Despite the market being lower early on based on fundamental
concerns, all it took was a headline out of Washington from House
Speaker Boehner mentioning confidence in the "fiscal cliff" talks
to send the markets shooting higher. Don't get me wrong, we prefer
an up market, but the focus should be on earnings and what can
drive share prices higher over the long run. Counting on Washington
to be part of the long-term path to prosperity for corporate
America just doesn't work. Share prices need to get back in line
with fundamentals and not so much with how politicians want to grab
the spotlight. In real news today, new home sales fell in October
despite expectations for an uptick - yet no one seems to be talking
about that point much today.
Looking at individual stock movers, Costco (
) shares were higher following news the company will be paying a $7
special dividend in December (more on the special dividend
situation below). PVH Corp (
) continued its dominant 2012 performance, up again as the company
reported its latest earnings results. It's too bad PVH won't reward
shareholders with something better than its minuscule dividend.
Elsewhere, Analog Devices (
) rallied from an early drop to close with slight gains, this after
the company reduced its 2013 profit guidance. There were plenty of
winners by the close, especially after headlines the Federal
Reserve remains adamant on continued liquidity for the markets.
Some of the big gainers by the close included VF Corp (
), Coach (
), Nike (
), and The Limited (
As always, check the
for all our latest coverage of earnings reports, company news,
analyst moves, and much more.
Frustrations Mount With Special Dividends
I had a conversation with a reporter from Reuters yesterday, and
the topic was special dividends and accelerated dividend payments.
My frustration has been building as more companies turn to paying
special dividends ahead of the dividend tax changes likely coming
due in 2013.
I get the positives from special payouts, but my preference
would have been to have these companies that were sitting on all
this cash to have been more generous with regular payouts over the
past few years. Companies like Wynn Resorts (
), Las Vegas Sands (
), Brown-Forman (
) and this morning's special dividend name, Costco (
), could have had better yields for the previous couple of years
and likely would have been on our Recommended list as a result. At
this point, if we rush in to recommend these names because of the
payout, we will be left with low-yielding plays once the special
dividend is paid out.
We always try and avoid playing see-saw with the names on our
list. Going in and out of names is not the aim for building wealth
through dividend stocks. In the meantime, we sit and watch the
special dividend announcements and try and figure out if the names
only make sense for the dividend-capture strategy crowd or would
they be names that we should be giving stronger merit to because of
the one-time payout jewels. All this thanks to the uncertainty out
of Washington. Ugh!
More Debt to Forgive Coming Soon as Delinquencies Soar
News was out late yesterday that total U.S. student debt
outstanding surpassed $1 trillion for the first time. According to
the Federal Reserve Bank of New York, 11% of student loans were 90
days or more past due in the third quarter, up from 8.9% in the
previous quarter and 8.8% a year prior.
Ironically, this data comes at a time when delinquencies on many
other consumer debts, including credit cards and mortgages, are
dropping. Students who graduated with a bachelor's degree this
spring left school with roughly $28,700 in student debt, up 31%
from five years ago, according to FinAid.org. And in many cases,
borrowers who've fallen behind on loans dropped out of college.
Now, we all know the government can come up with all sorts of
payment options including income-based payments, since these loans
have to get paid at some point. If the trend continues, expect to
hear about what Washington may want to do to keep this fire from
getting out of control.
Median Family Income at 43-Year Lows
A recent study done by New York University professor Edward N.
Wolff shows the median net worth of American households has now
reached a 43-year low of $57,000 (in 2010 dollars). According to
Wolff, between 1983 and 2010, the percentage of households with
less than $10,000 in assets rose from 29.7 percent to 37.1 percent.
Over the same period, the richest 1 percent of households increased
their average wealth by 71 percent. Now whatever is the exact blame
could vary from family to family - poor job record/prospects,
mediocre academic performance, too much spending/debt, family
crisis, zero ability to invest, etc.
What the future will be for these struggling families is hard to
say. They certainly won't have the financial flexibility to spend
discretionary income, which adds pressure to an already sluggish
economic recovery. There certainly isn't an end to the recent spike
in governmental financial assistance, but to stop the bleeding,
better programs must be in place from day one. The education system
as it is today needs to get with how the world is currently working
and can't just go with business as usual. We have many good jobs in
this country where many of our graduates simply don't possess the
knowledge to fill those holes. This is a major problem and despite
tuition hikes being pushed through year after year, the knowledge
gap still exists.
Beyond that, there are blue-collar labor skills that many lack
as well. There are many opportunities coming in the energy sector
and again, we will have a shortage of qualified employees to fill
those roles. Something needs to start being coordinated between
labor and academia if we are ever going to stabilize the job market
and get struggling families hope beyond worrying about when their
potential assistance benefits may run out. Will the politicians who
ran on the message of better job opportunities and education step
up, or will they fade out of sight until the next election season
is upon us? We'll see soon enough.
An Important Note Regarding the Best Dividend Stocks List
We want to make sure everyone understands that the stocks on our
Best Dividend Stocks List
are the names we currently like for new investor capital,
regardless of what date the stock was first recommended on. If and
when a stock is removed from the list, we will clearly state
whether the stock should be sold (which is rare but occasionally
will happen), or simply held in one's account until we see a better
entry point or catalyst.
And here's one last thing to remember about what we do here at
Dividend.com: it's not just the names that we recommend that can
help you build wealth, but also the things we try to steer you away
from that are just as important. Forget about speculative or penny
stocks, chasing unprofitable IPOs, and listening to the manic
talking heads in the business media!
A Dividend Capture Strategy for Active Investors
We now offer complete U.S. dividend data for all
members, so anyone that focuses on "Dividend Capture" trading
strategies should have plenty of good stuff to research each day.
Just check our enhanced
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Speaking of dividend capture, Dividend.com Premium members can
also access a 9-page report we published on the essential elements
to any successful dividend capture strategy. Be sure to check it
out here on the
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