The stock pays a dividend of $1.44 per share, giving us an initial yield of 2.9%. Over the last ten years, dividends have risen from $.60 per share to $1.44 per share, an annual increase of 9.1% per year. Value Line is projecting dividends to increase at 10% per year over the next five years.

Abbott Labs is the kind of company we want to own. With a reasonable initial yield and good prospects for dividend growth over time, Abbott should provide a steady source of rising income to our portfolios.

Previously, the stock had reached a high of $98 per share in 2004. We began purchasing shares in March 2006, at prices ranging from $33.63 per share to $50.00 per share.

Apollo Group is a fine company that we would love to own again at the right price. Our current buy price is $36 per share.

This sale illustrates that even when the overall stock market is in a bear market some companies will still rise in price.

In recent months Value Line has lowered SunTrust’s safety rating to B++, which is still above average (B+ is average). After this downgrade, SunTrust was no longer safe enough for us to acquire new positions. When a stock no longer qualifies for new purchases, we will sell that stock if we can purchase other companies whose projected return is comparable or better.

SunTrust’s price got as low as $19.75 on November 25th. Bear in mind that as the price per share falls, the projected return (as a function of current price) rises.  When it rose back up to $33.30, other companies on our buy list had comparable returns with higher safety ratings. On December 8th we sold SunTrust at $33.30.

As it turned out, the day after we sold the stock, SunTrust announced they were going back to the Fed to request another $1.4 billion in capital. The shares fell and are currently trading at about $27.00 per share.

It is amazing how fast time flies! Vincent will be three months old on Tuesday, November 25th. He is smiling, laughing, repeating sounds, and rolling himself over. We are both adjusting very well to his time spent at the caregiver’s home and making the most of our time together.

Click here or on Vincent’s picture below to see the most recent pictures of Vinnie in our photo gallery. Then you can click on any picture to see it full size. Enjoy!

I am enjoying my time at home and am trying to get into some sort of routine. We recently introduced formula to Vincent, which he gets once a day and seems to like. Once we get on a better sleep schedule at night, I will feel like I’ve got the hang of this parenting thing.

I do miss being at the office and I am looking forward to getting back to work very soon. Vincent and I have popped into the office a few times already and it’s worked out well. Next week, I plan on being at the office on a more regular basis. Fortunately, I can bring Vincent with me or take him to the sitter for a few hours. My plan is to start working 2-3 days a week for a few hours each day, gradually increasing the hours back to full time.

In the meantime, I intend to keep you up-to-date on the dynamic financial situation in this country. I am in the process of researching and writing blogs on the FDIC and the government’s bailout plan. Please check back on the blog and feel free to pass this it on to your friends and relatives.

For your enjoyment, I’ve included some recent pictures of Vincent. Click here to visit Vincent’s photo gallery.

The Fall Clearance Sale is now going on in the stock market.  Each day, we monitor over 300 blue chip stocks.  On July 14th and 15th of this year, over 45% of these stocks were buys.  Back in 2007 at the top of the market, less than 8% of the stocks were buys.

Bargains Are Created by Bad News

Bargains in the stock market are created when investors become fearful.  That’s why Warren Buffett, the world’s most successful investor has said, “Be greedy when others are fearful.”  There is certainly enough to be fearful about.  In the last two weeks, we have had Fannie Mae, Freddie Mac, Lehman and AIG.  Each day seems to bring a new crisis.  I can judge the level of fear by the number of phone calls I get from clients.  Trust me, there is more than enough fear to go around.

Buying When Stocks are on Sale

On July 15th, 46.7% of the stocks we monitor were on sale.  This is the time when banks were being sold because of the fear of bad loans.  Remember National City, Washington Mutual and Fifth Third?  We favor high dividend stocks.  The Dow Jones Select Dividend index is made up of 100 high yielding stocks, including many banks.  From July 15th, this index has risen 19.7%.  The time to buy is when there is maximum fear in the market.

High Yielding Stocks are on Sale

Third Federal, a bank in Cleveland, is offering 4.75% for a 48 month CD.  We currently have ten stocks on our buy list with yields over 4.75%. 

All of these companies are financially strong and most have increased their dividends substantially over the past ten years.

S&P 500 At 1998 Level

As of the close on September 17th, the S&P 500 index (500 blue chip stocks) stood at 1156.39.  It first reached this level on July 6, 1998!  You can invest money today and get the same price you would have gotten ten years ago.  How many other things can you buy today at 1998 prices?  As a reminder, postage was 32¢ in 1998 verses 42¢ today.  In 1998, dividends for the S&P 500 were $16.20.  This year, they are estimated to be $28.85.

Remember Our Goal

When investing, we are attempting to build an income stream from dividends that will pay our living expenses when we retire.  The market is giving us a tremendous opportunity to invest in very high quality companies, paying excellent dividends, at bargain prices.

For more information on the government takeover, be sure to read Keith’s explanation in the September newsletter.

I took my mom up on her offer (insistence) to stay with us and help out for a while.  Even though I took infant care classes over the past few months, I figured the assistance would be good for my parental confidence level.  My mom worked at a daycare center for several years so she shared with me her knowledge and showed me how to do the basics.  Since I never had those motherly instincts that most women have, I know education and practice are my keys to success.  I am pleased to announce that my mom left to go back to Pittsburgh today and I am doing the mom thing all by myself.  

After my mom’s departure this morning, the visiting nurse came for an hour.  She gave Vincent a clean bill of health.  He weighs 7 pounds 1 ounce now.  Apparently, babies lose a pound of water weight and eventually get back to their birth weight by the time they are 2 weeks old.  In addition, his temperature is normal and his skin coloring is great (no jaundice).  We see the pediatrician on Friday for his first check up.

But, it’s not all business with this little guy.  We are really enjoying Vincent’s personality.  He is very loving with everyone and with Brewster.  His mouth and eyes crack me up.  The cute faces he makes, combined with the faux-hawk (fake Mohawk) I comb into his hair are sure to make him irresistible with the ladies!

We’ll be posting more photos early next week.   Thanks to everyone for their kind thoughts, messages and gifts.