Money & Investing - Banks.com

One of the “safe havens” of stock investing strategy has generally been stocks that pay dividends. But now, that whole outlook may be seeing something of a change. Today, Freddie Mac not only announced its spectacular losses for the second quarter of 2008, but also revealed that it will be cutting dividend payouts from 25 cents per share to 5 cents per share.

Ouch.

One of the things to look at in terms of stock investing strategy revolves around the kind of yield these dividend paying stocks have. If the yield seems high, it could be a sign of trouble. Smart Money points out that Freddie, along with Fannie Mae, a fellow government sponsored enterprise, both had rather high yields (13% and 12%, respectively). And we all know where those stocks are now.

Smart Money also points this out about looking for stocks that pay dividends:

Another pitfall to avoid when looking for dividend payers is forgetting that cash is king. Earnings per share don’t pay the dividend; it comes from operating cash flow. A company that consistently generates cash flow is in much better shape to fund a dividend. And don’t forget to look at the balance sheet. A company drowning in debt is going to have a harder time borrowing money to fund a dividend than one with a clean slate. Finally, don’t forget that unless Congress extends the rules, taxes on most dividends will likely go up in 2010.

Choosing companies with dividends really can be a helpful stock investing strategy. However, it is important to take a look at the fundamentals to ensure that the company is in a good place. You want to maintain your dividends, and you don’t want to choose an investment that goes the way of Bear Stearns.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

Tags: stock market, investing strategy, investing blog, stock investing,
dividends, investments, Freddie Mac

For the second day in a row, oil prices have been dropping. Now they are below $120 a barrel, and many stocks on the market are beginning to take heart from the situation.

Why are oil prices dropping?

One of the big reasons that oil prices are dropping is to do with global demand. Demand for oil is slowing as prices cause inflation. Even in the United States, drivers have been cutting back in order to save money on transportation costs. In developing nations — nations that are expected to use increasing amounts of oil in the next few years, oil prices are preventing the commodity from being affordable. This is causing a drop in demand as well.

Oil prices and the stock market

For the stock market, falling oil prices are a good sign. Oil is necessary for many businesses, and in several sectors (airline stocks especially are seeing some gains) lower oil prices mean that profit margins are likely to increase, since the cost of energy is lower.

However, it is important to note that oil prices are volatile, and that they could spike upward again. Predictions that oil will drop to below $100 a barrel, now that it has started its slide, may be premature (though such a drop is certainly possible). Even if it doesn’t, the current drop is certain fueling a great deal of optimism. If oil price increases are arrested for a while, it might provide some breathing room to get the economy on the road to recovery.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

Tags: stock market, stock market news, investing blog, oil prices,
economy, investments, oil prices stock market

Now that oil prices are in decline, and the global economy is finally damping commodities, there is some speculation that it is time to pull out of commodities. And, since oil prices are coming down, there is also concern for alternative energy stocks. But some investors feel that there are still good reasons to keep with commodities and green stocks. After all, these are sectors likely to enjoy overall growth for the future. Here are 11 green stocks and commodities that Stock Trading To Go thinks are likely to do well in the coming days and weeks:

1. Powershares D B Commodities (DBC).
2. United States Steel Corp (X).
3. A K Steel Holding Corp (AKS).
4. Canadian Solar (CSIQ).
5. A-power Energy Generation (APWR).
6. First Solar (FSLR).
7. C F Industries (CF).
8. Mosaic (MOS).
9. Alpha Natural Resources (ANR).
10. Massey Energy Company (MEE).
11. United States Oil Fund (USO).

Now could be a good time, since many green stocks and commodities are lower right now, making them a good value. And since commodities generally rise over time, getting in now before things start heading up may be a good idea. It is also worth noting that even though green stock may be dropping right now as energy focus shifts back to oil, eventually we will have to face the fact that renewable energy is the only long-term solution for our growing energy problems. This bodes well for renewabl and green energy stocks.

Of course, what you decide to do depends on your risk tolerance, as well as whether you see a future for these investments.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions.

Tags: stock market, investing, investing blog, renewable energy,
commodities, investments, green stocks