There are more than a trillion reasons to invest in stocks and shares, and every single one of them has a dollar-sign attached.

In 2017, global investors received an incredible $1.252 trillion in company dividends, according to the latest Janus Henderson Global Dividend Index.

That is a new record, and marks a rise of 7.7% across the year, the fastest rate of growth since 2014. Underlying growth, which adjusts for movements in exchange rates, one-off special dividends and other factors, was an impressive 6.8%.

Whether you hold individual company stock, mutual funds or exchange traded funds (ETFs), your portfolio will have felt the benefit.

Minor blip

Now is a good time to remind investors of the power of dividends, as many remain rattled by the recent bout of stock market volatility.

Rather than the end of the world, this looks like a temporary correction late into a lucrative nine-year bull run, the second longest in history. The panic is already subsiding.

Throughout it all, companies kept dishing out the dividends, and wise long-term investors kept reinvesting them back into their portfolios for growth.

Income highs

Global dividends have been driven to a new high thanks to the strengthening world economy and rising corporate confidence, Janus Henderson said.

Payouts increased in every region and almost every industry, with record-breaking increases in 11 out of 41 countries, including the US, Japan, Australia, Switzerland, Hong Kong, Taiwan, South Korea and the Netherlands.

In the US, dividend payouts grew 5.9% on a headline basis while Canada did even better, with dividends surging almost 20% to $37.5bn.

Star of the show was Asia Pacific (excluding Japan). Here, total dividends jumped 18.8% to almost $140bn, boosted by exceptionally large special dividends in Hong Kong. However, payouts in Singapore dipped from $6.6bn to $5.8bn.

Emerging market dividends grew strongly, including dramatic growth in Russia, but remain well below their 2013 peak.

Euro woe

Europe was the only disappointment, with headline growth of just 1.9% to $227bn. This was down to a weak euro during the crucial second quarter when most European dividends are paid, fewer special dividends and a handful of large companies cutting in the final quarter.

However, Germany rebounded last year with dividends growing 4.7% to $38.1bn, while in the UK underlying growth was a healthy 10%.

Dividend delight

Janus Henderson is optimistic for the year ahead forecasting underlying growth of 6.1%, with expansion continuing from every region of the world.

If the dollar remains weak then payments will translate into dollars at more favourable exchange rates, pushing headline growth to 7.7% again.

It predicts payouts totalling $1.348 trillion for 2018, yet another record.

This is a long-term wealth story, perhaps the greatest story the stock market has to tell. Since 2009, dividends have risen by almost three-quarters, and there is plenty more to come.

Yet otherwise-sensible people worry about a few weeks of share price volatility… They really should know better.

The post Dividends Are Making Global Investors Richer Than Ever! appeared first on The Motley Fool Canada.

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They were the best performing asset class in 2017, according to fund manager Fidelity, closely followed by Asia Pacific equities, which to many people is the same thing.

Emerging market stocks easily beat other strong performers such as Europe and Japan, and blitzed bonds and cash.

Chasing last year’s best performer can be risky but there are signs that emerging markets can do it again in 2018.

And because they are more volatile than developed markets, when they grow they can quickly become millionaire makers!

Rising BRICS

Emerging markets have just posted their best year since 2009, growing a chunky 37.72%, according to MSCI, well ahead of the rest of the world’s at (a still impressive) 14.4%.

China had an astonishing year, its stock market growing 52.5%, while India grew 30.49%, South Africa 36.12% and Brazil 24.11%. Of the BRICS only Russia disappointed, growing just 0.08%.

Many smaller markets to also put on a show well, for example, Hong Kong leapt 36.17%, South Korea climbed 30.56% and Singapore rose 25.46%.

Developed markets also did well, but not that well. The U.S. rose 21.90%, the UK rose 22.38% and Canada was up 9.22%, as measured by MSCI.

Germany rates a mention, though, rising 27.70%.

Momentum builds

Chasing strong performance is always dangerous, but there are signs emerging markets could do it again in 2018.

First, momentum is on their side. Growing investor and business confidence looks set to trigger a virtuous circle, as higher investment inflows release pent-up domestic demand and trigger domestic growth cycles, which further boosts confidence, and so on.

Racing ahead

The IMF is upbeat, predicting global GDP will rise 3.7% this year but this rises to 4.9% for emerging markets, up from 4.6% in 2017. It forecasts China will climb 6.5% and India a whopping 7.4%.

As ever, risks remain, with the IMF warning that China must accelerate efforts to curb its credit bubble while India’s transition from a cash-based society to digital banking is proving disruptive.

Russia is still too dependent on high oil prices, while both Brazil and South Africa are hampered by corruption and political scandals.

These risks will always be there, to a degree, and no reason to hold your nose and stay away.

Dollar weakness is another tailwind for emerging markets, as this shrinks their foreign debt liabilities and reduces the cost of their dollar-priced commodity exports to customers, which should boost demand.

Right balance

Emerging markets also look far better value than the U.S. stock market. While the S&P 500 index currently trades on a price-to-book ratio of 3.1, Brazil, China, Poland, South Korea and Russia look far cheaper ranging between 0.8 and 1.8, according to figures from Saxo Bank.

Emerging markets are back so check what exposure you already have to this fast-growing sector. You might want a little more…

The post Emerging Markets Are Making Investors Brilliantly Rich Again appeared first on The Motley Fool Canada.

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Global stock markets are on a roll, defying repeated predictions that they are about to crash.

The US S&P 500 index has just posted 13 consecutive months of growth for the first time in 90 years, while Europe MSCI is up 25% over the past year.

Yet investors have lost their passion for one key market. It is so unloved, even the locals do not want to invest in it.

I am talking about the UK.

Where did our love go?

The British are pouring money into stocks and shares investing a record £5.6 billion in September, with global funds the bestselling sector.

Europe, Japan and North America all enjoyed massive inflows, but there is one place the Brits do not want to invest.

In fact, they are pulling money out. It is their own country.

No growth

The British certainly have plenty of reasons to feel fed up right now. Inflation stands at 3%, but wages are growing at just 2.2%, which means people are getting poorer in real terms.

Effectively Britain has not had a pay rise in 15 years, and GDP growth is now the lowest in the EU.

Brexit is dividing the nation, and creating massive business uncertainty. Recently the UK has discovered the price of leaving the EU: between €60bn and €100bn.

Collapse

The world has noticed. The latest Bank of America Merrill Lynch survey of investor sentiment shows attitudes towards the UK are as low as in 2008, when the UK banking system was on the verge of collapse.

Things could get worse, especially if the UK crashes out of the EU without a deal.

It seems that everybody hates the UK… which could make now an exciting time to invest.

The benchmark FTSE 100 index of top stocks is up 12.1% in the past 12 months, a positive return but just half the growth seen across Europe.

However, there are hopes that the UK and EU will edge closer towards a much-needed trade deal, especially with the UK apparently now agreeing to pay the divorce bill.

There are sticking points on Ireland and the rights of EU citizens, but both sides have a clear financial interest in striking an agreement before March 2019.

If we see further progress over the coming months, business confidence and investment will pick up and the love could start flowing again.

Fighting back

While the overvalued US is trading at almost 31.86 times earnings, according to the Shiller PE ratio, the FTSE 100 trades at just 15.22, and offers a generous average yield of 3.86% to boot.

It also includes global behemoths who should perform well regardless of what happens domestically, such as oil majors BP and Royal Dutch Shell, HSBC Holdings, British American Tobacco, pharmaceutical giants GlaxoSmithKline and AstraZeneca, and Vodafone Group and Unilever.

If you show some love to the UK right now, your portfolio might just love you back.

The post Should You Invest in The World’s Most Unloved Stock Market? appeared first on The Motley Fool Canada.

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If you are searching for evidence of investment bubbles, you don’t have to look very far. Apparently, they are all around us.

Global property is in a bubble. The bond market is in a bubble. The stock market is in a bubble. Crypto-currency Bitcoin is the very definition of a bubble.

They can’t all be bubbles, can they?

Bubble trouble

Whenever an asset class performs strongly, somebody somewhere will inevitably claim it is a bubble.

They have been saying it about stock markets every day of the current eight-year bull market run.

However, I find it almost impossible to get worried about the prospect of a stock market bubble.

Crisis management

First, I am investing for the long term and will hold my money in the market even if we get a major correction, and wait for the inevitable recovery.

That is exactly what I did during the financial crisis — I sat tight and didn’t sell a single stock or fund.

Instead, I continued to reinvest all my dividends at the new lower price, and benefited when share prices began to recover. I also avoided running up unnecessary dealing charges.

So let the share price bubble burst, and if it does, act quick to pick up your favourite companies at reduced prices.

Bit of trouble

Bitcoin is the bubble that really interests me, because it is quite self-evidently a bubble, one that puts all other current bubbles in the shade.

First, it has relatively few practical uses. It may come in useful if, say, you want to shift money out of Venezuela or Zimbabwe in a hurry, but high transaction costs make it an expensive way of doing your everyday spending.

Nor does it work as a store of value, like gold, because it is subject to such massive volatility.

Despite that, “buy bitcoin” is now a more popular search phrase than “buy gold” on Google.

Fear and greed

People worry about the inflated valuations of top internet stocks such as Amazon, Apple, Facebook, Google and Netflix, but these companies offer a practical service people are willing to pay for.

In contrast, most people buying Bitcoin today are pure speculators, greedily seeking a quick buck or fearfully buying to avoid missing out.

Excessive optimism has driven the price far beyond its intrinsic value, the very definition of a bubble.

Coining it in

Just because Bitcoin is a bubble does not mean it is going to burst any time soon. As a proud holder of two Bitcoins – I’m rich! – I hope it does not.

Bubbles have a habit of running for much longer than people expect, then blowing up all of a sudden.

One day Bitcoin may establish itself as a reliable alternative to fiat currencies, or it may cease to exist. Nobody knows.

Either way, stock markets will power on. They may be subject to short-term bouts of volatility, but in the longer run, there is nothing crypto or virtual about investing in real world companies.

Stocks and shares may be a little overvalued but if we are talking bubbles, they have nothing on Bitcoin.

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The 30th anniversary of Black Monday has triggered fears that we could be heading for a similarly spectacular crash.

Article after article has retold the story of the biggest ever one-day stock market crash and reminded us that markets look overvalued today.

The suggestion is that we are heading for another Black Monday, and should be prepared to cut and run. We should do nothing of the kind.

Paint it black

Black Monday, 19 October 1987, was certainly a crash to remember with the Dow Jones falling 22.6% in a single day, wiping $500 billion off share values.

This was far more extreme than the original Black Monday on 28 October 1929, when the market dropped a relatively modest 12.8%.

New electronic trading systems worsened the sell-off by automatically liquidating stock holdings once they fell below a certain level. Portfolio insurance designed to minimise losses created a vicious cycle of selling instead.

Investors braced themselves for a repeat of the 1930s depression. It felt like the world was going to end. It didn’t.

Running with the bulls

Black Monday was preceded by a spectacular bull run. The Dow Jones average of 30 industrial stocks rose a dizzying 27.66% in 1985, then another 22.58% in 1986.

By August 1987 the US market was up another 40%, but then investors started to worry that shares were overvalued.

You can see why people are keen to draw parallels with today, as the current bull run has lasted well over eight years and stocks look pricey.

The Shiller PE measure of stock market valuation peaked at 17.5 in the run-up to Black Monday. Today it sits at 31.

It has only hit this level twice before, in 1929 and the dot-com bubble of 1999. How scared should we be?

Flying high

Stock markets will inevitably crash at some point. Why? Because that’s what stock markets do.

Nobody knows when this will happen, whatever they may claim. So please do not rush to sell now, as markets could just as easily power higher.

Also, even if markets do crash, it does not matter. Really.

Monday, Monday

The true lesson of Black Monday is what came afterwards. Markets recovered rapidly, and actually ended the year higher than they began.

In 1988, the Dow leapt 11.85% and another 26.96% in 1989. The 1990s bull run followed.

Markets always recover, if you give them time. Provided you are invested for at least five or 10 years, you can afford to sit tight.

If we do get a crash, there is only one sensible thing long-term investors can do. Grit their teeth, and buy shares.

Good companies will get sold off with the bad, so find those companies, and pick up their stock at the new reduced price. Then simply sit back, let the dividends roll up, and wait for share prices to rise again, as they always do.

The post Black Monday Taught Investors A Lesson They Must Never Forget appeared first on The Motley Fool Canada.

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These are tough times to be a retailer, as the potential bankruptcy of Toys R Us is an uncomfortable reminder.

Whether the company is selling toys, clothing, electronics, books and now even food, the internet is taking a bite of their business.

We all love the ease and simplicity of shopping online, and the discounts that sites such as global behemoth Amazon (NASDAQ: AMZN) are now able to offer us.

However, there is a price to be paid, in this case the death of the high street and the shopping mall.

Investors need to take a close look at their portfolios to see whether the web could kill off their retail holdings.

Retail therapy

Toys R Us made a net loss of $164m in the first quarter of 2017 and now has debts totalling a hefty $400m.

Same-store sales have fallen for three consecutive quarters as shoppers choose to have fun online rather than trudge to one of its big box store in their local retail park or shopping centre.

Toys R Us had already a bruising encounter with all-powerful Amazon, after striking an exclusive deal in 2000 to exclusively supply toys to the site.

It ended in an ugly legal battle after the online giant allowed rival toy stores on its site.

Amazon was expected to be the big loser but it didn’t turn out that way.

Fire sale

Toys R Us is hardly alone in succumbing to the power of the world wide web. Remember video rental stores? High street record shops? Local bookstores? All were strangled in the net.

A string of big-name companies are vulnerable to Amazon. They simply do not have the firepower to fight back.

Office supplies stores Staples, wholesaler Costco, lingerie specialists Victoria’s Secret, book chain Barnes & Noble and shoe retailer Foot Locker are just some of the businesses that could soon be feeling the heat. Amazon is ruthless, they can expect no mercy from that quarter.

Food fight

Next it could be the turn of the big grocery chains, following the Amazon tie-up with Whole Foods.

There are doubts over whether people will be willing to buy perishable food items online, although many are already ordering food online from their existing supermarket.

Amazon is willing to sacrifice profits today for market dominance tomorrow, so you cannot rule out success here as well.

There is a reason why founder Jeff Bezos briefly leapfrogged Bill Gates in July to become the world’s richest man with a fortune of more than $90bn, just 22 years after he started selling books from his garage.

One winner

Any business that has found Amazon making a serious bid for its territory knows it has a life-and-death fight on its hands.

Some will survive, others, like Toys R Us, will find that Amazon isn’t playing for fun, it is playing to win. Could it kill off any retail stocks in your portfolio?

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Time is the one thing that nobody has enough of these days. In our crazy 24/7 world, you can’t afford to waste it.

Unfortunately that is exactly what most investors do.

Not just a small proportion of it, but a whopping 75%. Why do we do this? Because we have got our priorities wrong.

Going for growth

Too many investors, especially at first, spend their time hunting for stocks they expect to rise in value. Capital growth is all they care about.

Some rush around trying to catch falling knives in the hope that they will quickly fly upwards again.

Others jump onto momentum stocks in the expectation that they will continue to power ahead.

Another strategy approach is to buy undervalued stocks and hope they recover.

Time rich

All of these strategies can make you richer and pursuing them should take up, say, 25% of your time.

However, 75% of your total return over the longer run will come from dividends.

They will make up three quarters of the money you ever make from investing, assuming you re-invest them for growth.

Fun, fun, fun

Regular Fool users may already know this, because we have been banging on about it for years, but too many investors still haven’t got the message.

Too many are distracted by the prospect of buying a stock that will double, triple or quadruple in value.

However, it cannot be relied upon. Share prices can crash, or stagnate for years.

Ultimately, growth is just 25% of the fun.

Income stream

Dividends may not seem as exciting at first yet in the longer run, that is where you will generate most of your money.

Those quarterly or annual payouts may not look spectacular, but you get them year after year.

Well-managed companies will also aim to regularly increase their dividends, giving you a rising income.

The benefits compound over time.

Compound growth

Say you invest $1,000 in a stock yielding 4% a year, and the company increases its dividend at an average rate of 5% a year.

After 10 years, you money will be worth $1,633, giving you a total gain of 63.34%, provided you have ploughed your dividends back into buying more stock. The average gain is 6.33% a year.

If you hold the stock for 20 years and the dividend growth continues, your $1,000 will be worth $3,589, a total gain of 258.86%, or an incredible 12.94% a year.

Any share price growth will be on top of this.

Time is on your side

Even more amazingly, your annual dividends will have grown from $40 in year one to $329 by year 20, which works out as a yield of nearly 33% expressed as a percentage of your original investment.

Too many investors fail to realise this, because they have been spending 75% of their time focusing on capital growth.

Time is money, so allocate yours wisely. You should be thinking about dividends, three quarters of the time.

The post Investors Are Wasting 75% of Their Time appeared first on The Motley Fool Canada.

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The last year has been tough on the UK, as the shock Brexit result tears the country in two.

British negotiators are now being given the runaround by scornful EU officials, with little progress on a deal.

Worse, the UK economy is slowing, while the pound is down around 15% against a basket of global currencies since the referendum.

Many now think the UK will leave the EU without any deal at all. Others fear it will surrender to EU demands and hand over billions of euros in compensation. Some even see a second referendum, with the people begging to be let back in.

Who would invest in a country like this? Well, you should.

Toxic Brexit

The fallout from Brexit was expected to be much worse. During the referendum campaign, pro-Remain campaigners warned of 500,000 jobs lost and more than 5 per cent off GDP if Britons voted to leave the EU.

The worst-case scenario hasn’t happened, although there is still time.

However, there are clear signs that the UK is falling behind the rest of the world and, adding insult to injury, a resurgent Europe.

Falling behind

The British economy grew just 1.7% year-on-year in the second quarter, against 2.1% for the US and 2.2% for the Eurozone, according to Eurostat.

British stock markets have also underperformed. Although the UK All Companies index grew 14.6% per cent over the last year, according to TrustNet.com, North America grew 17.6%, Europe grew 24.7% and China soared almost 30%.

Britain is falling behind, which is why you should invest in it.

Cheap as fish and chips

The UK benchmark FTSE 100 index is cheap as foreign investors get up to 15% more for their money thanks to the sharp drop in the pound.

A flood of takeover bids are now pouring in as foreign competitors look to take advantage, with top companies such as Burberry, Jimmy Choo and Unilever all targeted lately.

However, this window of opportunity may quickly close. The pound has picked up over the last week amid speculation that the Bank of England might finally hike interest rates in November. The Footsie may not always be this cheap.

Global exposure

There is another compelling reason to buy the FTSE 100. This is a truly global index, listed companies generate more than three quarters of their revenues overseas, shielding them from domestic worries.

Combined with the weaker pound, this makes the UK a tempting way to play the global economy.

Recovery play

If the UK does strike some kind of Brexit deal, with a transition period giving it access to the single market and customs union, then sentiment could quickly reverse. If that happens the FTSE 100 and pound could both fly, giving you a double benefit.

If you believe in investing at a time of crisis and holding on for the long-term, as we do at The Motley Fool, the stricken UK looks like the perfect place.

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If you are a long-term investor, the news is your enemy. You need to approach your TV set with caution, or it could lure you into making silly and expensive mistakes.

Today’s 24-hour news-never-sleeps cycle can inflict untold damage on your investment portfolio, if you allow it to. So tune it out.

Leadership problem

News channels have gone into overdrive over the unprecedented hurricane season and two other forces of nature: US President Donald Trump and North Korean supreme leader Kim Jong-il.

The possibilities are terrifying, but the last thing you should do is respond by ditching your shares and running for cover.

The stock market has survived worse, and can survive these latest threats, too. In fact, it is already shrugging them off.

Economic disaster

Hurricane Harvey and Hurricane Irma have caused up to $290 billion of damage across Texas and Florida, according to estimates from Accuweather.

They will cost the world’s biggest economy around 1.5% of GDP, including business disruption, damage to transport and infrastructure, lost crops, increased fuel prices, damage to homes and belongings, and temporarily increased unemployment.

This is equivalent to the entire US economic growth from mid-August to the end of the year.

Gold age

The fallout from the North Korean stand-off has mostly been psychological so far, as we learn to start worrying about the bomb again.

Yet it was enough to inflict several weeks of stock market turbulence, with investors fleeing to safe havens such as gold.

Some will have regretted their haste. The spot gold price hit a 2017 high of $1,350 last week but is already falling back after Kim Jong-il went an entire weekend without letting off a hydrogen bomb..(!)

Think long

Global stock markets have been shaken by hurricanes and nuclear threats but the damage has only been temporary. They were already rising again on Monday,.

This pattern only confirms what we have been saying on The Motley Fool since the site was launched.

Investors have to look past the short-term noise, lower the volume on the TV and online news, and set their sights on the long term.

That means sitting tight while the storms rage above your head, rather than panicking and dumping stock.

By rushing to sell, you are only crystallising any temporary paper losses. You then face the tough question of deciding when to buy back into markets and are highly likely to leave it too late and miss out on the recovery.

To make things worse, you will have racked up a load of trading charges along the way.

If you have a bit of money to spare, you can even take advantage of any sell-off to pick up stocks in your favourite companies at a discounted price, then hold them for the long term.

We may live in turbulent times, but the stock market has seen it all before. This storm too shall pass. That’s old news, but it still bears repeating.

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Investors are a worried bunch these days, fretting over all sorts of economic ailments, real or imagined.

A quick look at the newspaper headline suggests they are a bunch of hypochondriacs, worrying themselves to death.

Most of the concerns centre on the US, a spillover from Donald Trump’s wayward presidency. Wall Street bankers are so anxious about the unwinding of the over-hyped Trump rally, they are said to be selling their own shares.

With Trump now threatening a government shutdown if Congress doesn’t fund his border wall with Mexico, autumn could be tense.

Crashing bores

Signs of a slowdown in the eight-year bull market have brought out the doomsayers this year.

Jim Rogers, who founded the Quantum Fund with George Soros, has been warning of a $68 trillion ‘Biblical’ collapse.

Mark Faber, the original Dr Doom, is predicting a crash to rival the greatest in history (he does this every year). Economists Andrew Smithers and James Dale Davidson have also played the doom-and-gloom card.

Predictions of a coming apocalypse exert a grim fascination, but usually fall well wide of the mark. If you want a copper-bottomed forecast, I have one for you here.

In good health

Dr Copper is so named because shifts in demand for the red metal can offer an accurate diagnosis of economic trends.

Copper is key to the global economy because it has a broad spread of uses across key sectors including automobiles, construction, electrical, machinery and telecommunications.

When copper is in demand, it is a sign that business is investing, and a stronger economy should follow.

Other industrial metals have narrower uses and are therefore less reliable, while gold and silver swing on sentiment rather than business practicalities.

In 2014, Dutch bank ABN AMRO found strong correlation between copper prices, world trade and economic growth.

Which is interesting, because right now, Dr Copper is telling us the global economy is in good health.

Precious metal

The copper price has hit a three-year high as demand rises and inventories record the biggest weekly drop in more than a decade.

High-grade copper has now leapt the key $3 hurdle, up 20% from $2.50 in May, with all the moving averages pointing upwards.

China is the world’s largest consumer of copper and demand is rising as its economy picks up.

Last month, the IMF revised up China’s growth forecast for 2017 and 2018 to 6.7% and 6.4% respectively.

On the mend

Dr Copper is a powerful leading indicator, but sometimes these signs can be misleading.

Like most commodities it is priced in US dollars and the recent fall in the greenback has made it more affordable to foreign buyers, boosting demand. Speculation can also affect the price. Some say the rally has been overhyped.

However, in any battle between Dr Copper and the doom-mongers, I know which side I would choose.

If the global economy shows its mettle, stock markets should follow. Which is just what the doctor ordered.

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