Once you have identified investment ideas and found something into which you want to put your money, the next step is to make sure that it fits with your overall portfolio.  It doesn't do any good to add another cheap oil stock if you already have 70% of your portfolio invested in the energy sector.  That isn't diversification.

Look for businesses with good returns on equity.  Don't fall into a peak earnings trap.  Pick up tricks along the way, such as this tip for comparing the intrinsic value of two stocks.

Basically, just take advantage of tax shelters like your 401(k) plan, invest as much as you can, get free matching money, and let time and compounding do the rest.  Control your expenses so you aren't paying a lot to banks and brokerage firms.  It's really not very hard, to paraphrase one of my favorite investors.

A few moments ago, I posted about the massive dividend tax increase Americans face next year, with dividend tax rates jumping from 15% to 43.4% plus state income taxes, depending on where you live.  It doesn't stop there.  When the clock strikes midnight at the end of this year, Americans will face what the news media is rightfully calling Taxmageddon.  It is a staggering increase in taxes across the board, many of which will fall squarely on the poor and middle class.

• Personal payroll taxes will increase, with the typical American family paying at least $1,000 in cash more to the IRS
• Personal income tax brackets will increase, with the top tax rate going to 39.6%
• Estate taxes will go from the current 0% rate to 55%
• The Alternative Minimum Tax (AMT) patch that kept middle class families from paying higher taxes meant to be paid by the rich
• The 100% business tax expensing depreciation tax rule, that rewards small businesses for taking risk and investing in expansion now to help the recovery
• There will be a new 3.8% tax on your investment income to pay for the health care reform law

The situation is so bad, that the chief economist for Moody's believes that it will result in at least 3% drag on GDP, cutting severely into the economic recovery and job creation.  Once again, the people who will be able to sidestep most of the tax increases will be those who can hire expensive lawyers and accountants to shelter their income.  For investors who want to live off their income investing portfolio, it would be an unmitigated disaster.

You read that correctly.  It is possible that you might have to part with a staggering 43.4% of your personal dividend income beginning on 2013 because Congress continues to spend money it doesn't have to pay for services the American people don't want.  This is one of the reasons that, as we discussed a few minutes ago, Wall Street is having a dividend party.  Companies are distributing cash while they can.  The whole thing is asinine.  Who would risk a recovery by allowing one of the biggest tax increases in American history to happen?

To learn more about how the math works, and how big your bill might be, read Dividend Tax Rates Might Increase from 15% to 43.4% on January 1st, 2013.

Over the past few years, corporate America has generated trillions of dollars in excess cash and parked that money in the bank (or, at the very least, Treasury bonds and other cash equivalents).  Companies ranging from technology giants to conglomerates have hoarded their liquidity, terrified of a repeat of the Great Recession of 2008.

Lately, it seems like every Board of Directors on Wall Street has finally decided to finally release some of the coins that have been piling up in the treasury.  How are they doing it?  By announcing large dividend increases.  Johnson & Johnson announced its 50th consecutive annual dividend increase, bumping the payout to investors by 7%.  ExxonMobil recently announced a staggering quarterly dividend increase of 21%, making for a rich payday if you happen to hold a considerable amount of the oil and natural gas giant's shares.  Chevron announced an 11% rise in its dividend.  IBM raised its quarterly dividend by 13%.  The list goes on and on ... it is a dividend party and stockholders who were buying during the crash that reached a bottom in March of 2009 are reaping the benefits.

If your focus is on passive income with a specialty in dividend stocks, the first four months of the year have been off to a great start.