Monday, December 18, 2017

Stock Dividends - The Gift of Nothing

Have you ever been tempted to wrap up an empty box and give it to your spouse for your anniversary. You could say something mushy like, "this isn't an empty box, it is filled with all my love." I don't know how your spouse would react, mine would see through this ploy as me just trying to be cheap.

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Sunday, December 17, 2017

Weekend Reading Links - December 17, 2017

For your weekend reading pleasure, the articles listed below contain some of the best dividend and value investing insights found on the web. They were written by various members of the Dividend Investing and Value Network over the past week:

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Thursday, December 14, 2017

Price-Earnings Ratio Expansion Explained – And Why You Should Care

The market is more expensive today than it was a year ago.
We all hear that, but do we really know what they are talking about? When we read about the average market Price-Earnings Ratio (PE Ratio) going up, what does that really mean? You pay more than you used to. This phenomenon is called “PE expansion.”  I’ve built this small guide to tell you what it is and why it has an impact on your portfolio.

A quick review of the PE Ratio

The PE ratio refers to the number of times you pay the profit per share of a company. For example, if a company reports earnings of $1 per share and the stock trades at $11, this means you pay 11 times its profit. In other words, the value of the company is equal to 11 times its profit today. If you own all shares of that company, you would need 11 years to get all of your money back, assuming profit doesn’t change.

What happens when you pay more

Imagine the same company with the same earnings suddenly trades at $13. An affluent of new investors want to buy shares of this company and they are ready to pay a more expensive price ($13). At that time, we are looking at the same company with the same profile and earnings. The only difference is that it costs $2 more per share. The only reason why you pay more today for the stock is because there are more people wanting it.
This could be because they think the company will go through a major breakthrough and that earnings will go up. This could be because interest rates are low and investors are ready to pay a higher price for a solid dividend payer (hence, pushing the yield lower at the same time).

A real-life example

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Wednesday, December 13, 2017

2 Recent Buys – PAAS, ABCN

A quick update on a couple of recent purchases in my portfolio. For this round, I added to existing positions in my portfolio in the commodities and marijuana sectors.

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