq War?) , but that can be stopped and corrected if we make it a high enough priority and insist on it, just like anything else in life and politics.
There are many good american companies giving 7-9% dividends they are not "aristocrats" but they do not manipulate the dividend policy either.
On Aug 25 10:51 AM GregT wrote:
> The reason to buy these stocks rather than munis or other high yielding
> stocks is dividend GROWTH. The income producing securities that
> User251091 mentioned offer either little or no income growth. Dividend
> growth stocks increase their payout each year. It is like a government
> worker with a COLA pension - except that many good companies increase
> their dividend much more than the rate of inflation.
Additionally, SS is funded by a payroll tax that makes American workers less competitive. THIS NEEDS TO BE REPLACED WITH A CONSUMPTION BASED TAX (exempt food, shelter to average cost and clothing to average cost) so that Foreign manufacturing doesn't increase, creating a self-feeding spiral of reduction in resources to support Social Security.
Protectionism is not the answer; I love paying less today for the same brand of jeans I wore in 1972 which is a direct result of efficiencies from multinational trade, not to mention the peace dividend (China and Russia must avoid war with the US because they cannot fight a war after their economy is ruined by loss of trade with the US and our allies; There are no other superpowers). It is, however, fair to determine that access to the US market is taxable, whether the enterprise accessing the market is domestic or foreign!
On Aug 25 11:09 AM cross wrote:
> On the plus side I appreciate your comments regarding Abbot Labs
> as I have a position in this company. It's a great long-term hold.
>
> As criticism, your comments regarding the solvency of Social Security
> are so far off the mark I really don't know where to begin. First
> of all, the bonds held by the fund were not issued by the govenments
> of Kosovo or Somalia, they were issued by the United States, an
> entity that has never defaulted on either its principal or interest
> obligations. (I'll simplify this for you: Real time, banks are not
> rescuing the Federal Government; the Federal Government is rescuing
> banks. Do you own a bank stock? Where did the dividend go?? I've
> heard, over the years that BAC was a rock-solid, take-it-to-your-grave
> investment) To suggest that the Feds will default on their obligations
> is just speculation on your part. Secondly, it is not a fund that
> needs to be permanently fixed. It just needs an occasional tweaking:
> raising the cap, raising the age, adjusting the COLA. All these
> things will need to be done, and indeed, have been done. It just
> takes political will. Third, it is not a static fund, it will receive
> 10's of trillions of dollars over the next thirty years of new money
> that will be used to partially fund benefits.
> What is the solution? Raise taxes, limit benefits.
> P.s. Gold??? At $900 + an ounce? I don't think so.
www.socialsecurity.gov...
You will find that by SS own findings it will need to start redeeming the trust fund in 2016. The amount that will need to be redeemed between then and 2036 when the trust fund runs out will be north of 7 trillion dollars. Do the math. Add it up yourself. If you assume an average population of approx. 350 million people over the 21 years (add census bureau projections for 2010 and 2040 and divide by two to get the average) it works out to around 350 million people in the US average over that time frame. That works out to $995 per person per year every year from 2016 to 2036 that will be need to be raised in taxes JUST FOR REDEEMING THE TRUST FUND and IN EXCESS OF ALL OTHER GOVERNMENT SPENDING NEEDS FOR THOSE YEARS.
About 46% (from wikipedia based on IRS data) of the populace are taxpayers. That means that for every year from 2016 to 2036 each taxpayer will need to come up with, on average, an additional $2200 in taxes in order to redeem the trust fund.
These figures are based on the Intermediate cost projections of the SS governors themselves.
Like I said, do the math for yourself using SS's own projections and then tell me you honestly think that every taxpayer in the country is going to be able to come up with an additional $2200 per year for 21 years JUST TO PAY BACK TAXES AND INTEREST THAT HAS ALREADY BEEN SPENT FROM THE TRUST FUND.
That doesn't include the rest of the deficits, etc.
Some here may be sanguine about the prospects for SS. Since I can add, subtract, divide and multiply and have done so, I am not.
Although I initially bought stocks emotionally, I no longer listen to the advice by public analysts - now it's for the yield, and 2 to 3% is not nearly enough for me. I had a lot of oil stocks last year, and watched the price of gasoline go up without caring. My fuel efficient car helped there, and my dividends more than covered the higher costs, even while increasing my stock base. I now have a few more financials, and although their dividends are not up to my standards, their base value has tripled and the dividends will come back. The oil stocks are still covering my fuel costs (and then some), and are also still increasing my base.
On the sidelines, but still evident, are the tanker stocks (waiting for the next push) and housing stocks (also starting to come back), and the utility stocks (holding their own).
With luck, I will get enough in the dividends to supplement my income and cover the additional taxes from the income. And if I'm really lucky, I won't care if Social Security is there or not.
This nation is treasonously run by two ruling parties with no sense whatsoever of the concept of fiscal responsibility. The Republicrats have done more to damage and weaken this nation than all the Communists, Socialists, terrorists, Jihadists and other - ists in history. And Americans are so ignorant of this fact that election after election, they keep voting for the miscreants that created the mess.
If you go into a voting booth and vote for a Republicrat, YOU are the problem.
PS Why are there zero articles on SA on other financial vehicles. You can currently get a fixed annuity with a 10% bonus, guaranteed 7.5% interest (accumulates tax free) from a reserve insurance company (noone has ever lost a penny with a reserve insurance company).
2 or 3% div's don't even keep up with inflation and taxes. And if you examine the div "growth" are they "growing" at a rate greater than inflation ? Not likely.
In a nutshell, the best dividend stocks raise their dividends each and every year, and therefore they spin out higher and higher yields every year--not necessarily to new buyers, but to those who bought them years ago. That's because your cost is fixed while the dividend itself is rising. (Dividend / Cost = Yield.) My informal goal in dividend investing is to achieve 10% return on my original investment (called "yield on cost") within 10 years...hence the "10 by 10" title of my article.
To those who criticize the author's selection of four stocks as examples: First, get real--do you really think the author is "pumping" his own stocks, as if a little article like this on Seeking Alpha will influence the price of the stocks? Second, I always consider it more credible when an author actually puts his money where his mouth is by owning stocks that he is praising; I'm much more suspicious of recommendations when the disclosure reveals that the author has no position in the stock he's recommending that you buy.
Third, in dividend investing, I maintain minimum threshhold of 3% current yield (2.5% for stocks that have raised their dividends for at least 20 years). So I wouldn't buy Wal-Mart or Abbott at this time as part of a dividend strategy--their initial yields are too low, it will take too long for them to get up to a healthy return. (Again, refer to my article.) But that doesn't mean that with price changes over the years, they might not develop 3%+ yields. "Current yield" changes every day as the price of the stock changes. Although I wouldn't buy Abbott today as part of a dividend strategy, I own Abbott, because I bought it at a time when its price was much lower--and therefore its yield much higher--than it is right now. It's a great stock, its dividends are compounding even as we speak, and I expect to own it for a long time.
On Aug 26 08:59 AM axelrod608 wrote:
> I've said it before and it bears repeating - Eisenhower started building
> the Interstate system with money the USA didn't have, and EVERY Congress
> and administration since then has spent more than it has taken in.
>
>
> This nation is treasonously run by two ruling parties with no sense
> whatsoever of the concept of fiscal responsibility. The Republicrats
> have done more to damage and weaken this nation than all the Communists,
> Socialists, terrorists, Jihadists and other - ists in history. And
> Americans are so ignorant of this fact that election after election,
> they keep voting for the miscreants that created the mess.
>
> If you go into a voting booth and vote for a Republicrat, YOU are
> the problem.
>
> PS Why are there zero articles on SA on other financial vehicles.
> You can currently get a fixed annuity with a 10% bonus, guaranteed
> 7.5% interest (accumulates tax free) from a reserve insurance company
> (noone has ever lost a penny with a reserve insurance company).<br/>
>
> 2 or 3% div's don't even keep up with inflation and taxes. And if
> you examine the div "growth" are they "growing" at a rate greater
> than inflation ? Not likely.
----------------------...
Better idea, how about we phase SS and Medicare out over the next 15-20 years (inflation may do that anyway) and put the onus back on people to do their own retirement savings and medical care preparation?
Vis Medicare: The average SA reader (and their employer) will contribute around $60,000 into the Medicare Slush....er...Trust fund over a 40 year career. With nominal interest, this becomes $142,000. This would buy a pretty gold plated private insurance plan instead of having to find a medicare accepting Doctor (fewer every day) who will put up with a diminishing pay schedule and the onerous paperwork.
p.s. I am on Medicare and in my first 2 years have spent less than the current Medicare Pt B premiums and certainly less than the interest on the aforementioned $142,000.
- Margaret Thatcher
"The problem with capitalism is that eventually the plutocracy and their oligarch managers run out of other people's money and have to bankrupt the commonwealth."
What is this nonsense of proposing raising the retirement age? This betrays a true ignorance of real economics, as opposed to the phony kind practiced by the corporate shills who masquerade as economists. Now cut the retirement age to 55. Yes 55. We can afford it. We only need to start creating wealth again and properly allocate the surplus.
You said:
" I am on Medicare and in my first 2 years have spent less than the current Medicare Pt B premiums and certainly less than the interest on the aforementioned $142,000"
and
"...having to find a medicare accepting Doctor (fewer every day) who will put up with a diminishing pay schedule and the onerous paperwork"
Perhaps you have not had enough experience with Medicare. I have been on Medicare for 8 years. I have had three surgeries. My wife and I have been treated by 15 different doctors associated with 12 different offices/facilities. We have never encountered any question of a doctor accepting Medicare. In fact, my general practioner and one of my surgeons have both told me that they much prefer dealing with Medicare to dealing with insurance company claims. They say the paperwork is much simpler and payment is more prompt.
If you have specific instances of problems perhaps you could share them.
This is also related to the illegal immigrant problem. Largely driven here by NAFTA and the allowing of cheap US agricultural products in to Mexico, many Mexican and Central Americans really have no other choice. So instead of creating a reasonable response like a guest worker program we have illegals. Very useful, even cheaper labor and they can once again play Americans off against illegals. And because the illegals do not pay into the social programs that they use since they are "illegal" it's even better to create a backlash...Always, in America the upper 1% of the income chain wins.
Put a guest worker program in place, having them pay into SS and Medicare and you are half way there to solving the problems. But no, we don't really want to solve any of these issues, now do we?
On Aug 26 10:09 AM Marxwuzrite wrote:
> Fixing SS is no problem. Get income tax rates for upper income people
> back to Eisenhower levels. Put a chunk of it into SS. Cut the completely
> unnecessary $1 trillion budget for the National Security State. You
> know, military, "homeland security" so-called. Start making stuff
> again, i.e., rebuild our manufacturing base. You don't get rich exporting
> raw materials to China and importing manufactured goods. Duh.
>
> What is this nonsense of proposing raising the retirement age? This
> betrays a true ignorance of real economics, as opposed to the phony
> kind practiced by the corporate shills who masquerade as economists.
> Now cut the retirement age to 55. Yes 55. We can afford it. We only
> need to start creating wealth again and properly allocate the surplus.
On Aug 26 10:09 AM Marxwuzrite wrote:
> Fixing SS is no problem. Get income tax rates for upper income people
> back to Eisenhower levels. Put a chunk of it into SS. Cut the completely
> unnecessary $1 trillion budget for the National Security State. You
> know, military, "homeland security" so-called. Start making stuff
> again, i.e., rebuild our manufacturing base. You don't get rich exporting
> raw materials to China and importing manufactured goods. Duh.
>
> What is this nonsense of proposing raising the retirement age? This
> betrays a true ignorance of real economics, as opposed to the phony
> kind practiced by the corporate shills who masquerade as economists.
> Now cut the retirement age to 55. Yes 55. We can afford it. We only
> need to start creating wealth again and properly allocate the surplus.
On Aug 25 02:54 PM merlynp wrote:
> It was LBJ who dissolved the SS Trust Fund. It was at a time when
> all agreed there was so much money in the fund, no one would ever
> be able to spend it; so, it was used to pay for the Vietnam War,
> The Great Society, and the Moon Shot. One success out of three is
> not bad… in baseball.
>
> Later, when we hit a deficit that was greater than all the gold reserves
> (evidently the SS Trust Fund was not large enough to pay for Vietnam,
> The GS, and the Moon Landing), Richard Nixon took us off of the Gold
> Standard, allowing our currency to float against all others, so that
> we would be able to expand the money supply.
>
> Both parties have treasonously mismanaged our country. During my
> lifetime, we have constantly ridiculed dictators, socialists, and
> communists; yet, we are altogether as corrupt as they.
>
> We have only had crisis management. There has never been an interest,
> or ability, to manage for the long term, for our grandchildren’s
> future. Ours is NOT a democracy; it is a Plutocracy!
>
> For instance, during the last “gas crisis” of 1973, had we begun
> to use (seekingalpha.com/symbo...) Compressed Natural Gas
> as a truck fuel, we would not have gotten into our current dependency
> on foreign oil. Our environment would have been cleaner, our costs
> less, and the fuel would have come from the US. This is 1950s technology
> that works very, very well. Why don’t we use it?
>
> We have had decades, over many administrations, to correct the SS
> fund. Nothing has been attempted! The United States is, in fact,
> bankrupt!
On Aug 25 10:40 AM savvy investor wrote:
> Why invest for 2 to 3 % income in these stockes you chose when you
> can buy munis and get 4% plus and no taxes state or fed to boot???
>
> You push your 4 stocks simply because you own them. For income I
> buy Canadian oil sands stocks and oil/gas transmission stocks that
> pay upwards of 10% income.
Given the fact that SS has never, ever failed in its obligation to issue the promised check, billions of times to hundreds of millions people and given the realities of the last year: Bear Sterns, Lehman, Citi, Stanford, Madoff, BofA, CIT,GM, Fannie, Freddie, I'm just surprised that an article would appear with the headline "stocks to insure against Social Security failure".
I'm very happy that you can add, subtract, multiply and divide. I just wonder, given the news of the last two years, if you have had time to read?
On Aug 26 08:45 AM sewells wrote:
> Well, I've done some analysis on the SS issue. If you look at:<br/>www.socialsecurity.gov...
>
>
> You will find that by SS own findings it will need to start redeeming
> the trust fund in 2016. The amount that will need to be redeemed
> between then and 2036 when the trust fund runs out will be north
> of 7 trillion dollars. Do the math. Add it up yourself. If you
> assume an average population of approx. 350 million people over the
> 21 years (add census bureau projections for 2010 and 2040 and divide
> by two to get the average) it works out to around 350 million people
> in the US average over that time frame. That works out to $995 per
> person per year every year from 2016 to 2036 that will be need to
> be raised in taxes JUST FOR REDEEMING THE TRUST FUND and IN EXCESS
> OF ALL OTHER GOVERNMENT SPENDING NEEDS FOR THOSE YEARS.
>
> About 46% (from wikipedia based on IRS data) of the populace are
> taxpayers. That means that for every year from 2016 to 2036 each
> taxpayer will need to come up with, on average, an additional $2200
> in taxes in order to redeem the trust fund.
>
> These figures are based on the Intermediate cost projections of the
> SS governors themselves.
>
> Like I said, do the math for yourself using SS's own projections
> and then tell me you honestly think that every taxpayer in the country
> is going to be able to come up with an additional $2200 per year
> for 21 years JUST TO PAY BACK TAXES AND INTEREST THAT HAS ALREADY
> BEEN SPENT FROM THE TRUST FUND.
>
> That doesn't include the rest of the deficits, etc.
>
> Some here may be sanguine about the prospects for SS. Since I can
> add, subtract, divide and multiply and have done so, I am not.<br/>
There was an article in the Philly Inquirer about this a few days ago. Apparently the idea/concept is growing quickly around here.
I fail to understand the rationale of people with incomes of more than $100,000 collecting SS checks? SS is meant to provide a living income to the old, feeble and poor retired workers - not provide an extra income people who are already quite well off.
In Canada,if you’re 65 or older in 2009, the government will progressively clawback SS for incomes $66,335. SS is completely eliminated for incomes over $107,692.
Net effect is the Canadian SS system is healthy - not a burden on the government and SS taxes for workers are 4.95% with a
# Maximum Contribution o $2,118.60 per year - which I am happy to pay even though I will never collect any of it because of my income.
And a lot of things can be do in legislative actions against vested interests , Federal medical licences instead of State ones for example, recognition and validation of medical studies of foreign countries, use of generic drugs instead of trademark ones etc.
A lot of savings in a expensive and wasteful model can be done very easily.
On Aug 26 10:39 AM Trane250 wrote:
> The truth is that SS is the biggest Ponzi scheme of all time and
> will collapse sometime during the early retirement years of the baby
> boom generation. Any attempt to "fix" SS will only make the situation
> worse.
Regards.
On Aug 26 09:04 AM David Van Knapp wrote:
> To those who don't understand the compounding effect of rising dividends:
> See my article, "10 by 10: A New Way to Look at Dividend Yield and
> Growth" ( seekingalpha.com/artic...
> ).
>
> In a nutshell, the best dividend stocks raise their dividends each
> and every year, and therefore they spin out higher and higher yields
> every year--not necessarily to new buyers, but to those who bought
> them years ago. That's because your cost is fixed while the dividend
> itself is rising. (Dividend / Cost = Yield.) My informal goal in
> dividend investing is to achieve 10% return on my original investment
> (called "yield on cost") within 10 years...hence the "10 by 10" title
> of my article.
>
> To those who criticize the author's selection of four stocks as examples:
> First, get real--do you really think the author is "pumping" his
> own stocks, as if a little article like this on Seeking Alpha will
> influence the price of the stocks? Second, I always consider it more
> credible when an author actually puts his money where his mouth is
> by owning stocks that he is praising; I'm much more suspicious of
> recommendations when the disclosure reveals that the author has no
> position in the stock he's recommending that you buy.
>
> Third, in dividend investing, I maintain minimum threshhold of 3%
> current yield (2.5% for stocks that have raised their dividends for
> at least 20 years). So I wouldn't buy Wal-Mart or Abbott at this
> time as part of a dividend strategy--their initial yields are too
> low, it will take too long for them to get up to a healthy return.
> (Again, refer to my article.) But that doesn't mean that with price
> changes over the years, they might not develop 3%+ yields. "Current
> yield" changes every day as the price of the stock changes. Although
> I wouldn't buy Abbott today as part of a dividend strategy, I own
> Abbott, because I bought it at a time when its price was much lower--and
> therefore its yield much higher--than it is right now. It's a great
> stock, its dividends are compounding even as we speak, and I expect
> to own it for a long time.
Trying to invest to protect yourself is folly.
On Aug 26 11:17 AM doublebogey wrote:
> If social security fails in any meaningful way. I suspect which
> dividend stocks you have in your portfolio will matter very little
> because the value of stocks will be close to zero anyway. I'm not
> saying it cant happen. It very well might as we voters continue
> to allow the government to ignore the problem. But it it does this
> current financial crisis will pale in comparison to what will happen.
> You will want a physical stock pile of lead rather than gold and
> something to propel bits of it with. I fear we are all just rearranging
> the deck chairs on the Titanic. The most proactive thing most of
> can do that might a difference is learn Chinese. But I confess I
> am blithly chugging alone with everybody else toward what is going
> to be very painful if not catastrophic.
The fedeal government simply bypasses borrowing money from the Fed and prints money and issues it directly to retirees who can spend it into the economy.
What has destroyed America is the criminal conspiracy of forcing the government to borrow money from the Fed - the interest that is subsequently paid greatly reduces the amount of money that can be spent for federal programs, thus requiring ever more borrowing.
The national government is now teetering on bankruptcy and irrelevance because it was taken over by the bankers who were willing to destroy a nation so they could fill their coffers and survive anything.
We owe China and the whole world a lot of money because the federal government did not follow the Constitution and simply issue money to finance its operations. The Constitution was a very wise document.
Russia may have its problems due to the massive problems caused by the Khazar occupation of 1917, but today it simply issues money when it wants to do something.
It has a balance of payments surplus.
No way should the bankers who destroyed our nation and ecoomy ever been bailed out.
They should have joined the homeless on the streets and in their new downsized apartments.
Only in America....
I don't think dividend stocks will offset the deliberate destruction of Social Security by the rich waging their usual class warfare.
The people who've demanded lower taxes and are too stingy to fund education in a meaningful way have not brought about a more stable and prosperous nation. Big corporations and especially big, greedy, financial organizations are the ones who crashed our economy. Wall Street is culprit number one, hand in hand with their political cronies and enablers. George W. Bush went for "guns and butter" even bigger than Lyndon Johnson did. That is another black hole, still unresolved, that is draining our resources.
A real health care program with a public option, even better a single payer program will help our economy not wreck it, and it's the same, selfish crowd, big business and wealthy politicians who are, in fact, not doing the people's will, it's these same people who are bad mouthing Social Security.
A smart person would be making plans on that basis; i.e., steadily increasing rates of inflation for the foreseeable future once the current deflation abates. There is not the political will in this country for sound fiscal policies which leaves one alternative; i.e., inflation to get us out of the debt hole.
To be honest, I don't much care what you do or don't do with factual information or whether you approve or disapprove. That's your perogative and your problem.
* return = price appreciation + dividend
If the price appreciation is good, just sell the stock and use part of the gain as income.
* For the same equation, it will not help you when the dividend is great but the stock loses all the value.
* Dividend growth normally implies stock appreciation. But, not in the current phase of a market cycle (market bottom).
The comment that it was the largest social program included as a negative is an example of how limited the conservative mind can be, it a pension plan for the entire country! Did you expect it to be small?
And to suggest the four stock approach you mention is a substitute for one of the greatest social initiatives of all times is just silly.
On Aug 25 11:09 AM cross wrote:
> On the plus side I appreciate your comments regarding Abbot Labs
> as I have a position in this company. It's a great long-term hold.
>
> As criticism, your comments regarding the solvency of Social Security
> are so far off the mark I really don't know where to begin. First
> of all, the bonds held by the fund were not issued by the govenments
> of Kosovo or Somalia, they were issued by the United States, an
> entity that has never defaulted on either its principal or interest
> obligations. (I'll simplify this for you: Real time, banks are not
> rescuing the Federal Government; the Federal Government is rescuing
> banks. Do you own a bank stock? Where did the dividend go?? I've
> heard, over the years that BAC was a rock-solid, take-it-to-your-grave
> investment) To suggest that the Feds will default on their obligations
> is just speculation on your part. Secondly, it is not a fund that
> needs to be permanently fixed. It just needs an occasional tweaking:
> raising the cap, raising the age, adjusting the COLA. All these
> things will need to be done, and indeed, have been done. It just
> takes political will. Third, it is not a static fund, it will receive
> 10's of trillions of dollars over the next thirty years of new money
> that will be used to partially fund benefits.
> What is the solution? Raise taxes, limit benefits.
> P.s. Gold??? At $900 + an ounce? I don't think so.
On Aug 25 10:40 AM savvy investor wrote:
> Why invest for 2 to 3 % income in these stockes you chose when you
> can buy munis and get 4% plus and no taxes state or fed to boot???
>
> You push your 4 stocks simply because you own them. For income I
> buy Canadian oil sands stocks and oil/gas transmission stocks that
> pay upwards of 10% income.
On Aug 26 02:34 AM RatWatcher wrote:
> Sorry, no. The SS Trust Fund is nothing more than a US Gov IOU in
> the US Gov's own pocket. This is neither savings nor debt; it is
> an unfunded promise to make future payments, but the expected payment recipient has no legal right to the funds.
ah, the genius of the far right - the US Gvt can honor IOUs to every gvt in the world, but is free to default on American retirees. I REALLY hope some future wingnut president actually tries this, as then we can finally rid the USA of the curse of "reaganomics".
Once again, the fund can be preserved and its life extended through some simple adjustments. Reagan was able to work it out with the Dems, why is that not possible today?
Bruce calls it the Northwest plan and it's a pretty smart one. If it were only necessary to do this in isolation, I have no doubt it would work as SS is about the smallest fiscal problem we have. Unfortunately, it being the smallest fiscal problem we have is also why it can't be considered in isolation.
Even with the Northwest plan, the figures I provided showing approx. $2200 per year per taxpayer for 21 years,from 2016 to 2036, still stand. Start adding that to what's needed for health care, military spending (although I think we need much, much less of that than some others do), education, etc. etc. and the whole edifice starts to look really dicey. Like I said earlier, I'm betting my retirement and my money on inflationary pressures coming along for the foreseeable future.
Where's the leadership & balls necessary to reduce military spending and divert money into useful, long-term growth programs that will generate well-paying jobs? It's hard to find while our gov't leaders are bought & sold by corporate interests. Nobody seems to know how to fix this skewing of power.
On Aug 25 02:54 PM merlynp wrote:
> It was LBJ who dissolved the SS Trust Fund. It was at a time when
> all agreed there was so much money in the fund, no one would ever
> be able to spend it; so, it was used to pay for the Vietnam War,
> The Great Society, and the Moon Shot. One success out of three is
> not bad… in baseball.
>
> Later, when we hit a deficit that was greater than all the gold reserves
> (evidently the SS Trust Fund was not large enough to pay for Vietnam,
> The GS, and the Moon Landing), Richard Nixon took us off of the Gold
> Standard, allowing our currency to float against all others, so that
> we would be able to expand the money supply.
>
> Both parties have treasonously mismanaged our country. During my
> lifetime, we have constantly ridiculed dictators, socialists, and
> communists; yet, we are altogether as corrupt as they.
>
> We have only had crisis management. There has never been an interest,
> or ability, to manage for the long term, for our grandchildren’s
> future. Ours is NOT a democracy; it is a Plutocracy!
>
> For instance, during the last “gas crisis” of 1973, had we begun
> to use (seekingalpha.com/symbo...) Compressed Natural Gas
> as a truck fuel, we would not have gotten into our current dependency
> on foreign oil. Our environment would have been cleaner, our costs
> less, and the fuel would have come from the US. This is 1950s technology
> that works very, very well. Why don’t we use it?
>
> We have had decades, over many administrations, to correct the SS
> fund. Nothing has been attempted! The United States is, in fact,
> bankrupt!
WAKEUP:
Agreed. Why don't the editors at SA ban this clutter?
Rob
On Aug 26 01:05 PM WAKEUP wrote:
> No matter how many different names you post, under, you're still
> a simple-minded jerk.
>
re: Social Security
You may believe that big government social programs are well-conceived, managed and executed. Alas, the record suggests otherwise. The various writers who opine about the 'Ponzi' characteristics of SS are onto something. The Peterson Foundation underwrote a well-produced film (IOUSA) that addressed the fiscal problems our nation faces but it was poorly attended and disappeared from the movie theater system almost immediately...too much for our electorate to process. The founder of the institute, eponymously named, Pete Peterson, is an American icon of business and philanthropy. He also wrote a book on this subject (US fiscal problems) titled, "Running on Empty ", a worthy read. Yes, we as a nation committed to personal responsibility, can solve our fiscal problems. The real problem arises from the misperception that big government has an infinite source of money to throw at every social injustice.
Just one near-retired taxpaying citizen opening the dialog.
Is that what you call a good dividend investment?
If thats the best anyone can find, then don't buy stocks, they're not worth the risk.
Maybe you deeply regret that w's scheme for privatizing part of SS was thwarted. You could have tucked that extra money into a little Bear or Citi. How about Lehman? ("dick" Fuld could have taken your money back to his Montana ranch with him! : ) (if you have no idea what I am talking about, then you need to do a little reading)
On Aug 27 04:46 AM specguy wrote:
> tsk, tsk, all you name-callers. Didn't your mom tell you it wasn't
> nice to do that? As adults, we should be able to understand that
> telling other adults they are "morons" or "wingnuts" or any other
> derisive label is counterproductive and a waste of time. Argue persuasively,
> if you can, with facts, history, tested hypotheses and conclusions...heck,
> use humor appropriately to get the conversation going.
> re: Social Security
> You may believe that big government social programs are well-conceived,
> managed and executed. Alas, the record suggests otherwise. The various
> writers who opine about the 'Ponzi' characteristics of SS are onto
> something. The Peterson Foundation underwrote a well-produced film
> (seekingalpha.com/symbo...) that addressed the fiscal
> problems our nation faces but it was poorly attended and disappeared
> from the movie theater system almost immediately...too much for our
> electorate to process. The founder of the institute, eponymously
> named, Pete Peterson, is an American icon of business and philanthropy.
> He also wrote a book on this subject (US fiscal problems) titled,
> "Running on Empty ", a worthy read. Yes, we as a nation committed
> to personal responsibility, can solve our fiscal problems. The real
> problem arises from the misperception that big government has an
> infinite source of money to throw at every social injustice.
>
> Just one near-retired taxpaying citizen opening the dialog.
On Aug 25 10:40 AM savvy investor wrote:
> Why invest for 2 to 3 % income in these stockes you chose when you
> can buy munis and get 4% plus and no taxes state or fed to boot???
>
> You push your 4 stocks simply because you own them. For income I
> buy Canadian oil sands stocks and oil/gas transmission stocks that
> pay upwards of 10% income.
The 10X10 table by David Van Knapp at: seekingalpha.com/artic...
is outstanding in it's clear layout of the results of time on Dividend Payouts. There have been a LOT of studies by some very intelligent and practicle (not always found together) that have shown that Dividend Paying Stocks that have been RAISING dividends for at least 5 years do better overall than the rest of the market (1.8% average from 1926 to the present). If you think that the extra 1.8% compounded does not make a difference over a decade or two (or more) - you are simply not looking at it clearly. Inflation has averaged 3% during that time and dividends simply make too big a difference to ignore. You can argue about where to get them or just go ahead and make up the mix of investments that makes you happy. If you simply take action - instead of sitting and fussing about the details - you WILL be much better off in the long-term.
An excellent article on the difference that Yield on Your Cost makes is here: www.dividendgrowthinve...
Here is an excellent list that combines all 3 of the long-term dividend payers lists into one clear list:
dividendsvalue.com/ana.../
CANROYs and MLPs can be a very good way to add to your income list and I have some of each in my Core Portfolio along with some hand-picked stocks from the last list. I have done very well through both market ups and downs as well as in a sideways market with these stocks. Check it out - spend some time studying this stuff - then decide if you want to do it or not.
As far as SS goes - I have no idea if I will be able to continue getting it or not or if inflation will render it worthless even if I do continue to get it. I DO know that having dividend paying stocks, CANROYs and MLPs paying me and getting those dividends re-invested in the investment that paid them has had amazing results over time. For instance, I have one stock that I bought years ago that paid a dividend of 3% when I bought it. I now have WAY more shares than I bought and the dividend is up. The yield on my Cost-Basis is now well over 30% and rising as time goes by and it is just one of many just like it that have been paying RISING dividends for 5+ years or more. Most of mine have been doing it over 25 years and have continued to do it right through this last drop in the markets. Think about it.
I would love it if the current system could keep going, but the numbers will never add up, it's crash is unavoidable. China cannot float the U.S. forever, at some point no one will buy our debt, and then it's game over. People think the US can never go broke, it can, and will.
I would love to opt out of this crashing ponzi scheme, even if I never got one cent back from what I've contributed.
It would be a criminal Ponzi scheme were it not sanctioned by most of the unwitting participants who, because of lack of planning and personal risk management, will need to live on this entitlement. I won't engage in a social engineering discussion because your mind seems to be made up. And since you've made several assumptions about me (incorrectly), let me be clear: I read enough to know who Dick Fuld is, and what Bear and Citi are, and what you infer by introducing 'w' into the conversation. And why would you imagine I might like to go back to an era when life expectancy was 67 to 68 years? Read my comments again re: the Peterson Foundation - it's well researched and based on GAO findings. David M. Walker was the head of that agency as US Comptroller General and now heads up the Peterson Foundation. I guess he found it tiresome in trying to reach individuals whose minds wouldn't open to the fiscal realities facing our nation and decided his effort would be more well-directed by joining the foundation.
Your thoughtless repartee represents the small-mindedness of those who are so in love with their preciously held positions on everything that new information and ways of seeing things just can't penetrate their psyches.
And thank you for your self-righteous lecture on my needing to read more and on the subjects and sources you deem appropriate. That's really rich.
On Aug 27 11:24 AM cross wrote:
> I find the "ponzi scheme" analogy to be a poor one. Just as it's
> not useful to call people names, it really doesn't serve the discussion
> to call institutions names either. "Ponzi's" are crimes, people who
> engage in it conceal the crime by taking new money and passing a
> little bit of it back to the older investors to conceal the crime.
> The simple fact is that the SS trust fund has a couple of big, well-known
> (no Ponzi-style concealments) problems: Demographics and increased
> longevity of people receiving benefits. At it worst, that is, if
> no adjustments are made, SS will still be able to pay 70% of promised
> benefits in the year 2040. That is not "failure" as the author suggests.
> I am 58. My retirement date for full benefits has been pushed back
> from 65 to 66. I have no problem with this. I would have no problem
> if it was pushed back another year. Would we prefer to go back to
> the good old days when the average recipient lived 18 months after
> commencement of benefits vs the 12-15 years we enjoy now? (thank
> Medicare, in large part, for that).
> Maybe you deeply regret that w's scheme for privatizing part of SS
> was thwarted. You could have tucked that extra money into a little
> Bear or Citi. How about Lehman? ("dick" Fuld could have taken your
> money back to his Montana ranch with him! : ) (if you have no idea
> what I am talking about, then you need to do a little reading)<br/>
What I am concerned about, is how they're going to hide the offsetting costs of these benefits. My guess is that they will print the money, or write the IOU's from other holes in the budget. With the excess money supply, the fed will start jacking up interest rates, impeding future growth. We'll pay for it through inflation and slower growth, and never see an additional dime taken out of our checks.
So, I'll say that Social Security will remain around, but it will be much less valuable than it is today. For my personal retirement planning, I'm assuming it will grow at half the rate of inflation, but I'm preparing for less.
I guess that's progress.
I just look at all the shit (I'm sorry, there really is not a nice word for it) that has gone on over the last decade; all the reputable businesses gone under, run by disreputable people: Worldcom, Enron, Citi, Lehman, Bear, Merrill and a dozen other big firms and then I consider all the promises that have been kept by Social Security, hundreds of millions of checks to tens of million recipients, like clock work, never missing a beat and then finally I read comments like yours, after all this history, implying that Social Security is some sort of scam.
It's really a bit much don't you think?
On Aug 26 12:31 PM swaps wrote:
> Social Security does not have to go broke.
> The fedeal government simply bypasses borrowing money from the Fed
> and prints money and issues it directly to retirees who can spend
> it into the economy.
> What has destroyed America is the criminal conspiracy of forcing
> the government to borrow money from the Fed - the interest that is
> subsequently paid greatly reduces the amount of money that can be
> spent for federal programs, thus requiring ever more borrowing.<br/>The
> national government is now teetering on bankruptcy and irrelevance
> because it was taken over by the bankers who were willing to destroy
> a nation so they could fill their coffers and survive anything.<br/>We
> owe China and the whole world a lot of money because the federal
> government did not follow the Constitution and simply issue money
> to finance its operations. The Constitution was a very wise document.
>
> Russia may have its problems due to the massive problems caused by
> the Khazar occupation of 1917, but today it simply issues money when
> it wants to do something.
> It has a balance of payments surplus.
> No way should the bankers who destroyed our nation and ecoomy ever
> been bailed out.
> They should have joined the homeless on the streets and in their
> new downsized apartments.
> Only in America....
> I don't think dividend stocks will offset the deliberate destruction
> of Social Security by the rich waging their usual class warfare.
>
People were saying this while I was buying in 2003. I hope more pile on with this prediction.
On Aug 26 10:34 AM Sunnsea wrote:
> Put a guest worker program in place, having them pay into SS and
> Medicare and you are half way there to solving the problems. But
> no, we don't really want to solve any of these issues, now do we?
>
The 12 million folks who are not paying into the SSN program can bail out the SSN for many years to come if we simply gave them some status that would encourage them to become visible while giving the govt. some time to put in place an expanded immigration review/approval/legali... process.
Beyond that enough with the negativity in Obama/government spending, etc. The current situation was purposefully created by the Bush idiot who ran our economy into the ground and did not pay for the Afghanistan/Iraq wars nor the Medicare Part D program.
Remember that the Democrats you rile about left W a surplus. Has it ever occurred to you negativists how the reduction in income[less taxesfor wealthy] and increase in expenditures[war/PartD... got us into this mess?????
On Aug 28 04:01 AM www.hdvideoconverterma.../ wrote:
> Social security is the most important for us.
On Aug 26 08:21 AM SeekingTruth wrote:
> All my life , I've listened to people say that they would never receive
> their Social Security.
> These same people not only received it, but did so for many years
> and died receiving it.
> It is true that the program can fail, but if it failed as soon as
> it was forecast decades ago , it would be long gone and only a distant
> memory.
> It IS being abused and mishandled by "some" of our politicians ,
> no doubt, (What isn't where large pools of money are involved? Have
> you checked out the stealing and abuses of the Iraq War?) , but that
> can be stopped and corrected if we make it a high enough priority
> and insist on it, just like anything else in life and politics.
Another interesting play may include currency and commodity protection, BHP.
Watch your stock's trends, place stop-loss orders and trust your gut.
Eliminate Congressional pensions and move them into Social Security.
On Aug 25 05:15 PM SeekingTruth wrote:
> Any good and worthwhile system can be abused, mismanaged, and thoroughly
> screwed up and destroyed by saboteurs , miscreants and special interests.
> We have just seen enough of that in our banking system to get the
> attention of even the simple minded .
> In our country, this is especially true for a program that serves
> the general public instead of just special interests and marketeers.
>
> These are valid reasons for keeping those people in office that will
> protect and improve a good system, and not use it as a piggy bank
> to plunder , exploit and propagandize for selfserving, and political
> reasons.
> If my memory serves, the wholesale borrowing from Social Security
> was initiated during the Reagan Admin. wasn't it? These were not
> friends or supporters of Social Security.
> This same thinking and "strategery" is the same kind that turns years
> of surpluses into years of punishing and frightening deficits. Something
> , once started, can take years to turn around and usually gets much
> worse before it can get better.
>
> Perhaps our chances are improved on receiving Social Security and
> would be enhanced, if we keep those people in office that truly believe
> in it , are willing to financially sustain and improve it, and keeping
> those people out that are trying to propagandize, and plunder it
> for self serving reasons, and ultimately destroy it.
On Aug 26 08:21 AM glassshoe wrote:
> Gold is just shiny dirt and has no compelling economic value of its
> own. True, in times of war, Gold is a good way to make wealth portable,
> but I don't expect war here. In times of poor economic performance
> demand may drop and there is always the possibility of a huge new
> gold strike, ruining the price.
>
> Gold is volatile, doesn't pay dividends and is not a suitable investment
> for retirement.
This is a financial website and the election is over. Get a new hobby!
On Aug 26 08:08 AM Oldguy67 wrote:
> The average person(family) can not accumulate
> enough funds to support themselves in a long
> retirement based on a 2 or 3% return.
>
> If you only get 3% return on a million dollars you will
> only generate $30,000.00 anual income. That is a
> less than average income for 2 people much less
> if it has to support more people.
>
> The fact these stocks consistantly raise their dividends
> is meaningless when they pay out such a low percent
> of the base investment.
On Aug 26 08:51 AM whisperonthewind wrote:
> I agree that we need to supplement Social Security, whether it's
> with a personal IRA/401k or dividends. I began with a Roth, preferring
> not to have to pay additional taxes at distribution time, except
> on the interest, but my general portfolio (outside the Roth) was
> doing so much better that I've since concentrated on that. I aim
> for stocks with dividends (although not exclusively) and I aim for
> 5% or better. My goal is to have the dividends available in the future
> to use as that supplement, and to save the base stocks for my family
> to inherit and hopefully use for the same purpose. I think of it
> as my own personal social security.
>
> Although I initially bought stocks emotionally, I no longer listen
> to the advice by public analysts - now it's for the yield, and 2
> to 3% is not nearly enough for me. I had a lot of oil stocks last
> year, and watched the price of gasoline go up without caring. My
> fuel efficient car helped there, and my dividends more than covered
> the higher costs, even while increasing my stock base. I now have
> a few more financials, and although their dividends are not up to
> my standards, their base value has tripled and the dividends will
> come back. The oil stocks are still covering my fuel costs (and then
> some), and are also still increasing my base.
>
> On the sidelines, but still evident, are the tanker stocks (waiting
> for the next push) and housing stocks (also starting to come back),
> and the utility stocks (holding their own).
>
> With luck, I will get enough in the dividends to supplement my income
> and cover the additional taxes from the income. And if I'm really
> lucky, I won't care if Social Security is there or not.
*The author is expecting to live off the dividends, not any appreciation in the stock.
*If the dividend is great, the stock will not lose all value. Why? Because investors will buy the stock in order to realize the dividend yield which will stabilize the stock's price if not cause it to appreciate.
*Dividend growth implies growth in earnings. Companies are in fact increasing dividends despite this recessionary period.
On Aug 26 02:29 PM TonyP4 wrote:
> This is the common misconception to buy high-paying dividend stocks.
>
>
> * return = price appreciation + dividend
> If the price appreciation is good, just sell the stock and use part
> of the gain as income.
>
> * For the same equation, it will not help you when the dividend is
> great but the stock loses all the value.
>
> * Dividend growth normally implies stock appreciation. But, not in
> the current phase of a market cycle (market bottom).