It was another Ben Bernanke to the rescue day for the markets as
the latest Federal Reserve commentary has rates likely remaining
low till the end of 2014 now. Again, more bad news for savers and
investors that remain sitting mostly in cash.
We continue to monitor earnings season closely, and despite
today's Fed announcement, we remain super-selective in our
recommendations. As much as we would like to add a bunch of new
names to our
Best Dividend Stocks List
, we're still wary of how many companies continue to offer cautious
guidance (as well as lowered guidance). If valuation was a concern
before, you can bet we're even more alert now that these lower
earnings numbers are coming in.
Looking at some of the big movers on earnings-related news
today, shares of Textron (
), Occidental Petroleum (
), and Polaris Industries (
) jumped higher on better-than-expected earnings news, while shares
of Wellpoint Inc. (
), W.W. Grainger (
), Corning (
), and Hess Corp (
) all ended lower following their results. It was a big day for
) prices as investors see the printing press effect on U.S. dollars
as a reason to get long the yellow metal.
Can Apple Sustain its Momentum?
The big name that the markets were glued to last night was tech
titan Apple Corporation (
), which easily blew away earnings estimates in their latest
report. Many dividend investors are probably eying these shares,
wishing Apple would pay a dividend. With nearly $100 billion in
cash sitting in its coffers, we'll likely see some form of a
dividend initiated by Apple, but only time will tell.
From a share price standpoint, the company's valuation is
actually attractive at around ten times 2012 earnings. When
disregarding AAPL's massive cash hoard, its valuation could even be
closer to eight times earnings.
I urge investors to exercise caution around the shares, however.
Remember, this is a stock that has run up from $7 a share in 2003
to now $450 a share. This precipitous rise has made many top
company executives multi-multi-millionaires, and at some point, it
becomes very difficult to keep extremely rich people motivated.
Without the godfather-like presence of the late great Steve Jobs to
rule with an iron fist at the company, don't be surprised to see
Apple stumble at some point within the next few years.
Apple competitor Microsoft (
) is a recent example of this sort of downturn. Once founder Bill
Gates shifted his focus to philanthropy (a noble move, no doubt),
the stock's share price soon began to suffer. For more than a
decade now, MSFT has underperformed the markets. Eventually, the
company initiated a dividend and has now raised its payout
substantially in recent years. Similar to Apple, the dividend move
came while MSFT was generating tons of cash.
Apple is under significant pressure to report record earnings
every single quarter. It's possible they could continue to knock it
out of the park for years, but likely improbable. Initiating a
dividend payout wouldn't necessarily light a new fire under the
stock should it begin to flounder, but we certainly wouldn't mind
the opportunity to initiate coverage on the company here at
Finding a Great System that Works for Others
I have mentioned in the past that we spend very little on
marketing when it comes to growing our Dividend.com business. That
doesn't mean we're not looking to gain greater exposure, but I'd
say a good portion of our new users come from word of mouth from
our current subscribers. The best possible marketing you can have
is when customers refer your product or service to family and
I've always believed that results are what matter the most when
evaluating different systems. Is it set in stone that what works
for one person will automatically work for another? No, but having
a referral makes people more open to at least trying a new
service is pretty unique in the stock world. Our focus is on
long-term results, not short-term trading. Our recommendations are
made very carefully and thoughtfully, and we're not afraid to tell
subscribers when we believe the market has run a bit too far. The
feedback we've received from our subscribers has been tremendous,
and we thank those subscribers who've shared the story of their
successes with us.
Anyway, nothing beats trying out something new for yourself.
Here's one more tip I urge you never to forget: always consider the
source of where a recommendation or advice (of any kind) comes
from. Remember, successful people tend to make smarter choices with
the long term in mind than those who constantly seek "get rich
quick" and similar systems.
Working Your Brain "Muscle"
A couple of years ago, I read an article on thedailybeast.com
which talked about the debate of whether or not the brain acts like
a muscle. An interesting part in the article described a program
that was set up for a low-performing elementary school in Oakland.
Over the course of eight weeks (twice a week), kids would go into
one of two rooms to play board games, video games, and card games.
Each room had a particular function, one was to challenge kids'
reasoning ability and the other to challenge their processing
At the end of the program, the results were incredible. The
group that trained for reasoning ability saw their non-verbal
intelligence scores leap 32%, while the group that trained for
processing speed saw their brain speed scores jump 27%. So in just
a total of 20 hours, the games had a drastic impact on the kids'
It would seem that these sort of game activities are just what
today's generation could use. We now live in a distracting,
tech-enabled society, where many cognitive skills are massively
undeveloped. Texting, tweeting, etc. are very much in vogue, but
aren't making our younger folks any much smarter. In fact, one
could argue these methods of communication are counter-productive
in children's development, as many kids these days can barely carry
a real-life conversation.
The easiest way to build up one's brain muscle is by reading. I
am an advocate for reading as much as you can about the issues that
are important to us, especially as we get older. Whether you're
trying to better yourself financially, professionally, or shape up
your health, reading up on these topics is no doubt the best way to
fill the information void. It's easy to kick back and watch movie
after movie, or browse the latest celebrity gossip, but if you
don't take the time to read, your brain will certainly begin to
contract. At some point, my guess is your wallet will soon follow
2011 Was a Big Year for Dividend Stocks!
It is always great to see the media tip their hat to what has
been a great year for dividend-paying stocks. We've been seeing
several major media outlets publishing articles about how dividends
were a big investing theme in 2011 and likely in 2012.
The truth is that we tend to see solid years more often than not
in the dividend world, but the business media focuses their
attention instead on the high-risk momentum action. Only in times
of extreme duress does the media seem to focus on our dividend
niche. Regardless, we won't be distracted from our job of finding
the best dividend names to put fresh capital into.
I'd like to thank all our
subscribers and newsletter readers for helping spread the word
about our service. It means a lot to us, and telling loved ones
about Dividend.com is the best possible gift you can give to us
this holiday season.
Beat The Markets with Dividend Stocks
eBook Has Arrived!
We just debuted our brand new 275-page eBook, exclusively on
Dividend.com! In this digital-only book, we look ahead to 2012 and
the main factors that could affect dividend investors. A $39.95
value, the eBook is a
Beat The Markets with Dividend Stocks
contains a full economic forecast for 2012, including in-depth
analysis on 65 of the biggest dividend stocks out there. It's a
great way to get prepared for your investing next year! So head
over to the
Dividend.com Premium homepage
now to download your copy.
A Dividend Capture Strategy for Active Investors
We now offer complete U.S. dividend data for all
members, so anyone that focuses on "Dividend Capture" trading
strategies should have plenty of good stuff to research each day.
Just check our enhanced
, which is the best in the business, to search for upcoming
Speaking of dividend capture, Dividend.com Premium members can
also access a 9-page report we published on the essential elements
to any successful dividend capture strategy. Be sure to check it
out here on the
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