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Market Wrap-Up for Apr.17 (KO, GS, JNJ, CMA, MAT, C, MTB, more)
As last-minute tax filers scrambled to get their paperwork completed, the markets were racing higher with a decent smattering of earnings leading today's headlines.
Early earnings winner today included Coca-Cola ( KO ) ( read their full report here ) and Comerica ( CMA ). Goldman Sachs ( GS ), which announced a dividend hike this morning, traded slightly lower following its earnings release. Pharmaceutical giant Johnson & Johnson ( JNJ ), who also reported earnings, ended with a slight gain
Omnicom Media ( OMC ) dipped following the company's earnings results. Meanwhile, Wall Street analyst upgrades helped push stocks like EOG Resources ( EOG ), Citigroup ( C ), and M&T Bank ( MTB ) higher.
Earnings Season Can Get Tricky (Especially for Traders)
One of our recommended names, Mattel ( MAT ) got hit on their earnings news yesterday and the stock sold off, prompting several subscribers to reach out asking whether we have changed our opinion on the share. While the company's revenue growth was nothing to get excited about, the stock is still an attractive prospect for income investors as the yield hovers around the 4% level.
If you are buying dividend stocks to get in and out of quickly (which we don't recommend), my advice is to avoid doing much trading around earnings season. This season tends to be the most volatile time for stock price action - and where traders tend to see some of their biggest losses. Again, we look at quality dividend stocks as long-term income-producing assets. We will change our opinion when warranted, but again, if we do take names off our recommended list, it means the stock is a "Hold," meaning we would not put any new capital in the stock.
For Mattel, we still like the shares and are keeping it on the recommended list at this time. If we do make any changes to our recommendations, we will certainly alert our premium subscribers whenever we take such action.
I received a letter the other day from a local realtor who stated that ALL of the listings in my area are under contract and that they needed new listings for prospective buyers. My local realtor contacts assured me this claim the furthest from the truth, so how about that approach in trying to get listings?
It's too bad that the initial contact made by this realtor is based on misinformation. Listings are gold in real estate, but so is integrity. Residential real estate, whether we like it or not, will continue to be pushed down our throats as a great investment. I continue to look at it as choosing a place where you want to live (and hopefully afford) and if the value of the property rises in any significant way, that's great, but I wouldn't expect much.
Now if I was living in New York City or Silicon Valley, I may take a different viewpoint when it comes to investing in condos/apartments/single family homes. We have seen some crazy price moves in those areas, and if you time things right, there is a chance to make some money. However, if your timing is off you need to sell? Look out below.
I am sometimes asked what I would be buying if I wanted to build some real estate exposure. I personally don't own any income-producing real estate property, but I certainly believe it can be a great investment if you do your homework. Growing up, I was surrounded by relatives that only believed in buying real estate that produced income. Many of them purchased properties where the tenants would cover their overhead expenses (2-3 family homes, and even bigger multi-unit buildings as well). Now you need to develop a knack for dealing with tenants and that is never easy, regardless of how easy the "get rich in real estate" courses will tell you it is.
I always tell people that it pays to be handy or have someone in the family that can help save you money when things break, and with tenants, you can always count on some issues popping up in time. Investors need to look at residential real estate in most areas as a place to raise their family first and foremost, and then as a place where their money could be parked with hopes that your principal investment can be recovered upon a sale when you decide to move, and again, if prices rise in your area, that's a bonus.
Ask anyone who has owned a home for a few years and they will tell you that carrying costs are usually higher than one budgets for. There are tax benefits of course to owning real estate, but it may not matter much if the bottom line expenses still overwhelm the property owner. Real estate is tricky as an investment, so before you jump in, do a lot of homework first.
That's Not How We Do Things Around Here
Red Sox fans got their taste of life with Bobby Valentine as their new manager recently. Being a Met fan, I remember how Bobby Valentine (former Mets manager) could sometimes get under a player's skin, but whether they liked him or not, the team raised their level of play and made it to the World Series in 2000 with what many Met fans would recall as a pretty pathetic lineup.
Fast forward to 2012 and this past weekend and Bobby Valentine questioned whether one of the team's most popular players (Kevin Youkilis) was emotionally and physically into the game as much as he has been in the past. The Red Sox team, led by captain Dustin Pedroia, quickly came to Kevin Youkilis's defense and issued a verbal message that "this is not how things are done up in Boston" (i.e. a manager calling out a player in the media).
Not to cause too much of a fuss, Bobby Valentine apologized for the remark he made and felt it may have been taken out of context. Again, having been a met fan and seeing Bobby Valentine work his magic with a scrappy Met team, Dustin Pedroia may want to re-think how things get done in Boston, especially since the team hasn't won a championship since 2007.
If a leader can not ask for accountability on occasion (especially if a certain team member is not performing up to task), then an organization will most likely be doomed to failure over time. Will the Red Sox as a team respond? That answer remains to be seen, but some one had to at least point out why the results haven't been stellar so far.
Whether we look at a business we own or even our own family household, there is almost never an exact "right" time time to point out the flaws in the system. An occasional reminder of the high level of performance to be expected is usually a good idea, however.
Income, Income, Income
At Dividend.com, we maintain our focus on the best income-producing investments the markets have to offer during time of heightened volatility. We want to make sure we have only the most pullback-resistant names on our Best Dividend Stocks List . Also, if we see the market putting in what looks like a decent bottom, we will be prepared to scale up the list of stocks we like. Stay tuned and be sure to look for Dividend.com Premium member alerts along the way. Don't count on the government or your employer to set you up for a remarkable retirement. Take control, do your own research, and achieve your goals yourself!
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Thanks for reading everybody. I'll see you tomorrow!