The market continued to exhibit skittish behavior in its
reaction to economic headlines. Despite what would have appeared as
bearish data points coming out this morning in Europe, the indices
all managed to close higher. Not that we're complaining, but the
tape action once again expresses the notion of how hard active
trading can be. There was also a late-day rumor being floated that
central banks stand prepared to offer coordinated actions if
additional liquidity is needed, which did help secure the
gains.
Kroger (
KR
) shares ended higher on
positive earnings news
. Elsewhere, shares of Home Depot (
HD
), Costco (
COST
), and Mead Johnson Nutrition (
MJN
) all gained nicely as investors focus on consumer brands. We did
however see some red on the screen in shares of Qualcomm (
QCOM
), possibly related to
news of layoffs/plant closures
in competitor Nokia (
NOK
). Also, shares of Tiffany & Co. (
TIF
) lagged for much of the day. If you remember the company
disappointed investors with
its recent quarterly results/outlook.
Real Estate Woes Go Global
The latest data from Spain shows Spanish house prices fell at
the sharpest pace since current records began in 2007. The average
Spanish property selling price dropped 12.6 percent year-over-year.
Most of us here in the U.S. tend to focus in on the real estate
slump we've experienced, but with unemployment rates even worse
overseas, financial plays that have overseas exposure could be in
for some rocky months (or years) ahead if the proposed bailouts
don't contain the economic problems abroad.
We tend to hear a recurring theme from analysts that bank stocks
are "cheap." I'd say they're "cheap for a reason." Instead of
lining up to call the first turn up, we prefer to see a bit of
evidence real estate prices here and abroad are finished falling.
Outside of hot areas (of which there are few), real estate prices
on the residential side continue to struggle.
I personally prefer to own my home rather than rent, but renting
in the short-term makes sense as well, especially where career
flexibility is concerned. You'd be stunned at how many people are
tied to a specific geographical region because of a property they
own.
I'm not here to beat up on real estate, but from an investment
standpoint, I suggest folks look at homes only as places you want
to live in. Only if real estate prices stabilize over the long term
can a home purchase really be considered any sort of "investment."
The only proven investment tied to real estate are properties that
throw off positive cash (multi-family buildings, office buildings,
other commercial property). Most seasoned real estate investors
look mainly at the cash flow when evaluating a property's
investment potential. In some areas, you may see a premium added to
the equation due to an expectation of price appreciation, but those
are few and far between.
In conclusion, the housing market - both in the U.S. and abroad
- clearly has a lengthy recovery period ahead of it. As a result,
how this recovery plays out will have a huge impact on our
investment strategy as we continue to look forward.
Watch Out for Substitutes
You often hear the tag line above in product advertisements. I
think in this day and age, it is much harder for those who try and
replicate a service to make as big a dent as we used to see.
When you're in the content/research business like we are at
Dividend.com, the focus should be on putting out the best effort
possible. We try and raise the bar as much as we can to separate
ourselves from our competition. While a rival can try and replicate
the look or structure of our site, they'll never be able to
duplicate the quality of our research and the effort we put forth
each and every day. Our exclusive content and original voice really
set us apart from others in the dividend niche.
It doesn't matter what business you're in, you need to set the
pace and avoid playing catch-up. Every industry is filled with
numerous competitors, and if you watch the comings and goings in
today's startup landscape, it's fairly obvious how many "knock-off"
services there are out there. Amazingly, these companies are able
to raise substantial capital to compete in a space where they'll
only be playing catch-up to their more established competitors.
While it's not impossible for a new company to spring up and
disrupt the status quo, if you can create a platform that produces
results consistently, you will soon have a wider moat around your
business.
So if you are an entrepreneur or are thinking about becoming
one, get in the game to be a leader and leave those who can only
replicate in the dust.
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
highlights:
- 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
Dividend.com Premium
members. This list gives readers a good idea of what stocks we're
watching behind the scenes here for potential upgrades.
Go Beyond This Newsletter
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remember that with our
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- Finally, we offer the most complete and easy-to-use dividend
data on the web. Many subscribers use this data as part of a
"Dividend Capture" trading strategy, but long-term investors can
use it to keep track of impending payouts. Just visit our
Ex-Dividend Calendar
for a complete outlook on which companies will be paying out
soon.
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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
our ratings system here
.