The market got off to a fairly good start for the second quarter
as the monthly jobs report came out a bit better than expected.
Big news out today regarding a second offer coming in for NYSE
) from the combined team of Nasdaq OMX (
) and Intercontinental Exchange (
). NYX is trading nearly 13% higher but the hurdles remain high for
either of the two proposed deals to get finalized. If I were in the
shares, I would consider taking some of the position off.
Elsewhere, Wall Street upgrades helped push up shares of FedEx (
) and Allergan (
). The financials had a good start this morning with Prudential
) and Toronto-Dominion Bank (
) seeing decent gains. On the flip side, metal prices and metal
producers pulled back some. Anyone in the precious metals should be
carefully watching for any shifts in investor sentiment that could
derail what has been a big run. Nothing bearish to worry about yet,
but precious metals are considered an area where numerous traders
have been active. Those sentiments can shift quickly.
I hope everyone caught this morning's premium posts as we have
updated the biggest gainers and losers from our numerous watchlists
through the end of the first quarter.
I was just reading a report just released by Wider Opportunities
for Women highlighting the income needed for those employed to
cover basic expenses and save for retirement and emergencies.
- A single worker needs an income of $30,012 a year.
- A single worker with two young children needs an annual income of
$57,756, or just over $27 an hour.
- A family with two working parents and two young children needs to
earn $67,920 a year, or about $16 an hour per worker (This compares
with the national poverty level of $22,050 for a family of four.
The most recent data from the Census Bureau found that 14.3 percent
of Americans were living below the poverty line in 2009).
Fortunately Dividend.com has the solution. Everyone knows I (and
Suze Orman as well in her new "The Money Class" book) keep pounding
home the message of dividend investing and compound interest The
long-term benefits are enormous even if you have minimal capital to
get started. Let's look at these examples:
Investor #1 starts investing $5k a year at age 25 and does so
for 40 years ($200K total invested) in Bank CDs, money markets,
etc. averaging 3% a year. After 40 years, this person's nest egg
becomes worth just over $652K.
Investor #2 starts investing just over $4K a year at age 45 and
does so for 20 years ($81K total invested) in dividend-paying
stocks that historically average an 11% annual return, this
person's nest egg becomes worth over $653K.
Investors #3 starts investing $5K a year at age 55 and does so
for 20 years ($100K total invested) in dividend-paying stocks that
historically average an 11% annual return, this person's nest egg
becomes worth over $806K.
As you can see, compound interest is a very strong force when it
comes to putting money to work over a period of time. Next, you
will notice the danger of being too conservative with your money
(as Investor #1 is). They had the right idea is starting young, but
they chose too conservative an investment road. Lastly, you see
that age is not really a factor when it comes to being invested
properly. This example should inspire many individuals who make the
mistake of thinking it's too late to make a difference for your
When I was on Stu Taylor's Equity Strategies radio show
recently, we discussed the options if you are older and have not
saved a dime yet. Basically, let's say you just turned 50 and you
looked at your income statement and there is nothing but a $0 at
the bottom of the page, you still have plenty of time to build a
solid nest egg. For instance, you can start maxing out a Roth IRA
contribution ($5K/year currently, but in addition to the "standard"
contribution limits, taxpayers age 50 and over are eligible to make
a Roth IRA catch-up contribution of an additional $1K/year). If you
were to invest $5K per year for every year in your 50s, each $5K
you invest would turn into more than $40K after 20 years. So you
see, it's never too late to get started as long as you're investing
in the right dividend-paying stocks! Anyone that read last week's
data from EBRI stating 27% percent of workers said they are "not at
all confident" about their retirement savings (Another 23% said
they are "not too confident" - amounting to about half of workers
worried about saving enough for their future retirement) should
find solace in the example I have given above.
The retirement story can hit hard for women especially. The
latest statistics show that women earn about 76% of what men earn
over their lifetime. Plus, women spend an average of 12 years out
of the workforce, whether it's taking care of children or loved
ones. Other key factors for women to consider when it comes to
getting a handle on their own retirement: potential for divorce,
women tend to live longer so longevity is a concern, a married
couple's combined Social Security benefit tends to be reduced by
one-third to one-half when one spouse dies (again, women usually
The bottom line is for individuals to get started and
consistently stay with the process of building a huge nest egg,
whether it is starting from scratch and opening your first online
brokerage account, educating oneself as to what dividend stocks can
work best to generate returns, automating the process of getting
money to be put to work into your brokerage account, and lastly
just keeping a watchful eye over your portfolio each month. No one
will care more about your finances than YOU!
Dividend investors that are looking for income should not be
distracted by the headline grabbers and instead be looking for
opportunities in companies that are currently on our
Best Dividend Stocks List
. If you are trading these names, then you may not be interested in
what the aim of our site is. We do feature some growth-related
dividend plays for those looking to be aggressive, but not for
day-trading types. Our main focus is on quality dividend names with
attractive yields, and this should be the main focus for all those
that are hoping to build income for the long-term. We will continue
to parse through our data to make sure the names we like best
remain on our recommended list. If we take off higher-yield names,
it is not a sell call unless we say it is. We just want to have the
best names from a risk/reward standpoint on our recommended list
for new money at all times. Investors should however utilize a sell
strategy in the event a company you own drops 25% and there are
company-specific problems that could cause significant
underperformance for that particular stock.
Not sure if anyone is noticing the IPO debut of GNC Holdings (
) today. If you are not familiar with the company, they are a
vitamin store franchise with 7,100 stores. They don't pay a
dividend at this time, but I thought you may find some of the
history interesting considering it has tried to come public twice
before. Bank in 2003 Apollo Management purchased GNC from Royal
Numico in 2003 for $750 million. The company then entertained the
idea of going public, but withdrew proposed initial public
offerings several times. In early 2007, Ares Management and the
Ontario Teachers' Pension Plan decided they saw a great deal in GNC
and paid what amounted to nearly $1.65 billion for the company.
Fast forward to this morning and you can imagine there are many
fingers being crossed the IPO will be a success.
My question is what was the pension plan thinking in the
acquisition of a company that had to withdraw their IPO plans
several times? I talk about this because I like to examine the
psychology of what works in business and when deals make sense. If
you are in retail, you may be familiar with the mistakes many
ambitious entrepreneurs make when it comes to trying to make it a
go with a location that has seen many enterprises come and go. In
business, you have to check your ego at the door many times when
exploring opportunities. You know how many restaurants open and
close every year just from picking bad locations. I can bet you
plenty of times the "attractive" rents were used as a lure to bring
inexperienced first-timers in to take their shot. When I look at
the history of GNC, I wonder what the person who advised the
teachers' pension plan to get in on the deal saw that the public
markets didn't have an appetite for several times didn't see. I am
hoping things work out well for those investors today as GNC opens,
but this could be a lesson that anyone who is considering a "deal"
better do their homework when it comes time to weighing the reality
of the situation. Why should the teachers' pension plan buy a
company the public markets had no appetite for? Other example from
above: why will my restaurant make it in a location that have seen
numerous other food places fail? I ask you this: are you listening
to what the market is telling you?
Be sure to catch up with our latest watchlist updates this
, including reports on earnings/story stocks, analyst
upgrades/downgrades, dividend ETFs, and more. And as always, you
can view our current recommendations on our industry-leading
Best Dividend Stocks List
. Also, please keep the book reviews coming on Amazon.com coming if
you have picked up a copy of my just-released
"Be a Dividend Millionaire"
book. It means a lot to get your support!
Thanks for reading! P.S. Please pass this e-mail on to someone
you think can use some financial motivation. Thanks again!
Be sure to visit our complete recommended list of the
Best Dividend Stocks
, as well as a detailed explanation of
our ratings system here