by: Charles M. O'Melia
From the book 'The Stockopoly Plan' by the author Charles M. O'Melia
There are several factors an investor in the stock market should consider:
1. All stock purchases should be commission-free.
2. All stocks purchased should be from a company that has a history of raising their dividends
3. The company should not only have a history of raising their dividend every year, but should
also show price appreciation in the market place, on a year to year basis.
4. All dividends from the companies should be rolled-over into more shares of the company,
until retirement. This should be done by the company, for the shareholder, commission- free.
5. The companies purchased should have staggered dividend pay-out dates so the income from
12 companies will provide the shareholder cash dividend income every week of the year. No
more than 12 companies should be owned, otherwise, youre probably spreading your money too
6. A systematic approach of dollar-cost averaging should be done on a quarterly basis. A savings
plan should be adopted to add to your holdings every quarter, along with the dividend
7. Stocks purchased should pay a dividend yield of at least 2.0% or better. A low 2.0% dividend
yield isn't necessarily bad because it means the company in question is using most of their profits
too expand. In other words, it's a growth stock with business, profits and earnings growing. A
growth stock makes up for the lower dividend yield because their stock prices will more than
likely rise faster.
8. The company should have been in business at least eight years, showing dividend increases
each year. This will eliminate the risk involved in putting money into a risky new start up
company (the kind that is going to change the world - they are just too hard to find).
9. The company must have a stock dividend reinvestment plan (DRIP). If the dividend paid by
the company is $2.63 for the quarter, all of that $2.63 will purchase a further percentage of
shares (partial shares) and this should be done automatically for you by the company or their
10. The companies you purchase should be purchased with the intent of realizing ever-increasing
cash dividends for you and your family for the rest of your lives.
Everything you would need to know to start an investment program which emphasizes the
considerations above is explained to you in my book 'The Stockopoly Plan', soon to be published
by American-Book Publishing.
Below is an excerpt from the book I would like to share with you!
Have you ever noticed how some words in the English language are so perfectly named for what
they describe? And how some words seem to be, I guess you could say backwards? For instance,
the word sunflower! How wonderfully aptly named is the sunflower, that beautiful yellow flower
that follows the sun from sunrise to sunset. And then there are those words in the English
language where there meaning appears to be backward, so to speak - like parkway and driveway.
When my car is parked at home, I would think it would be parked on, well, a parkway - and
when Im on the road driving somewhere, I would think Id be driving on a - a driveway.
In the stock market world, I think the word analyst is a perfect word in the English language and
stockbroker sounds right to me, too. And this leads me to what I call the brainwashing mantras of
The brainwashing mantras of Wall Street may take the form of a number, such as a stock rating
of 1, 2, 3 etc. Or the mantras may be a star, 1 star, 2 stars etc. The mantras may be a word or a
group of words- attractive, unattractive, neutral, market perform, market out-perform, market
under-perform, market under-weight, market equal weight, market over-weight, sector perform,
strong buy, buy, sell, strong sell.
These mantras are so ingrained in Wall Street and investors minds that they have created multi-
billion dollar industries. There are other types of mantras, such as RSI (relative strength index - a
trading volume indicator), Bollinger Bands (named after its creator John Bollinger (he use to be a
regular on CNBC) and the bands deal with the channels a stock trades in, in relation to its
moving average- another mantra), Stochastics (used to tell if a stock is 75 % overbought - too
many people have been buying) or 25% oversold (too many people have been selling),
Momentum, MACD (Moving Average Convergence/Divergence price of the stock, up or down,
in relation to its moving average), 50 day, 200 day moving averages, triple bottoms and tops,
pendants, flags, bear and bull markets, head and shoulders formations, double bottoms, P/E ratios
etc, etc, etc. All these mantras serve a purpose (and if youre inclined to trade in the market they
are, I admit, useful tools) - they create commissions. And in my opinion, have no meaning what-
so-ever for the long-term, dollar-cost averaging, buying investor of companys shares, free of
commission charges, whose companies raise their dividend every year, with the investors idea or
purpose being to provide an 85% tax-free income, through ever-increasing dividends for the rest
of their lives, no matter what the price of the stock at any given time in the market place may be.
(Whew! What a sentence!)
For more excerpts from the book The Stockopoly Plan visit http://www.thestockopolyplan.com
This article was posted on July 09, 2004