Know someone who'd like to receive Dividend Alerts?
With the “Comprehensive” Spending Review out of the way it’s now time to announce a new dividend write-up.
If you are a bit "angsty" that the markets are well ahead of any recovery in the real economy and expect the FTSE100 to tank - you know where I am coming from on this -, you may want to read our write-up on a rather simple way to benefit from any collapse of the FTSE100.
As we are long-term investors, we have decided to develop a new section on the website, called “long term investment themes”, starting with the re-emergence of nuclear power and its implications.
New dividend write-up released: Pearson Plc
Following the release of their 9 months results, earlier this week, it’s timely for us to have completed the write-up on the dividend history and prospects of Pearson Plc.
Pearson enjoys solid revenues and earnings. The company also offers an unbroken record of 18 years of increasing dividends and there are no obvious reasons why this can’t continue:
Click here for a write up on Pearson's dividend history and prospects as from May 2005.
Annual reports: a must for serious investors
FREE annual report ordering and download service from Early Retirement Investor.com
Ask the Editor: How to benefit from a collapse in the FTSE100?
I believe, it’s rather easy to argue that the FTSE100 will soon come crashing down. Quantitative easing, rock-bottom base rates and government stimulus programmes continue to mask the scale of the problems the United Kingdom faces, notably its massive budget deficit, and huge public as well as personal debt.
I would guess, our harsh new "brave" world may well begin on January 1st, when VAT increase to 20 per cent.
With some indices (nearly) touching or even crossing their Spring 2010 highs you may be tempted to think that something has to give. You may even want to start considering how to benefit from any ‘sudden’ substantial falls.
Of course, long-term investors may simply choose to tough it out, collecting their increasing dividends, hold on to their positions and draw comfort from the reams of statistics which show equities have tended to outperform bonds and cash in the long run.
Yet those investors who want to ‘protect’ their portfolio, have a higher appetite for risk and a limited interest in suffering short-term pain in the hope of long-term gain may want to position themselves for any falls in the UK market.
Shorting the FTSE100 in order to protect your portfolio
One way to benefit from a collapse in the FTSE100 is to “sell the index” using an exchange-traded funds (“ETFs”).
ETFs may be held in most stocks & shares ISAs and SIPPs, but check your provider. You benefit from low charges (usually the TER is around 0.5 per cent) and real-time trading.
While ETFs allow you to essentially buy or sell an index, a commodity or any other financial instrument, and trade it like a share, so-called “Short ETFs” work the other way round, meaning that for instance when an index or commodity drops in value, the value of your share holding rises.
DB x-tracker FTSE100 Short
In June, 2008, the FTSE Group (FTSE), the global index company, licensed to Deutsche Bank the use of the FTSE 100 Short Index as the basis of a db x-tracker Exchange Traded Fund (ETF). It was subsequently listed on the London Exchange, trading under "XUKS".
How does this instrument work?
If the FTSE100 index rises: XUKS falls by the same amount. If the FTSE100 index falls by 10 per cent, your DB x-tracker FTSE100 Short goes up 10 per cent. Its historical performance graph looks like the FTSE100 graph turned upside down.
If you are worried that markets will fall, you may want to consider this type of tracker. It might prove a cheaper and easier way of protecting your portfolio rather than selling your entire portfolio.
In a way, you have not a lot to lose. If markets rise further, your share portfolio will rise with it. If they fall your Short ETF will limit your losses.
Be aware of so-called ‘leveraged’ ETF’s. These offer the potential to make extra gains (or losses!) – for example, a 1 per cent decrease in the FTSE100 index translates into a 2 per cent rise in the value of the ETF. However, if the markets keep on rising you will lose 2 per cent for every 1 per cent increase in the Index.
Thank you for your endorsement!
We are steadily growing our subscriber base and are thankful to those subscribers who have emailed onwards previous editions of Dividend Alerts to someone they know who'd like to receive Dividend Alerts themselves.
If you know somebody who may benefit from our publication simply forward this edition of Dividend Alerts together with the link for them to subscribe: https://www.early-retirement-investor.com/dividend-alerts.html
We value your feedback and suggestions!
As the core group of users of Early Retirement Investor.com I am particularly interested to hear your views on the website, the issues we raise, and any ideas and suggestions you may have for us to improve the site.
This is your chance to help shape the future of our web site. Please, provide your feedback, ideas and suggestions. It should take you only a few minutes of your time to fill out the form. It's much appreciated!
Thank you for reading.
Until next time.
Early Retirement Investor.com
Know someone who'd like to receive Dividend Alerts themselves? Simply forward this link to anyone you think could benefit from our publication: https://www.early-retirement-investor.com/dividend-alerts.html
Dividend Alerts is an unregulated product published by EMAR Publishing, publishers of Early Retirement Investor.com
EMAR Publishing is not registered as an investment advisor or financial advisor.
We do not and will not provide personalised investment or financial advice, or individually advocate the purchase or sale of any security or investment. We publish opinionated information about the stock market and companies that we believe our subscribers may be interested in.
There is no guarantee that dividends will be paid. Figures are calculated using the closing prices. All gains are gross, and returns will be affected by dividend payments, dealing costs and taxes. Profits from share dealing are a form of income and subject to taxation. Tax treatment depends on individual circumstances and may be subject to change in the future. Editors or contributors may have an interest in shares featured.
Past performance and forecasts are not reliable indicators of future performance. Shares are by their nature speculative and can be volatile. Your capital is at risk so you should never invest more than you can safely afford to lose.
Information in Dividend Alerts is for general information only and is not intended to be relied upon by individual readers in making (or not making) specific investment or financial decisions. Appropriate independent advice should be obtained before making any such decision.
No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein.
© 2010 EMAR Publishing. All Rights Reserved. The content of this email may not be reproduced without the written consent of EMAR Publishing
Click for Legal Information, Disclaimer and Privacy Statement Here.