Tag Archives: NASDAQ:AAPL

Have New Money To Invest? Which Sectors To Buy? Which To Avoid?

Year-to-date, the Utilities ETF (NYSEARCA:XLU) has appreciated 21% and the big two telecoms, AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ), have also appreciated more than 20%. Those are amazing returns especially including the above-average dividend yields utilities and telecoms typically offer.

However, with the bid up prices, it has become riskier to invest new money in utilities and telecoms.

The top five utilities in the XLU are all overvalued, including NextEra Energy Inc (NYSE:NEE), Duke Energy Corp (NYSE:DUK), Southern Co (NYSE:SO), Dominion Resources, Inc. (NYSE:D), and American Electric Power Company Inc (NYSE:AEP).

Reversion to the mean can happen for any of these utilities that are overvalued, and it could mean negative returns in the short term.
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How To Save More Money

Do you find that you’re not saving enough even though you have a plan to limit your spending? Let’s go back to the basics to see how to save more money. These tips should lead you to more savings and money in your pocket.

save money

First, we have this savings formula: Savings = Earnings – Expenses

It tells us that:

  • The more you earn, the bigger your savings can be.
  • The less you spend, the bigger your savings can be.

So, let’s think of ways to increase your earnings and reduce your expenses.

Increase earnings

Increase earnings through passive income

What’s exciting to lots of people is to earn a passive income. You can earn a passive income by investing and renting out real estate properties to collect monthly rent.

However, that comes with managing properties and dealing with tenants. It could turn out to be more work than expected and would defeat the purpose of a passive income, which should require less work than an active income.

Perhaps a simpler way to generate a passive income is through a portfolio of dividend stocks. Less money is required for an initial investment compared to a real estate property.

Let’s say a condominium costs $300,000 and you rent it out for $1,500 per month, that’s a return of 6%, excluding the mortgage interests, maintenance fees, property tax, strata fees, and so on.

Historically, the market has returned 7-10% per year. Theoretically, you can buy quality dividend stocks when they’re on sale. After the commission fee for buying, you can hold and avoid paying any more commission fees that are required for sales.

Then, you can just collect passive income from dividends. It’s common to find 3-4% dividend yields that can grow at least 5% per year and 5% yields that may grow 2% a year.

Eligible Canadian dividends are favourably taxed if received in a non-registered (taxable) account for Canadians, and likewise, qualified U.S. dividends are favorably taxed for Americans. Canadians can receive qualified U.S. dividends in registered retirement savings plans (RRSPs) without the 15% withholding tax.

The business growth, which eventually translates to capital gains, is tax deferred until you sell, at which time, only 50% are taxed at your marginal tax rate (if you’re Canadian).

If Canadians buy and hold in a tax free savings account (TFSA), they don’t have to pay any taxes on dividends and capital gains!

If your goal is to generate a passive income, then, you don’t even need to worry about the sell side. Just focus on buying quality, dividend-paying companies when they’re at reasonable valuations and collect their dividends forever.

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Buy Apple’s Stock For These Reasons

There are many reasons to invest in Apple. It’s priced at a discount, generates lots of free cash flow, and returns profits to shareholders. Specifically, at $108, Apple is selling at a 23% discount. Its ability to generate lots of free cash flow allows the company to build a cash pile for whatever it desires to do, including increasing dividends, buying back shares, paying down debt, and making investments.

Some investors didn’t believe in the growth trajectory of Apple Inc. (NASDAQ:AAPL) anymore after it restarted its dividend in 2012. However, it looks like it’s still well on a growing path. The question is…will it continue? Should you buy Apple’s stock today?

a black Apple TV

Holiday Season Sales Boost

In the fiscal year that ended in September, Apple posted revenue growth of 28%, reaching record revenue of almost $234 billion. It was its most successful year yet. In the past few years, Apple generated the most revenue in the first quarter of each fiscal year, that is, the quarter that includes the holiday season.

In fact, Apple posted a record quarterly revenue of $74.6 billion in Q1 2015. Its product lineup for this year’s holiday season and Christmas sales include iPhone 6s and iPhone 6s Plus, Apple Watch with the choice of cases and bands, the new iPad Pro, and Apple TV.

Just looking at the revenue data below, if Apple manages to maintain the usual 48% revenue growth from its previous 3 quarters, its shares might go sideways like it did in the first few months of 2014. If the growth is lower, the shares are likely to fall depending how far off it is. If the growth is higher, the shares might rise such as in Q1 2015 when revenue rose substantially higher, the shares shot up 10% within the following three weeks. Read More