Yesterday's bounce-back was short-lived as nervous investors and traders hit the sell switch hard throughout today's session. The failure of the overseas markets to lift off of yesterday's rebound certainly didn't help sentiment.
Monthly retail sales reports were out this morning (as occurs every first Thursday of the month) and there was plenty of red in that space. Leading the way lower were shares of Kohl's ( KSS ), PVH Corp ( PVH ) (formerly Phillips Van Heusen), Coach ( COH ), and The Buckle ( BKE ).
We witnessed an earnings disaster in the energy sector today as well, with Walter Energy ( WLT ) leading the mess, down over $32. Other names getting hit hard included Cimarex Energy ( XEC ) - down over $8, and Apache Corp ( APA ) - down over $9. The stocks had been holding up well earlier in the year, but as you can see what often happens to stocks that have an extremely low dividend yield, any disappointment is met with heavy selling.
There had been one bright spot in the earnings space as Kraft Foods ( KFT ) reported solid numbers and announced the company will be splitting into two independent publicly-traded entities. Unfortunately the bulk of the gains were erased by the close. The company's move would spin-off its North American grocery business from its global snack foods business.
We remain proactive in analyzing what names are best for our "Best Dividend Stocks" List in this current environment. We downgraded two more names earlier today, so please be sure to check out the post detailing these changes if you did not read the e-mail alert we sent out today. One other quick note, be sure to check out our weekly "Top 50 Watchlist Names" post that is out today, only for Dividend.com Premium members.
Many retirees took a deep sigh of relief upon hearing the first phase of the debt ceiling resolution excluded any cuts for social security and medicare. However, the second series of cuts will be tough for social security to dodge. It will not be an obvious cut, but look for the Chained CPI metrics to gain steam as I have discussed previously. It's unfortunate for those who rely mostly on social security for their retirement income, as older individuals have few choices to change the equation unless they can get back in the workforce with a job that can supplement their fixed income.
We continue to see more reasons why individuals need to take charge of their own retirement goals. A study just released from the Society for Human Resource Management has found the proportion of companies offering traditional pension plans that guarantee payments in retirement for life declined from 40 percent of employers in 2007 to 22 percent in 2011. Not to mention the town of Central Falls, Rhode Island, which just filed Chapter 9 bankruptcy. The town has promised $80 million worth of retirement benefits to 214 police officers and firefighters, far more than it can afford. The existing fund that pays out benefits is set to run out of money in October, giving Central Falls the distinction of becoming the second municipality in the United States to completely exhaust its pension fund. The affected workers will likely have to restructure their pensions to secure a fraction of what they had been expected to get. Now this is a worst-case situation, but for those who are not prepared and have a lifestyle that was set to revolve around a certain income level in the later years, drastic changes will likely have to be made.
There are plenty of anecdotes out there today that should instill a sense of financial urgency for investors. What many people fail to realize is that as an investor you can also achieve tremendous success without needing to worry about being on the same level financially with Wall Street professionals. The idea of investing in quality dividend stocks is a simple one. You have the beauty of compound interest acting as the "wind at your back" propelling the value of your portfolio higher.
The beauty of compound interest (which dividend stocks are great at providing when you re-invest those dividends) is something to marvel at when you start tabulating the numbers. You can use our Compounding Interest Calculator to measure your hypothetical rate of return, based on the number of years and amount of money you invest.
If you lack consistency when it comes to putting money to work, or are still contemplating your first move, it's time to get busy (regardless of what the market is doing day-to-day, month-to-month, or year-to year). The hardest job isn't finding the right stocks to buy (Dividend.com has that covered), but rather it's the individual's ability to allocate funds and put them to work. Be relentless! No one will ever care more about your money than YOU!
Thanks for reading, and I'll see you tomorrow! P.S. Please pass this e-mail on to someone you think can use some financial motivation as well as being kept in the financial news loop that could affect them. Thanks again!
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