Market Wrap-Up for July 12 (PG, FAST, MAR, FDO, TXN, LVS, more)
The recent selling trend continued today, as investors weigh the possibility of global economic stimulus failing to lift many boats.
From an earnings standpoint, we saw a bit of a divergence in today's results. On the upside, SAP ( SAP ) made some bullish comments and Fastenal ( FAST ) is seeing a bit of a bounce after finally releasing their results, which they had previously warned would fall short. On the flip side, investors were not too enamored with results from Infosys Ltd. ( INFY ) and Marriott International ( MAR ).
Elsewhere, cautious Wall Street analyst commentary had stocks like Family Dollar Stores ( FDO ), Hormel Foods ( HRL ), Texas Instruments ( TXN ), and Las Vegas Sands ( LVS ) moving lower. Lastly, shares of Procter & Gamble ( PG ) bucking the selling, with the shares rallying on the news Bill Ackman's Pershing Square Capital Management has taken a stake in the consumer goods giant.
Headline of the Day
Earlier this morning I saw this headline come across the wires: "Las Vegas Strip Casino Gambling revenue down 18.15% in May." I needed to look at the number several times to believe it. We at Dividend.com are located in South Jersey, just a stone's throw from Atlantic City, so this news cannot bode well for the local market here (Las Vegas is typically a much stronger casino market than Atlantic City).
I've been closely tracking the drop in luxury brand shares like Coach ( COH ), Tiffany ( TIF ), and Ralph Lauren ( RL ), as well as dividend-paying casino giants Wynn Resorts ( WYNN ) and Las Vegas Sands ( LVS ). These moves give me pause about the health of the overall economy.
Putting the odd diversions of daily economic data aside (one day things look great and the next it's back to "what can the Federal Reserve do to stimulate things?"), the proof our concerns are valid are coming across the stock tape on a daily basis. As a pricing mechanism, the stock market tends to do a fairly good job pricing forward news pretty well (granted the bubbles we see on occasion are the result of manic traders which eventually do get resolved for better or worse - usually worse for traders that can not balance themselves properly between fear and greed).
The repercussions of the high end of the market slowing down can have a substantial impact on the whole economy. If you think about it, the spending power of those in the higher income brackets tends to get stronger as economic/investing situations show signs of stress. Hence the importance of trying to stay ahead of the curve when it comes to your earning power. When I refer to the term "hustling," it's not just about making enough money to keep the lights on, or buying a minimal amount of quality dividend stocks each month. Rather, hustling involves going above and beyond the "normal" expectations for monthly income. I can tell you this: the government will not stop hiking taxes, whether it's on your spending, what you earn, or your investment income.
It is paramount today, more than ever, to get as far ahead as soon as you can. Once you reach the higher tax brackets, you too can take advantage of lower-priced investments (stocks, real estate) during economic lulls. I have known many great investors who made their best moves in times of crisis. Why can't we all do the same? We can and we will - if we are able to make the extra sacrifices that puts us in a position of financial strength. That way, when opportunities present themselves, we'll be ready to act. Of course, you'll also need to actively seek those opportunities. Most good deals don't just fall into your lap!
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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Thanks for reading, and I'll see you tomorrow!