In 2003, former President Bush signed into law the Jobs and Growth Tax Relief Reconciliation Act. One major provision of this law was to reduce the tax rates on certain dividends from nearly 40% for the highest income earners down to 15%. The dividend tax rate for the lowest tax brackets even reached as low as 0%! For us income investors, this tax break was a welcome sight. But the cuts were passed with the provision that they expire at the end of 2010. With the nation… Read More

In 2003, former President Bush signed into law the Jobs and Growth Tax Relief Reconciliation Act. One major provision of this law was to reduce the tax rates on certain dividends from nearly 40% for the highest income earners down to 15%. The dividend tax rate for the lowest tax brackets even reached as low as 0%! For us income investors, this tax break was a welcome sight. But the cuts were passed with the provision that they expire at the end of 2010. With the nation heavily in debt and having run large deficits for the past several years, it’s a foregone conclusion among the investment community that these dividend tax rates will have to rise. Just to be clear, I’m not taking sides. I’m simply trying to prepare you for what could lie ahead. President Obama has proposed only increasing the dividend tax rate to 20% for families making over $250,000. However, the recent healthcare package already tacks a 3.8% tax on investment income for this group starting in 2013. In other words, the highest earners… Read More

Retirees and others that rely on income from their investments will be the first to tell you that interest rates are not what they used to be. Prior to the credit crisis, an individual with $2 million saved up could achieve a six-figure income just by holding a diversified basked… Read More

Here’s a handy tip: Yahoo! Finance has a page with information on all sorts of bonds rates. The page makes it easy to see where bond yields are right now. Click here to see the list (be… Read More

U.S. banks had a great run. From December 1994 to December 2006, the KBW Bank Sector Index (an index of leading banks) soared nearly +400%. But the financial crisis ended that party. Now the index is at 1996 levels again. Read More

When the topic is the current market, a lot of pundits like to talk about “the new normal” — that is to say, a range-bound stock market confined by a slow-growth economy. But when it comes to finding decent long-term… Read More

Investors tend to steer clear of any company or industry with limited growth prospects. But there is money to be made if the rest of the market looks to shun such investments. After all, these largely matured businesses don’t need to invest much money to develop products and fuel new growth, so they can generate an outsized level of profits on their revenue streams. That’s why some investors love tobacco stocks. They’re unloved by many, but they typically offer very juicy dividends, making them a favorite among income-oriented investors. Friday morning, we were reminded… Read More

Investors tend to steer clear of any company or industry with limited growth prospects. But there is money to be made if the rest of the market looks to shun such investments. After all, these largely matured businesses don’t need to invest much money to develop products and fuel new growth, so they can generate an outsized level of profits on their revenue streams. That’s why some investors love tobacco stocks. They’re unloved by many, but they typically offer very juicy dividends, making them a favorite among income-oriented investors. Friday morning, we were reminded just how profitable these companies are: Lorillard (NYSE: LO), which makes Newport cigarettes, announced that an already juicy dividend would be boosted +12.5%, and the company plans to buy back another $1 billion in stock. Let’s take a deeper look to see if the sector should merit your investment dollars. Final spurt of growth Many of us (myself included) assumed that Big Tobacco is already in decline. Yet as the table below notes, the biggest industry players are still seeing a bit more revenue growth this year, thanks in part… Read More

I’ve mentioned before that I often go off the beaten path to find the best income investments in my High-Yield Investing and High-Yield International newsletters. These days you have to — remember that the common stocks in the S&P 500 yield only 2% on average. Luckily, there… Read More

This is a tricky market for income investors. Bonds are selling at historically low yields and high prices. The 10-year Treasury bond currently pays a miniscule 2.6% and a three-year CD pays about 1.8% on average. Meanwhile… Read More

In a former life, I worked as a manager and analyst at IBM (NYSE: IBM) for almost 20 years. During my time there, I was in charge of some pretty big budgets — some reaching nearly $100 million a year. But at a major company like IBM, there are some even larger numbers in play. Case in point: On Monday of last week, IBM sold $1.5 billion in bonds. It was a good time to do it, too. According to The Wall Street Journal, the three-year notes were issued with an interest rate of… Read More

In a former life, I worked as a manager and analyst at IBM (NYSE: IBM) for almost 20 years. During my time there, I was in charge of some pretty big budgets — some reaching nearly $100 million a year. But at a major company like IBM, there are some even larger numbers in play. Case in point: On Monday of last week, IBM sold $1.5 billion in bonds. It was a good time to do it, too. According to The Wall Street Journal, the three-year notes were issued with an interest rate of just 1% — barely above what similar Treasuries pay. But it’s not news that companies are issuing debt now to fund their business. Remember: rates are at record lows. If you think you’ll need the money, it’s a great time to issue bonds. However, it is news that IBM is doing it. My former employer has an uncanny track record when it comes to the timing of its debt offerings. IBM seems to know when interest rates have hit lows, and issues debt just as rates are about to ratchet back… Read More

In my Daily Paycheck newsletter, I buy income-generating securities for the long haul — reinvesting dividends for compound growth and income. But when I see an investment with ridiculous fundamentals, coupled with a repeating trend, it gets my trader’s heart beating. And that’s what I see when… Read More