The markets followed yesterday's lead as a better-than-expected
pending home sales number had some real estate bulls feeling good.
Still, we're seeing no clear trend from month-to-month in the world
of real estate data.
Federal Reserve chairman Ben Bernanke commented yesterday that
the fed would take whatever means necessary to keep the economy
moving ahead. That commentary increased investor confidence late in
the day, and has carried over a bit this morning. If Bernanke is
serious about being open to a negative fed funds rate, sitting in
cash will become even more painful for investors still leery of
putting their money to work. As always, we feel dividend stocks are
the best possible investment vehicle for the vast majority of all
Today has been a huge day for quarterly earnings results.
Looking at some of the biggest winners, the list included names
like Mead Johnson Nutrition (
), Raytheon (
), Starwood Hotels (
), L-3 Communications (
), and Xilinx (
). On the flip side, we saw selling following earnings results from
companies like Aetna (
), Cliffs Natural Resources (
), Whirlpool (
), Potash (
), United Parcel Service (
), and Dow Chemical (
). We've also seen plenty of dividend payout hikes reported this
week, so be sure to check out all the increases detailed in our
daily articles on
The Tipping Point
Almost every investment we make will have a tipping point.
Whether you're talking stocks, real estate, or other vehicles,
everything reaches a point where the investment value flatliness
and begins to move lower.
In the stock world, almost anything can end a good run.
Competition, falling industry demand, new technology, complacency
at the top (management), bureaucracy killing innovation, and many
other factors can turn a company's fortunes sour. In real estate, a
particular area can simply become overpriced and values begin to
lag. Or, an area can head lower due to local industries closing
shop, creating a potential exodus from employees affected by the
The key with any investment you make is to avoid a dangerous
sense of loyalty to any particular holding. Just because something
worked for you in the past doesn't mean it's still the best option
At Dividend.com, we pay very close attention to various
indicators in the market as well as specific company situations
that can signal a tipping point. Keeping track of key economic
indicators can also signal a turning point coming, which then
factors into our opinions on the dividend-paying names we cover.
Looking ahead is what investing is all about. As always, we'll be
sure to pass on our opinions and recommendations to readers
Investing is Not a Sport
Having been a trader for many years myself, I still like to stay
in the short-term investing loop. I talk with traders who battle
the markets on a daily basis, and most of them comment on how hard
the markets are to trade these days. Rapid-fire moves due to
leveraged ETFs, computer trading algorithms, and the daily
"breaking news" cut-ins from business media are just a few of the
challenges facing traders.
Investing in dividend-paying stocks is almost the exact opposite
of day trading. Dividends provide long-term compound interest and
allow investors to escape from the day-to-day worries that traders
face. Of course, dividend stocks can encounter problems just like
momentum stocks. However, the inherent stability of high-quality
dividend stocks makes them much more attractive to everyday
investors who will not panic at the first sign of red on the
For us here at Dividend.com, we are not into investing for
"sport," but rather to build wealth at a steady pace and without
many of the usual headaches that you would get from trying to
"play" the markets.
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- Understanding their unique company structure
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25 Years of Dividend-Increasing Stocks
We recently updated our list of dividend stocks that have been
paying out dividends for 25 years or more. Be sure to check out
the latest list of names here
Dividends Really Matter
Financial blog DailyReckoning.com recently took a look at the
difference dividend payouts made in the overall return investors
saw throughout the prior decades. Here are some of the
- The Nasdaq is down 28% since the end of 1999. Even the "blue
chip" S&P 500 stocks are down 15% during that time frame…until
you add back those "boring" dividends. With dividends included, the
S&P 500′s 15% loss flips to a 6% gain.
- Without dividends, the S&P 500 index would have produced a
loss for the 25 long years from August 1929 to August 1954. Then
again, without dividends, the S&P 500 produced a 5% loss during
the 13 years from September 1961 to September 1974. But with
dividends included, the S&P's loss became a 46% gain.
- Over the course of the last half-century, dividends have
contributed more than half of the stock market's total return -
56%, to be exact.
Of course, you can't discuss the potency of dividend investing
without making mention of how awesome compound returns are. I can't
stress enough the power of compound interest: you take a small
amount of money and turn it into a large amount over time. Finding
the right companies at the right price points which not only grow
earnings, but also grow their dividend payouts as well!
New Watchlist Article Out Today
Be sure to check out our weekly Top 50 High-Yield Watchlist
Names post that is out today, exclusively for
members. This list gives readers a good idea of what stocks we're
watching behind the scenes here for potential upgrades.
Go Beyond This Newsletter
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use it to keep track of impending payouts. Just visit our
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Thanks for reading, and I'll see you tomorrow!
Be sure to visit our complete recommended list of the
Best Dividend Stocks
, as well as a detailed explanation of
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