The markets pulled back following news that U.S. service
companies, which employ roughly 90 percent of the work force,
expanded more slowly in April. The data points signify less growth
in new orders as well as a slowing in new hires. These points
overshadowed better-than-expected jobless claims data, which also
came out this morning.
We saw plenty of focus on earnings today, with traders reacting
negatively to results from the likes of Visa (
), Prudential (
), and Weight Watchers (
). On the flip side, investors were buying up the earnings news
from insurer Allstate (
) as well natural-foods centric supermarket brand Whole Foods (
). Despite having a much larger price-to-earnings ratio than its
peers and many stocks that trade on the S&P, While Foods' share
price spike is continuing the recent investor "buy the brand you
love at any price" mentality with companies they are familiar with.
This trend could lead to portfolio underperformance for those
buying up shares at the end of a big move.
For all the latest earnings results, be sure to check out
The Dividend Daily.
Two Dividend Stocks Removed from Recommended List
We removed two dividend stocks from our
"Best Dividend Stocks"
list this morning. We still like both names long-term, but we are
cautious in the short-term. Check out the names removed
Bank CD Gimmicks Beginning to Ramp Up
Gone are the days of getting a toaster at your local bank just
for opening an account. In this era of record low interest rates,
banks have turned to bigger gimmicks to lure in customers.
Yesterday I came across one such gimmick that must be seen to be
believed (and I quote):
"Trevor Burgess, CEO of Community Bank announced today that,
in conjunction with its name change to C1 Bank on May 1st and in
partnership with Crown Eurocars, it will be offering a new five
year $1,000,000 CD product where the client will receive a brand
new Mercedes‐Benz from Crown Eurocars as pre‐paid interest."
Clients will be able to choose from the 2012 SLK350 Roadster,
2012 E350 Sedan, 2012 ML350 SUV, and 2012 E350 Convertible.
C1 Bank CEO Trevor Burgess said, "C1 Bank is offering its
clients the ability to drive off in their own brand new
Mercedes‐Benz just for moving their money to C1 Bank. In this
interest rate environment where the five year CD has an APY of
1.20% it is thrilling to change the game with the instant
gratification of a spectacular Mercedes‐Benz that our client will
own including tax, title, and license."
As for the fine print:
In the event of early withdrawal, C1 Bank will deduct from the
$1,000,000.00 principal amount deposited the amount of the
pre‐calculated, pre‐paid interest paid in advance and
specifically used for a Mercedes‐Benz vehicle purchase from Crown
Eurocars Incorporated, including any delivery, tax and costs paid
with such interest ($61,294.04). In addition to the early
withdrawal penalty, C1 Bank will also deduct an early withdrawal
fee of $3,000.00 from the $1,000,000.00 principal amount
Some of you may be thinking, what's wrong with getting a new
Mercedes? The CD rate is comparable to other 5-year bank CD's,
after all. What's the catch?
The catch is, your money is locked into super low interest rate
for five whole years. This campaign is pretty clever if you ask me:
use the smoke screen of a luxury car to lure in high net-worth
investors, making them feel OK about subpar results for several
Even when the stock market was pulling back dramatically in late
2008/early 2009, smart investors (like our subscribers here at
Dividend.com) realized the sell-off was creating amazing bargains
for certain blue-chip names. We pinpointed those great buys back
then, including recommending Phillip Morris International (
) below $40 a share and yielding over 5%. Throw in the several
dividend raises since then, and you have a stock paying out
incredible income just in dividends alone, let alone the stock more
than doubling. If and when we get another market pullback, we'll be
on the lookout for places to put our hard-earned capital.
In short, tying your money up for five years, basically at
break-even when you factor the taxes you'll owe, at just over 1%
interest, should be of no interest to dividend investors (luxury
car and all). My guess is that we'll continue to see these kinds of
gimmicks from banks in the coming weeks and months, as they
desperately try to land some of the big money still sitting on the
The Safest Investment is…
As per the latest Gallup Poll, Gold takes first place as the
"safest investment" according to everyday U.S. adults surveyed. A
full 28 percent of adults ranked gold as their top choice, down
from 34 percent last year. One interesting factoid was Gold was
most popular among older Americans, those without a college a
degree, and individuals who earned between $30,000 and $75,000 a
year. These points are very interesting to me, as the general
public tends to hear about manias or crashes once most of the move
(up or down) has already occurred.
Am I surprised that so many people still see gold as the safe
haven choice? Not really, but the fact that real estate edged out
stocks in the survey was a big surprise. What many people don't
realizes is that dividend stocks continue to be the best possible
investment vehicle for most folks - as they have been for several
The media has done a great job in getting jittery investors to
freeze up and do nothing. This process has been made easier by
tumbling real estate prices, which make property owners even more
shy with their money. I am not sure the current generation (those
under 30 years of age) will have the same gusto for the American
dream of owning your own home as generations like mine and those
before had. What kind of investment implications will this trend
have? The changes will be quite dramatic in my opinion, and we will
undoubtedly touch upon this point further in future
New MLP Report Just Released!
The Essentials of Investing in MLPs
, we outline the do's and don'ts of investing in high-yield Master
Limited Partnerships (MLPs). Our exclusive new MLP report outlines
everything you need to know about these popular high-yield
- Understanding their unique company structure
- What you absolutely need to know about their special tax
- Why MLPs may not be suitable for retirement accounts
- How to find the best high-yield partnerships
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Head to the
page to download this brand new report today!
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
- 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
members. This list gives readers a good idea of what stocks we're
watching behind the scenes here for potential upgrades.
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