There was certainly no surprise as far as today's QE3
announcement becoming official out of the Federal Reserve. It
appears they are now looking to keep rates low into 2015 as well.
The beat goes on for those being hurt the most, which is primarily
savers and those looking to avoid much of any risk with their nest
egg. Inflationary costs that are eating into consumers' pockets
will continue to be a burden, despite the benign economic data we
tend to get whenever inflationary data is broken down.
We were following some of today's early movers on the back of
several Wall Street analyst calls. On the positive side, stocks
like Apple (
AAPL
) and Limited Brands (
LTD
) generated nice gains on upgrades. Gold (
GLD
) prices, along with Oil (
USO
) prices spiked on news of further Fed accommodation. Financial
sector plays, especially the big banks like Citigroup (
C
), JP Morgan (
JPM
), and Wells Fargo (
WFC
) jumped higher as well.
Viewer Discretion is Advised
As we got set to hear what the Federal Reserve had to say - and
what kind of sustained damage they will have decided to inflict on
savers regarding low interest rates - the investor in all of us
must remain wary of doing much portfolio shuffling on days like
today. The business media will tend to be dramatic and the
headlines will likely raise blood pressures for those folks glued
to the television set or scanning the headlines online. If you are
a fan of volatility however and love to gamble, you live for days
like this.
I'm not quite sure our audience profile falls under the "needing
action" category, but you can count on plenty of active players
jumping on the initial move. As the headline above says, listen all
you want, but avoid shuffling your entire wealth-building plan on
any one event.
Doing More With a Lot Less
It wasn't much of an attention grabber this morning from a big
business story headline, but USG Corp (
USG
) announced it will make about 4,700 job cuts this year, and is
also being cautious about rehiring. The twist to the story here is
the company's stock is currently trading at 52-week highs and is in
the building materials business (they make drywall used in
construction).
This development makes for quite a counter argument to the
growing chorus of real estate bulls making headlines with every
housing data blip. USG is certainly a company that would know the
building industry as well as anyone, and yet they are still looking
to get leaner.
Despite the headlines of an improving unemployment rate (as
calculated by convenient means), I believe there are wholesale
changes happening in today's workforce. With that, I see job
opportunities to make big money dwindling for the masses, unless
you acquire and develop a special skill set that is needed in
today's world. With declining education-based scores in the U.S.,
many of our younger generations may be on the outside looking in
when it comes to global opportunities - if there is not enough
emphasis placed on schoolwork and education.
This message needs to come from the home front as much as from
anywhere else. Average workers are going to be in financial danger,
whether it is from a wage standpoint or employment opportunity
standpoint.
From our research, we haven't seen any meaningful hiring plans
from any of the big-name companies that reported earnings this
quarter. The only job growth we've seen came from the retail sector
(i.e. lesser-paying burger-flipping jobs), while most of the other
industries have been silent for the most part. In fact, a good
number of companies have been looking to put in "productivity"
measures to optimize profits and keep margins strong. Job cuts seem
to still be the norm in corporate America, as companies continue to
do more with less.
From an investing perspective, you cannot ignore the changes
taking place today, especially if you're looking to achieve great
investment results from your dividend holdings. As always, we'll do
our best here at Dividend.com to keep readers abreast of all the
economic developments we notice coming down the pike.
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
highlights:
- 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
Dividend.com Premium
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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