The Motley Fool's Weekly Editors' Picks
Fools were out and about this past week in an investing world jam-packed with actions and ideas. Here are three articles you might find useful as you decide how to invest your money.
The Case for Flexible DividendsA consistent dividend payout is good for shareholders in the short term, but not always good for their companies in the long run. Investors understand that stocks are volatile, Fool analyst Morgan Housel wrote, but as he explained: "there's a unique standard when it comes to dividends. The market demands stability, and companies will jump through hoops to deliver." At AIG (NYS: AIG) , for instance, the company raised its dividend payout three times from late 2007 through the summer of 2008. "In a year that erased nearly two decades of profits, AIG paid its shareholders $2.1 billion," Morgan noted.
Cal-Maine Foods (NAS: CALM) , an egg company with a $990 million market cap, has a better handle on what needs to happen, Morgan wrote. It adopted a variable dividend policy in 2007. It pays a quarterly dividend equal to one-third of net income and stops dividends when net income is negative. Since the program began in the third quarter of 2008, there has been just one instance when no dividend was paid, according to information on the company's website.
"Shareholders should embrace dividends that fluctuate with earnings," Morgan wrote. Read the article for more insight into the call for flexible dividends.
Kill the S&P 500The S&P 500 (INDEX: ^GSPC) is in the line of fire in this Tom Jacobs article lamenting how investors become focused on relative returns. The S&P 500 -- an index of 500 leading publicly traded American companies -- is the benchmark against which many investors measure their portfolios. "In 2008, the S&P 500 total return was negative 37%," Tom wrote. "To beat the S&P 500, for relative return, all your portfolio had to do was lose 36%. Wow, how great would you feel? Manic? Or even pleased? I doubt it."
So what's an investor to do? Tom says the key is focusing on absolute returns and that a great way to rack up those positive numbers over the years is by (1) buying shares at set, regular intervals and never wavering and (2) investing (and reinvesting) in solid, dividend-paying companies.
Read the article to see whether you agree with Tom's approach and to get more advice.
I'm Booting This Company From the World's Greatest Retirement PortfolioThere's more to investing than numbers. Fool analyst Brian Stoffel is selling Activision Blizzard (NAS: ATVI) from his "World's Greatest Retirement Portfolio" after watching some young cousins playing Call of Duty. "I'm simply not proud to own a company that fosters violence and detachment from the living world around us," Brian wrote. He noted some of the company's strong financials, including owning some of the most valuable franchises in the video-game business while having $3.2 billion on hand and no debt, but in the end he had to let the stock go.
Stepping out into the real world, Brian wrote that Westport Innovations (NAS: WPRT) is one of four replacement choices for Activision Blizzard. It is "a small Canadian company that designs engines that can run on natural gas," Brian wrote. "The engines produce far [fewer] carbon emissions, and with a potential mass conversion to natural gas vehicles, there is enormous potential here."
Read the article and use the comments section on that page to weigh in on whether you think Brian did the right thing.
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The article The Motley Fool's Weekly Editors' Picks originally appeared on Fool.com.Fool online editor Kris Eddy owns no shares of any stocks mentioned in this article. The Motley Fool owns shares of Westport Innovations.Motley Fool newsletter serviceshave recommended buying shares of American International Group, Activision Blizzard, and Westport Innovations, as well as creating a synthetic long position in Activision Blizzard. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policy.
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