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Steven Dotsch
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From a very young age, Steven learned the value of money and saving. He started saving money when he was only five, washing his father’s car and started to invest in Dutch shares when he was fourteen. Following university in Amsterdam, Steven pursued a career in merchant banking in The... More
My company:
EMAR Publishers
My blog:
Dividend Income
My book:
Guide to Dividend Investing
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  • Dividends - The Gift Of Perpetual Income

    Many people increasingly find that the income generated by their money held in bank accounts is insufficient to meet their needs, or to keep up with the long-term effects of inflation. Although inflation has gone up and down sharply, the last few years, interest rates have remained very low.

    The combination of occasional periods of high inflation, combined with very low interest rates can significantly reduce the purchasing power of savers' money. Holders of interest bearing government bonds are facing similar difficulties.

    In this environment, savers and investors are increasingly recognising the appeal of regular inflation-beating dividend payments to provide them with an income in the medium to long-term - perpetual income - perhaps for example to supplement their pensions.

    The gift that keeps on giving

    Generally investors have the choice of many companies in which they could purchase shares.

    Often, once companies have started paying a regular dividend, they will often go to considerable lengths to maintain its size, even if they suffer a setback to their profitability or when stock market conditions have become tough with share prices moving up and down, as the cancellation, cut or freeze of a regular dividend is usually viewed negatively by investors.

    Historically, the ability to maintain the size of their dividend payments, or, indeed, increase them, has come about because some companies have been able to increase the prices they charge for their goods and services while keeping their costs in check, helping them to maintain and increase their profits and allowing them therefore to pay increasing dividends.

    While long-term dividend income investors are usually drawn to the most profitable companies or to those companies that pay out a high dividend yield they have not necessarily purchased these shares at the right moment.

    The gift of paying the right price

    Generally many investors are not paying enough attention to the prices of the shares they buy.

    Instead they get seduced by reports in the media regarding companies with a low price earnings ratio and 'high' dividend yields. Always remember that earnings and any metrics with an 'earnings' element in it do not provide you with any information whether a company is truly 'profitable', i.e. cash rich, and, therefore whether they are able to maintain or, even, increase their dividends on a regular basis.

    Truly successful long-term dividend income investing is very much depended on the price at which you buy your dividend paying shares rather than always being 'fully invested'. This means: you may not invest at all in dividend paying companies during periods when there are no high quality dividend paying companies that are historically undervalued.

    Unfortunately, many investors buy shares when they are regarded 'safe' and therefore by definition 'expensive'. Generally, when you invest in dividend paying shares when they are not priced at the 'right' share price (based on our long-term historical undervaluation investment methodology) the end result is that you are unlikely to generate good long-term returns.

    The gift of long term returns

    A truly long-term investor has a time horizon of several decades if not more before drawing returns from his or her investments.

    When you invest in historically undervalued dividend paying companies you have the choice to cash in your dividends or to re-invest the dividends in order to boost the value of your share portfolio by the purchase of additional shares in the same or similar historically undervalued high quality dividend paying companies (at the time of purchase).

    Using your dividends to buy more shares - with those shares producing more dividends - to buy more shares, and so on, and so forth, allow you to grow your perpetual income exponentially from your income generating share portfolio until the time you start drawing an income.

    Christmas gift from Dividend Income

    As a long term dividend income investor I invest in high quality dividend paying companies but only when they are historically undervalued as well as when they are financially strong as per our in-house developed dividend share valuation and financial strength investment methodology

    With the potential to provide a regular and increasing income, as well as capital growth over the long term, investing in dividend paying shares when they are historically undervalued is the gift that keeps on giving which I want to share with you.

    A Merry Christmas and a Happy New Year

    Steven Dotsch - Managing editor - Dividend Income

    Nov 27 5:37 AM | Link | Comment!
  • U.K. Dividend Payouts Hit Highest Ever Quarterly Total

    Dividend payments in the third quarter of 2012 were the largest ever distributed by UK firms. In the third quarter, the total was £23.2bn (approx $37.2bn), up 10.4 per cent compared to the same period in 2011, according to the latest Dividend Monitor report from Capita Registrars, which analyses data provided by Exchange Data International. Q3 2012 is the seventh consecutive quarter of payout growth.

    By the end of September London listed dividend paying companies had paid out a record total of £64.6bn since January, an increase of 17.1 per cent compared to the same period in 2011, equivalent to an additional £9.4bn ($15.9bn) in investors' pockets. Investors received more in the first three quarters of this year than they did in each of the full years 2007, 2009 and 2010.

    However, despite the very large amount of cash paid out, third quarter saw the slowest quarterly growth rate since the fourth quarter of 2010, which had been depressed by the cancellation of BP (NYSE:BP) dividend after the Gulf of Mexico disaster.

    Special dividends

    Year to date, special dividends have totaled £6.4bn, £800m more than the combined totals of 2008-2010 inclusive, and 2.7x the amount paid out in the first three quarters of 2011, which was already a record.

    Unlike many other recent quarters, such as first quarters'
    2012 Vodafone (NASDAQ:VOD) (OTCPK:VODPF) payment, the total payout was not significantly flattered by special dividends. They reached only £432m ($693m), less than one fiftieth of the total. In the first half of the year, they made up one seventh of the total payout.

    Johnson Matthey (OTCPK:JMPLF), the manufacturer of catalytic converters and other chemical-related products, was responsible for over half the Q3 2012 total. Severn Trent (OTCQX:SVTRF), the water utility company, made the other big Q3 payment, posting investors an additional £167m ($268m) in gross dividends

    FTSE100 versus FTSE 250 companies

    For the first nine months of the year, FTSE 100 companies paid out £58.5bn ($93.9bn), 18.5 per cent more than 2011. £6.3bn ($10.1bn) of this was due to special dividends, compared to £2.2bn ($3.5bn) last year

    Dividends from FTSE 100 companies rose 11.1 per cent in the third quarter, markedly down on the 22.9 per cent rise in the first half. The UK's biggest companies paid £21.0bn ($33.7bn) to their shareholders in the three months to the end of September. The FTSE 250 dividends rose a headline 6.2 per cent to £1.9bn ($3bn). Vodafone's £3.5bn ($5.6bn) dividend was almost twice the size of the entire FTSE 250.

    The top five companies were made up by Vodafone, Shell (NYSE:RDS.A) (NYSE:RDS.B), HSBC (HBC) (OTCPK:HBCYF), BP and National Grid (NYSE:NGG) (OTCPK:NGGTF). These five companies distributed £8.6bn ($13.8bn) in the third quarter. The top five companies accounted for 37% of the total paid out by the entire market in the third half, the lowest concentration of third quarter dividends since Capita began measuring this metric in 2007.

    The top fifteen stocks paid out over two thirds of all dividends (68 per cent). In comparison, the FTSE 250 accounted for just one twelfth of third quarter dividends.


    At a headline sector level, all groups except the small tech sector increased their payouts in the third quarter. Basic industries, industrials and basic materials topped the growth table, with the special dividend from Johnson Matthey behind the big increase in basic industry dividends.

    At a subsector level in the third quarter, the biggest were the mobile telecoms, thanks entirely to Vodafone's £3.5bn ($5.6bn) dividend. At £3.2bn ($5.1bn), the oil and gas producers, mainly BP and Shell are close behind, up 11 per cent compared to the same quarter last year.

    The miners came third with £1.8bn ($2.9bn), up 22 per cent year on year. In fourth place, pharma stocks paid £1.7bn ($2.7bn), but with essentially no increase over last year's total - Astrazeneca (NYSE:AZN) (OTCPK:AZNCF) and Glaxosmithkline (NYSE:GSK) were the two payers in the sector. GSK paid £1.4bn ($2.25bn) in the second quarter, including a £280m ($449m) special dividend.

    226 companies paid a dividend in the third quarter, down from 228 in the same period last year. Among these, 173 increased, started or reinstated their payments, 36 cut or cancelled them while 11 kept them the same.

    Charles Cryer, Chief Executive of Capita Shareholder Services said:

    "The volume of cash being distributed by UK companies is unprecedented. The total for 2012 will be almost one sixth higher than last year's record £68bn ($109bn). Given the lack of high yielding alternatives, investors can be hugely relieved that equities are providing a decent income. Dividends cannot grow rapidly forever against the slower global economic backdrop, so the rapid increases of the last year or so may now be slowing down. It is also unlikely that special dividends will repeat their stellar performance next year. Nevertheless, our underlying forecast growth rate of 8% for next year is still a very respectable increase, and there is upside to our cash forecast from further one-off payments."


    For the full year 2012, Capita are upgrading their forecast again, this time by £300m ($481m). Special dividends are again the main reason for the increase. For the full year Capita now forecast £78.6bn ($126bn) in total dividends, up 15.6 per cent from 2011. This is £3.6bn ($5.8bn) higher than the forecast made in January 2012.

    Capita's forecast for 2013 is £81.0bn ($130bn); 3 per cent higher than 2012. The apparent lack of progress is mainly due to the fact that Capita does not attempt to forecast special dividends and they suspect that they are unlikely to be able to repeat the huge level of 2012.

    Disclosure: I am long VOD, NG, GSK, AZN.

    Oct 23 6:42 AM | Link | Comment!
  • The Clever Secrets You Need To Know In Order To Grow A Fortune

    Dividend Income


    Perhaps you are sitting in front of your computer reading through your emails right now, but like most of us, there is probably one pressing thought at the back of your mind - how to cope with the economic uncertainty and financial strain.

    Take a moment and think of all the things you would do if you had several hundreds or even thousands of extra pounds per month - and were worry free concerning your retirement. I am sure you came up with plenty of options how that money could be used.

    Maybe you already have your money invested somewhere. But ask yourself this question - is your money working hard enough for you and are you seeing the return that you want and absolutely need to have on that investment?

    Today the case for investing in inflation beating dividend paying shares is as strong, if not stronger, than ever. When in 1999 the Bank of England base rate was 5.5% inflation was 1.6% and falling. Today, base rate stands at 0.5%, and inflation at 3.4%, still well above the Bank's 2% target.

    Anyone holding cash is likely to be subject to a negative return after accounting for inflation. Fortunately, some of the UK's best companies are offering dividend yields of up to 7.5%.

    Consider this…

    "Looking at the long-term performance of the stock market, a strategy based on investing in dividend stocks has outperformed the broader market and had lower volatility. It is also worth noting that in the last 20 years dividends represent almost half of global equity total returns" Measured by the MSCI World Index

    Investing in Dividends from high quality companies is a safe, effective, and proven investment strategy that will grow your hard earned money, if done in the right way…here is the truth:

    U.K returns: Since 1900, UK stocks have returned 5.1% in real terms (after inflation). Without dividend reinvestment, they returned only 0.4% - less than bonds. Dimson et al CS 2008 yearbook, London Business School.

    Investing in Dividends can be an incredibly low risk and profitable way to see the return on your investment money that you have been hoping for. Clever investing in historically undervalued companies at the right time can be one way to help resolve your financial investment dilemmas.

    At Dividend Income we focus on real total return defined as dividend yield plus dividend growth plus capital gains.

    We look to combine "high yield" (those shares with dividend yields at least 40% higher than the FTSE100 average) with "dividend growth" (companies with good dividend track records and growth potential) that are "historically undervalued" (using a share's dividend yield as the primary measure of value, investors will learn to buy and sell when dividend yields instruct them to do so) thereby maximising total real return.

    The reasoning behind real total return appeals to us as long-term investors as it deals with averages - an average dividend yield, average dividend growth and average annual share price appreciation.

    Of course, we cannot be sure that dividends will rise in each and every year. We also cannot be sure when and to what extent share prices will rise.

    However if we can buy a high quality dividend paying share at historically undervalued price levels, and, if this company has a long, uninterrupted history of dividend payments and of frequent dividend increases over a period of years, we can be pretty sure that the total return on that investment is likely to outperform the total return on any other kind of investment.

    Our focus on total real return from high quality dividend paying shares could therefore help you to stay ahead of inflation, but also increase your real wealth over time.

    Introducing the Guide to Dividend InvestingGuide to Dividend Investing from Dividend Income

    "…if you can get what the author of the Guide to Dividend Investing has to say, then you are qualified beyond the 99.9% of private investors who allow their riches to be run by someone else for a huge fee…" Shares: Reaping the Dividends - Michael Wilson

    Click Here to have a look inside

    The complete Guide To Dividend Investing is the comprehensive 91 page tool that you need to have in order to maximise your real total return. The Guide will help you:

    · How to manage your own dividend investments so you don't have to pay an expert, because you will now be an expert

    · How to tap into the incredible market of viable low risk investment returns that many people don't realise the potential of

    NOTE: More than 90% of the total returns in the UK stock market can be directly attributed to dividends and dividend growth

    · That timing and selection is everything; you will learn when to make critical investment decisions using valuable dividend-yield patterns

    · Why dividend investing can be extremely lucrative and what traps you need to be aware of

    You don't need to wonder any more about what your next financial move will be. With the Guide to Dividend Investing, you will know exactly what to do and you will see the results of your investment strategy, without having to worry or spend thousands of pounds using a financial advisor.

    Order the Guide to Dividend Investing NOW so you can take the guesswork out of your investment decisions. As a previous purchaser has said:Guide to Dividend Investing from Dividend Income

    "I have already produced my own watch list of high dividend payers but without the thorough analysis you do. Your dividend reports are excellent. At least I don't have to spend hours researching these companies now myself. It's done for me"

    ***Click Here to order your Guide to Dividend Investing***

    Many thanks


    Steven Dotsch

    Managing editor

    EMAR Publishers

    Dividend Income @Investoretire

    Apr 27 4:50 AM | Link | Comment!
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