My High Dividend Stocks Blog

My High Dividend Stocks
This is my high dividend stocks site where I help site members find high dividend stocks with earning power and strong balance sheets.

Don't be like these people. They will be wards of the State.

Fidelity Investments released results from a 401(k) study a few weeks ago.  Fidelity is one of the largest investment companies in the US.  The huge number of people in the survey are a representative sample of the US investing population.  The results of the survey are ominous.  The average Fidelity 401(k) account balance was $71,500.  The article touted this as a positive development, but I don’t see it that way.  These people will be wards of a failing State that can’t deliver its welfare/retirement promises.

Social security and Medicare are huge ponzi schemes.  Please read the free introductory chapter of Tom Wood’s new book Rollback to get a succinct overview of the coming government default.  Type your email and they will email you a PDF file of chapter 1.

http://bit.ly/RollbackChapter01

$71,500 invested in a high dividend stock portfolio averaging a 6% yield would generate $4,290 in income minus extortion (taxation).  They might get some social security money.  Let us assume a monthly benefit of $1,200 from social security and no pension money.

$1,200 social security (pre-tax) + $357 (monthly high dividend pre-tax) = $1,557 per month pre-tax income.

The average 401(k) account holder is screwed.  They will be forced to accept a much lower standard of living, reverse mortgage their home, and/or move in with some of their children.  There is no way someone retiring today at 65 years of age with $71,500 in their retirement account could not live off of their savings for 20 years.

Let’s assume for a moment that those closest to retirement have twice the average Fidelity account balance.  How much better off are they?  They would have an account balance of $143,000.

$143,000 in their 401(k) x 6% dividend yield = $8,580 per year dividend income or $715 per month

$1,200 social security + $715 dividends = $1,915 per month income.

Yikes!  Can you say Wal-Mart greeter?  These people will not be able to retire on an income of $1,915 per month.  Keep in mind that most people are not putting together high dividend stock portfolios earning over 6%.  The S&P 500 index is only providing a pathetic 1.71% dividend yield recently.  These people will be devastated by the Federal Reserve’s price inflation.  The money supply and later prices will skyrocket when the commercial banks lend out the over one trillion dollars in excess reserves.  Retirees are on fixed incomes.  They will be crushed by price inflation.

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Fidelity Study Finds 401(k) Account Averages in 2010 Reached 10-Year High

Posted in 401k, Financial News, Retirement

February 23, 2011

The average 401(k account balance showed a significant increase at the end of 2010, according to a new study released by Fidelity Investments. On average, accounts held $71,500 during the year, which was the highest average account balance revealed by Fidelity in 10 years.

Accounts Up 11 Percent from 2009

Fidelity Investments had a lot of positive numbers to share regarding the increases in 401(k) accounts. One great bit of data was that, for the 17,000 employer-sponsored defined contribution plans and their 11 million participants, the average balance of their retirement accounts rose 11 percent over the average balance in the fourth quarter of 2009.

Even better was the fact that after 401(k) accounts took a huge hit from the financial crisis, some even losing more than half of their balance in 2008 and 2009, they managed to increase 7.65 percent over the accounts in 2000 that averaged $54,700.

According to the study, about two-thirds of the increases seen were driven by market performance while one-third increased thanks to participant actions such as contributions. The Standard & Poor’s 500 Index increased by about 13 percent last year, and according to the study, workers deferred an average of 8.2 percent of their salaries.

Continuously-Active Accounts Tripled Over the Decade

The report also found that savers who were continuously-active, meaning they were employed by the plan sponsor and had a balance for the entire decade, saw their plans triple during that time. The average 401(k) balance increased from $59,100 in December 2000 to $183,100 in December 2010.

One reason account averages increased was because most participants continued to contribute to their plans through the financial crisis and fought against withdrawing funds or borrowing from their plans.

In fact, four out of five savers didn’t take a loan from their plans last year and only 33 percent cash out when leaving a job. Most people found that keeping money in their plans was the best way to ensure they would have money available once they retire.

Original link: http://www.gobankingrates.com/retirement/fidelity-study-401k-account-2010-10-year-high/

American Capital Agency Declares $1.40 First Quarter Dividend. Where is the money coming from?

American Capital Agency Corp. (AGNC) just declared another $1.40 quarterly dividend.  Where are they getting the money to cover this dividend?  They are not earning enough income to cover their dividend.  Here is an excerpt of what a wrote after AGNC released 4Q2010 earnings a few weeks ago:

·         American Capital Agency Corp. (AGNC) reports $1.26 net income per share, excluding $1.24 of other income (mostly the sale of agency securities and derivatives paying off).  AGNC’s earning power is less than their dividend payments.

·         They paid a $1.40 dividend for 4Q2010.  Their net income doesn’t cover the dividend.  Dividend payout ratio was 111% excluding the irregular income items.

They can continue issuing new shares to raise capital, but then the total dividend payment is bigger and they would have to lower the dividend rate per share.  This can't go on too many quarters longer.  The stock price is going to tumble when they cut their dividend and the management knows it.  They are kicking the can for as long as they can.

This high dividend stocks does not have enough earning power to sustain a $1.40 per share dividend and it has a weak balance sheet.

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American Capital Agency Declares $1.40 First Quarter Dividend
 
BETHESDA, Md., March 7, 2011 /PRNewswire/ -- American Capital Agency Corp. (Nasdaq: AGNC) ("AGNC" or the "Company") announced today that its Board of Directors has declared a cash dividend of $1.40 per share for the first quarter 2011.  The dividend is payable on April 27, 2011 to common shareholders of record as of March 23, 2011, with an ex-dividend date of March 21, 2011.
 
 

What Indicator Predicts Recessions?

The economy is not getting better despite the announcements emanating from Big Brother.  I have written before on how the consumer price index (CPI) is understated by the government statisticians.  Well, it shouldn’t shock you to learn that the jobs numbers touted weekly are rigged as well by faulty modeling assumptions.  Paul Craig Roberts explains this eloquently below.

Your investments/savings are at risk from these false job numbers.  Someday it will be impossible for the government to hide the lack of recovery, investors will panic, and the market will crash again.  You need to have your money on the sideline before that happens.  An inverted yield curve is a good indicator of an impending recession (http://www.garynorth.com/public/department81.cfm ).  Recession ensue typically within five months of an inverted yield curve.  The exception was 1966-1967.  You should see this to believe it.  Click on this link and click “Animate” when ready.

http://stockcharts.com/freecharts/yieldcurve.html

Notice how the yield curve rises in 2006 and then finally inverts in October 30th, 2006 through January 2007.  What happened half a year later?  You got it.  The market topped and the recession followed.  The inverted yield curve was a warning to sideline your investments.

Right now the Federal Reserve’s QE2 is attempting to push down short term interest rates.  The curve is very steep presently.  We must consciously track the yield curve and ignore the blather coming out of the Bureau of Labor Statistics (BLS) on a weekly basis.

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(Hat tip Larry S)

More Jobs Mirage

by Paul Craig Roberts

Recently by Paul Craig Roberts: A Government Shutdown Imperils the Power of Congress

 

 

 

The announcement on March 4 that 192,000 new jobs were created in February was greeted with a sigh of relief. But the number is just more smoke and mirrors, as I will show shortly. First, let’s pretend the jobs are real. What areas of the economy produced the jobs?

According to the Bureau of Labor Statistics, 152,000 of the jobs or 79% are in private services, consisting of: 11,700 jobs in wholesale trade, 22,000 in transportation and warehousing, 36,400 in administration and waste services (of which 15,500 are temporary help services), and 36,200 in ambulatory health care services and nursing and residential care facilities. Entertainment, waitresses and bartenders accounted for 20,000. Repair and maintenance, laundry services, and membership associations accounted for 14,000.

As one who has often reported the monthly payroll jobs breakdown, I am struck by the fact that these categories are the ones that have accounted for job growth for year after year. How can this be? How can Americans, who have had no growth in their real incomes and who are foreclosed from their homes and maxed out on credit card debt, car payments, and student loans, spend more every month in bars and restaurants? How can a few service areas of the economy grow when nothing else is?

The answer is that there were not 192,000 new jobs. Statistician John Williams estimates the reported gain was overstated by about 230,000 jobs. In other words, about 38,000 jobs were lost in February.

There are various reasons that job gains are overstated and losses understated. One is the BLS’s “birth-death model.” This is a way of estimating the net of non-reported new jobs from business start-ups and job losses from business shut-downs. During recessions this model doesn’t work, because the model is based on good times when new jobs always exceed lost jobs. On the “death” side, if a company goes out of business because of recession and, therefore, doesn’t report its payroll, the BLS assumes the previously reported employees are still in place. On the “birth” side, the BLS adds 30,000 jobs to the monthly numbers as an estimate of new start-ups.

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Williams estimates the “death” side is really reducing employment by about 200,000 per month, and the “birth” side is stillborn. Therefore, “the BLS continues regularly to overestimate monthly growth in payroll employment by roughly 230,000 jobs.” The benchmark revisions of payroll jobs bear out Williams. The last two benchmark revisions resulted in a reduction of previously reported employment gains of about 2 million jobs.

Another indication is that despite 10 years of population growth, there are 8 to 9 million fewer Americans employed today than a decade ago.

Some “New Economy” we have. If only we could have the old one back.

March 7, 2011

Paul Craig Roberts [send him mail], a former Assistant Secretary of the US Treasury and former associate editor of the Wall Street Journal, has been reporting shocking cases of prosecutorial abuse for two decades. A new edition of his book, The Tyranny of Good Intentions, co-authored with Lawrence Stratton, a documented account of how Americans lost the protection of law, has been released by Random House.

Link to original article: http://www.lewrockwell.com/roberts/roberts296.html

Safe Bulkers, Inc. Announces Filing of 2010 Annual Report.

 I'm going to read the annual report this weekend.  I'll blog about anything interesting I find next week.

Here is a link to the 3 year chart for Safe Bulkers: http://stockcharts.com/h-sc/ui?s=SB&p=W&b=5&g=0&id=p43475946092

I like this company, but I would wait for a pullback to the $6.20 - $6.00 range.

Disclosure: I don't own Safe Bulkers right now.

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SOURCE: Safe Bulkers, Inc.

Mar 04, 2011 13:00 ET

Safe Bulkers, Inc. Announces Filing of 2010 Annual Report on Form 20-F

ATHENS, GREECE--(Marketwire - March 4, 2011) - Safe Bulkers, Inc. (the "Company") (NYSE: SB), an international provider of marine drybulk transportation services, announced today that it has filed its 2010 Annual Report on Form 20-F with the U.S. Securities and Exchange Commission (the "SEC").

The 2010 Annual Report on Form 20-F is available by link through the Company's website, www.safebulkers.com, under Investor Relations > SEC Filings.

Alternatively, shareholders may also receive a hard copy of the 2010 Annual Report on Form 20-F, free of charge, by request to Capital Link, using the contact details provided at the end of this press release.

About Safe Bulkers, Inc.

The Company is an international provider of marine drybulk transportation services, transporting bulk cargoes, particularly coal, grain and iron ore, along worldwide shipping routes for some of the world's largest users of marine drybulk transportation services. The Company's common stock is listed on the NYSE, where it trades under the symbol "SB." The Company's current fleet consists of 16 drybulk vessels, all built post-2003, and the Company has contracted to acquire nine additional drybulk newbuild vessels to be delivered at various times through 2013.
 

TIP OF THE WEEK - Watch What They Do; Not What They Say

Watch What They Do; Not What They Say

Jason Brizic

Mar. 4, 2011

Federal Reserve chairman, Ben Bernanke, says a lot of contradictory statements in his boring speeches.  Ignore what he says.  You should watch what Federal Reserve does instead.  The FED’s balance sheet visually shows you if they are inflating or deflating.

The stock market’s nominal index numbers will go up when the FED is printing money out-of-thin-air.  Commodities will go up when the FED is printing.  The purchasing power of the dollar goes down when the FED prints money.  However, the opposite happens when the FED deflates.

Cumber Associates does a great job of visualizing FED balance sheet data.  It is available for free and it is updated weekly.  Click on this link to see the Federal Reserve’s balance sheet:

www.cumber.com/content/misc/fed.pdf

It looks like this:

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The large dark blue increase at the bottom of the chart since December 2010 is QE2 (the purchase of US Treasuries).

For more tips, go here:

http://www.myhighdividendstocks.com/category/tip-of-the-week

Marc Faber's March Outlook: Falling Stocks, Wicked Inflation, and Middle East Turmoil.

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Marc Faber’s March Outlook: Falling Stocks, Wicked Inflation, and Middle East Turmoil

By Nathaniel Crawford Mar 1, 2011, 12:48 AM Author's Website  

Marc Faber is out with his latest issue of the Gloom, Boom and Doom Report, which is always a must read for serious investors. This month’s report covers his outlook for the stock market, gold, oil, and the future for the US and global economy. Here are some of the highlights:

1. Stock Market–Still bearish in the short-term. Faber cautions against being bearish longer-term as long as the world is printing money, which will continue to inflate nominal stock prices. That said, technical indicators suggest a market correction. In particular, Faber notes the declining number of new 52 week highs, overly optimistic sentiment, and breakdowns in major stocks like Hewlett-Packard and Wal-mart. Furthermore, corporate insiders are selling stocks at a furious pace (855-1), indicating that they believe now is time to take profits, not risks.

2. Emerging Markets—Faber is still bearish on emerging markets in the short-term, and he expects world markets to correct further. However, emerging markets should be bought on the decline, especially since many of them are already down from their November 2010 highs. He notes that many institutions have been rotating out of EM and into developed markets, despite EM having better fundamentals. Some EM stocks have fallen 20-30%, which makes them a good value compared to US stocks. EM markets with the lowest forward PE ratios are Russia, Hungary, Turkey, and Brazil, which are good places to invest. Other markets to consider are Malaysia, Thailand, and Singapore where you can get good dividend yields.

3. Gold—To Faber the risk concerning gold is not whether it goes up or down, but the risk lies in not owning any of it in your portfolio. Gold could face a correction, but this does not bother him. He advises people to continue to accumulate gold and silver by dollar cost averaging every month. Strong fundamentals favor gold long term–not just because of money printing by central banks, but also because demand from emerging markets like China are increasing at an extraordinary rate. In 2010 China and India accounted for 50% of total gold demand in 2010. This number will only increase, providing strong support to the gold price.

4. Oil and Energy Stocks–The price of oil will remain high for the foreseeable future because of the unrest and likely further deterioration in the Middle East, along with inflationary policies by the world’s major central banks. Faber postulates that Pakistan could be the next domino to fall which would be a catastrophe for the world as it has nuclear weapons. While oil has spiked to $100 recently (WTI Crude), Faber thinks it will remain above $90 due to these these factors. Regarding energy stocks, they have a had a nice run, and investors should take profits or wait for a pull back before initiating new positions. Favorites are Chesapeake Energy and Suncor Energy.

5. Retail Stocks–Faber thinks retails stocks are vulnerable right now as rising food and oil prices reduce consumer spending. Wal-Mart is the classic example of difficult conditions for retails stocks, after the retailer reported another decrease in same store sales. If you want a real proxy for how the economy is doing, follow Wal-Mart’s stock price which has been flat for the past 2 years.  Faber even advises people to short the Retail Index (RTH) with a tight stop-loss.

Link to original article: http://wallstreetpit.com/64261-marc-fabers-march-outlook-falling-stocks-wicked-inflation-and-middle-east-turmoil

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Seeking Alpha contributor Power Hedge is bullish on SeaDrill (SDRL).

Seeking Alpha contributor Power Hedge is bullish on SeaDrill (SDRL).  He cites reasons why in this article:

http://seekingalpha.com/article/255853-seadrill-why-i-remain-bullish

I agree with his sentiments, but I would wait for a stock market correction or crash to buy it dirt cheap at around $20.00 share.  That 7% yield would jack up to double digits.

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Why you shouldn't be concerned with SeaDrill's exposure to Gulf of Mexico drilling permit delays.

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Deepwater oil driller SeaDrill (SDRL) has the least exposure to the US government’s drilling permit delays amongst ultra-deepwater drillers.  They only have one rig operating in the Gulf of Mexico (West Sirius pictured).

http://www.reuters.com/article/2011/03/01/energy-drillers-gulfofmexico-idUSN0113598720110301

Rig type: Semi-submersible

Name: West Sirius

Generation/type: 6th-BE

Built: 2008

Water depth (feet): 10,000

Drilling depth (feet): 35,000

Location: Gulf of Mexico

Client: BP

Current contract: Start – July 2008; Expire – July 2014; Dayrate - $474,000

Previous contract: none

Source: SeaDrill Fleet status report 4Q2010 (http://www.seadrill.com/investor_relations/fleet_update_report )

SeaDrill is paid by BP $474,000 per day regardless if they are allowed to drill or not.  However, oil companies will eventually terminate their contracts with drilling providers (like SeaDrill) if the US government doesn’t issue permits in a manner timely enough to profitably drill for oil.  The good news is that if the US government is slow to issue permits to drill, then SeaDrill is exposed the least amongst the companies mentioned in the article link above.  Transocean (RIG) has the most exposure to the Gulf of Mexico deepwater permit delays.

The West Sirius should bring in $173 million dollars in revenue per year for SeaDrill per its contract with BP.  I couldn’t find the cost to build the West Sirius in a simple Google search.

Most of SeaDrill’s rigs are in Southeast Asia waters.

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What irony. The voluntaryists are winning the vote in Toyota's NASCAR paint scheme contest. You can help.

What happens when you combine individual liberty with NASCAR?  Please help my favorite cause win the Toyota fan paint scheme contest.

Vote for the black-and-gold Free State Project NASCAR design here:

http://www.sponsafier.com/share/430

We're already up to first place, but only about 900 votes ahead of second place with two days to go in the contest.  The grand prize winner's design goes on a real car to be showcased at a race.

No registration, no gimmicks ... only two clicks to vote.  Come back tomorrow and do it again, and please share with your friends!

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Farrell Predicts Market Crash 2011: It Will Hit by Christmas

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Paul B. Farrell

Feb. 22, 2011, 12:01 a.m. EST

Market Crash 2011: It will hit by Christmas

Commentary: The S&P 500 is worth only 910. Get out or lose big

Mr. Farrell, behavioral economics columnist and former Morgan Stanley investment banker, recently wrote a damning commentary on the lies that Wall Street and the Federal Reserve continue to feed you.  Ignore it at your own peril.

There will be another opportunity to buy high dividend stocks at or near the bottom of the next phase down in this Federal Reserve induced bust (bear market).  Keep your invested savings on the sideline in a money market fund.  Make sure you are raising your trailing stops on your winning high dividend stocks.

http://bit.ly/BearMarket

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(Hat tip to Larry)

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