Better late than never, that’s what I say. So, on to the weekly recap!

• Probably my favorite post of the week was a guest post by Millionaire Mommy Next Door  on Get Rich Slowly called How I Became a Millionaire While Working in my Pajamas. She talks about how she and her husband started young with a small income and achieved financial security by starting a business. Talking about saving money and cutting spending has it’s place, but stories like this one show why I believe that entrepreneurship and increased income are the real key.
• On a related note, Mrs. Micah wrote about determining what your time is worth when it comes to different ways of making money, particularly online. She mentions things like paid surveys, which can seem like good money but often work out to a very low hourly rate. I do like surveys for a little spare time cash, but her point of knowing how to focus on profitable use of your time is well taken.
• Continuing the income theme, No Credit Needed wrote about how just $10 a day can add up to $750,000 over a 50 year period with only a 5% return. Two points here: 1-Even a small investment really adds up over time, and 2-time is the most important factor, so procrastination is costly.
• Shifting gears, My Dollar Plan has a good list of 10 tips for holiday shopping online. I know that the convenience and lack of crowds has converted me to shopping online almost exclusively, and this list has some good tips to get the most out of it.

Finishing on a holiday note: 10 days till Christmas, are you ready?

Miscellaneous | 3 Comments »

The last few months have not exactly been kind to bank stocks. Sub-prime mortgage losses have hammered banks that made such loans, and even brought down banks with no direct exposure. Analyst downgrades and investor pessimism have been the rule.

While the past week has brought a small reprieve with rumors of another Fed rate cut on the way, many banks are still hovering near their 52 week (or longer) lows. While analysts are mostly saying “sell” or “hold”, I am looking to buy.

Why?

In a word - dividends. Banks tend to have high dividends, and plunging stock prices have pushed yields to almost ridiculous levels. Citigroup is currently yielding over 6%. Bank of America - 5.6%, Wachovia - 5.8%, US Bank - 4.8%, Key Corp - 5.7%.

Slightly smaller; National City - 8.3%, Huntington Bank - 6.5%, or if you feel brave, Washington Mutual currently is yielding 11.7% with most people betting that the dividend will be cut next quarter.

With large established banks like this paying 6-8%, it really is a tempting situation. Of course, as with any stock, the price can continue to go down, particularly if more losses show up at that bank. But on the other hand, with prices so far depressed compared to historic levels and the risk of total default so low (do you really think Citigroup will fail?) the upside just in terms of income seems pretty solid. There is also risk of dividends being cut (like WaMu is widely expected to do), but companies generally avoid this if possible, because it is a big signal of financial weakness.

Bottom line: do your homework, but as an income play, banks are worth a look!

Disclaimer: I am not a financial advisor, and I don’t recommend any particular stocks or investment strategy. The above is just my own thoughts and speculation.

Edit 12/11/07: And as expected Washington Mutual has slashed its dividend (by 70%!) Cross that one off the list…

Investing | No Comments »