High dividend yield stocks in S&P500

For those who like dividend stocks I have run my screener for all 500 companies in index S&P 500 with dividend yield 5 or higher. Currently 37 companies matching this criteria.

On top of the rank is time Time Warner Cable (TWC) with incredible yield of 72%. The number doesn't describe the real picture after separation and dividend spin-off with Time Warner Inc (TWX). More information at Time Warner homepage.

Other two positions come from Financial sector. American International group (AIG) and MBIA Inc (MBI) with 56% yield respectively 37% yield. For this extremely high yields you take risks of dividend cuts and high volatility of shares. On the other hand both companies faced in short-term significant pullback and are traded near short-term lows.

First company with "normal" dividend yield is traditionally from Telco, Frontier Communications Corporation (FTR), with 12%.

Eastman Kodak (EK) is last company with yield above 10%. Current dividend yield ratio is 11%.

Investing in gold with ETF.

Recently I posted article about investing in physical gold like buying coins, ingots or bricks. This time I would like to cover the other side of gold investing which is investing without keeping or owing physical gold.

One of the most common investment product that act as alternatives for those who want to invest in gold is ETF, or exchange traded funds (sometimes translated as index shares). It is a form of collective investment funds with low costs, greater flexibility and transparency, and accurate monitoring of the underlying asset (index, commodity, etc.).

ETF gold are due to its properties as an ideal alternative to physical gold. Emerged as a tool for investors who want to own physical gold, but do not have it stored at home and want to have it for cheaper money. Management fee is usually less than half a percent, but to be added charges for trading broker, which may not be the cheapest.

In 2004, the WGC, in cooperation with State Street Global Advisors launched gold ETF on the New York Stock Exchange under the name of streetTRACKS Gold Shares, now called Tracks SPDR Gold (GLD). Today, this product is also traded on stock exchanges in Singapore (GLD 10US $), Tokyo (1326) and Hong Kong (2640). At present it is the most popular investment tool for investing in gold and indirectly holds more than the custody of 1 127 tonnes of gold.

Other well-known ETF are iShares COMEX Gold Trust, which determines the price based on the price of futures contracts on the COMEX commodity exchange. Traded on the New York Stock Exchange (IAU) and the Toronto Stock Exchange (IGT). The Fund currently holds 80.72 tons of gold, but in this case, there are criticisms and doubts about the quantity of gold which backed securities. The Depositary is The Bank of Nova Scotia, Canada.

Among the investors are very popular Canadian ETF Central Fund of Canada (CEF) and Central Gold Trust (GTU) traded on the New York Stock Exchange and the Toronto Stock Exchange. According to some experts are safer investment in gold than GLD. In addition to the long history of funds it is also mainly due to the simplicity and clarity of the investment strategies and fund structures as well as the need to hold all the gold at Depositary without the opportunities to lend it to third parties (at least 85% of funds must be kept in precious metals).
First appointed but also invest in silver. Currently, the ratio of the two metals is 55:42 in favor of gold and the rest is in cash. Central Gold Trust holds 396.8 thousand ounces of gold, which is 97% of its portfolio.

Here is full list of Gold ETFs with their specifications.

How to invest physically in gold

Every week gold price is reaching new highs but for many investors the peak is still well ahead. For those who believe in the long term potential of gold as inflation protection investments, is an ideal way to buy gold ingots, respectively. bricks, or investment coins. It is virtually the purest form of investment in gold, in which the investor has the physical security of tenure of the yellow metal with all advantages and disadvantages.

Purchase of ingots and bricks is a relatively simple matter, just contact the selected dealer and buy gold. There are plenty of traders offering the possibility of investing in gold ingots. Choosing the merchant will actually be the most difficult task. You get bricks or ingots from reputable manufacturers with a certificate bearing the manufacturer, punch, weight and serial number.

A good trader is also a guarantee of liquidity, as well as ensure the redemption of investment in gold. Sometimes, when redemption of gold company offers you a lower price for ingots, which are purchased from another dealer (from another manufacturer). Thus preventing speculation in prices because the difference in prices between different dealers can be significant.

Investment alternative may also be investment gold coins, which also reflect the real price of gold (plus dealer charges) and have no problem with liquidity. On the market there are several different types of issuers and are commonly available in various weights one tenth of an ounce to an ounce. Some may even be a collectible article.

Probably the most famous investment coins are South African Krugerrand, which emits since 1967. It's bigger and heavier, because it has only 22 carats, but the amount of gold is the same as for other coins. In the U.S. there are two investment coins that is American Buffalo with a 0.9999 and American Eagle which has a purity 22 carat (0.9167) like the Krugerrand. The British Britannia has content that only 22 carat gold and is the most heavy investment coin (34.05 g in one ounce version). Australian Nugget (Kangaroo respectively) and the Chinese Panda are interesting in that its appearance changes every year and are so popular among collectors. Most investment coins are issued also in the design proof and also in silver version.

Outlook for interest rates

Zero interest rates currently works as a relatively strong attraction for investors who are borrowing cheap dollars and turning into purchases of shares and commodities.

What happens on the next FED meeting nobody knows but general expectation is unchanged interest rates until summer 2010. The Federal Reserve may start raising interest rates on June. This comes from the results of the Fed Funds futures. Currently traders give 54% chance to increase the minimum rates by 0.50 basis points. The increase is estimated could take place at the regular meeting, scheduled for 23 June 2010.

The increase in interest rate markets are generally perceived as a strongly negative element, but this time it could be consider differently. That would mean that the Fed feels confident about the economy, as well as the financial system is strong enough to withstand higher interest rates. It would be a positive for equity markets. Australia has recently experienced something similar. Local central bank after a long pause decided to increase the lowest interest rate for the past 49 years from 3% to 3.25%. Australian S & P / ASX 200 responded by the increase of 1.8%.

Energy stocks for bull market

One thing is for economic recovery the same as ever. Demand for energy during growth simply must grow. And for those who believe in recovery here are some of energy stocks.

Chesapeake Energy (CHK) mines natural gas. While the price of gas is pushed down by the economic downturn and new technologies which allow to isolate the material from clay. But the recovery will come only with the end of the recession, but at the expense of coal, which generates more pollution. Estimated profit for 2010 is over U.S. $ 2.4 per share. So it is possible to buy those shares for about 12 multiples of expected profits.

Devon Energy (OK) is one of the producers of natural gas and oil (which constitute 86 percent of its sales). At estimated profit of USD 6.2 shares are very attractive to buy that provides 11 multiples of expected profits.

Oil giant ConocoPhillips (COP), among other things, owns 20 percent of Russia's Lukoil. From their lows around 35 USD has bounced up to $52, but still have long way to highs (just slightly below $100). ConocoPhillips is at around 9 multiples earnings per share which is currently one of the cheapest stocks in energy sector.

American Electric Power (AEP) generates electricity. 73 percent of production is from coal-fired power plants, which is not in vogue, but the shares are still nearly 40 percent cheaper than that at its peak in 2007.

The best investments for year 2010

Today I publish similar poll which I usually do before the year-end. What is the best investments for the next year. Which investments do you consider as the best for the year 2010. Please participate in our survey. You can choose among US stocks, international stocks, bonds, soft commodities, energy commodities and precious metals.

The poll will be active until the last day of this year. And you can find it in the left sidebar at StockWeb site.

I also try to post opinions for the best investments of the top investment gurus. For example you can see already in March 2009 Warren Buffett was increasing share in Burlington Northern (BNI).

Warren Buffett investment strategy

Warrenn Buffett is a real investment guru who earned his enormous assets by investing in capital markets and with strict adherence to certain rules which every investor knows but few respects. In fact Warren Buffett investing strategy may have for ordinary investors more negatives than positives and ultimately may lead to the desired profit.

One of the reasons is the size of transactions and volume of funds which most investors have only dreamed of. Buffett can afford to invest billions of dollars, which his company Berkshire Hathaway has which allows him to buy his interest for shares in companies. At the same time it provides a better bargaining position when entering into the company for an interesting price.

Another related significant difference compared with the ordinary investor is that Buffett often buy shares to own that company (or at least significant part). As an example can be Coca Cola (KO), Wells Fargo (WFC), Procter and Gamble (PG), and last but not least mentioned Burlington Northern Santa Fe Corp. (BNI), which make up the majority of its entire portfolio. He often buy preferred stocks selected companies that give quite an interesting advantage over ordinary investors.

It also reflects the basic principles of long-term investment horizon (and its strict compliance), buying stocks of well-established companies whose functioning well understood by the investor at a low price and limited diversification (with Berkshire Hathaway Buffett owns more than 40 titles from various sectors such as consumer goods, finance, energy, industry, health, etc.).

In recent years, the Buffett and his investment company quite significantly deviates from the established rules which brought him his fortune. The first problem is the purchase of shares of companies in terms of fundamental analysis do not meet his criteria of values and eventually some of them had to quickly get rid of. Examples can be expensive buying shares in recent years, like Anheuser Busch (BUD), Wrigley (WWY.BA), Conoco Philips COP) or two Irish banks, which recorded big losses.

Perhaps the biggest disappointment for many investors seeking to invest on the basis Buffett's rules is a relatively large amount of funds that are kept in derivative instruments. Buffett has always been known for his very negative attitude to derivatives. Even though he sold options with a value of 4 billion U.S. dollars. It is also a fairly risky naked put options.