We heard lots of buzz this morning about the latest real
estate-related report. Data points showed that U.S. builders broke
ground on the most new homes and apartments in nearly four years
last month.
Ironically, I was watching the show "House Hunters" last night
on HGTV. The episode showed a person looking to buy a home right
outside of the Las Vegas strip area. The home prices varied from
$75K to $130K for homes most people would find quite desirable.
Here's the hook: all of the homes were short sales. Clearly, real
estate's rebound is heavily localized, and those who believe the
rally will lift all boats will likely be disappointed. From an real
estate investment standpoint, the deals seem obvious. However,
problems for landlords still persist. Will tenants that can't
afford to buy ultra-cheap homes be able to pay their rent
anyway?
Getting back to the equity markets, earnings were front and
center today. We saw earnings-related rallies for the likes of
Honeywell (
HON
), W.W. Grainger (
GWW
), and Stanley Black & Decker (
SWK
). SWK also
boosted their dividend payout 19.5%
. On the flipside, investors reacted tepidly to results from
banking plays Northern Trust (
NTRS
), Bank of America (
BAC
), and PNC Financial (
PNC
). Elsewhere, oil prices moved back to the $90 per barrel level, as
commodity prices continue to spike on any buzz that further
bailouts may be coming.
Has the Bond Market Stopped Mattering?
The bond market here in the U.S. is nearly impossible to
decipher these days. The 10-year yield continues its downward
spiral (1.47% to 1.50% yield last I checked), but the lack of
effect the apparent rising demand for bonds (more people buying
bonds means lower bond yields) has had on the equity markets is
truly baffling. I've begun to wonder how relevant bonds are as an
overall indicator anymore.
Granted, we know the government is purchasing its own bonds to
fund its bloated operations. However, our concern is the effect
these tactics will eventually have on stock prices. How far will
investors go to buy up yield in the face of stretched valuations?
So far, the better bet has been to chase yield, regardless of
rising stock prices. But we all know how that game can eventually
end.
Trading volume continues to decline (giving more credence to the
conspiracy theorists who believe there is a consistent manipulation
to keep share prices from falling), and we scratch our heads about
what the technical ramifications will eventually amount to. Stocks
rising on declining volume and dropping on increasing volume (a
concept known as "distribution") almost always leads to lower stock
prices. However, this scenario simply hasn't happened in the past
year or two. So you see, we are forced to maneuver very carefully
when it comes to the stocks we're recommending.
We will not let strange market occurrences throw us off the path
to wealth. We will continue to seek the best possible dividend
stocks regardless of the current environment. Despite the recent
lack of new moves on our
Best Dividend Stocks List
, we can assure you we are looking very carefully each and every
day at several new upgrade candidates. Earnings season tends to
provide better clarity about how companies will fare in the coming
months and years, so stay tuned!
Dividend Stock Removed from Recommended List
We removed another dividend stock from our
Best Dividend Stocks List
this morning. We still like the name, but would wait to add new
money to the shares for now. Check out the name we downgraded along
with a full explanation
here
.
Our
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
free download
for paid
Dividend.com Premium
subscribers.
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.
I hope everyone had a chance to check out our
Dividend.com Premium
members-only weekend articles , including new features that
highlight some of the biggest winners and losers from the week that
was, such as analyst upgrades/downgrades and earnings/story stocks.
These articles are a great way to catch up on the week that was in
the markets. We also have a rundown of how various Dividend ETFs
performed on the week.
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
.