Today, the market had its first legitimate sell-off we have seen
in quite a while. Part of the fall was being contributed to a
not-so-stellar personal spending report released this morning.
Throw in the consumer savings rate dropping for the first time in 5
months, and investor angst became certainly apparent.
This downside move isn't necessarily a bad thing, however. We've
been concerned about recent market complacency when bad economic
data points have been released. The markets are doing what they're
supposed to do for once - pulling back on negative news.
We also saw monthly retail sales data from numerous retailers
this morning, and there are some winners and losers that are
standing out so far. Leading the gainers list were shares of Gap
) and Kohl's (
), while TJX Companies (
) and Autozone (
) had the opposite reaction. We also saw some nice dividend
increases from our banking friends from the north as
Toronto-Dominion Bank (
), Royal Bank of Canada (
), and Canadian Imperial Bank (
) all raised dividend payouts. We have liked some of these Canadian
banking names in the past, and continue to monitor the sector
closely for possible upgrades.
Discipline Trumps Conviction, Every Time
We have seen many a great trader fall from grace over the years.
Often times these investors had previously enjoyed great
performances over long periods of time, and developed a strong
sense of conviction along the way.
Unfortunately, conviction can sometimes be a dangerous trait.
When investors get used to most decisions going well, they'll
sometimes draw lines in the sand, always expecting the same
results. It is during these particular moments of conviction where
one fails to recognize downward trends. Maybe the investor has
always admired this particular company, and can't come to terms
with the fact that negative shift is irreversible. Instead of
recognizing this reality, "hope" enters the picture. Steep losses
almost always follow.
It is at these times where careers can sometimes come to an end
for even highly-heralded traders. Even though we as individual
investors may not be investing the vast amounts of money some of
the most successful money managers do, keeping our own discipline
is just as important - regardless of whether a position is small or
large. Taking losses and making mistakes is part of the overall
investing process. Don't shun these developments. Embrace the, You
will be a better and more profitable investor for learning these
lessons in the long run.
This point leads me into the current market environment, where
stock prices are sort of meandering around. Investors are waiting
for Ben Bernanke to say the magic words, that the printing press
will remain active and further easing is on the horizon. We at
Dividend.com have taken a more cautious approach in recent months.
We are trying to remain focused on fundamental reasons to buy
shares, more than what the Federal Reserve is planning or not
planning. Despite our
Best Dividend Stocks
list remaining fairly lean, there are some opportunities we are
closely monitoring that could be in our sights to recommend in the
very near-term. We will keep subscribers updated to when we do make
any new additions, as well as alterations to what we presently
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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Best Dividend Stocks List
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"Dividend Capture" trading strategy, but long-term investors can
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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
our ratings system here