Despite the recent selling we have seen, the lack of real panic
has some market watchers wondering if investors are really all that
concerned with all the manic chatter surrounding the "fiscal cliff"
headwinds in Washington.
As the markets continue to drag, third quarter earnings continue
to flow. Seeing some investor selling on earnings results were
shares of Wal-Mart Stores (
), Limited Brands (
), and Williams-Sonoma (
). Looking at Wal-Mart specifically, we've been wanting to see
those shares take a breather after a ridiculous run this year. Too
many investors buying brands forget that stocks need to grow into
their valuations, especially when revenue growth is not exactly
On the flipside, investors cheered results from PetSmart (
) as the big pet retailing chain continues to have a solid year in
2012. Also higher on quarterly results are shares of Target (
) and Viacom (
). Lastly, oil giant BP plc (
) is getting close to turning the chapter on the company's
devastating oil spill disaster as settlement talks could be near a
conclusion. BP's shares finished sligher higher in today's
As always, consult
The Dividend Daily
for our coverage on company earnings, analyst moves, and other news
affecting dividend stocks.
Hanging on to the Past
On a recent "Kitchen Nightmares" episode, the restaurant in
question was a pizzeria/restaurant based in Brooklyn, New York,
where the owner has been working for decades (his parents started
the business in the 50′s and he worked there from 10 years old and
Unfortunately over the years, competition has intensified in the
neighborhood and the ways the business thrived in the past was no
longer working. The menu and recipes never changed and as Gordon
Ramsey put it, the business was stuck in decades past. By the end
of the show, the owner realized he needed to change and let go of
Letting go of the past is a tough thing for many of us to do. I
have an uncle who still pays the phone company for a rotary phone
attached to a wall in his parents' old apartment, which sits on the
first level of their two-family home. His parents have long since
been deceased and his daughter now lives there, but the phone still
hangs in the same place, as it has for several decades. Obviously
the phone holds a great deal of sentimental value for my uncle.
That may be an extreme example, but you know how difficult it is
for many people to move on.
Investors are no different. They will latch on to what has
worked in the past and buy stocks that may have seen their better
days. Right now, we are experiencing a real panic (courtesy of the
business media) in regards to the incoming tax changes and what
that means for stocks. Dividend stocks have not been immune to the
selling as we have been seeing. But here's the thing. If you were
chasing some of the high-yielding names with little growth (i.e.
utilities) and stretched valuations because yield was in
super-demand, you are stuck unless you sold quickly.
We have been warning readers about the recent breed of new-found
supposed income investors who were buying utility plays at
valuations that were unsustainable. Throw in some momentum buyers
who buy whatever is making new highs and the whoosh down we have
seen should not come as a surprise. At some point, we will be
looking at some of these dividend names again, especially if the
selling gets overdone. It takes as much discipline to not chase the
flavor of the day than it does putting money to work on a regular
basis. But the recent action should serve as a lesson to remember
for all dividend investors out there.
2013 Dividend Guide Coming Soon!
We just wanted to let everyone know that we are working hard on
a new 2013 Dividend Guide, loaded with our thoughts on what to
expect in the coming year for dividend stocks. Again, this is only
available to Dividend.com Premium members for download, so be sure
you are signed up to receive the guide once it's released! Last
year's Beat the Market with Dividend Stocks eBook was a smash
success, and this year's version will be even better. We anticipate
releasing the new guide within the next couple of weeks.
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.
Go Beyond This Newsletter
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