Dividend stocks get a new respect

By Jonathon Chung - Wall Street Journal

The spotlight is again on dividends after Intel raised its payout last week and the Federal Reserve said it might soon allow banks to increase their payments.

While U.S. investors have long been reluctant to embrace dividend stocks, there are some signs investors are paying some more attention.

Intel shares jumped 1.5% Friday after the company announced a 14% increase in its dividend. And bank stocks rose almost 6% in the two days after a report the Fed may loosen its rules to allow banks to increase their dividends.

In the first part of the rally from the March 2009 lows, stocks of non-dividend paying companies far outpaced stocks of those who do pay dividends. But as interest rates have reached new lows and the economy has remained sluggish, dividend paying companies have been catching up. The 372 dividend paying S&P stocks have a total return of 12.5% including dividends, since the end of June.

The reasons supporting investing in dividend paying stocks are many: Most importantly, the S&P 500 stock index is chock full of companies sporting yields higher than the 10 year Treasury note.

At least one class of dividend stocks is doing well: the S&P 500 Dividend Aristocrats index, the handful of S&P 500 companies that have increased their dividends for at least 25 consecutive years. These 46 stocks which include Exxon, McDonalds, Proctor & Gamble and Walmart have outperformed the S&P this year with total returns of 13.8%.

Sugar Daddies and Mommies Wanted!

In a national survey conducted by Prince & Associates of almost 1,000 unmarried people with incomes ranging from $30,000 to $60,000, the majority of those people recognized that money can ease a lot of concerns and "marrying up" makes perfect sense. Provided the circumstances are acceptable. About 2/3s of the survey respondents expressed a high degree of interest marrying someone for their money and the associated fiscal security. When asked about the amount of money it would take to seal the deal, every respondent gave a figure that exceeded $1 million.

"Very" or "Extremely" Willing to Marry for Money

Males 55.3%

Females 72.8%

Average 65.1%

Amount of Money required

Males $1.1 million

Females $3.8 million

Average $2.7 million

Source: The Family Office: Advising the Financial Elite (2010)

The 401(k) pays off for a lucky few

By Andrea Coombs, MarketWatch

SAN FRANCISCO (MarketWatch) — People who stuck with their 401(k) plan through thick and thin for the past 10 years more than doubled their account balances, according to the latest data from Fidelity Investments on the behavior of 11 million plan participants.

The average account balance for savers who are now 55 years old or older and have been participating in their plan continuously for 10 years was $211,300 at the end of the third quarter, up from $96,000 a decade ago, according to Fidelity.

Keep in mind: About two-thirds of the account-balance gain is due to savers’ own contributions, plus their employer match, and one-third of the gain is due to market returns, according to Fidelity.

Looking at the total population of Fidelity accounts, the average balance rose 9.4% to $67,600 in September, from $61,800 in June.

Workers pumped an average 8.2% of their earnings into their 401(k)s, a figure that hasn’t changed for almost two years. But a sign of optimism, perhaps: 4.2% of savers increased their contribution rate, a bigger portion than the 3.1% who decreased it.

5 solid stocks your kids will like

These child-friendly shares might look pricey, but they have a reputation for growth — and room for more.

Walt Disney. Mickey is a perennial kid-favorite. And this blue chip stock pays an annual dividend of 35 cents a share and is up 40% over the past five years. A history of conservative stock growth and the company’s acquisition of Marvel Entertainment last year may add to its bottom line.

Hasbro. Its live action films like "Transformers," and its games, like Battleship, will entice your kids. Investors are on board too: Hasbro’s stock is up 140% since 2005. Its quarterly dividend is 25 cents a share, up 25% from last year. Given its product innovation and management strength, Hasbro’s stock still has room for growth.

Apple. Even the least tech-savvy kid will get excited at the prospect of owning a piece of Apple. And despite its high price of $314 a share – up 410% over the past five years – analysts expect the stock to continue growing on the success of the iPad and iPhone.

Nike. Kids clamor for the the LeBron James shoe, and many of their favorite athletes are featured in Nike commercials. The company's quarterly dividend is 27 cent per share; Nike has proven to be a steady earner – the stock is up 88% since 2005. Nike weathered the downturn because of its name recognition and the popularity of its worldwide retail stores.

HJ Heinz. The ketchup company’s stock is up 58% from its 2009 low, largely a market downturn casualty. Long-term, the stock is likely to continue growing given its main product is a fixture on just about every child’s dinner plate (and at lunch and breakfast, in some cases). Currently trading at $49, the company pays a quarterly dividend of 45 cents per share for common stock.

Disclosure: I own Apple and Nike

Traditional IRA Deductibility Limits For 2010

For any tax year, your may contribute the lesser of the regular contribution limit or 100% of your taxable compensation (or earned income). If you reach age 50 by the end of a year, you may contribute an additional amount as a catch-up contribution. Here is a chart outlining contribution limits for some tax years:

You may contribute to a spousal IRA on behalf of your non-working spouse. The limits discussed above apply. Remember that if you also contribute to an IRA for yourself, both IRAs must be maintained as separate accounts, as IRAs cannot be held jointly. Of course, in order for you to make a spousal IRA contribution, you and your spouse must file a joint income tax return. Your combined contribution should not be more than the amount of taxable compensation you report on your tax return.

IRA participant contributions must be made by Apr 15. If Apr 15 falls on a weekend, the deadline is the next business day. Contributions postmarked on or before Apr 15 are considered to be made by the deadline.

"I Don't Have the Money..."

Many folks do not realize how little it takes to get a retirement investment plan going. They incorrectly assume it requires thousands of dollars to start.

Nothing could be further from the truth. In fact, investment companies have lowered the threshold specifically to attract those "starting-out" investors.

Did you know you may be able to establish a retirement investment account with as little as $50.

Yes, you read that right. Fifty dollars. All you need to do is agree to an Automatic Purchase Plan of $50 or more.

So for less than your monthly cell phone bill or less than dinner for two at Outback Steakhouse, you can start building retirement wealth.

Obviously everyone's situation is different and not all investment companies are suitable for every investor, but where there is a will there is a way.

Death Tax Not Just for the Wealthy

Unless there is Congressional action the Estate Tax which went away for 2010, will resume with a vengence in 2011.

Starting in 2011, any estate valued at over $1 million will be taxed at the 55% rate. Due in full no later than 9 months after death.

The good news is that, if you are married, your spouse does not incur any estate tax obligation.

But bad news is that if you are single or widowed, all of your assets are eligible for the estate tax.

Many folks think: "But I don't have a million bucks... so I'm okay."

The estate tax does not just look as money in the bank. It includes, real property, bank accounts, investments, corporate and individual retirement plans, and insurance. For example:

• You home is valued at a modest $250,000
• You own a life insurance policy on yourself for $500,000
• You have $100,000 in an investment account
• You have a company 401(k) valued at $200,000
• Other personal property and assets valued at $50,000

Things add up quickly...

Guess what? Your kids will have to pay the Death Tax on amounts over $1 million.

As always, consult with your legal and tax professional for the latest in this...