Most market watchers were expecting some selling following the
President's prime-time gloomy picture of the debt ceiling talks
going on in Washington. It would appear the markets are pretty
certain a deal will get done in time to keep the lights on (until
the next time the debt ceiling debate is back on the agenda, at
least). That said, it didn't stop nervous investors from doing some
selling toward this afternoon's close.
I am certainly not taking anything for granted, especially when
you have politicians involved. However, I have seen politicians act
at the market's beckon for years and years. The stock market has
become Washington's scorecard, and even though the economy may not
be as tied to the market's performance, it is still the barometer
of choice.
And speaking of the markets, earnings were the headlines moving
individual names once again. Upside highlights included Broadcom (
BRCM
) (which needed a good quarter to break the recent losing streak),
Cummins Inc. (
CMI
) (which did not see the same slowdown competitor Caterpillar (
CAT
) talked about during its earnings commentary), Lockheed Martin (
LMT
) (which raised guidance despite threat of military spending
slowdown), and Simon Property Group (
SPG
) (which posted yet another solid quarter from this retail
space-oriented REIT). SPG is a name that we moved to the sidelines
a while back unfortunately and the stock has not come in much. The
dividend yield at these levels does not seem great from a
risk/reward scenario.
On the downside today, we had U.S. Steel (
X
) (which has been underperforming the last several quarters and
this earnings report was not better), United Parcel Service (
UPS
) (surprisingly the market is holding up fairly well considering
the weakness in the shares as some market watchers look at this
play and FedEx (
FDX
) as a barometer for the overall economy), and 3M (
MMM
) (which was due for a breather as the results have been stellar up
to this point). As is the case with SPG, we would like to find a
better entry point in 3M shares for investors to consider taking a
position.
Quick Note - We removed a dividend stock from our
Best Dividend Stocks List
this morning. Please be sure to check out
the full post detailing this downgrade
if you did not read the e-mail alert we sent out earlier today.
A forecast out from the Department of Agriculture yesterday said
food price inflation is expected to persist in 2012 with prices
expected to increase 2.5% to 3.5%. Heat or drought conditions could
cause an even bigger impact as well. The USDA predicts supermarket
prices to climb 3% to 4%. We've also heard earnings results from
various food makers that have pushed through price increases in
recent quarters. Beverage-makers like Coca-Cola (
KO
) have announced price hikes are in the pipeline due to rising raw
materials costs. It will be interesting to see how these numbers
get factored in the CPI figures that are used to determine Social
Security payout levels. It's amazing to see the headline numbers
whenever they are released, and the government rationalize the data
by saying "if you take this number and that number out, inflation
was relatively unchanged." Try that the next time you pay your
income taxes and see how the IRS treats that sort of accounting!
The best way to keep up with whatever the coming inflation rates
will be is to own pieces of companies that have the ability to pass
on price increases and reward investors with hefty dividend hikes.
Not every company is able to get away with price increases. For
some, the cost of doing business will only increase, and with that,
will come less rewards for shareholders. Keep up with the best
companies to own by having access to our industry-leading "Best
Dividend Stocks" list.
Dividend investing allows an investor the opportunity to put
compound interest to work for them, and it's never too early or too
late to become a dividend investor. The key is once you start, you
need to stay consistent and make money available to put to work for
you. That's it. Don't count on the government or your employer to
set you up for a remarkable retirement. Take control, do your own
research, and create one for yourself. It's great to hear from
subscribers that have said they are seeing superb results, and for
the first time feel like they have an actual game plan for building
and maintaining their wealth. The best thing we can do as
individual investors is look for opportunities where we receive
great income (dividends) from the companies who can best weather
the economic storms ahead. You can count on Dividend.com to be your
guide in that arena. As always, you can find all of our current
recommendations on our industry-leading
Best Dividend Stocks List
.
Our main focus is on quality dividend names with attractive
yields, and this should be the focus for all those that are hoping
to build income for the long-term. We will continue to parse
through our data to make sure only the names we like best remain on
our recommended list. Remember, if we downgrade stocks from the
list, it is not a sell call! Only in very rare instances will we
advocate liquidating positions in a formerly recommended name. We
just want to have the best names from a risk/reward standpoint on
our recommended list for new money at all times. Investors should,
however, utilize their own sell strategy in the event a company you
own drops 25% from its 52-week high and there are company-specific
problems that could cause additional significant underperformance
for that particular stock.
Thanks for reading, and I'll see you tomorrow! P.S. Please pass
this e-mail on to someone you think can use some financial
motivation as well as being kept in the financial news loop that
could affect them.
Be sure to visit our complete recommended list of the
Best Dividend Stocks
, as well as a detailed explanation of
our ratings system here
.