Dividend Yield

The main parameter to know when you are buying the blue chip stocks is the dividend yield. What that means is that when you are paying for the stocks which are giving the dividends you do not need to shell out more for the stocks while buying.

A dividend yield of 10 % means that you will have to have the stock bought at Rs.100 and the dividend it gave was RS.10. Now if the price rises then of course the dividend yield will reduce as you will be paying more to buy that stock.

Here is the list of the top ten stocks which have the good dividend yields.

Bank of America(BAC) – 9.09%

General Electric (GE) -  7.65%

Pfizer(PFE) – 7.23%

Du Pont(DD)

Alcoa(AA)

At&T(T) – 5.75%

Verizon Communications (VZ)

Merck(MRK)

Jp Morgan(JPM) – 4.82%

I have listed the dividend yields and these dividend yields have the benefit that you can then use this for the Dogs of the Dow Theory.

I will explain that a little later but here is what the people think about the stocks that are there when they pay out dividends. TheBlue chip dividend paying stocks mean that these stocks are

Very very stable

Good cash flows

The benefits of having the dividend paying stocks is that they make you money even when you are holding the stocks as opposed to growth stock which make you money when you are sell. You can use the dividends to reinvest in the stocks or buy some mutual funds.

Dividend investing is also a way of investing if you are trying to learn to invest stocks

Dogs of the Dow Theory

This theory says that buy those stocks which have high divined yields and that will means that these stocks share prices are lower than whet they should be. You will benefit when the stock prices rise for these stocks as the share prices are lower.

This theory was coined by Michel of Higgins in his book beating the Dow.

At the beginning of the years you will calculate the dividend based on the closing price of the last trading day and then buy those top ten stocks which have the highest dividend yield. Since the price is low and the yield is high the price will rise and you will gain good profits on these shares and may even beat the Dow.

Related posts:

1. Dividend yield definition and Ex-Dividend Defined
2. Dow Jones Blue chip stocks
3. Blue chip companies – Top Australian blue chip companies

Well do not worry here is the way to invest in the foreign stock markets  

ADR or the American Depository Receipts is one of the best ways to invest in the stock market of the emerging countries without even thinking of using another broker. You use the existing discount stock broker like E*trade or Ameritrade or Schwab to buy the stocks. These ADR’s represent the underlying stocks which are listed on the exchange of the home country.

Then the discount stock brokers have expanded their operations in countries like Canada, France, Germany, Hong Kong, Japan and Britain and that also will mean that rather than buying ADR’s you can buy the shares of the company directly from the stock exchanges of these countries. That is not to say it will be cheap because the commission for the international trade will be much more than the regular commission for domestic trades.  

Invest in ETF or mutual funds to buy international stocks

There are specific mutual funds that are there which track the companies in the international markets as well as there are country specific ETF’s which is a proxy of investing in the foreign markets

Well all is not hunky dory and there are a lot of risk factors associated with the stocks such as having the currency risk. With the dollar value plunging you may be making money whereas the dollar value surges you may end up losing money. Another major thing is the political risk especially in countries like China, Mexico and Brazil.  

One such fund is the ishares MSCI EAFE Index fund or iShares MSCI Japan

You shoul have about 20 – 30% of your portfolio in the foreign stocks.

Barclays(BCS)

ABN Amro(ABN)

Novo Nordisk(NVO)

Infosys(INFY)

Glaxo Smithkline Beecham(GSK)

How do I invest in China and India stock markets?

Well the best way is to invest in the ADR’s as generally the companies that have the ADR’s listed are good blue chip stocks in the home country and because of the ADR’s listed here they are also very much the epitome of good accounting norms.

Related posts:

1. Buy International stocks – Go investing in foreign stocks
2. Buy International stocks – Go investing in foreign stocks
3. Buy Canadian stock or the Buy stock TSX

A lot of analysts that moment were suggesting not putting the money in Satyam. Hey but the fact is that the luck favors the brave. Imagine the returns when the current price is Rs.122.

 The Satyam stock price was bound to go up once the government stepped in and it did a wonderful job after the Satyam scam broke out. The government appointed the board of directors who did a good job in retaining talent, talking to the customers and then looking for a buyer. 

That said I am a keen buy and hold strategy player but as I have always said there is nothing which can keep you from taking advantage when an opportunity arises. You need to see what your risk taking ability is and then jump right in. 

It is here that a lot of people always follow the herd and I am sure that a lot of folks would never even have thought of buying Satyam as they would thought that the stock is doomed. 

The future for Satyam looks bright and I a sure that the Satyam share price will zoom ahead once the results are announced. Hey even if the results of the previous year are bad I am sure it will be an opportunity to invest more money in this stock as the management is very capable and the future earnings definitely look good. The previous results will be short term blip on an overall long term growth story and people should easily buy at these levels. 

Mr. Ramalinga Raju milked crores to invest in real estate and in the end it was big mistake which he could not correct.

Related posts:

1. Satyam Scam, Satyam Fraud, Satyam Scandal A lesson for Investors
2. Oil India listing price – Investors may gain 10-12% with the Oil India Share price
3. Unitech Share price