Dividends for My Daughter’s New Car

In the mid-1970s I talked about the “Williams Plan” on my radio show at WAMO radio in Pittsburgh and on my cable TV show called “Finance and You।” The Williams Plan is a way that people with very little money can buy income producing Utility Stocks such as the stocks found on the Dow Jones Utility Average. These are not the only Utility Companies that give dividends. Utility companies usually pay a high dividend. So speculators can get paid while they wait for their stock price to go up.

The Dow Jones Utility Average is made up of 15 large US Utility Companies. See http://www.money-zine.com/Investing/Stocks/Dow-Jones-Utilities/

Yield = Dividend/Recent Yield

Just like we discussed with bonds, the speculator can have the dividends accumulate in the account and buy more income producing stock as time goes on। One advantage that Utility Stocks have over bonds is that the speculator participates in future earnings increases of the company. For example: the speculator may start out receiving a dividend of cents .25 per quarter in 2010 but by 2020, the dividend might be $1.50 per quarter. The stock may have been bought at $16.50 per share but in ten years sell for $75.00 per share.

Payout Ratio = Dividend /Earnings Per Share

The higher the ratio, the more in trouble the dividend becomes। If a company pays out all of its earnings or more than it earns in dividends, the less chance that the company will grow. Not paying a dividend gives the company cash to grow. This situation gives a very good chance for the company’s stock to appreciate. However, the speculator has no dividend to take advantage of.

Yield and Dividend Dates

Taking a Payout Ratio below 80% and the highest yield will give you good growth in stock price and a good dividend return। Utilities usually give four dividend payouts per year. If the speculator buys stocks that in total give dividends every month, payout will hit the speculators account every month. This gives the speculator a change to purchase more stock every month. That will increase the speculators return with a compounding affect for the total portfolio.

In 1983, I started accumulating Utility Stocks for my oldest daughter’s account. When she graduated in 2001, I sold all the stock and bought her a 2001 Hyundai Accent. Recently her and her family sold the car and bought a crossover van. This is how over time, you and your family can pass on the wealth that was accumulated over several life times.

Why I Write This Blog?

The reason why I write this blog is because I want you to train your nieces, nephews, brothers and sisters, children and grand children, as well as cousins about how to build wealth in their families। I was trained by the old retired steelworkers in the early 1970s. All they asked is that I train others coming up after me. They claim that it would not be long before the national elite will take away the rights of the common person to own and control companies and to make money in America’s financial markets. I really did not believe that but I only had to wait until the late 1980s before I started seeing the average person being shut out of the market place by lack of education and steering people into mutual fund with high sales charges.

The leaders of the US Economic System do not want the average person to know what I am telling you। It is not to their advantage for you to make money the way they make money। That is why this is not taught in public schools, most colleges or universities. They want you to go to them for wealth building advice so that they can charge you money for it.

Not too long ago a woman who worked for the past 45 years, ask me to review her retirement account। After I did and showed her how her nice helpful broker was taking her for everything she had, she fired her broker. Now she makes over 10% per year in herself managed accounts.

Next time in Part 2, we will examine the ideal accounts to carry out the Williams Plan.