Market Wrap-Up for May 7 (INTC, DVN, PEP, TSN, LLY, more)

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Market chatter was dominated by global election and economic headlines this morning. Early negative points included concerns about the pending new leadership in France, to worries Greece may run out of money by the end of June if no further aid is given, so the markets were bound to see a bit of red in early action. When all was said and done, it was pretty much a push for the indices.

Looking at some of today's movers, we saw share of Tyson Foods ( TSN ) trading higher following this morning's earnings report.

Earnings releases pick up tomorrow, so Wall Street analyst calls played a large early role today. On the plus side, analyst upgrade calls helped stocks like PepsiCo ( PEP ) and Eli Lilly ( LLY ). On the flipside, cautious commentary had shares like Carnival Corp ( CCL ) and Devon Energy ( DVN ) moving lower. Lastly, shares of Intel Corp ( INTC ) ended slightly lower, despite news the company's board has agreed to authorize the company's third dividend payout hike in the last 18 months. We recently downgraded the stock following a solid run for the shares since our recommendation. Intel is certainly a stock we would re-consider for new money on any bigger-than-expected pullbacks.

Stay off the Ledge

I noticed plenty of speculation yesterday afternoon about how badly France's new socialist leader could affect the markets Monday morning. While some short-term blips in the markets can occur from worries about the balance of power in Europe, I will not let the news cause any sort of portfolio panic. Many global events will affect the indices in our investing lifetime. Each time will be different no doubt, but when the smoke settles, we as investors have to think long-term, and simply consider the best places to put our money.

How will the news affect the businesses of the stocks we currently recommend? It's difficult to say, but the ultimate effects are certainly part of the analytical puzzle we're putting together. Global disruptions tend to take whole markets down in the short-term, but while that happens, we look for opportunities that could be setting up. Along the way, we continue to monitor our current recommendations to see if any of them need a downgrade.

I certainly don't want to preach complacency here, but specific company news tends to be the biggest key when evaluating a stock's future performance (not global news events). For dividend investors, most of the negative market events we see in our investing lifetimes will tend to be times to breathe, relax, and get our money to work in the best income-producing assets we can find!

Speaking of Putting Money to Work…

If you are 50 years of age or older, you can start making catch-up contributions to your IRA and 401(k). In 2012, you can add $5,500 to your 401(k) above the $17,000 annual contribution limit, for a total of $22,500 for the year. You can also add an extra $1,000 to your Roth beyond the $5,000 annual contribution limit, for a total of $6,000 for the year.

I can't stress enough that you can not just "pack it in," simply because you may have missed putting money away in your early years. Getting stuck on regret will only hold you back from the progress you can quickly begin to make. Get busy putting money to work and make sure your current income streams are steady. Don't forget to continually learn new skills, which will help ensure your employment later on. Also, you may need to work longer if you failed to invest well early on. If working longer isn't your cup of tea, then a drastic lifestyle change (probably cutting your spending/current expenses) may be necessary to be comfortable in your golden years.

The Latest Ridiculous Wall Street Valuation

I had to do triple-take on Friday when I saw an analyst put out a ratings call on Facebook shares, which haven't even begun trading yet . I've never once seen such a thing in my many years of following the markets.

Let's set aside the fact that an analyst initiated coverage on a stock that doesn't IPO until later this month. He probably just wants to grab some of the early spotlight, right? But here's the kicker, the analyst is using 2015 EPS (earnings-per-share) estimates to justify a target price of $44 for the social media giant. Not 2012. Not 2013. Not even 2014. We're talking valuation based on earnings estimates three years in the future!

This is the sort of ridiculousness I want dividend investors to steer clear of when trying to evaluate the best options for long-term investing. Could Facebook shares pop at the IPO? Sure, they definitely could. Just remember this fact, though: most of the early money going in will likely be from traders looking to get in and out of the stock early on. I'm sure the business media will be all over the stock's trading as it debuts, but the ultimate key will be how well the company can grow earnings. If you are considering Facebook shares, I would suggest doing your homework and figuring out how much of your investor dollars you want to take an extremely volatile ride with. For most people, it simply won't be worth the headache.

Our Beat The Markets with Dividend Stocks eBook Has Arrived!

We just debuted our brand new 275-page eBook, exclusively on Dividend.com! In this digital-only book, we look ahead to 2012 and the main factors that could affect dividend investors. A $39.95 value, the eBook is a free download for paid Dividend.com Premium subscribers.

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I hope everyone had a chance to check out our Dividend.com Premium members-only weekend articles , including new features that highlight some of the biggest winners and losers from the week that was, such as analyst upgrades/downgrades and earnings/story stocks. These articles are a great way to catch up on the week that was in the markets. We also have a rundown of how various Dividend ETFs performed on the week.

Thanks for reading everybody. 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 .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Created by Dividend.com


This article appears in: Investing , Stocks

Referenced Stocks: CCL , DVN , INTC , LLY , PEP

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