CVX

Last year I introduced the Stock Ideas list and it has proven to be immensely popular. The list consists of Dividend Aristocrats, US Broad Dividend Achievers and U.S. Dividend Champions. Here are some highlights on this year’s changes:

I am a firm believer that asset allocation plays a significant part in a portfolio’s long-term results. Recently, I received a question asking if you could have a diversified portfolio of dividend stocks. It is an interesting question that deserves further examination.

FirstEnergy (NYSE: FE) and Allegheny Energy (NYSE: AYE) to Combine in a $8.5 Billion Stock-For-Stock Transaction. Allegheny shareholders would receive 0.667 shares of FirstEnergy common stock in exchange for each share of Allegheny they own. FirstEnergy will also assume approximately $3.8 billion in Allegheny net debt. The combination creates a leading regional energy provider.

Honeywell (NYSE: HON) announced earnings per share were $0.91 versus $0.97 in the prior year fourth quarter. analysts average $0.90. HON beats by $0.01.

Fourth quarter sales were $8.1 billion versus $8.7 billion in 2008 partly due to lower sales from the aerospace and automation units.

Honeywell International Inc. operates as a diversified technology and manufacturing company worldwide.

A doozy of a recession may be behind us, but that doesn’t mean stocks are out of the woods. Creeping inflation, high unemployment, sluggish consumer demand and still-unsettled credit markets are only a few of the concerns that remain.

There are certainly many ways to categorize the different styles of investing in dividend stocks, including yield, risk, growth, etc. Over the years, I have found that most dividend investing styles fall into one of the three major categories listed below:

Deep-down in my soul, I am a contrarian. I felt a sense of excitement entering October. This is the month that stocks have traditionally gone on sale. I was prepared to make a double allocation depending on the level of the markets decline. It didn’t happen.

We all want to succeed in everything that we do, including investing in the stock market. Though I have no analytical data to back it up, I am convinced that most people will lose money in the stock market over their lifetime. So why do so few people succeed at investing?

With the recent decline in the U.S. dollar, investors are thinking more about international diversification. This can be accomplished by many different means. However, one method that is often overlooked is buying a large U.S. multi-national company.

What makes investing in dividend stocks so intriguing is the power of compound dividends. Compound interest is what occurs when interest earned is added to the principle and is considered when calculating future interest–i.e. earning interest on interest. Compound dividends are like compound interest, but much better.

The historic rally that has lifted the Standard & Poor's 500 index by 50% from its March lows has been led by economically sensitive and lower-quality stocks, including such sectors as financials, basic materials, retailers and industrials.

I believe a pull back [7%-15%] on the major indices is not only inevitable but necessary for a healthy market recovery. Let's face it, we've come too far too fast, and as we were oversold on the downside until early March, I believe we are currently overbought.

As recently posted in my blog, I've been expecting a pull back. However the market has made a fool of me lately. The S&P 500 passed through the 1010 mark today on rather bad news, so maybe this rally is for real and will continue.

People keep calling me a bear, but I'm just being conservative. Given the rally we've had, I think it's a great time to take profits. I was selling a lot of covered calls for the August expiration Thursday, as we approached market close. I'm getting conservative because I think we're due for a pull back on the major indices.

As previously stated on my blog, this rally could continue through August; but what if it doesn't? What is the market sells off?