Newsletter Review: Motley Fool Income Investor

Written by The Dividend Guy on February 7, 2008

Motley Fool Income Investor

Investment newsletters are generally not worth the usually high costs in my experience. Over the years I have subscribed to a few, so it was with trepidation that I signed up for The Income Investor newsletter with the Motley Fool. I have been a member over at The Fool for a number of years now, and even was a paid subscriber to their discussion boards when they required a subscription. For many of their newsletters, they offer a 30 day subscription that allows investors to give them a test drive. If you don’t want to continue, just let them know and they will not bill you. This is not a paid review, just an look at a newsletter that is focused for dividend investors.

Naturally I was interested in The Income Investor, as it is focused on income producing investments. Here is a description of the newsletter, from the website:

First and foremost, Income Investor is a dividend-stock newsletter. Each month, the newsletter presents two investment selections, providing an analysis of each company that includes both catalysts and risk points. Once a company has been selected, we’ll be watching it. We’ll let you know if our original investment thesis changes.

Our core selections will almost always be equity investments — i.e., ordinary stocks, real estate investment trusts (REITs), and master limited partnerships (MLPs). This is simply because dividend payers have historically outperformed the market with less volatility than other investments (a win-win situation).

As it says, it is focused primarily on dividend stocks. However, it does cover a wide variety of income producing assets such as REITs and even MLPs. The issues are available as either HTML (right on the web) or as a PDF download. I found the PDF most beneficial as it allowed me download the issues to my computer and read them, even if I wasn’t hooked up to my wireless network at home. Each edition of the newsletter is typically dividend into the same sections:

Section Title
Description
Sample Content
Introduction Market Commentary Market roller-coaster, dividend stocks down in the dumps
Stock Analysis #1 One of two typical investment suggestions with analysis Pfizer, Bank of Nova Scotia
Q&A - Stock #1 Question and answer from one of the analysts assigned to Income Investor, usually on contentious issues with the stock analysis We’ve been hearing that Big Pharma’s chemical-based model, focused on blockbusters, is broken and that generic competition is stronger than ever. Are the problems overblown, or is Pfizer priced cheaply enough to cover these worries?
Stock Analysis #2 Two of two typical investment suggestions with analysis Masco, Washington Mutual
Q&A - Stock #2 Same as for Q&A - Stock #1 Same as for Q&A - Stock #1
Feature Article Timely articles covering a variety of topics Lessons of 2007, Market Timing
Close Calls Further analysis of news items or other company events which affect previous Income Investor stock suggestions Look back at Weyerhaeuser, Most Likely to Succeed

What I Liked About The Newsletter

  • Access to Subscriber only discussion boards which were dividend investing focused. There is a wealth of knowledge on the boards, and the analysts and other Motley Fool staff frequent the boards, more than the other ‘general public’ discussion boards.
  • Issues were available in both HTML and PDF, allowing subscribers with the ability to read the issues right on line or download them to their computer.
  • The stocks featured include many I had not been exposed to or would have ever considered had it not been for the newsletter.
  • For your subscription fee, the analysts do a good job of looking at a company’s fundamentals and provided me with a good level of comfort.

    • What I Didn’t Like About The Newsletter

  • There were too many Master Limited Partnerships and REITs for my liking. My REIT strategy is index fund focused and I am not interested in MLPs, due to limited liquidity.
  • Do not get to see the actual numbers that went into the analysis. The analysis is a written up synopsis of the analysts findings, with very little emphasis on the actual numbers given.
  • The price to subscribe is expensive, at $149 (US). That is $149 I could invest right into the market.

    • Aggressive marketing - the ads you see for the newsletters (and all Fool newsletters) have that slimy marketing focus on them. Themes such as ‘Millionaire Maker’ or ‘2,365% return from one stock.’ It hints of that mutual fund advertising that I spoke about earlier on in the week.

    Summary

    So far I have enjoyed being a trial member and am considering subscribing, for the additional stock ideas and for the purposes of what I write on this blog. I could see them providing good post ideas that I could write about here, as I did learn a thing or two going through the back issues. As they have the 30 day free trial, I encourage you to go over and check out the Income Investor.


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    10 Comments so far

    1. Dividends4Life February 7, 2008 12:07 pm

      Thanks for sharing your thoughts on the newsletter. I had considered trying the trial version, but was hesitant due to some past bad experiences (not with TMF) stopping the trial before the company started charging. I am interested to see how things work out for you.

      Best Wishes,
      D4L

    2. Yielder February 7, 2008 12:35 pm

      Why waste your money?

      You’re interested in stocks that have, among other things, long term earnings growth that approximates a straight line; have strong balance sheets; and pay a growing, sustainable dividend while maintaining a reasonable payout ratio. For US stocks, you can work from a canned universe such as S&P’s Dividend Aristocrats or Mergent’s Dividend Achievers or you can roll your own using web-based stock screeners - http://preview.tinyurl.com/2xwlko . In the Canadian Shareowners’ Stock Guide, you have a reasonable though very inflexible tool that provides you with a consistent, well-founded, disciplined approach.

      So why waste your money? Having been there and done that with newsletters over the years, WADR, I’d say that you might have some doubts about your stock picking abilities and figure that paying buck$ will give you a better result. You don’t get better results and may even get worse results because you tend to sit back and do less digging yourself. Stick with what you’re doing through the coming recession, read the notes to financials carefully, and listen to the conference calls to see how much bobbing and weaving is going on. Some, maybe most, perhaps all of your stocks will get hammered but the cream will rise to the top as it always does.

    3. The Dividend Guy February 7, 2008 2:26 pm

      Yielder,

      Thank yo so much for the well thought out repsonse. All the tools you mentioned I use, so your point it very well taken. It is $149 (US) that I can invest in equities and receive dividends from going forward.

      Point taken,

      The Dividend Guy

    4. Tyler February 7, 2008 2:28 pm

      Interesting that you mention the “slimy marketing feel” as it is omething that I have found with the Fool for years. The only thing that I like about their articles are the headlines…they are the masters of creating clickable headlines. Other than that, I agree with Yileder - you do a fine job of selecting stocks and ETF’s yourself.
      -Tyler

    5. Rob Madrid February 8, 2008 6:33 am

      “at $149 (US)”

      I remember when that used to mean something, ie Like ouch it’s in US dollars!

    6. The Div Guy February 8, 2008 8:47 am

      I am not a fan of the Fool as well. I never read their articles because they never have anything to say and they want you to sell you all their “secrets”.

      I am a fan of MLP’s, just look how they have performed over the past. They are doing extremely well in share price appreciation over the short term and have been great at providing income over the long term. What is not to like? Check out KMP, I have owned this stock since Oct 2002.

    7. Weekly Dividend Investing Roundup - March 28, 2008 » The Dividend Guy Blog March 28, 2008 7:10 am

      […] investment newsletters worth $300? This article from CNN’s The Mole attempts to answer this […]

    8. Leslie March 28, 2008 12:43 pm

      Investment Letter caution included in this SEC web page http://www.sec.gov/investor/pubs/cyberfraud.htm

      Learn to read a financial statement and do your own due diligence before investing. If you’re looking to make a quick buck in the stock market, that’s gambling not investing.

    9. Investments on The Finance World For News and Information Around The World On Finance » Blog Archive » Newsletter Review: Motley Fool Income Investor March 29, 2008 5:09 am

      […] Newsletter Review: Motley Fool Income Investor Our core selections will almost always be equity investments — ie, ordinary stocks, real estate investment trusts (REITs), and master limited partnerships (MLPs). This is simply because dividend payers have historically outperformed the … […]

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