Don’t get me wrong, Apple is still a great company, and should do fine in the next few years. The new iPad is a great update to the iPad 2. The expected new iPhone this year should also sell well, and lastly the rumored Apple TV should at minimum do OK in the market. I do think the growth rate they are going at is unsustainable for a company this large. Keep in mind, Apple just past the $500 Billion mark, making them the biggest company ever.

It really comes down to I wanted to lock in some of my gains, and look for other investment opportunities. I like buying stocks that are on sale. While for many Apple is still considered a good deal, it’s no longer a highly discounted stock like it was previously.

I believe Apple is close to be fully valued at the moment. Regardless of some of the stock “analysts” say about the stock going to $700/share. Apple is getting all sorts of media attention: about it’s products and it’s stock price. People are getting greedy with the stock valuation, and Apple can do no wrong. As Warren Buffett says “Be fearful when others are greedy”.

No stock has a parabolic increase, without some pull back. I believe Apple’s stock might see some short term pull back. If the stock pulls back to the $520-540 range, I’ll consider re-adding to my existing position. Otherwise I am long with the existing shares I own. If the stock were to rise to $700/share within six months, I might consider selling more of my shares.

Disclosure: Long Apple (AAPL) stock

Related posts:

• Why I Sold Stocks In My Taxable Account Today
• Are Those Long Term Capital Gains, or Short Term Gains?
• WTF Fund (April 2011 Update)
• 2011 WTF Fund Update
• Tax Benefits of Donating to Charity

Sold Some Apple Shares Today is from Investor Junkie Copyright © Empowering Media, Inc.

For 2012 a total of 10 companies were added from the list, and only one was removed. As you can see from the list of stocks, these aren’t exactly a list of highflying tech stocks like Apple (AAPL) or Google (GOOG). In fact most people consider these stocks boring, but boring is sometimes better. Also keep in mind an increasing dividend does not necessarily mean they are great company to invest. This list is a great starting point of possible companies to invest in, but you should always do some stock market research.

At the time of writing, the 10-year treasury is less than 2.00%, and the best 5 year CD yield is currently 2.4% APY. Many of these stocks have comparable or higher dividends. So not only do you have the chance for an increasing dividend, you also can benefit from a rising stock price. Members may be deleted during the December rebalance if during the calendar year dividends did not increase, or intra-year if the stock is removed from the underlying S&P 500. Included is the historical list of stocks added/removed from prior years.

Index Changes

2012 changes

Stocks Removed:

• CenturyLink Inc. – (CTL)

Stocks Added:

• AT&T Inc. – (T)
• Colgate Palmolive Co. – (CL)
• Franklin Resources Inc. – (BEN)
• Genuine Parts Co. – (GPC)
• HCP Inc. – (HCP)
• Illinois Tool Works Inc. – (ITW)
• Medtronic Inc. – (MDT)
• Nucor Corp. – (NUE)
• Sysco Corp. – (SYY)
• T Rowe Price Group Inc. – (TROW)

2011 changes

Stocks Removed:

• Integrys Energy Group Inc – (TEG)
• Lilly, Eli & Co – (LLY)
• Supervalu Inc – (SVU)

Stocks Added:

• Ecolab Inc. – (ECL)
• Hormel Foods Corporation – (HRL)
• McCormick & Company – (MKC)

Dividend Aristocrats for 2012

Disclosure: Long XOM, JNJ, KO

Related posts:

• Press Your Luck With Dividend Stocks or Fixed Income
• Lending Club (January 2012 Update)
• Weekend Reading for February 17, 2012
• Weekend Reading for January 13, 2012
• Weekend Reading for April 6, 2012

2012 Dividend Aristocrats is from Investor Junkie Copyright © Empowering Media, Inc.

Donating Money and Goods

One of the most straightforward ways to donate is to directly give money to a charity. (If you want the tax deduction, though, make sure that you double check the charity’s tax exempt status. Donations to some non-profits aren’t actually tax-deductible.) Itemize your deductions, and you can reduce your income by the amount you have donated. Make sure you have receipts from the charities you donate to in order to document your giving.

You can also donate goods for a tax deduction. The goods have to be in good condition, though, and you will need to get a receipt. You can donate the current market value of your clothing and household goods, not what you bought them for. There are also opportunities to donate your car on behalf of charity. As always, documentation is required, in case of an audit.

Donating Stock to Charity

Another option is to donate your stock to charity. You are exempt from capital gains taxes on the earnings when you donate appreciated stock to charity (since you haven’t received the cash directly). On top of that, you also receive the ability to deduct the total value of your investment at the time of your donation.

If you bought 200 shares of a stock 20 years ago for $10 a share (total value $2,000), the stock might have appreciated to $35 a share at some point, for a total value of $7,000. Now, though, it might have dropped back to $25 a share for a value of $5,000. You still have capital gains of $3000, but you are exempt from paying the tax on them. Plus, you can deduct the entire $5,000 value from your income because of your donation.

A losing stock, though, might not be the best option for a donation, since you can only deduct the value of the stock, and you wouldn’t have to worry about capital gains anyway. Instead, consider selling your losing stock first. You can deduct the loss as an investment. Then, you can take the cash you have now and donate that to charity. So you receive the deduction for your charitable donation. This strategy can help you make the most of a losing investment.

Bottom Line

You can help others and get an advantage. While a tax deduction isn’t as valuable as the dollar for dollar reduction in taxes that you get with a tax credit, it is still useful. Indeed, a deduction reduces your taxable income. If you have enough deductions, your income is reduced, so you pay less in taxes because of your lower income. And, if you plan things correctly, you might able to reduce your income sufficiently to stay in a lower tax bracket.

Related posts:

• Will The Wealthy Donate Less Because Of Health Care?

Tax Benefits of Donating to Charity is from Investor Junkie Copyright © Empowering Media, Inc.

How Governments Forced Markets Higher

Governments globally cooperated (or conspired depending on which word you choose) to pump markets full of liquidity, backstop failures in large institutions and even EU member states with guarantees and essentially prevent further declines in equities. We saw the US try to forestall declines in housing with Trillions of dollars in bailouts, Fannie/Freddie guarantees, mortgage modification programs, zero interest rates, cash for clunkers, and even the 2011 energy tax credit which was partially extended from the 2009-2010 program. While the net benefit of many of these programs is questionable at best, the actual impact was to essentially pull forward Billions in spending in exchange for a increased debt servicing burdens down the road. Essentially, over the past 2 years, consumer spending has been artificially stoked in epic proportions, thus boosting equity returns the likes of which we’ve never seen.

Why Governments MUST Continue to Force Stocks Higher

So much for free markets. As much as I question valuations, fundamentals and future debt problems for the economy at large, governments will continue to force equities higher. The reason is the stakes are too high to let them fall. See, Trillions of dollars in pension plans, retirement plans, state and municipal budgets, not to mention wealthy investors – all have a lot riding on equities returns. With virtually every state’s pension plans underfunded, rather than fessing up and increasing taxes or cutting spending, they’ve simply resorted to boosting their projected annual returns in some cases to 8.5% or higher. After a 100% runup in equities, reasonable investors in a vacuum shouldn’t expect 8.5% per year in the near term, but that’s what states and municipalities are projecting. Furthermore, as TARP and other government guarantee programs come into the black as equity prices increase, it makes the bailout history appear to be more palatable (and thus, set the stage for future bailouts). After all, if we lost Billions on the bank loans, during the next financial crisis, it would be difficult to shell out that kind of money again. But at the moment, we’re showing break-even and even profits for various facets of the bailouts due to skyrocketing equity prices. So, next time a Too Big to Fail bank is ready to fold, politicians can now look back and point to the profit the Treasury realized last time around.

So I’m not a permabull citing natural reasons equities should climb from here. I’m a reluctant participant along for the ride, finally accepting of the role our government has taken on in forcing equities higher at least for the next year to two. I do believe our reckless debt burden will eventually come home to roost and by the time it’s reflected in higher interest rates it will be too late to course correct. But that is now likely years off – which will make it even more dire when the time comes. But with an election year coming up for Obama, you can be sure there will be even more efforts, either overt or covert – to continue to push equities higher. Voters’ retirement accounts, state budgets and pension plans are counting on it!

What Are Your Thoughts?

This has been a guest post by Darwin. He is an engineer and MBA who takes an “evolutionary” approach to finance, writing about adapting to evolving financial management, tax, investing, and savings opportunities. Making more money and saving more money is an adaptive process – join the evolution! He blogs at Darwin’s Money and ETF Base.

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• Peak Oil – Is It A Real Problem?
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The Real Reason You Should Be Bullish On Stocks is from Investor Junkie Copyright © Empowering Media, Inc.

I’m not making excuses about my poor performance. Yes I know the performance was awful. Though keep in mind the original purpose of this fund was to make risky bets, and is a very small part of our family’s overall portfolio. In comparison, our overall performance for the quarter was 4.4%. So I’m not losing sleep with the WTF Fund, and plan on keeping my methodology.

My Trades

I did make a long put option on VMWare, Inc. (VMW). I was correct on they would decrease in price, and was within my strike price. So I did ok with that trade. On the other hand, my purchase of Apple (AAPL) and Cisco (CSCO) hasn’t worked out so well.

In another account, I owned both stocks. In that account Apple saw triple digit gains. I’m not so nieve that I was expecting the same returns now, but I am still bullish on their stock. I think they are historically still cheap. Their IPad product line is still on fire. Apple’s IPhone is now available on the Verizon (VZ) network. Apple has $26 billion in cash and short-term investments, holds another $25 billion in long-term investments, and has generated $16.5 billion in free cash flows in fiscal 2010. It carries no debt. Apple’s is a free cash flow monster.

Cisco is also on the other hand is also a cheap stock, but has quite a few issues with internally. Cisco did announce a one time dividend of $0.24 a share, or 1.4% annual yield. Unfortunately history has shown for the past 10 years the stock has not really gone anywhere. I still think they are a good value play. With $40 billion in cash and investments on hand and free cash flow running at about $9 billion annually, the firm isn’t starved for financing.

With the remaining $2,658.17 left in the account, I haven’t had the time to really do much stock research. With family matters, and my businesses – I’ve been very busy. As some of this settles down, I should have more time this quarter to do more research. I plan on keeping the two existing tech stocks within my WTF portfolio.

TradeKing Review Update

I’ve had more time to use TradeKing since I’ve signed up with them and gave my initial TradeKing review. I like their pricing, service, and features.
While not as fully featured as Fidelity (see Fidelity review), it’s perfect for the type of account I’m using it for. Trading stocks and options. Since my review, they have decreased their option pricing (see: TradeKing Lowers Their Option Pricing). Barron’s also gave them another favorable review in their Barron’s 2011 broker survey. They rated TradeKing 4 out of 5 stars for best long term investing.

Disclosure: Long AAPL and CSCO

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• 2011 WTF Fund Update
• Lending Club (April 2011 Update)
• My WTF Fund
• Lending Club (October 2011 Update)
• Weekend Reading for April 11, 2010

WTF Fund (April 2011 Update) is from Investor Junkie Copyright © Empowering Media, Inc.

Basically, instead of receiving a small dividend check at the end of every fiscal quarter, the company will reinvest that money back into that same stock, and purchase more shares.

Here’s a detailed example of a DRIP in action:

Exxon Mobil (XOM) currently offers a dividend of $1.76 per share yearly (or $0.44 quarterly). If you own 100 shares of Exxon Mobil, you would receive a dividend check of $44 each quarter. Rather than accepting this small check, you may decide that you’d rather reinvest it into the Mobil stock, and utilize the DRIP method to do it. If the stock price is $88, your reinvestment will purchase one half of one stock. That’s it! Simple huh?

How Did DRIPS Start?

Many companies offer a stock purchase program for their employees (often purchased at a discount, which is a nice bonus). Rather than pay out dividends in a check, these companies offered their employees the option to reinvest that money back into the company’s stock. This became quite popular, and many companies now offer this option to all stockholders.

How Do You Start DRIP Investing?

Investors who wish to take advantage of DRIP Investing must first own at least one share of the company’s stock and own it in their own name (not their broker’s).

If you meet these two requirements (in the previous paragraph), you can set up the DRIP by simply calling the company (found either in the prospectus or on their local homepage) and ask for the DRIP enrollment information. Their DRIP accounts may be handled by a transfer agent, but I’m sure they will be happy to redirect you to the proper contact.

After you enroll, all of your account activity will be handled by that transfer agent (often times, this is First Chicago Trust or Boston EquiServe).

How to Purchase a DRIP?

1. Brokerage – Some brokerages allow shareholders to reinvest their dividends at no cost through their plan. If you already have your shares purchased through a brokerage, perhaps you could investigate this option.
2. Transfer Agent – Since these DRIPs have become so popular (and time consuming for the dividend-offering companies), some companies have turned to a third-party corporation to take care of the reinvestment plan. The most well-known transfer agent (in my opinion) is First Chicago Trust.
3. Direct – Quite a few companies do still run their own DRIPs. When you call them for their enrollment information and they direct you to an in-house representative, you know that they are handling these operations by themselves.

Honestly, it really makes no difference who is handling the DRIP, and long as your dividends are being reinvested back into your investments; and after you enroll, that’s exactly what will happen.

What Companies Offer DRIPs?

Obviously, companies must be offering a dividend before they can institute a DRIP program, and many businesses are actually moving away from this offering. According to The Motley Fool, out of the millions of millions of companies, there are only a few thousand that are offering a dividend these days, and out of those, there are only about 1,100 companies that provide a DRIP investment program. In the grand scheme of things, though, a thousand options still offers you quite a wide variety to DRIP stocks to choose from. Many of the dividend aristocrats offer DRIP programs to their investors.

Here are a few companies that offer DRIPs:

• Coca Cola (KO)
• 3M (MMM)
• Exxon Mobil (XOM)
• PepsiCo Inc (PEP)

What Are the Advantages of DRIPs?

DRIPs are long term investments, and for adding at little amounts at a time.

• Low Cost – This is often a very low-cost (sometimes free) way to reinvest in a company that you believe in. If you decided to receive the dividend check and reinvest the funds yourself, you would need to pay the transaction fee on the purchase (which might actually cost more than the reinvestment amount!).
• Automatic Reinvestment – By setting up your automatic reinvestment, your mindset will automatically think in terms of long-term investing, which is the ideal model for a handsome retirement savings in the future.
• Increasing Dividend – By purchasing more stock with the dividends, you will increase your dividend payout in the next quarter. This will be an exponential growth as you continue to reinvest your dividends!

If you invest in a DRIP, can you tell us which company? What features do you like or dislike with the specific DRIP?

Full Disclosure: Owns no stocks mentioned

This is a guest post by Derek from Life And My Finances. Derek currently has his degree in Finance and enjoys using his knowledge to help others get out of debt, save money, and get rich!

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What is DRIP Investing? is from Investor Junkie Copyright © Empowering Media, Inc.

Exxon Mobil is one of the stocks I like to buy-n-hold.  My reasons:

• An annual dividend increase for past 20+ years.  No decrease has occurred during this time.  This increases the ROI on the initial shares purchased.
• Frequent stock buy backs.  This makes less shares available, which in turn drives up the share price. Over the past five years, Exxon repurchased $135 billion worth of stock, reducing outstanding shares by 23%.
• Is a cash flow fiend.  The trailing 12 months generated over $32 Billion in cash flow.  Though decreases in oil prices will decrease future cash flow.
• A method to hedge inflation.  The many government initiatives in the long term will surely increase the cost to produce resources like oil.

The last item I should mention, was a great way to offset the increases we saw in gas prices at the pump.  The stock purchase basically negated (with additional profit) the increases we paid filling up our cars.  With increasing consumer prices hedging with stocks is a great way to help ease the pain.

As I mentioned before, FDIC secured investments are now generating poor returns and some of the lowest in history.  The highest 5 year CD rate nationally is 3.29% APY, while XOM’s dividend is 3.11%.  Ten-year treasuries are earning an even lower 2.98% return.  It’s a no brainier to buy this stock over a CD because of:

• The stock’s current and 8.3 forward P/E
• Cash reserves of over $9 Billion, ensuring the dividend can be paid.
• Their history of increasing the dividend overtime.
• The steady dividend, and very good chance of upside potential.

While in the short term the stock could go lower, my time horizon is 10+ years.  The stock also has gotten beaten up because of the announced XTO Energy (XTO) acquisition, which will give them increased exposure into natural gas.  This is also another win-win as natural gas prices are very depressed at the moment, and could help aid increase the stock valuation.  In my opinion Exxon Mobil is a much safer value play on oil, than say BP (BP).  There are many unknowns with BP which makes it much more riskier to invest in: the total cost of cleanup, the total cost of payouts, and what additional government intervention (ahem shakedown) will occur with BP.

This stock is owned in my taxable growth portfolio.  While I am worried about the possible increases in tax dividends, since Bush’s tax cuts will end January 1st 2011, long-term I still think it’s a great stock to own.

Full Disclosure: Long XOM

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• Preparing Your Portfolio for the End of the Year
• What is DRIP Investing?
• 2012 Dividend Aristocrats

Added More Exxon Mobil (XOM) To My Portfolio is from Investor Junkie Copyright © Empowering Media, Inc.

• I’ve had considerable gains in the stocks I owned (20%+ in one year)
• Believe the market is overbought with a somewhat high P/E ratio (approx 20)
• The stocks I sold have dividends and since they are in a taxable account will be subject to much higher tax rate next year
• The primary reason was to fully fund our Roth IRA accounts for the year

We are already 5% in cash with our retirement accounts.  I’ve made adjustments to our retirement accounts in the past few months, but I have not (nor will) make adjustments to them other than for some re-balancing.  I believe asset allocation is much more important than selling based upon emotional factors.

I’m taking the money from today’s sale and fully funding our Roth IRA accounts for 2010.   I’ve not mentioned this before, but our 2010 investment strategy is:

• Max out my wife’s 403(b) account (I don’t have a 401k or IRA setup within my company)
• Max out both our Roth IRA accounts
• Contribute $10,000 to our children’s NY State 529 accounts (since contributions up to $10k are tax deductible to the state)
• Invest $5-10,000 in US I Savings Bonds (I’m not sure the exact amount because I’m not crazy about the existing rate)
• All remaining funds invest within our taxable accounts

I eventually want to invest our taxable savings into real estate or another business.  I haven’t found anything suitable so far.  My thought is then take some of that taxable money off the table, and move into tax differed savings.

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• Fidelity Review – Opening an Online Brokerage Account
• The Real Reason You Should Be Bullish On Stocks
• Press Your Luck With Dividend Stocks or Fixed Income
• Tax Efficient Investing

Why I Sold Stocks In My Taxable Account Today is from Investor Junkie Copyright © Empowering Media, Inc.