The markets caught a bid this morning following news ECB
President Mario Draghi pledged to do whatever it takes to save the
troubled euro zone. Will the rally be a one-day wonder? As many of
you know, I tend to put more emphasis on the fundamental side of
investing and not get too enamored with sensationalist headlines or
catchy sound bytes.
Once again, today was a big day for earnings reports. On the
upside, we had names like Whole Foods Market (
), Visa (
), Colgate-Palmolive (
), Kimberly Clark (
), and 3M (
) pushing higher. On the flipside, stocks like Cliffs Natural
), Mead Johnson Nutrition (
), Dow Chemical (
), and Dunkin Brands (
) all saw red following their reports.
As always, you can read all the earnings reports we've been
covering over on
The Dividend Daily
Earlier this week, AK Steel (
) and Radio Shack (
) announced they would be suspending their dividends. These
companies have been mentioned numerous times as takeover candidates
or even private equity takeover targets. These purported rumors did
nothing to get us excited to even consider the names for
recommendation ideas. We know bad stocks when we see them, and will
never be sucked in by such nonsense.
We continue to caution investors that the so-called "deep value"
space is an extremely treacherous one to maneuver through. If you
for some reason are attracted to single-digit (sub-$10) stocks,
you'd better get over it fast - or be prepared to watch your
portfolio value crumble over time.
"Never Mind Earnings, It's About Users!"
There it was today, front and center on Yahoo! Finance. The
headline read "Facebook Earnings: Forget EPS, It's All About the
User Base." This headline comes less than 24 hours after another
former web darling Zynga (
) got blown up after reporting its latest earnings. Since Zynga
represents a large portion of Facebook's (
) revenue, FB shares are also getting hit hard today.
As an investor, the further you veer away from fundamentals
(earnings), the much more dangerous your investing strategy
becomes. Sure, we see times in the markets when you can make money
on bubbles, if traders (and business media) are drinking the
"kool-aid." Those times are very narrow, however, and most retail
investors forget to take money off the table following these
occasional rocket-like moves. Greed is a human attitude that we all
possess. Some manage it well, but for the most part, many are
overcome by green and end up seeing investment (trading) profits
disappear right in front of their eyes.
So if you choose to invest based on an analyst's opinion that
focuses not on earnings, but on user base potential, be forewarned:
the ending is almost never good.
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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Thanks for reading, and 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
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