Dividend Stock Investors Beware

From The Danger in Dividend Stocks in this week’s Barron’s:

…anyone heavily invested in stocks or bonds that throw off lots of cash—whether through interest income or dividends—should beware of the abundant signs of frothiness.

Sectors with the highest dividends are trading at rich premiums to the broad market, relative to the historical norms, warns Vadim Zlotnikov, chief market strategist at AllianceBernstein. He studied the price-to-book and enterprise value-to-Ebit (earnings before interest and taxes) ratios of industry sectors relative to the broad market over the past 30 years, and found that sectors paying the highest dividends are fetching some of the highest prices they’ve ever reached in this stretch.

And this…

Based on 10-year averages, the S&P utilities index, which boasts a 15.1 forward price/earning multiple versus its usual 14, fetches an 8% premium. In contrast, the Standard &Poor’s 500 trades at a 14% discount—with a 13.6 P/E compared with its 15.9 norm, notes Andrew Pusateri, a senior utilities analyst at Edward Jones.

Something to think about.

That Keurig Coffee You Buy is VERY EXPENSIVE!

We bought a Keurig Vue for my wife to replace our Tassimo. When we first got it, I thought that I might use it too. I really liked the Italian Blend.

But, after buying several boxes, I started thinking about how expensive it was to drink coffee that way.

Each Italian Blend box holds 12 Vue Cups (The Italian Blend is a larger Vue cup and therefore only comes in packs of 12. Smaller cups come in 16 packs. Interestingly, K-cups for the K-Cup machines come in packs of 18). Each Vue cup contains .48 ounces of coffee. That means each box holds 5.76 ounces of coffee. Each Vue box costs around $12. Dividing $12 by 5.76 ounces, we get a cost per ounce of about $2.08. That works out to…

Are you ready?

$33.33 PER POUND!

I buy 12 ounce bags of excellent Columbian and French Roast whole bean coffee at H.E.B. for $6.74. Dividing $6.74 by 12, I get a cost per ounce of $.56, which works out to $8.99 for a 1 pound bag. That’s a huge difference.

As of right now, Keurig does not offer a reuseable cup that can be used with regular coffee. Even if they did, I would think it would be a pain to use.

Anyway, this might be something to consider if you are in the market for a new coffee maker.

Andrew Carnegie on The Advantages of Going the Extra Mile

Among the many books I’m working my way through is Think Your Way to Wealth (Tarcher Success Classics)* by Napoleon Hill. The book is essentially an interview between Napoleon Hill and Andrew Carnegie which ended up being the basis for many of Hill’s books—especially The Law of Success*. Some of the language and ideas are dated but the book as a whole is interesting.

Chapter 5 in the book is about going the extra mile, a virtue that almost seems to have vanished these days. I have always been a believer in going the extra mile. I’m not sure why. It probably had a lot to do with the way I was raised. If it’s one thing my dad taught me, it was to do a job, do it well, and give people more than they paid for. It does pay off in the long run as long as you do it with a good attitude. Oh, and one advantage I have seen personally is that it helps you stand out from the competition.

So, here are Andrew Carnegie’s advantages of going the extra mile. Some of the terminology might make better sense after reading some of Hill’s other works.

1. The habit of Going The Extra Mile gives one the benefit of the law of Increasing Returns, in a variety of ways too numerous to be described here.

2. This habit places one in a position to benefit by the law of Compensation, through which no act or deed will or can be expressed without an equivalent response (after its own nature).

3. It gives one the benefit of growth through resistance and use, thereby leading to mental development and increased skill in the use of the body. (It is a well-known fact that both body and mind attain efficiency and skill through systematic discipline and use which call for the rendering of service that temporarily is not paid for.)

4. The habit develops the important factor of initiative, without which no individual ever rises above mediocrity in any calling.

5. It develops self-reliance, which is likewise an essential in all forms of personal achievement.

6. It enables an individual to profit by the law of contrast, since obviously a majority of the people do not follow the habit of doing more than they are paid for. On the contrary, they endeavor to “get by” with a minimum amount of service.

7. It helps one to master the habit of drifting aimlessly, thereby checking the habit which stands at the head of the major causes of failure.

8. It definitely aids in development of the habit of Definiteness of Purpose, which is the first principle of individual achievement.

9. It tends strongly to aid in the development of Attractiveness of Personality, thereby leading to the means by which one may relate himself to others so as to gain their friendly co-operation.

10. It often gives an individual a preferred position of relationship with others through which he may become indispensable, thereby fixing his own price on his services.

11. It insures continuous employment, thereby serving as insurance against want in connection with the necessities of life.

12. It is the greatest of all the known methods by which the man who works for wages may promote himself to higher positions and better wages, and serves as a practical means by which a man may attain the position of ownership of a business or industry.

13. It develops alertness of the imagination, the faculty through which one may create practical plans for the attainment of one’s aims and purposes in any calling.

14. It develops a positive “mental attitude,” which is one of the more important qualities that are essential in all human relationships.

15. It serves to build the confidence of others in one’s integrity and general ability, which is an indispensable essential for noteworthy achievement in every calling.

16. Finally, it is a habit which one may adopt and follow on his own initiative, without being under the necessity of asking the permission of anyone to do so.

So what do you think? Is going the extra mile how you do your job?

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