Today, the market had its first legitimate sell-off we have seen in quite a while. Part of the fall was being contributed to a not-so-stellar personal spending report released this morning. Throw in the consumer savings rate dropping for the first time in 5 months, and investor angst became certainly apparent.
This downside move isn't necessarily a bad thing, however. We've been concerned about recent market complacency when bad economic data points have been released. The markets are doing what they're supposed to do for once - pulling back on negative news.
We also saw monthly retail sales data from numerous retailers this morning, and there are some winners and losers that are standing out so far. Leading the gainers list were shares of Gap Inc. ( GPS ) and Kohl's ( KSS ), while TJX Companies ( TJX ) and Autozone ( AZO ) had the opposite reaction. We also saw some nice dividend increases from our banking friends from the north as Toronto-Dominion Bank ( TD ), Royal Bank of Canada ( RY ), and Canadian Imperial Bank ( CM ) all raised dividend payouts. We have liked some of these Canadian banking names in the past, and continue to monitor the sector closely for possible upgrades.
Discipline Trumps Conviction, Every Time
We have seen many a great trader fall from grace over the years. Often times these investors had previously enjoyed great performances over long periods of time, and developed a strong sense of conviction along the way.
Unfortunately, conviction can sometimes be a dangerous trait. When investors get used to most decisions going well, they'll sometimes draw lines in the sand, always expecting the same results. It is during these particular moments of conviction where one fails to recognize downward trends. Maybe the investor has always admired this particular company, and can't come to terms with the fact that negative shift is irreversible. Instead of recognizing this reality, "hope" enters the picture. Steep losses almost always follow.
It is at these times where careers can sometimes come to an end for even highly-heralded traders. Even though we as individual investors may not be investing the vast amounts of money some of the most successful money managers do, keeping our own discipline is just as important - regardless of whether a position is small or large. Taking losses and making mistakes is part of the overall investing process. Don't shun these developments. Embrace the, You will be a better and more profitable investor for learning these lessons in the long run.
This point leads me into the current market environment, where stock prices are sort of meandering around. Investors are waiting for Ben Bernanke to say the magic words, that the printing press will remain active and further easing is on the horizon. We at Dividend.com have taken a more cautious approach in recent months. We are trying to remain focused on fundamental reasons to buy shares, more than what the Federal Reserve is planning or not planning. Despite our Best Dividend Stocks list remaining fairly lean, there are some opportunities we are closely monitoring that could be in our sights to recommend in the very near-term. We will keep subscribers updated to when we do make any new additions, as well as alterations to what we presently like.
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.
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- 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!
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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