It’s probably no surprise that in the last year I’ve been buying some blue chip companies with a solid history of dividends. Dividend investing is one of those long term investing strategies that has, for the most part, fallen out of favor after the fantastic dot-com craze, crash, and subsequent bull market that saw the Dow at 14,000 before it crashed to the mid-6000s in the depths of the economic panic. Throughout that time the Dividend Aristocrats, stocks that have paid and raised their dividend in 25 consecutive years, and the Dividend Champions, stocks that have paid a constant or rising dividend for 50 years, have maintained their dividend like clockwork.

Through dividend increases, many a billionaire’s fortune have been built (Warren Buffet’s annual dividend from his shares of Washington Post and Coca Cola exceed his investment).

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Every year, Smart Money takes an in-depth look at online brokers, from their trading platform to their customer service, and rates them based on their performance. They open up accounts and make trades, they call up customer service and pore through the reviews, and they share all of their experiences with you – the good, the bad, and the ugly.

One thing that does surprise me is how little the list changes each year. For yet another year, the top five are the same, though their order has changed a little, and the back of the list sees the same faces. You would think that these brokers would look at these problem spots and at least make some steps to address them.
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In every professional sport, there’s a concept of a “rebuilding year.” These are the years where the team is working on drafting good prospects, building up their young talent, and crafting a competitive championship-caliber team piece by piece. It’s difficult to field a championship team every year for more than a few years, with free agency and everything, so it’s expected that after a few years of stellar performance, you’re bound to have a few leaner years where you’re rebuilding your talent. The good teams do this well, with strong performing rebuilding years, and others do it poorly.

How does this apply to you? It’s a little downside psychology. With the recent economic crisis, a lot of folks are forced into their rebuilding years. You may have lost your job. Your investments may have lost value. Your money doesn’t seem to get you as far as it used to… you’re down, but not out. So turn this year into a money rebuilding year.

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How would you like to make $1000 risk free starting with just $1? It sounds too good to be true right? It sounds like a scam? Well, 99.999% of the time it’s a scam. This is that 0.001% time it isn’t and when you read through my Grand Plan, you’ll know it’s not a scam.

You won’t get rich with the Grand Plan, you’ll just get a little bit ahead. What you do with your new found wealth is up to you – you can pay off some high interest debt, you can put it in a high yield savings account, you can put it in the stock market, or you can just hide the money in your house somewhere. Whatever you do, please don’t squander it. Once you do the steps on this list, chances are you won’t be able to do it again. Don’t waste it.

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When I learned about E*Trade selling their banking business to Discover, I knew my days with them were numbered (I later learned that only bank accounts with no brokerage relationships were moving… but alas the ball was already rolling). Brokers are finding it increasingly difficult to differentiate themselves and when you can get good customer service at a cheaper cost elsewhere, even the pioneers are going to find their businesses suffering. Those who have been reading for a while may remember me mentioning my investments at E*Trade and how I’ve been doing any new investing with TradeKing. My original approach was to leave my assets at E*Trade until I sell them, but a recent offer changed my mind.

TradeKing has a promotion where they will reimburse new accounts, defined as opened in the last thirty days, up to $150 in transfer fees. My account is far older than that but I asked a CSR if they’d be willing to extend that offer to me and they agreed! (had they not agreed, I wouldn’t have transferred…) E*Trade has a $60 full account transfer fee, much less than the $150 reimbursement limit, that is paid using account assets. I’m not sure what would happen if I had $0 cash, but the simple solution was to transfer $60 into the account prior to initiating the transfer. If you plan on doing this, be sure you have the amount of the fee in cash or you might not like what the brokerage does on your behalf!

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Charles Schwab announced today that they would be charging a flat $8.95 per online equity trade regardless of the customer’s account size or the number of shares traded, down from $12.95. Schwab has been marketing itself as the broker of the average Joe, with their “Talk to Chuck” marketing, and moving to $8.95 a trade is certainly going in the right direction.

I’ve always thought of Schwab as a full-service broker along the lines of a TD Ameritrade, who charges $9.95 a stock trade, and less of a discount broker, like TradeKing ($4.95) or E*Trade ($12.99). As the lines between services that discount and “full-service” offer gets blurred, the only differences will come down to the commissions. Right?

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Before investing in the stock market was opened to the masses with brokers offering cheap stock trades, Sharebuilder was the only one with a commission in the single digits. Four bucks was all it cost to buy a stock, as long as you were willing to schedule your purchase ahead of time (the following Tuesday). Real time trades cost you $9.95, which puts it on par with the more “expensive” discount brokers. Any sale of stock was considered a real time trade so the total round-trip commissions would cost you $13.95.

Since then, there are close to a dozen brokers offering stock trades for less than $10 a trade, buy or sell. The slight competitive advantage Sharebuilder once had was now gone and I’m wondering why anyone would choose Sharebuilder?

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OptionsHouse is offering 100 commission free trades for new accounts with promotion code FREE100. You must deposit at least $3,000 within 45 days and the 100 free trades expire after 60 days of funding. This offer expires December 31st, 2009.

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