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Making Investing Simpler

|Includes:ConocoPhillips (COP), COST, TGT

For beginners, investing is intimidating.

I've been around the world of investing for long enough to get the meaning of most of the arcane terminology and to understand the basic principles.

But, I also understand that for most Americans, whose education at school never included a good explanation of economics (And I spent some time as an economics major), getting the hang of market mechanics is not going to be easy. I suspect that even for policy wonks in government, grasping the scale and complexity of world finance is well beyond their grasp.

So I have decided to redirect some of my Instablog posts, targeting those readers new to investing, with the idea that my failures and successes, small as they are, can be examples.

First, I have to admit front and center that the biggest financial wins I have made have been in Real Estate. Not REITs, not LPs. Just old fashioned, me and the bank own it, real estate. Good, bad or indifferent, that is the truth. There were big chunks of cash made fast in dirt.

So I believe that a modest position in Real Estate is important, even vital, long term, in the big picture.

My failure here is that I translated this experience to mean that I should also invest in Real Estate in my securities portfolio. The most money I have ever lost, in one sector is in Shearson Lehman Limited Partnerships, all Real Estate focused.

What is true, in the passing years, is that some public companies have also failed and gone away. Enron comes to mind, and others have survived and done well for their owners. Exxon comes to mind.

Had I divided my Real Estate investments between Enron and Exxon (both in the "energy" business, in theory) I'd would be better off than I am today. But I was trying to be "conservative" with my investments.

Somewhere in here is also the lesson, taken from Peter Lynch, to buy what you use. Had I bought Apple stock every time I bought an apple computer, especially in the same dollar amount I spent for the computer, the likelihood is excellent I'd be retired and at the beach.

So chalk all those lesson up to the vicissitudes of life.

Currently, I have two companies in my cross hairs for additional investment in my "Big Dog" portfolio. Both also qualify for my Dividend Monsters list as well.

They are Conoco (NYSE:COP) and Target (NYSE:TGT). COP is currently yielding (today, Friday the 24th of January) a hair over 4%. TGT is at 2.96%.

The double "good" news for new buyers interested in TGT is that it is not only suffering from the market downdraft, but also is getting whacked from its unfortunate run in with a 17 year old hacker.

Look at this chart!

TGT's price has suffered an outright collapse from 73.50 to 52.08, today, to set new lows for one year or more. Now its bounced to %59.06 (today).

So what's changed in reality for TGT?

Not much. There will likely be store closings, like all of retail. The link tells the tale. But the security issue will, someday, pass. (I like Costco (NASDAQ:COST) as well but it falls below my minimum dividend, but what a great company.)

The numbers below indicate a potentially very nice dividend future for TGT once the world gets sane, hackers move on the attack someone else and after the market has or does not have a massive correction. When its all done, people will get out in their cars to go shopping. Its genetic for some of us.

Dividend Yield: 2.91 %
Dividend Yield 5yr Avg: 2.00 %
Dividend Rate: $ 1.72 %
Dividend Payout Ratio: 42.00 %
Dividend Payout Ratio 5yr Avg: 29.00 %
Dividend Growth Rate 3yr Avg: 23.55 %
Dividend Growth Rate 5yr Avg: 21.58 %
Click to enlarge

To wrap up with TGT, peek at the complete info from the great people at where I got the above data.

My other little gem is Conoco, whose $.69 per quarter per share dividend makes the yield, at today's price a hair over 4%.

Here are the stats:

Dividend Information
Dividend Yield: 3.88 %
Dividend Yield 5yr Avg: 4.50 %
Dividend Rate: $ 2.76 %
Dividend Payout Ratio: 41.00 %
Dividend Payout Ratio 5yr Avg: 45.00 %
Dividend Growth Rate 3yr Avg: 8.35 %
Dividend Growth Rate 5yr Avg: 7.84 %
Consecutive Div. Increases: 0 years
Click to enlarge

Click here for the NASDAQ stats on the COP dividend history.

I am long and getting longer in both these companies. I'll ride them down as we watch the market dangle over the edge.

Disclosure: I am long COP, TGT.

Additional disclosure: Am planning further positions to add to existing holdings.

Stocks: COP, TGT, COST