Despite the uncertainty gripping investors in Europe, the U.S.
markets closed the week with one of its biggest one-week gains so
far in 2012.
Looking at today's headlines, McDonald's (
MCD
) shares ended lower following the company's second consecutive
disappointing monthly sales update. This news hurt shares of
competitor Yum Brands (
YUM
) as well. Elsewhere, investors were looking positively on HMO
plays Wellpoint Inc. (
WLP
) and Aetna (
AET
) as election year implications start to be explored. In my
opinion, it's way too early to make election-centric bets. There
are too many moving parts, and opinions can cause wild share price
gyrations.
Once again, Wal-Mart Stores (
WMT
) acted as a safe haven, despite its somewhat unattractive dividend
yield. Also, Wall Street analyst upgrades had shares of W.W.
Grainger (
GWW
) and SunTrust Banks (
STI
) tacking on gains. Other dividend names gaining nicely today, also
included Target (
TGT
), Coach (
COH
), and Capital One Financial (
COF
).
For our full coverage on these stories and more, be sure to
visit
The Dividend Daily
, which is chock full of dividend-centric articles.
Dividend Stock Removed from Recommended List
We removed another dividend stock from our
Best Dividend Stocks List
this morning. We still like the name, but would wait to add new
money to the shares for now. Check out the name we downgraded along
with a full explanation
here
.
Saving is a Virtue to Embrace
The majority of people in our American society place very little
priority on saving money. These folks prefer instead to spend every
dime they earn on material possessions. They live in the "now,"
rather than looking toward the future.
Unlike savings trends in European countries such as Germany,
France, Austria and Belgium, which have all seen household saving
rates hover between 10 and 13 percent for the past three decades,
Americans barely save any money at all. In fact, the savings rate
in the U.S. dropped to nearly zero by 2005. The rate then rose
above 5 percent following the 2008 financial crisis, but has
recently fallen back below 4 percent.
Because Americans can borrow money with relative ease, the U.S.
has adopted a mindset that endless consumption - regardless of
potential repercussions - is good for the economy. While this
approach has certainly fueled America's growth over the past few
decades, I believe the rubber band will eventually snap.
While the government can put together temporary patchwork fixes
to avoid "paying the piper" so to speak (i.e. printing money),
individuals don't have the same luxury. Declaring personal
bankruptcy is still an option for those who dig too deep a hole,
but the world is changing. Lenders are becoming less and less
willing to overlook past money discrepancies. And although we've
heard some recent chatter about governmental incentive programs to
help individuals better prepare for their later years, I'm sure
you'll agree that waiting for Washington to rescue you is a real
long shot.
Meanwhile, people have unlimited tools at their disposal to
improve their finances themselves. Working to eliminate debt
(especially high interest loans like credit cards) is a great
initial step. Financial accountability also means focusing a bit
more on budgeting your money. Prioritize your expenses to first
account for your main fixed costs (rent, mortgage, food, insurance,
etc.) before doing any extra spending (clothes, dinner, movies,
etc.). This practice makes a ton of sense, and I think also will
teach you some self-discipline.
Building wealth also requires you to set aside funds and invest
them in income-producing assets. Dividend investing is our
immediate focus, but you can also invest in a personal business, or
even look into positive cash-flow real estate as another potential
money-maker.
Dividend investing does not require a special talent, education
level, years of experience, luck, or much money either. It simply
requires a commitment from you as an investor that to keep
consistently put money to work in the best ideas available (that
would be from our
Best Dividend Stocks List
). It's that simple!
Leaving Money out on the Street
I recently read an interesting article in the Wall Street
Journal about how companies are taking longer to pay their
outstanding invoices. The latest data shows up to 64% of the 850
small businesses surveyed last year (source: National Federation of
Independent Business) reported having invoices that went unpaid for
at least 60 days, and 20% said delinquencies were getting worse.
These invoices are for companies mostly with annual sales of less
than $5 million.
A study released in May by Experian, a global
information-services company, found that businesses earlier this
spring were paying bills an average of 7.6 days past due, a 14.1%
increase from the same period last year. Of nearly 5,000 small
businesses, 14% cited late payments as their biggest business
challenge in 2010, up from 2% in 2008, according to the latest
available data in an ongoing study by the Kauffman Foundation of
U.S. start-ups.
Why are these data points important? Because they relate
directly to jobs. The longer companies take to get paid, the harder
it is for them to feel good about expansion possibilities. Lines of
credit are getting tighter and tighter, so business owners are
having more difficulties making payroll. This trend is not a good
one as far as economic activity is concerned. For investors, it may
be a case of focusing on larger-cap companies who may be using the
delay in payments to their advantage (trust me, it's not a strategy
I love to see, but it is happening). Larger companies also have
better leverage with financial institutions and can negotiate
better rates.
Finally, here's a quick side note. A friend of mine owns a pest
control business (mostly commercial clients) and I ran into him a
few months back. The first thing he said to me is how much money he
has "out on the street" (meaning unpaid invoices). I'm sure the
last thing he is thinking about is hiring new people, when people
all over town are dragging their feet on paying him.
Our
Beat The Markets with Dividend Stocks
eBook Has Arrived!
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Dividend.com! In this digital-only book, we look ahead to 2012 and
the main factors that could affect dividend investors. A $39.95
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Dividend.com Premium
subscribers.
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contains a full economic forecast for 2012, including in-depth
analysis on 65 of the biggest dividend stocks out there. It's a
great way to get prepared for your investing next year! So head
over to the
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now to download your copy.
A Look to Next Week and a Weekend Preview
Looking ahead to next week, earnings will continue to be a
non-factor with few companies reporting. The focus will likely be
on the economic data as well as the latest Wall Street analyst
calls.
Be sure to catch up with our latest watchlist updates this
weekend on
Dividend.com Premium
, including reports on earnings/story stocks, analyst
upgrades/downgrades, dividend ETFs, and much more. And as always,
you can view our current recommendations on our industry-leading
Best Dividend Stocks List
.
Thanks for reading, and I'll see you this weekend! 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
.