General Electric (GE) was once revered as one of the bluest of all blue-chip companies in the world. During its glory days, GE was respected as an industrial conglomerate that manufactured some of the world's best jet engines, locomotives, appliances and even the highly regarded General Electric light bulb. However, as best I can determine, the roots of General Electric's ultimate demise were established in 1930 when the company, responding to the great depression, formed GE Finance in order to help their customers finance GE appliances over time.

Over the many decades since, GE Finance rapidly grew into GE Capital, the company's largest, and for many years, their most profitable division. Essentially, General Electric morphed from being one of America's great industrial companies into one of America's largest diversified financial services companies. However, in addition to helping large customers finance their jet engines, locomotives and other General Electric products, General

The Dow Jones industrial average sits above 15,000, an all-time high. But don't be fooled, this doesn't mean that stocks are expensive. I understand that it seems logical to assume that if the Dow Jones industrial average, what many believe to be the bellwether index of the stock market, is at an all-time high, then it must simultaneously be overvalued. Herein is the danger of relying on headlines and simple statistics.

This article intends to demonstrate that more than one third of the 30 Dow stocks (11) are undervalued, another 6 are fairly valued, another 6 fully valued, but not overly so, and finally, only 7 that could rightfully be classified as overvalued. In other words, the Dow Jones industrial average is rather cheap, even though it sits near an all-time high.

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But as I often like to say, "The Angels are in the details." The beauty

Introduction

This is part two of a series on investing for growth, part one can be found here.

One of my primary objectives for preparing this series is to dispel some of the common myths that many investors hold regarding investing for growth. For example, many believe that growth stocks are, by definition, riskier than dividend paying stocks. Although there is some truth to this, I believe this concept is overblown.

One commonly measured metric for measuring risk is beta. At its core, beta is a measure of volatility which is also referred to as systematic risk. More simply stated, it is a measurement designed to reflect whether or not a given stock is more volatile than the general market. A baseline beta of one reflects the market. Therefore, a stock with a beta less than one indicates that it is less volatile than the market, and a stock

Introduction

It seems like I've been writing only about dividend growth stocks for what seems like forever. Therefore, I felt it would be a refreshing change to alter my focus from dividend income to pure unadulterated growth. Although I'm a major proponent of investing in dividend growth stocks, unlike many of my fellow dividend growth investor friends, I am also a big believer in the benefits of investing in non-dividend paying growth stocks with the potential for generating a higher total return.

The equity universe is broad and multifaceted. Since there are so many different types of stocks that investors can choose to invest in, I often get frustrated when I read or listen to opinions making broad statements regarding either the perils or merits of investing in common stocks in the general sense. I especially get agitated when these over-generalized discussions attempt to stereotype all stocks as being risky.

Introduction

To me, there's almost nothing better than finding a great company that I truly want to own at a fair valuation, or better yet, undervalued. In the long run, it has been my experience that this usually leads to outsized future returns, especially if you buy stocks when they are undervalued at the time. But there is quite often a side effect that can prove very disconcerting. Once an undervalued stock starts moving to the upside, momentum will often carry it above what prudent fair valuation would dictate.

As a result of the recent run-up in the market, many of my holdings have, by the strictest of definitions, become overvalued. This begs the general question: what do I do now? Moreover, additional questions pop up such as: If I do sell, should I sell a part of my position, or all of it? When should I pull the trigger,

So far in calendar year 2013, stock markets have been very strong. One very strong sector in particular has been the utility sector. Utilities have long been considered a low risk dividend paying sector. However, because of the regulated nature of most utility stocks, they are also a very low growth sector. Consequently, I feel their attractiveness and investment merit lies more with their dividends than it does for their profit potential.

Therefore, I also strongly believe that because of their low growth, investors must take great care that they do not overpay when investing in this sector. My feelings are based on the fact that because of their low growth characteristics, even modest overvaluation can greatly impact future returns. In my way of thinking, utilities make sense when they are cheap, i.e. undervalued. On the other hand, even slight overvaluation greatly expands the risk of investing in them, while

Introduction

There is a growing trend towards doing-it-yourself (DIY) portfolio management. Many individual investors have become disillusioned with professional investment management at various levels, to include mutual funds as well as custom-designed professionally-managed portfolios. Consequently, they have become motivated to take their financial futures into their own hands and manage their own portfolios.

Generally, I am in favor of this action as long as several conditions are met. First of all, the individual do-it-yourself investor (DIY) must be willing and able to commit the time, work and effort necessary to effectively manage a portfolio. They also need to have the proper tools and research at their disposal. In our Internet age, there are numerous free financial blogs and websites at the do-it-yourselfer's disposal. However, there are also many reasonably priced research subscription sites that ought to be considered as well.

But perhaps most importantly, I believe that the individual do-it-yourself

Introduction

A significant portion of all the great advantages that the world has received through the promise of technology can be credited to the Big 3: Cisco Systems Inc. (CSCO), Intel Corp. (INTC) and Microsoft (MSFT). Great gratitude should be attributed to these technology titans, because, thanks to them, the world enjoys a functioning Internet and enormous productivity advances.

Once powerful growth stocks, they have all morphed into solid dividend growth investments. Today, an equal investment in all three would provide an above-average dividend yield of 3.37% with the potential for double-digit growth. However, our bipolar business associate, Mr. Market, who for so long lavished ludicrously high valuations upon them, currently values them as though with disdain.

To me there is a great absurdity in it all, where Mr. Market just can't seem to get valuation correct on the best of our blue-chip tech. However, we should always keep in

Introduction

For a lot of reasons, dividend growth investing is becoming more and more popular every day. The historically low interest rate on fixed income is perhaps one important reason for this trend. However, an equally important, and perhaps even the most important reason, might just be that investors are better informed on the dividend growth strategy than ever before.

On the other hand, there seems to be a side effect to the better medicine that dividend growth investing offers. As dividend growth investing has become more popular, there have been many proponents gleefully willing to share their enthusiasm and commitment to the benefits of dividend growth investing for their retirement portfolios.

This has simultaneously created the equivalent of a negative feedback loop against dividend growth investing. Sometimes dividend growth investors appear to come off as smug, and this irritates certain people. Personally, I don't believe they are as arrogant,

Looking for good dividend-paying stocks to add to your retirement portfolio? You might want to try trusting analysts' estimates to aid in your selection process.

Putting Analysts' Estimates Into Perspective

I believe that estimating future earnings growth is a major key to successful long-term stock investing. If you're a true investor, then you are actually investing in the business. Consequently, the success of the business that you invest in is going to be the primary determinant of how much money you can expect to earn on that investment. Stated more directly, when you invest in a stock you are buying its future earnings potential.

To my way of thinking, the only logical reason I would ever want to own any stock (business) is because I believe that the company is a profitable enterprise. But not just in the past, or the present, but most importantly, in the future. After all,

By now, it should be no secret to anyone that the stock market has been on a nice run of late. Moreover, this Bull Run has conjured up a lot of discussions that might lead one to believe that stocks in general are overvalued. There are even some that want to play the bubble card because they argue that the S&P 500 and/or the Dow Jones Industrial Average are both approaching all-time highs. However, I believe these extremists are confusing value with price.

Investors need to understand and recognize that both a company and/or an index can be trading at an all-time high price, while at the same time be trading at a reasonable or even a low valuation. Additionally, there can be more than one reason for this to occur. For example, if earnings are at an all-time high, the price can also be at an all-time high while

Introduction On Stock Valuation

When it comes to writing about investing in common stocks, my favorite theme typically revolves around valuation. In fact, I once had a reader dub me "Mr. Valuation." Which, I might add, was very flattering to me. Moreover, in the context of discussing valuation, there are normally three concepts that are included. They are typically fair valuation, undervaluation or overvaluation.

Oh, but wouldn't it be wonderful if everything about valuation were that simple? In truth, the concept of valuation is much more complex than those three simple notions. Therefore, one of the primary objectives of this article is to broaden the reader's perspectives and understandings of the incredibly important concept of valuation as it relates to investing in common stocks.

However, before I delve too deeply into this subject, I would like to offer these following positioning statements. Position number one, just because a stock is

I believe it is extremely important that investors focus on the value of what they own more than they do on the day-to-day machinations of price volatility. However, I also believe, and even recognize, that very few investors are capable of ignoring volatile stock price movements. When the price of a stock that they own is rising or falling, especially when the swings are large and/or violent, it is very difficult for people to maintain a steady head and hand. Instead, emotions take over reason, which often causes otherwise rational investors to make irrational decisions.

My last article dealt with how to think about stock prices in today's volatile markets, and can be found here.

The above article was well-received by readers, and generated many lively comments and questions. One comment/question in particular that attracted my attention was also the inspiration to offer this follow-up regarding how to think about

Price volatility is an unavoidable aspect of investing in common stocks. During periods when emotions are dominating reason, price volatility can become more pronounced than is normal during calmer times. The insidious part of this fact is that the more volatile stock prices are, the more fear and stress they generate, which only feeds even greater volatility. Of course, the same can be said when greed raises its ugly head. The purpose of this article is to provide some logic and reason that can be applied to stock price volatility that simultaneously weakens its potential damage.

However, in order to accomplish my objective, it is imperative that the reader be willing to consider what I believe is the undeniable reality that stocks are often mispriced by Mr. Market. This concept flies directly in the face of the so-called "Efficient Market Hypothesis (EMH)" accepted by proponents and followers of Modern Portfolio

Introduction

In my previous article found here I reported on Dividend Champions that I felt were fairly valued. In contrast to Dividend Champions that have raised their dividends every year for 25 consecutive years, Dividend Contenders have raised their dividends every year for 10 to 24 years. Therefore, I feel that the Dividend Contenders list also provides numerous excellent candidates for a retirement portfolio interested in generating a constantly-increasing income stream. Moreover, I believe there are many candidates on the Contenders' list that also meet the seven criteria of quality and quantity that the venerable Ben Graham expressed. The seven criteria are repeated here as follows:

1. Adequate Size of the Enterprise
2. A Sufficiently Strong Financial Condition
3. Earnings Stability
4. Dividend Record
5. Earnings Growth
6. Moderate Price / Earnings Ratio
7. Moderate Ratio of Price to Assets

General Considerations and Thesis

In order to avoid being repetitive, I suggest that the reader refer

Introduction

In a previous article found here, I postulated that the S&P 500 was currently fairly valued. In this article, I review a specific hand-selected list of Dividend Champions that I believe are reasonably priced and therefore capable of generating above-average returns at below-average risk. In today's low interest rate environment, I believe that high-quality blue-chip dividend growth stocks represent an attractive asset class that can provide a retirement portfolio with a growing income stream.

Retiring Without Being Predestined to a Fixed Income

Once we reach retirement, investing becomes all about income and safety. Yet over the years one of the greatest laments of the retiree is the struggle associated with living on a fixed income. Retirees have been conditioned to the notion that once they reach retirement age, they must become completely risk-averse regarding their investing practices. Therefore, they end up holding portfolios full of fixed income with

Allow me to start this article by emphatically stating that I have a real problem with forecasting stock markets in the general sense. Instead, I prefer to forecast the intrinsic values of individual businesses based on their earnings justified fundamental values. I hold this position because I believe that it is not only possible, but also quite practical to analyze a specific business and then make an intelligent forecast (not a guess) but a rational estimation, based on the assimilation of fundamental facts, as to its past, present and future intrinsic value. Importantly, I'm not suggesting this can be done with absolute perfect precision down to the precise penny, rather I am suggesting it can be done within a reasonable range of rational probabilities.

In contrast, trying to estimate the collective results of a large group of companies such as the S&P 500 (SPY) is a very daunting task. There

Founded in 1980, Amgen (AMGN) is the world's largest biotechnology company with a current market cap of just under $68 billion. However, in spite of its already large size, we believe that Amgen has ample room to continue growing earnings at above-average rates into the foreseeable future. Our optimism for future growth is predicated on several factors. First and foremost, Amgen has a strong pipeline of potential blockbuster medicines, many of which are already in Phase III trials. We will highlight some of the major candidates later.

In addition to a strong pipeline, Amgen is utilizing its strong cash position, cash flow generation capability and its pristine balance sheet towards making strategic acquisitions that will expand its geographic reach and bring additional candidates into its pipeline. On December 10, 2012, Amgen announced that it acquired deCODE Genetics, a global leader in human genetics headquartered in Reykjavik, Iceland, in an all-cash

As I routinely do, I was recently searching for a hidden gem stock investment. In other words, I was trying to identify a proverbial diamond in the rough. As I was conducting my search, it suddenly occurred to me that if I wanted to find a jewel of an investment, I should look to where the most precious treasures would be found - so logically I "went to Jared." And in doing so, I discovered Signet Jewelers Ltd. (SIG), a stock that has soundly outperformed the stock market since 2009.

Since changing its stock market listing from the London to the New York Stock Exchange on September 11, 2008, Signet Jewelers Ltd. has been on a tear. Operating earnings growth has averaged almost 23% a year, and the stock price has risen from $8.67 on December 31, 2008 to $55.14 on the close of business on December 12,

Introduction

I have recently authored two articles showing that, all other things being equal, a stock that pays its shareholders a dividend generates a higher total return than a stock with similar growth characteristics that doesn't. This is based on the reality that stock prices follow earnings in the long run, and it is this relationship that generates the capital gain component of total return. Therefore, if there is a dividend it will provide the shareholder the additional return from the income component (dividends). Links to the articles can be found here and here.

Both of these articles generated a rather lively comment stream. However, very few of the comments actually discussed the concept of the dividend providing additional return. Instead, the comments denigrated into exhaustive discussions about whether or not a company would grow faster or not by not paying a dividend. In other words, the discussions did