Protect Against Collisions and More If you drive a car in the United States, liability insurance must cover it. This type of policy pays for medical and property damage resulting from a vehicular accident. You can also purchase comprehensive and collision insurance to cover other costs. These additional coverages help protect the value of your car should it be damaged. If you are calculating how much it will cost to buy a car, you need to take into consideration the cost of insurance as well. In this article, we’ll review the basics of car insurance and the best auto insurance companies in America, including costs, pros and cons. This is a brief introduction to automobile coverage. Liability Coverage When an accident occurs, liability insurance covers you, household members and authorized drivers for the costs associated with property damage and bodily injury. It covers the cost to repair or replace property damage that you caused. [youmaylike] You are also covered if you cause the bodily harm or death to someone else while you are driving the car. This includes medical expenses, loss of income and specified legal defense costs. Collision Insurance If you are involved in a collision, this type of insurance will help pay for repairing or replacing your vehicle. If the collision is your fault, the coverage may extend to other damaged vehicles involved in the accident. States do not mandate that you buy collision insurance, but your lender or car dealer will if you finance or lease the car. Policies offer a range of deductibles, which is how much you’ll have to pay for repairs before the insurance kicks in. Larger deductibles lower the policy premiums but expose you to more out-of-pocket expenses if a collision occurs. Comprehensive Insurance Comprehensive insurance covers damage to your car that occurs for reasons other than a collision, including theft, fire, vandalism, weather and natural disasters. This coverage is often required if you finance your automobile. You can add riders to this insurance to provide coverage of additional costs, including auto towing, glass repair, daily rental while your car is in the shop and emergency roadside service. As with collision insurance, you can set the deductible on your comprehensive insurance policy to cut your premium costs. Gap Insurance If your car is severely damaged in an accident or other incident, you might find that your comprehensive and collision damage won’t provide enough coverage to pay off the amount you owe on the vehicle. Many policies pay only the fair market value of a totaled car, which might be only 80% of the amount you owe. You can buy additional insurance to plug this gap and ensure you can pay off the car loan in full if the vehicle is destroyed or stolen. Normally, car leases require you to buy gap insurance. If you pay cash or pay off your loan, you can save money by avoiding or dropping gap insurance when no longer needed. Top Five Auto Insurers These five insurers all offer full coverage policies and many additional services. Amica Amica is a superstar among car insurers, winning accolades from Consumer Reports and J.D. Powers. It’s known for handling the claims process smoothly. The average annual cost for full coverage: is $1,360. Pros You can have your car repaired at any body shop, without restrictions. Offers a premium package which, for an additional cost, provides full glass coverage, rental coverage, good driving rewards and identity fraud monitoring. Superior financial stability rating from A.M. Best. Cons Missing some discounts, such as military, low-mileage and prepay discounts. Must speak on the phone to get a quote. Sparse website when it comes to customer education. State Farm State Farm is the country’s largest multi-line insurance company. It excels in customer service and regularly garners high marks from customers. The average annual cost for full coverage: is $1,337. Pros Superior financial stability rating from A.M. Best. Excellent online quote tool, getting customers a quote in as little as five minutes. Easy claim handling and top service from its more than 18,000 agents and its easy-to-use mobile app. Cons Doesn’t offer coverage for new car replacements or uninsured motorists. Missing prepayment and automatic payment discounts. The Hartford While only 11th in size, The Hartford is big when it comes to policy options. It offers rates based on your actual driving as well as full replacement of new cars when destroyed shortly after purchase. Average annual cost for full coverage: N/A. Pros Solid benefits, including superior roadside assistance and towing programs. High marks from customers for their purchase experiences. One of the few insurers with mechanical breakdown coverage for out-of-warranty repairs. Cons Mediocre service interaction according to J.D. Power surveys. Sparse online learning materials. Geico Geico is the second-largest U.S. car insurer. It is a favorite among tech-savvy geeks who appreciate the insurer’s mobile app and excellent online service. The average annual cost for full coverage: is $1,627. Pros Geico offers plenty of ways to save, such as multi-vehicle, driving history and vehicle safety equipment discounts. Special savings for active and retired military members and federal employees. Full-featured mobile app for getting quotes, buying insurance, managing your policy, submitting claims, summoning roadside assistance and making payments. Cons Human help may be in short supply, as just about everything is handled online. No gap insurance is offered. USAA No insurer matches USAA for service to military members. Unfortunately, it's only available to active service members, their families and retired veterans. Average annual cost for full coverage: $896. Pros Superior financial stability rating from A.M. Best. Top-ranked purchase experience score from J.D. Power. Cons Missing gap coverage. Doesn’t offer interior vehicle coverage or new car replacement coverage. Limited availability. The Right One for You Competition in the insurance industry helps drive down prices and prompts insurers to offer money-saving features. For example, your carrier might reward you for a safe driving record and for having a long-term relationship with the insurer. The right insurer for you is highly rated for service, offers the exact coverage you want and does so at an unbeatable price. You should always gather multiple quotes before selecting an insurer, and make sure you get credit for all applicable discounts.
Best Dividend Stocks 2020
The calendar has turned and we’re officially into 2020. It sure doesn’t seem like two decades since Y2K, but the calendar doesn’t lie.
It’s time to focus our attention on investing for this upcoming year. Personally, I like dividend stocks. These securities offer dependable income, no matter what happens to the underlying stock. They’re generally more stable, which protects your investments during any foreseeable downturn. Many investors also really enjoy partnering with companies they use everyday; mature firms that usually end up paying generous dividends.]
Let’s take a closer look at what makes a great dividend investment and a few top picks for the best dividend stocks 2020.
What Exactly Is a Dividend Stock?
A profitable company has several things it can do with its earnings. The cash can be reinvested into new growth areas. It can also be used to acquire a competitor. Or it can be given back to shareholders, who are the true owners of the organization, through dividends.
Companies with predictable earnings will often institute a regular dividend program. These firms will pay a portion of their profits back to investors every three months, although some will choose a monthly or yearly dividend.
Investors can then use this cash to buy more shares of the company, buy shares in a different company, or to spend on snacks; it’s completely up to you.
Generally, a stock starts to pay a dividend when it becomes more mature. This greatly reduces the risk to investors, although it also means most dividend stocks won’t produce stellar returns either. It’s an acceptable trade-off to make, especially as investors get a little older or after they get burnt chasing after a sexy growth stock.
What Makes a Great Dividend Investment?
Generally, what you’re looking for is a company with the following characteristics.
First, we want to make sure it’s still growing. Like I’ve already mentioned, most dividend stocks are more mature. So, they won’t be growing by 50% or 100% every year. But we still want to see both the top and bottom line expanding, even if it’s as little as 3–5% per year.
Next, you’ll want to invest in a company that isn’t at risk of being disrupted. Many retailers, for example, are hurting because of sustained pressure from Amazon. Apple, meanwhile, is less vulnerable to competition.
Once you’ve identified companies with these two characteristics, your next analysis should be valuation. Look at a stock’s underlying earnings and see if it’s expensive compared to other stocks. The average stock trades at a price-to-earnings ratio of around 20, so ideally, you’re looking for something a little cheaper. Paying a slight premium for an excellent company isn’t the end of the world either.
Analyzing earnings will also be able to tell you if a company can truly afford to pay its dividend. Some people take this a step further and insist on stocks that have consistently raised their dividends over time. This strategy has a lot of merit, but some people find it too restrictive.
Ultimately, the best investment returns will come from a combination of both dividends and capital gains. One common mistake investors make is focusing too much on the dividend part of the investing equation. If a stock pays a 7% dividend but shares go down 10%, the total return is pretty lackluster.
Top Picks: Dividend Stocks for 2020
Let’s take a closer look at four dividend stocks that are poised to do well in 2020.
Pepsico (NYSE:PEP) is one of the world’s top packaged food companies. It owns various soda brands, Lay’s potato chips, Gatorade, Quaker Oats, Tropicana and Aunt Jemima. It also recently acquired Sodastream. Thanks primarily to the strength in the company’s food brands both domestically and internationally, Pepsi’s top and bottom lines keep consistently growing. People still must eat, and Pepsi’s potato chip brands are one of the top snack foods. Shares also trade at a reasonable 16x P/E ratio, which is a good value. Pepsi’s dividend is currently 2.7%, and it has raised its payout every year since 1965.
3M Company (NYSE:MMM) is one of America’s largest industrial companies. It sells hundreds of products you likely use often, like Post-It Notes, various kinds of tape and cleaning tools. Thanks to a recent sell-off — shares are down approximately 25% over the last year — so the stock is a good value. The company trades at 18.5x 2020’s earnings expectations, and it has a 3.2% dividend yield. It has raised its dividend every year for the last 61 years.
If you’re looking for a little more yield, perhaps Ford (NYSE:F) and its 6.5% dividend yield might be a better choice. Ford also trades at a low price-to-earnings ratio of less than 10x, and its trucks are still considered the go-to vehicle for millions of Americans. One issue with Ford is the company may see weakness if the economy starts to suffer, since most people will delay the purchase of a new car during tough economic times. Like 3M, Ford’s share price is currently cheap. It looks to be a pretty good time to buy.
And finally, let’s take a closer look at banking giant Wells Fargo (NYSE:WFC). Shares are struggling lately because of fallout from its account sales scandal, which has hit the bottom line. I’m confident the company can turn things around, and the top line has continued to grow throughout this tough time. Brave investors who buy today are getting the company at less than 12x earnings and get to collect a 4.2% dividend yield. The company has also raised its dividend for 8 consecutive years.
The Bottom Line
After a decade of great returns, you might not think there are any good stocks left out there. I disagree. Sure, some stocks are quite overvalued (I’m looking at you, technology sector!), but there are many other stocks that are fairly valued today. And, as a nice bonus, most of them pay dividends.
The best time to invest is today. Even if the stock market has a rough couple of years, these stocks should still deliver plenty of dependable dividends. This is passive income you can either put back to work or spend on any number of things.
That’s the true beauty of dividend stocks. Once you get enough of them, financial freedom is within reach. Who wouldn’t love that?