The market has been doing a good job of "whistling past the
graveyard" when it comes to ignoring the bad economic data out
lately, including this morning (Philly Fed survey, existing home
sales, jobless claims). With many eyes on company earnings, the
poor economic data is being met with less reaction. However, this
practice could be a mistake for investors making big bets on the
markets continuing to ignore the fundamental story of the
As for the big earnings movers, investors were cheering the
results from V.F. Corp (
), Capital One Financial (
), IBM Corp (
), Qualcomm (
), and Union Pacific (
). On the flipside, selling was mostly the reaction to results from
Johnson Controls (
), UnitedHealth Group (
), Danaher (
), Morgan Stanley (
), and American Express (
We've got tons of earnings reports up on
The Dividend Daily
blog, so be sure check them out.
Missing on Revenues, Beating on Profits
The title above seems to be a central theme from the early
earnings reports we've been making our way through. Corporate
America is right to be cautious, as companies are not seeing the
growth analysts keep saying is right around the corner. So what
does corporate America do? More with less.
The mention of new job hires remains quite elusive, and despite
the moves we are seeing from the Federal Reserve, at some point the
economy needs to be able to stand on its own. The proverbial
"elephant in the room" that no one likes to point to is the
technological/web advances being made that can flip and industry on
its back, i.e. companies with 20-30 employees competing quite
easily with those who operate with many times that headcount.
As I keep saying, a healthy job market remains the ultimate
foundation for a vibrant economy. Without it, we will see the
numbers of those relying on government assistance continuing to
rise. As for the investment ramifications, we are monitoring the
data closely and will certainly make our recommendations with a
keen eye on what is coming down the road - and not what has already
Student Debt Will Bite Many of Us
New data released Tuesday by the Federal Reserve Bank of New
York shows middle-aged Americans feeling the biggest negative
effect of student debt obligations. The delinquency rate, or the
percentage of debt on which no payment has been made for 90 days,
was 11.9% for debt held by borrowers aged 40 to 49 as of March.
That rate is worse than the average 8.7% rate for borrowers of all
ages. Those over 40 and in debt are still paying balances from
college they attended many years ago, but at the same time, their
net worth has flipped upside down as home values and savings have
declined sharply in recent years. The college loan effect also taps
those in their 50′s and 60′s, as we hear of parents and
grandparents taking on the burden of helping children and
grandchildren absorb the cost of their college education.
Most older individuals going through these situations can all
tell you they never planned on being on the hook for the younger
generation's bills. Thus the importance of making sound
investment/financial decisions at every point in our lives. That
way, you'll be prepared when the unexpected happens.
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.
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