If you have never heard of this, it’s an ETF (exchange traded fund) which trades like a stock, and is comprised of the 100 highest dividend yielding US based stocks. There are further requirements such as the company must have had positive dividend per share growth in each of the past five years. Also, the company cannot pay out more than 60% of its earnings as dividends. With these details behind us, this ETF now (as of 3/31) yields 4.29%. This is a dividend, which is taxed at either 0% (if you are in the 10 or 15% bracket) or 15% (if you are in a higher bracket). Given the current, near 1% yield, on T-bills, and just above 3% yield on CDs (fully taxable at your marginal rate) the DVY offers an interesting alternative.
If you are considering a purchase, keep in mind, this is a stock index, you may lose part of your investment. But if you have a long term view, I think you’ll find that in the next 5-10 years, you will gain a modest return, in addition to the dividend income, and if you choose to reinvest, you will benefit from the increase in shares, as well as the higher dividends as the market recovers. I am not a stock picker, and not a short term trader. When I put some funds in DVY over the last 6 months, it was with the intention to stay invested for the next ten years.
(At the close on 4/21 DVY traded at $59.17 – close on 8/11 $54.43 (.63 dividend distributed since 4/21), I will update this each month)
Joe
{ }
In the scramble for solar related plays on words, Barron’s beat me to this one. They used it in the index of this week’s issue to reference their article on Applied Materials efforts in this market (solar power).
The pricing and discussion of cost of solar power can be a bit confusing. The typical benchmark used is dollars per KW. Currently, there are systems priced at $4.75/W or $4750/kW. (But this is for the Solar Panel only, the installed system will cost nearly twice this or about $9500. Now, for this to make sense, you need to ask how much power this really is. A 1KW system will produce about 1800 KWh/yr in Southern California. If 1 kWh costs about 20 cents, this is $360 worth of power, and a return of 3.8%/yr. Now, this isn’t great, admittedly, but as I’ve discussed prior, even with modest cost improvements, that number (the return on investment) will rise over time, and soon be a compelling alternative to buying off the grid. A site called solarbuzz offers much data on the progress of solar technology.
Joe
{ }
Or “Gift Card Madness Redux“. When I posted about gift cards in November, I warned how 27% (according to CNNMoney) of gift cards were never used, they were lost, forgotten, or put aside. Well, please allow me to add another warning; when a store for which you have a gift card files for bankruptcy, you may not be able to use the gift card, or at least not the way you supposed. It seems that bankruptcy law considers the money spent on those cards an asset of the company, not an obligation to the consumer. Consumer Reports published an on line article a month back, Sharper Image demonstrates perils of gift cards. As of this posting, Sharper Image will allow the use of a gift card if it’s used for half of a purchase AND it’s used in full. For me, I had received multiple certificates at corporate promotions. When the SI checkout person saw the certificates along with gift cards, he offered to combine them into one convenient card. $800 worth. So to spend this, I’d need to first find a $1600 or more item, and I’d need to pony up another $800. I think I’ll pass for now. Although that life sized Yoda would look great in my den.
If it wasn’t bad enough that you can easily misplace a gift card, or that there would be fees after months of inactivity, now you need to consider which companies may file for bankruptcy. Sounds like Linens and Things is already there and Circuit City may be next. When you see that rack of gift cards, you may just want to walk on by.
Joe
{ }
Take a moment to visit the Tax History Museum.
Joe
{ }
The full quote, “There are three kinds of lies: lies, damned lies, and statistics” has been attributed to Mark Twain, and it continues to ring true for me. Last week, I quoted a CNNMoney article which stated, “The national median price drop of 5.8%, to $206,200 from $219,300, was the steepest ever recorded by the National Association of Realtors (NAR), which has been compiling the report since 1979.” Now, I cannot dispute the facts. This statement is likely true, but what is the definition of median? Median simply means the middle number, half are higher, half lower. So far so good? But these numbers only represent transactions, not changes in existing values. Without digging deep into the data, one cannot understand the cause of such a drop. A large turnover in the lower end of the market will skew the data to reflect those sales. It’s possible (though not likely) that homes in a given area increased in value, but a combination of people in the higher priced homes simply moving at a below average rate combined with high transactions in the lower end results in median transaction values dropping.
Joe
{ }
