MONEYPAPER’S Top 7 “Buy and Hold” DRIP Strategies

MONEYPAPER'S

Top 7 "BuyandHold" DRIP Strategies

Long-Term Wealth AccumulationMadeEasy

?2016TheMoneypaperPublications,LLC.AllRightsReserved.

TABLE OF CONTENTS

DRIPS ARE THE BEST WEALTH- BUILDING SECRET OF THE SMALL INVESTOR 2 LONG- TERM WEALTH ACCUMULATION IS THE GOAL --------------------------------------3 "DRIP" INTO THESE 7 GREAT COMPANIES ----------------------------------------- 4 "BUY AND HOLD" DRIP CHOICE #1 -------------------------------------------------------5 JOHNSON & JOHNSON ( JNJ) ---------------------------------------------------------------------------- 5 "BUY AND HOLD" DRIP CHOICE #2: --------------------------------------------------------6 DR PEPPER SNAPPLE GROUP (DPS) --------------------------------------------------------7 "BUY AND HOLD" DRIP CHOICE # 3: --------------------------------------------------------8 UNION PACIFIC (UNP) -------------------------------------------------------------------------9 "BUY AND HOLD" DRIP CHOI CE # 4 " ------------------------------------------------------- 10 LOCKHEED MARTIN ( LMT) ---------------------------------------------------------------------11 "BUY AND HOLD" DRIP CHOI CE # 5 --------------------------------------------------------- 12 EXXONMOBIL ( XOM) . ----------------------------------------------------------------------------13 "BUY AND HOLD" DRIP CHOI CE # 6 : ------------------------------------------------------- 14 FRANKLIN RESOURCES ( BEN) ----------------------------------------------------------------15 "BUY AND HOLD" DRIP CHOI CE # 7 --------------------------------------------------------- 16 NEXTERA ENERGY ( NEE) -----------------------------------------------------------------------17 FIVE FUNDAMENTALS OF SUCCESS ---------------------------------------------------------18 GET STARTED NOW -------------------------------- -------------------------------- ---- 19 TOP TEN ADVANTAGES OF DRIPS -------------------------------- -------------------- 20

At Moneypaper, our mission is to help you, as an individual investor, "do it on your own" empowered with our tools and support. We have been helping self-reliant investors since 1981.

DRIPS ARE THE BEST WEALTH- BUILDING SECRET OF THE SMALL INVESTOR...

Unlike traditional investing, which is based on buying certain numbers of shares, DRIP investing is based on investing dollar amounts. A no-fee DRIP makes it feasible to invest even small amounts on a regular basis without going through a broker or paying commissions.

Investing the same amount on a regular basis is called dollar-cost averaging. By investing a fixed amount without regard to the share price, you end up buying more shares when prices are low and fewer shares when they are high, the classic goal of savvy investors. And dollar-cost averaging also imposes discipline on your investing because you decide how many dollars you intend to invest on a schedule that you set up in advance. You don't let the market dictate your actions, which generally points you in the wrong direction.

You can invest as little as $10 or $25 (of course, you can also invest a great deal more than that) on a regular basis and even set automatic withdrawals from your bank to make it as easy as possible. Or you can invest whenever you have the money to do so. You are in control.

Dollar-cost averaging through a DRIP means you don't have to guess which way the market is going next week, next month, or next year. You are in for the long haul! Market slumps can actually be an advantage. When the market is down, your investment will buy more shares than it would when the market is high.

Because you can open a DRIP account with a single share of stock you can become an owner of lots of different companies. There are companies that offer DRIPs in virtually every industry.

Why Dividends Matter Most

As owners, shareholders participate in the profits of a company. If the company does well and profits soar, the value of the shares will go up. In addition to share price appreciation which is the obvious benefit behind the strategy of "buy low, sell high", there's another way shareholders make money in the stock market: dividends.

Dividends are paid by many top U.S. companies ? established corporations so profitable that they take in more money that they need for their costs. They make so much that they can afford to distribute some of the profits to shareholders. In essence, dividend-paying companies are less risky investments than corporations that earn no profits, or need to reinvest all of their profits into a growing business. Many companies have a long record of paying...and increasing...dividend payouts year after year.

While investing in dividend-paying stocks may represent a more conservative approach to investing, there are also other reasons to concentrate your investments there. For one, there's the dividend itself, which can become a substantial part of your return on investment. Many retirees pay monthly expenses from the cash they enjoy from dividend-paying stocks. Stock dividends protect your stocks in times of market weakness.

Say, for example, you buy Company X stock at $90 a share and it's paying a $3.00 annual dividend. That's a 3.3% yield. Now the market hits a downdraft and all stocks tumble, even Company X's.

The stock falls to $75 a share. Because the company is still profitable, no matter what's happening in the stock market, its $3.00 dividend is safe. Now that dividend is 4% on a $75 stock price. The higher dividend will attract new buyers. Thus, Company X shares are likely to bottom out and rebound even while the rest of the market keeps tumbling.

Finally, rising dividends can help drive up the price of the underlying stock. Higher dividends indicate higher profits and make the stock more desirable to investors and increase buyer demand for the stock.

2

LONG- TERM WEALTH ACCUMULATION IS THE GOAL

While the importance of a secure and conservative stock investing strategy cannot be over- emphasized, the difficulty of constructing such a portfolio can be (and probably has been!) over- stated. When your focus is on long-term wealth accumulation, you're not trying to "bet" on a company that may surge over the next weeks or months.

Long-term wealth accumulation is more easily achieved by steadily investing in top quality companies that grow with the economy and habitually reward shareholders with dividends paid out of company profits.

Picking such companies isn't rocket science either. There are fundamental characteristics to look for.

TOP-PERFORMING DRIP COMPANIES SHARE A COMBINATION OF QUALITIES

"Buying what you know" simply means investing in the companies whose goods and services you...and millions of other consumers...use daily. Of course, that's just a starting point.

Combine this idea with the concept of owning a handful of basic industries...such as food, banking, oil, utilities, and health care...and building your portfolio becomes manageable, even easy.

These industries provide goods or services that people need on a steady basis, making them somewhat recession-proof.

Chances are that you can find at least one company in each of these industries that is familiar to you and that you

believe deserves a lot of "repeat" business. Companies that are laden with debt will have a hard time growing profits, just

as individuals with hefty credit card balances have hard times saving money. (Certain industries are exceptions. For

instance, utilities must borrow heavily to build new power plants, and banks' liabilities are high because they include

depositors' money.)

In general, debt-laden companies must devote much of their

Why Invest Directly?

operating profits to interest expense, and are hurt more than debt-free companies in a rising interest rate environment.

You have the legal right to buy stocks directly from nearly 1,300 top-notch companies... and bypass

Another basic yardstick is a company's price/earnings ratio (or the broker, or middleman, completely.

P/E) the stock's price divided by earnings per share. By calculating a stock's P/E, you can easily compare it with other companies in its industry to see if it represents a good value. You might even compare it with its own long-term P/E. When a stock is unloved, it will have a lower P/E ratio than when the

When you invest directly in a no-fee company, every dollar you have available to invest buys more shares instead of disappearing in unnecessary fees.

very same company is enjoying great popularity. When a stock's P/E is low and it is out of favor, it may be a great time to buy.

It's like buying your shares wholesale instead of retail. You skip the middleman and your wealth grows much faster.

3

VALUE vs. GROWTH ? WHICH STOCKS SHOULD YOU OWN?

Among the variety of things, we don't like about market pundits and money managers is their tendency to divide stocks into two primary "types" -- growth and value.

An investor might be exposed to one or the other category depending on what is thought to best fit his or her portfolio needs. While this approach may make it easier to make investment decisions, it probably serves the advisor more than it does the investor.

We have always maintained that the best companies exhibit qualities of both growth and value, and that they tend to do so consistently over time. As sales and earnings grow, the value of the company grows along with growing dividends.

It's too simplistic to peg low-yielding stocks as growth stocks and high-yielders as value stocks--which is a shortcut that is prevalent in the financial industry.

In general, the best choices for any portfolio are stocks that grow not only sales and earnings, but also dividends and capital gains--and do so on a steady basis, often for decades. In other words, growth creates value. But even among the best companies, it's important to understand that different companies grow in value in different ways. Some have consistently generous yields, whereas others provide capital appreciation, which can be a step ahead of the dividend growth.

It's true that dividend yield is a tempting attribute. We tend to include a minimum yield requirement when we evaluate stocks-and we tend to favor stocks that reward shareholders with high dividends. But dividend yield is only part of the story. Strict adherence to a high yield strategy will cause you to overlook some excellent prospects. Some great companies have fairly low yields. Based on a steadily rising stock price, the dividend will naturally provide a smaller yield. That's not all bad!

In this report, we've included our top 7 DRIP companies (that is, companies that offer direct investing to existing shareholders) that provide both value and growth.

"DRIP" INTO THESE 7 GREAT COMPANIES

The seven companies we have selected as our top choices meet our longterm goals. We state our criteria for their selection and if you agree, we encourage you to consider enrolling in the DRIP that each company offers. By investing through the DRIP, you can efficiently apply the wealth-building strategy of dollar-cost averaging, which is investing the same amount regularly in order to build holdings over time.

What's more, by "dripping" in, you won't need to speculate on the right time to invest. And, when it's time to retire, you will find that most of your shares were purchased when the stock price was relatively low because your regular investments will have bought more shares when prices were low and fewer shares when they were high.

Enroll in these plans, fund each plan with regular investments, request that your dividends be reinvested and watch your holdings grow. As the number of shares you own grow, so will the amount of your dividend payouts. And, as those amounts compound over time, you will end up with sizeable holdings acquire at favorable prices. There are, many great companies that meet our criteria for acceptable investments for long-term wealth accumulation.

4

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download