Politicians have just a few days remaining to come up with some resolution to the fiscal cliff facing the country. It appears the resolution will be another "can kick" that mostly increases taxes. The President's income break point is often stated to by $250,000 while House Speaker John Boehner's Plan B had higher taxes for those with incomes above $1 million. The problem with focusing only on increasing taxes and generating more revenue is the fact that the expense side of the budget needs to b...  Read more...

It would be hard to envision that the public has not heard about the fast approaching fiscal cliff. What seems lost in the narrative of the media and their focus on raising tax rates, is the fact government spending continues to consume a larger share of the government's budget.As the below chart indicates, the CBO is forecasting social security and medicare payments to account for a larger and larger share of the budget as far as the eye can see. Addressing the growth in these programs will be ...  Read more...

One of the most popular investment topics in the fourth quarter has to do with the impending fiscal cliff discussion taking place in Washington, DC as can be seen in the Google Trends graph below. One area of interest for investors is the impact on the taxation of dividends if Washington policy succumbs to going over the cliff. Going over the cliff would result in the tax rate on dividend income increasing to as high as 43.4% versus the current 15% rate. Interestingly, this potentially higher ta...  Read more...

As of December 11, 2012, the dividend yield for the S&P 500 Index equaled 2.27%. The largest contributor to the index's yield is now the technology sector, contributing 14.6% of the index's dividend income. This compares to the technology sector's income contribution at the end of 2011 of 10.29%. The sector experiencing the largest decline in contribution to the index yield is the consumer staples sector, declining from 15.6% in 2011 to 14.0% as of the close on 12/11/2012.From The Blog of HORAN ...  Read more...

The research paper noted below, a good read, has been making the rounds over the weekend. The report discusses bond valuations relative to stocks and when one asset class appears more attractive than the other. The paper's author, Andrew J. Redleaf of The White Box Advisor, states he is really a "bond guy" but notes the following:"Basically I am a bond guy. I like fat coupons. And I like return of principal. But I take my bonds where I can find them. And these days the place to find fat coupons ...  Read more...

The United Stated Department of Agriculture reported individuals receiving food stamps (Supplemental Nutrition Assistance Program) increased by 607,559 to 47,710,324 individuals in September versus August's enrollment. The number of households receiving food stamps increased just under 300,000 to 22,973,698. These are record levels of usage for the program with monthly cost totaling over $6.4 billion, nearly doubling in just four years. This data is further confirmation that Friday's job report ...  Read more...

An outcome of going over the fiscal cliff is the tax rate on dividends would increase to as high as 43.4% versus the current rate of 15%. In response to this higher dividend tax rate companies are initiating special dividends to be paid before year end. As the below chart shows, in the month of November, 228 companies have announced their intention of paying a special dividend as compared to the 97 companies last year. These numbers are based on common stocks (non-funds) listed on the ASE, NYSE,...  Read more...

Although Friday's Employment Situation Report (PDF) indicated non farm payrolls rose 146,000, not much else was positive about this report.those not in the labor force rose 542,000the civilian labor force fell by 350,000the number of employed declined 122,000discouraged workers rose 166,000, andthe participation rate fell two tenths of a percent to 63.6%From The Blog of HORAN Capital AdvisorsFor those nearing retirement age, it is turning into a not so golden one as more seem to be working longe...  Read more...

Assessing the equity risk premium (ERP) is an important factor for investment professionals and corporate finance officers. I will forgo discussing the importance to a CFO in assessing the ERP and focus on investment professionals. Given the importance of the ERP one will find a surprising amount of disagreement around how to determine the appropriate ERP level. One can perform a "Google search" on "equity risk premium" and find an inordinate amount of research on the topic.For investors thou...  Read more...

For the first eleven months of the year, the Dow Dogs price only performance has matched the Dow Index return with both returning about 6.6%. The S&P 500 Index return of 12.6% is nearly double the Dow Jones Industrial Average return. The Dow Dogs do have a yield higher than the index which results in slight outperformance for the Dow Dogs.As noted in prior posts, the Dow Dog strategy consists of selecting the ten stocks that have the highest dividend yield from the stocks in the Dow Jones Indust...  Read more...