The market remained tentative around the Dow 13K levels today,
while oil prices and Middle East tensions continue to provide
investors with plenty to worry about.
Earnings results helped lift names like Garmin (
) and Intuit (
read more here
) today. On the flipside, TJX Companies (
) and Chesapeake Energy (
) ended lower following their earnings announcements. TJX did raise
their dividend payout, but still yields less than 1.40%.
Gannett Boosts Dividend 120%
Speaking of dividends, Gannett (
) made some big waves in a conference call this morning. The
company's board authorized a massive 120% dividend hike. GCI's
quarterly dividend now goes from 8 cents to 20 cents, bringing the
stock's yield up toward the 5% levels. Predictably, the shares are
moving higher on the announcement.
As much as we like the new dividend yield, our main concern is
the company's business. The traditional publishing space has been
brutal for several years now, and shows no signs of recovering.
Plus, Gannett shares sold off back in January following their most
recent earnings announcement, which is another worry for us.
Just take a look at stocks like Nokia (
), Radio Shack (
), and other "value" names where the fundamental business has been
hurt badly. The high dividend yields of those stocks have failed to
keep shares from falling. Furthermore, let's not forget the
unfortunate case of The Tribune Company. That newspaper giant,
little more than 18 months after being bought by billionaire
investor Sam Zell, filed for bankruptcy in 2008. And another
Gannett competitor, The New York Times, has seen its own share of
troubles. NYT shares have plunged more than 72% in the past five
Now some may argue that Gannett could mimic the performance by
Meredith Corp (
), a broadcasting competitor of GCI that raised its dividend
significantly and has seen shares stabilize nicely since. In any
case, we bumped up our DARS ratings a bit for GCI (from 2.9 overall
to 3.2, but below the 3.5 rating needed to be recommended). We're
still concerned about the company's business prospects long term.
If the reaction to the most recent quarter is any indication,
investors may want to think long and hard if the stock merits a
place in their portfolio. The market likes the news today, but
beyond that, Gannett's future is far from certain.
Income-Oriented Investors in the Sweet Spot
An article in today's Wall Street Journal looked at how similar
the current period of low interest rates is to the economic
environment back in the 40′s and 50′s. According to Strategas
Research Partners, high-yield dividend stocks offered the best
returns for stock investors throughout the 1940s and 1950s. In the
1940s, dividends comprised 74% of the total returns investors
earned on stocks, and 40% of returns during the 1950s. That doesn't
mean every stock that pays a dividend gets the green light to buy,
of course. Our industry-leading
Best Dividend Stocks List
makes it easy to find what stocks deserve your hard-earning
My kids and I are big fans of American Idol, and watching this
year's "group round" auditions makes for some startling revelations
about today's younger generation and how they process
Granted, the contestants suffer from a bit of nervousness during
their auditions, but nerves can only account for so much. The young
singers (ages 15-28 I believe) break up into groups during this
round, and have an entire day to learn one song to perform
together. Each group member has just 3 to 4 lines of a song to
memorize, along with a bit of choreography for their next day
performance. Not super easy, but certainly not rocket science,
right? Problem is, most of these kids simply aren't used to putting
that kind of intellectual effort into anything.
After staying up late in an attempt to memorize lines, get their
performance in order, and gel with their teammates, it appeared
that some of the contestants' bodies and brains began to
"malfunction." Many suffered from nausea, fainting, temper
tantrums, paranoia, and other maladies.
The next day, the live performances began and I was appalled at
how many contestants couldn't remember 3 or 4 simple lines to a
song. This phenomenon didn't surprise me, unfortunately. Over the
past few years, I've spoken to high school and college students
about the business world, and these students' teachers and
professors usually weren't too positive in their assessments of
today's youth. Many educators related to me that they've seen a big
drop in attention to detail over the years. Their students seem to
have trouble when it comes to problem solving and using their brain
more than they usually do. It's hard to pinpoint the exact cause of
this trend, but the ever-growing popularity of video games,
texting, and social networking sites like Facebook and Twitter
probably aren't helping the problem.
As a parent, this trend is a big concern for me. I know full
well that if I don't stay on top of my own kids and push them to
succeed, it'll be all too easy for them to fall into an
intellectual rut. If you have children or grandchildren, I urge you
to do the same. Let's not fall into the trap of lowered
expectations for the younger generation. Instead, help inspire our
youth to learn and achieve more!
New Dividend Stock Recommended Today!
We just upgraded a new dividend stock this morning onto our
Best Dividend Stocks List
. Be sure to
check out our post
detailing the upgrade if you haven't already.
Quick note: if the stock is moving up too quickly following a
recommendation, it may be best to wait for a pullback. Investing is
a marathon, not a sprint!
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Thanks for reading everybody. 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
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