With the EU Summit and the Supreme Court ruling on the
President's healthcare plan leading the headlines today, investors
spent most of the morning and early afternoon making a quick dash
to the sidelines. However, late-day buying pushed the averages well
off the lows.
Part of the investor concern we saw was certainly tied to the
news JP Morgan (
JPM
) may have underestimated
the trading loss that shook the markets several weeks
ago
. There is some chatter the loss could be closer to $9 billion and
not $2 billion as was previously thought. This news hurt fellow
global bank names such as Deutsche Bank (
DB
) and Citigroup (
C
). Elsewhere, earnings results pushed stocks like Family Dollar
Stores (
FDO
) and Paychex (
PAYX
) lower. Also, cautious Wall Street analyst commentary is putting a
damper on shares of Seagate Technology (
STX
) and Coach (
COH
).
Earnings Season Approaches
The beginning of earnings season is upon us, and investors
should expect the unexpected. Some companies' reports will
disappoint, but the shares will rise anyway. Others will report
blowout earnings, but shares will pull back on the news. We will be
sorting out the winners and losers throughout this process as we
look for new candidates to add to our
Best Dividend Stocks List
, and re-evaluate names we currently like to see if they should
remain on the list.
Earnings season is often the most dangerous time to be a trader.
For dividend investors, however, the market's reaction to earnings
reports can present a welcome opportunity. If a stock gets beat up
for just meeting analyst estimates, we'll sometimes see momentum
traders scamper for the exits over several days, making stocks
we've been watching much more enticing.
Now here's a word of caution when it comes to analyst calls
during earnings season. I've seen many instances where analysts
like to play "catch-up" as far as earnings estimates go, either by
raising or cutting numbers just before a particular company's
report, only to see the stock move in the opposite direction (stock
rallies on a bad report or declines on a good report). So again,
just keep this factor in mind as you evaluate stocks that may be on
your watch list.
Getting an Investment Strategy That Fits
For investors, perhaps the most important factor is finding
reliable sources of information that help you formulate your
investing strategy. The mainstream business media is loaded with
all sorts of "gurus" - from those who advise on how the markets
will perform in the next 5 hours, to those who specialize in
specific industries or sectors. And then you have the economists,
whose aim is to predict how consumers will be affected from the
recent monetary twists and turns.
If you wind up listening to the wrong guru for your overall
investment strategy, i.e. one who doesn't fit your personal
objectives, you'll undoubtedly be disappointed by your results. The
same concept applies to life in general. Surround yourself with
people who spew shallow opinions with little relevant facts to back
up their take, and sooner or later you will likely become a member
of this traveling band of misguided observers.
Our Dividend.com users are a very hands-on bunch, as we found
out from a recent survey we did on the website. We asked how many
of our subscribers handle their own investments, without the aid of
an investment advisor or full-service broker. An overwhelming 80.5%
indicated they did not use an advisor to help guide their
investments.
Our stance has always been that most people are fully able to
make their own investment decisions, especially when they use the
simple dividend investing strategy we advocate here at
Dividend.com. Of course, that doesn't mean you should never
consider speaking with a financial planner or estate attorney
during times when their particular expertise can be of great
use.
You'd be surprised at how people well people can do for
themselves when they put the right strategy and knowledge into
practice!
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
We know many of you enjoy reading the daily newsletter, but
remember that with our
Dividend.com Premium
service, the newsletter is just one small component of what we
offer. Here are the "Big Three" benefits of our Premium
service:
- The
Best Dividend Stocks List
is used by tens of thousands of investors to help build their own
portfolios.
- Creating your own
Watchlist
allows you to track the performance, news, and upcoming dividend
payouts of the particular stocks you care about.
- 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.
We don't ask for a credit card to use our free trial, and we
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keep enjoying the newsletter, but please give
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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
.