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Market Wrap-Up for Feb.2 (MA, QCOM, CME, K, ANF, GPS, more)
2/2/2012 4:08:00 PM
It was a somewhat quiet but productive tape as far as the averages go today. The Asian markets were strong overnight and Europe held on to most of its gains as well.
Earnings were out in force and there are some winners we took note of, including MasterCard ( MA ) ( report here ), CME Group ( CME ) ( more here ), Cummins Inc. ( CMI ), Qualcomm ( QCOM ) ( read here ), and Kellogg ( K ) ( report here ).
Moving lower on earnings results were shares of Starwood Hotels ( HOT ) ( read more ), Ameriprise ( AMP ), and Cigna ( CI ). Monthly retail sales figures were out, but there are not too many headline fireworks besides Abercrombie & Fitch ( ANF ) seeing shares getting hit hard following their update. Moving the other way, The Gap Inc. ( GPS ) did post strong percentage gains following the company's update.
Pension Pressures Continue to Weigh on States
Recent data highlighted on Bloomberg showed the New Jersey state pension fund, which holds $67.2 billion of assets, returned just 1.7% in 2011. According to treasury reports, New Jersey's pensions, which cover government workers and teachers, had only 67.5 percent of the assets needed to pay future benefits as of July 1, down from 70.5 percent a year earlier. With expected returns over 8 percent, New Jersey governor Chris Christie took measures to close the gap, including raising pension and healthcare expenses, increasing the minimum retirement age for new employees to 65 from 62, and freezing cost-of-living increases.
Personally, my fear is that states will assume higher risks in order to achieve better returns. These risks could include investing in hedge funds that deploy aggressive and leveraged investment strategies that when mistimed, could result in even bigger shortfalls for these pension funds.
In some cases, we've even seen municipalities offering lower benefits to retired and near-retired due to poor fiscal planning/investment returns. For these reasons (among many others), it's vitally important that people take charge of their own retirement in as many ways as possible. If you haven't already, I highly suggest setting up and funding an IRA account with a major online broker. This tax-advantaged account is one great way to help ease the burden of retirement by diversifying your future income stream.
Only After Tough Lessons are Learned…
It's amazing how often we'll hear from Dividend.com Premium subscribers that say they wish they'd found us years earlier. The good thing is that they eventually did find us, but dividend investing is a bit like learning how to eat better. It tends to attract people after they have had some tougher times investing/trading in the stock market. So whether someone is in their middle-age years or looking to monitor their holdings properly as they head into their retirement years, our service tends to resonate to what you could describe as "mature" investors.
As we continue to grow as a company, we are attracting some younger investors as well. Thanks to the word spreading from our current subscribers to their kin, the younger generation is beginning to realize that saving and investing work very well together.
At the end of the day, it's never too late and certainly never too early to get started with dividend investing!
New MLP Report Just Released!
In The Essentials of Investing in MLPs , we outline the do's and don'ts of investing in high-yield Master Limited Partnerships (MLPs). Our exclusive new MLP report outlines everything you need to know about these popular high-yield investments, including:
- Understanding their unique company structure
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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.
Go Beyond This Newsletter
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- The Best Dividend Stocks List is used by tens of thousands of investors to help build their own portfolios.
- Creating your own Watchlist allows you to track the performance, news, and upcoming dividend payouts of the particular stocks you care about.
- Finally, we offer the most complete and easy-to-use dividend data on the web. Many subscribers use this data as part of a "Dividend Capture" trading strategy, but long-term investors can use it to keep track of impending payouts. Just visit our Ex-Dividend Calendar for a complete outlook on which companies will be paying out soon.
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Thanks for reading, and I'll see you tomorrow!