The market started out the day fairly strongly following
better-than-expected economic data, with a drop in jobless claims
being the headline story. The early pop lost a bit of air in the
afternoon, as the averages pulled off the highs.
Earnings results played a role in today's market action. FedEx (
) was a highlight on the upside following the company's earnings
beat. On the flipside, Discover Financial Services (
) gave up early gains and closed in the red despite a good earnings
beat and dividend payout increase. Steelmaker Nucor (
) pulled back slightly after the company guided its profit outlook
lower. Spin-off news from Covidien plc (
) pushed shares higher by the end of the day. Gold (
) prices were snapping back early on, but could not hold the gains,
finishing lower by the close.
Stay Away From "All or Nothing"
It's great to have confidence in what you are investing your
money in and it's even better to see the results you expect to see.
Where things get tricky is when investors decide to press the
What I mean by press could be simply putting more money to work
in individual positions than they would normally feel comfortable
with or begin to be more active from a trading standpoint as well.
If you remember the story in my "Be a Dividend Millionaire" book in
which I described what happened to a friend of mine who had a great
start to his trading career (netting him $9K over his first seven
trades). He pushed his luck buying a stock that had rewarded him
during some of those early winning trades (Broadcom), only to see
him buying more and more of the stock as it dropped (eventually
costing him $17,500) and bringing his previous net profit into a
$8500 loss when all was said and done.
There is a famous hunch that many professional gamblers and
traders like to go on. When they feel the odds are in their favor,
they bet big and sometimes bet it all. We all know that may sound
great, but is risking it all ever really worth it?
Plenty of investors have made a great career for themselves
hitting the proverbial "singles and doubles" without ever worrying
about the outcome of one earnings report singlehandedly making or
breaking their portfolio. If you ever feel a need to make it all up
in one trade or financial move, step back and realize what is at
stake. Avoid those situations always!
25 Years of Dividend-Increasing Stocks
We just 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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Thanks for reading, and I'll see you tomorrow!
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Best Dividend Stocks
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