The most and the least happy country in the world are shown in the graphic below. For four years in row, Finland was the most happy country followed by Denmark and Switzerland. Ukraine was the least happy country in Europe and Afghanistan was the least happy country in the world.
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Source: RFE/RL Infographic
There are many reasons to invest in dividend-paying stocks. One of the reason for example is to earn income. Another critical factor to invest in these equities is to keep pace with or exceed the rate of inflation. Inflation is the mysterious force that stealthily decreases the purchases power of the dollar. So for example, the value of 1 dollar may be worth only 97 cents in April next year, 95 cents in April 2023, etc. This erosion in the value of the dollar can be called the scourge of inflation.
These days the Effective Fed Funds Rate is ultra-low at just 0.07 percent. The Fed has stated its intention to keep interest rates ultra-low for the foreseeable future. With interest rates so low, savers can only get only under 1.00% in interest rate for a 1-year CD. Earning this rate is less than the rate of inflation. Though keep cash in banks is safe and secure, savers will lose money by investing in CDs. CD rates in the past used to be decent. However for many years now CD rates for different time periods have declined as shown in the chart below:
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Source: Historical CD interest rates: 1984-2021, Bankrate
With CD interest rates so low, savers are better off investing in high-quality dividend payers. In a recent article, Steven P. Greiner, Ph.D. of Schwab noted that dividends can help preserve purchasing power. From the article:
For retirees, on the other hand, the regular payouts from dividend-producing stocks have the potential to provide a steady stream of income. And whereas dividend yields from companies in the S&P 500 may have declined over time, it’s important to consider them in the context of inflation.
When inflation is high, it erodes your purchasing power, meaning your dividends must be greater to keep pace with rising prices. The opposite is also true: A low-inflation environment, like the current one, puts less pressure on income. Consequently, you want your dividends to regularly exceed, or at least keep pace with, the rate of inflation—something companies in the S&P 500 has been doing for the better part of five years (see “Preserving purchasing power,” below).
Preserving purchasing power
Dividends from companies in the S&P 500 may have declined, but they have surpassed inflation since 2012.
Source: Robert Shiller and the U.S. Bureau of Labor Statistics. Data are from 01/01/1979 through 12/31/2020. Past performance is no guarantee of future results.
Source: Why and How to Invest in Dividend-Paying Stocks, Schwab
Below are 10 S&P 500 constituents that pay dividends:
Disclosure: Long NEE, UNP
In order to be successful with investing in equities it is important to note that time in the market is more important than simply timing the market. Despite many ups and downs staying invested during all times is the wise strategy. Any investor that tries to get in and out of the market at opportune times is not wise. With that brief intro, the following chart from Vanguard Australia shows the need to be in the market:
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Source: COVID crash: one year on, Vanguard Australia
An excerpt from the above article:
Looking back over the past 30 years, it also shows that all asset classes have provided consistent growth over time, and some much more than others.
Taking the Australian share market, for example, up until the end of December it had delivered an average return of 8.9 per cent per annum over three decades, assuming all distributions had been fully reinvested.
Using a base amount of $10,000 invested back in 1990, a person holding Australian shares through an ETF or managed fund tracking the whole Australian market would have turned their initial holding into more than $141,000. That’s a total return of well over 1,000 per cent, excluding any fees, expenses and taxes.
A $10,000 investment into U.S. shares over the same time frame would have returned 10.3 per cent per annum and be worth more than $200,000 using the same assumptions as above.
Even cash, the lowest-returning asset, would have delivered a total return of 5.2 per cent per annum and turned $10,000 into almost $50,000 with the benefit of compounding returns.
That’s the ultimate power of being focused on time in the markets, instead of trying to time markets.
More recently the dramatic decline in market in March last year and the following spectacular recovery is another classic example of why staying in the market is better strategy.
Related ETFs:
Disclosure: No Positions
The FTSE-100 Index of the UK is still trading at levels below where it was in 1999 ! Indeed the index has gone nowhere on a price only basis all the way from 1999 when the dot com mania was in full swing. The index reached 6,930 in December, 1999. Yesterday it closed at 6,772. In the more than two decades since 1999, we have gone through many crises including the dot com crash, the Global Financial Crisis(GFC), the many phases of European sovereign debt crisis and of course the great British Brexit saga. The performance of index since 1999 feels like the UK has been literally frozen in time for more than 20 years. Curious minds are wondering how the UK that used to be called as the empire where the sun never sets has ended up in this situation.
One main reason why the FTSE-100 has been a disaster is that the index is dominated by “old world” companies and not technology leaders like the US index. The benchmark index is mostly concentrated in banking, oil & gas, consumer staples, mining and drug companies.
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Source: Yahoo Finance
Related ETF:
Many of the constituents of the FTSE-100 and other British companies trading as ADRs on the US market can be found here.
Disclosure: No Positions
Renewable energy is the future of energy as the world increasingly moves towards replacing fossil fuels which are dirty and cause pollution. Among the sources of renewable energy, the adoption of wind energy is growing rapidly. In the US, the Biden Administration announced major policy changes today to jumpstart offshore energy projects to further champion green energy initiatives and also boost the creation of thousands of jobs in the sector. Overseas, some countries in Europe such as Denmark and the UK are already ahead of the US in the use of wind energy. With that brief overview, let’s take a look at xx fascinating facts about wind energy below:
1.The height of wind turbines have been growing over the years. The next generation wind turbines due online in 2025 are projected to be 300 m (or 984 feet) tall. This is astonishing indeed ! These will be built by Siemens(SIEGY) of Germany and Vestas Wind Systems(VWDRY) of Denmark.
2.The evolution of wind turbine height and capacity is shown below:
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3.The blades of the next generation wind turbines will be longer the wingspan of Airbus 380. And they will generate 13-15 MW of electricity.
4.To put the height in perspective, the world’s largest windmill is only 33 meters tall. It stands in Schiedam in the Netherlands and was built in 1803 for the gin industry.
5.Texas is the fifth largest producer of wind power in the world after India.
6.We can boldly say Texas has “Gone with the Wind” since wind energy accounted for 22% of the total energy production in 2019 in the state.
7. Wind energy accounts for more than 30% of total electricity production in Kansas, Iowa, and Oklahoma.
8. In 2019, wind was the largest renewable energy source in the US.
9.A typical wind turbine has more than 8,000 components.
10.Higher wind speeds mean more electricity. Hence wind turbines are getting taller and taller in height where its more windier than the ground level.
Sources:
The stunning statistics of sustainable investing, Robeco
Top 10 Things You Didn’t Know About Wind Power, EIA
Disclosure: No positions
