The market started out the day fairly strongly following better-than-expected economic data, with a drop in jobless claims being the headline story. The early pop lost a bit of air in the afternoon, as the averages pulled off the highs.
Earnings results played a role in today's market action. FedEx ( FDX ) was a highlight on the upside following the company's earnings beat. On the flipside, Discover Financial Services ( DFS ) gave up early gains and closed in the red despite a good earnings beat and dividend payout increase. Steelmaker Nucor ( NUE ) pulled back slightly after the company guided its profit outlook lower. Spin-off news from Covidien plc ( COV ) pushed shares higher by the end of the day. Gold ( GLD ) prices were snapping back early on, but could not hold the gains, finishing lower by the close.
Stay Away From "All or Nothing"
It's great to have confidence in what you are investing your money in and it's even better to see the results you expect to see. Where things get tricky is when investors decide to press the action.
What I mean by press could be simply putting more money to work in individual positions than they would normally feel comfortable with or begin to be more active from a trading standpoint as well. If you remember the story in my "Be a Dividend Millionaire" book in which I described what happened to a friend of mine who had a great start to his trading career (netting him $9K over his first seven trades). He pushed his luck buying a stock that had rewarded him during some of those early winning trades (Broadcom), only to see him buying more and more of the stock as it dropped (eventually costing him $17,500) and bringing his previous net profit into a $8500 loss when all was said and done.
There is a famous hunch that many professional gamblers and traders like to go on. When they feel the odds are in their favor, they bet big and sometimes bet it all. We all know that may sound great, but is risking it all ever really worth it?
Plenty of investors have made a great career for themselves hitting the proverbial "singles and doubles" without ever worrying about the outcome of one earnings report singlehandedly making or breaking their portfolio. If you ever feel a need to make it all up in one trade or financial move, step back and realize what is at stake. Avoid those situations always!
25 Years of Dividend-Increasing Stocks
We just 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
We know many of you enjoy reading the daily newsletter, but remember that with our Dividend.com Premium service, the newsletter is just one small component of what we offer. Here are the "Big Three" benefits of our Premium service:
- 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.
We don't ask for a credit card to use our free trial, and we don't bill you when your trial ends. No obligation whatsoever! So keep enjoying the newsletter, but please give Dividend.com Premium a shot if you haven't already subscribed!
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.
Created by Dividend.com