Market watchers were hoping to see a bit of the ol' "Turnaround
Tuesday" action that sometimes happens after a weak Monday session,
but the bulk of the rally failed to hold by the close. The European
markets spent another day in the red.
Looking at today's market movers, retailers Dick's Sporting
earnings report here
) and TJX Companies (
) saw share prices pop on better-than-expected earnings results.
Meanwhile, home improvement giant Home Depot (
) ended down following
its own tepid earnings numbers.
In the M&A soap opera that is Avon Products (
)/Coty, the latest bit of news is that Coty has
withdrawn its takeover offer
, less than 24 hours after
Avon finally said they would consider it.
Talk about bizarre! If you'll remember, Avon
rebuffed Coty's first advance
back in April, after which Coty
sweetened the deal
. Nonetheless, Avon shares closed down 10% on the latest news.
JP Morgan (
) shares squeaked out a gain as financial sector watchers were
hoping to see some stability kick in following its recent drubbing.
You can bet that the fallout surrounding its recent
$2 billion trading loss
is far from over.
Elsewhere, Colgate-Palmolive (
) shares traded higher following
a Wall Street analyst upgrade this morning.
) shares ended flat despite news of a dividend payout hike. Be sure
to check out
each afternoon when we post our regular "dividend payout changes"
post that breaks down all of the day's new payouts.
The Hunger Factor
Sports fans love to examine an athlete's on-field performance
after they sign a big-money long-term contract. Much of the time,
the player's performance following the deal doesn't live up to
their exorbitant salary. This phenomenon is understandable when you
really think about it. Once someone gets a huge chunk of guaranteed
money in his pocket, what incentive is there for him to give 110%
The same concept applies to many businesses, as well. For
example, this past Sunday (Mother's Day), I visited a fantastic
local breakfast place that my family and I regularly patronize. I
usually order takeout from the restaurant, since there's normally a
wait outside to get a table.
Anyway, I stopped into the restaurant early Sunday morning to
place my takeout order in person. Despite getting there early,
people were already waiting for tables outside (it was Mother's
Day, after all). As I attempted to place my order inside, the
owner's daughter scooted by and told me that because it was going
to be so incredibly busy, they simply weren't accepting any takeout
orders. What a bummer! I went out of my way, stopped in, and was
sent away with nothing in hand.
As a former food business owner myself, I learned many retail
lessons. The two biggest lessons were 1) never run out of product,
and 2) never turn away an order. If I were in charge of the local
breakfast place this past Sunday, I would've handled the situation
I would've informed the customer that it was an extremely busy
day, and that his order would take much longer than normal. Then
I'd leave it up to the customer if he wanted to wait an hour or
more for his food. As a customer, I would've been fine with this
option. I would've just gone and run some errands and come back
later to pick up my food. Instead, I was simply told "sorry, no
takeout orders today."
I love the owner of this local eatery (and the food), so I won't
hold a grudge. I know that some people wouldn't have reacted so
calmly, however. In the long term, you lose more customers than you
gain by turning business away.
After this incident, I began to wonder about the owners of the
restaurant. They've enjoyed great success over the past six years
of owning it, but have they had enough at this point? Would they
have turned away business when they first bought the place?
Everyone encounters a similar point in their own lives. What
type of effort are we willing to deliver each and every day? Are we
simply content with where we are, or are we still hungry for more
success? Being content is fine, but if you turn complacent, your
career or business will almost certainly decline. As the old adage
goes, there is always going to be someone waiting to take your
At Dividend.com, we'll do out best to recognize any companies on
the decline and warn investors about them. We refuse to see our
investing results hampered by management teams that have turned
complacent in their industry. And I certainly hope my favorite
breakfast place can avoid the complacency that often strikes
businesses over time.
Financial Engineering and the Risk to Investors
Many companies focus on share buybacks, but we wish companies
would put more emphasis on dividend hikes. You see, higher
dividends legitimately enhance shareholder value, while buybacks
simply help a company artificially manage its stock price (and
Remember, the fewer shares of stock a company has outstanding,
the higher its earnings per share (
) number swill be. Yet for some reason, Wall Street praises these
sort of accounting gimmicks as being good for shareholders. And of
course, analysts almost never call out a company for buying back
shares at a much higher level than its current stock price.
Finally, companies can also use buybacks to pad management's stock
options and make its own executives richer.
Are share buybacks automatic red flags? Not necessarily, but
when they come too frequently, we begin to wonder if the company is
using them to mask a slowdown in earnings. You can count on us at
Dividend.com to weigh these factors and more as we examine
companies for possible inclusion on our industry-leading
Best Dividend Stocks List
Income, Income, Income
At Dividend.com, we maintain our focus on the best
income-producing investments the markets have to offer during time
of heightened volatility. We want to make sure we have only the
most pullback-resistant names on our
Best Dividend Stocks List
. Also, if we see the market putting in what looks like a decent
bottom, we will be prepared to scale up the list of stocks we like.
Stay tuned and be sure to look for
member alerts along the way. Don't count on the government or your
employer to set you up for a remarkable retirement. Take control,
do your own research, and achieve your goals yourself!
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