The market piled on some gains today as we get set to close out the year of trading tomorrow afternoon. 2011 was another year filled with many ups and downs, but for dividend investors, 2011 will go down as one of the best years of the past decade.
As I mentioned earlier this month, strength tends to attract newer investors, which is a good thing. We need to be careful, though, when stocks get a bit overcooked on the upside - as we have been seeing of late.
It's not a big issue in the long run, but we will always look for the best names entry-point-wise on our Best Dividend Stocks List . So if we happen to downgrade a name you own in your portfolio, there is no need to panic! Just hold off putting any new capital in those names we remove until we see a better opportunity. If we are wrong and the stocks continue to rally, you will still get the benefit of a rising share price.
Some of the utility names we liked in the past but subsequently downgraded to "Neutral" like Consolidated Edison ( ED ) and Southern Co. ( SO ) are making us feel a bit sore. Those names continued to ramp up with the recent yield-chasing phenomenon taking hold of the markets. Still, we'd like to see better entry points in those stocks for new capital. As always, we remain flexible to new opportunities at Dividend.com. In the mean time, subscribers can certainly enjoy the higher prices they are seeing.
Digging into today's rally, we saw buying in names like Stanley Black & Decker ( SWK ), Wells Fargo ( WFC ), J.P. Morgan ( JPM ), and Halliburton ( HAL ). On the flipside, Gold ( GLD ) dipped once again, as commodity bulls wonder if the yellow metal will soon test the $1,500/oz mark next.
Frugal to a Fault?
If you're a baseball fan and like to keep an eye on the "hot stove" offseason activities, you've likely noticed another winter of the Oakland A's dismantling the core of their team. The club's latest move included trading their recent Rookie-of-the-Year closer, Andrew Bailey, to the Boston Red Sox. This marks is the A's third big move of the offseason, as the team continues its pattern of trading away young talent before they earn big paydays.
The A's choose to stockpile younger players in their farm system and keep their payroll among the lowest in the league. The recent hit Hollywood film "Moneyball" chronicled Oakland GM Billy Beane's journey through ultra-frugality to build a winning franchise. The club's model entails stockpiling the organization with young (often minor-league) talent, only to trade these same superstars as they get closer to a big payday.
The A's were competitive for a few years with this strategy, but never came close to winning a World Series title. In fact, the team hasn't even had a winning season since 2006. Yet you'll hear nothing but praise for general manager Billy Beane and his ability to run a baseball franchise on a lean budget. If you're a sports fan, and particularly a fan of the A's, how do you feel about never actually winning?
Saving money is a great thing, but sooner or later, whether it's in investing or professional baseball, you need to put your money to work for you. Hoarding money to keep under your mattress or in a low-interest money market account or Bank CD will never get you close to building any sort of wealth. I bring up this point because there is way too much emphasis on frugality and not enough on building wealth. Living on less is a wonderful concept, but don't you want to really "live?"
I don't know about you, but I don't want to count coins and bring just enough to cover the bills each month. I want to earn more, invest more, and in the long term, reap the benefits of doing what the rich have done for centuries: make their money work for them. Some great vehicles for your money include income-producing assets like dividend-paying stocks, positive cash-flow real estate, and great cash-flow businesses as well. That's how you get to do some real living!
I see my own favorite baseball team, the New York Mets, talk about cutting their payroll significantly. I shudder to think where the franchise is going. If you aren't running a team with the intent of winning a championship, let alone even being competitive, what's the point? I'd like to see current Mets ownership sell the team to someone who does have that pedigree of wanting to WIN.
The same goes for all of us investors looking to achieve financial security. We won't achieve our goals through frugality alone, but rather through looking for opportunities in the areas where we can use our money to make more money.
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.
Our Beat The Markets with Dividend Stocks eBook Has Arrived!
We just debuted our brand new 275-page eBook, exclusively on Dividend.com! In this digital-only book, we look ahead to 2012 and the main factors that could affect dividend investors. A $39.95 value, the eBook is a free download for paid Dividend.com Premium subscribers.
Beat The Markets with Dividend Stocks contains a full economic forecast for 2012, including in-depth analysis on 65 of the biggest dividend stocks out there. It's a great way to get prepared for your investing next year! So head over to the Dividend.com Premium homepage now to download your copy.
A Dividend Capture Strategy for Active Investors
We now offer complete U.S. dividend data for all Dividend.com Premium members, so anyone that focuses on "Dividend Capture" trading strategies should have plenty of good stuff to research each day. Just check our enhanced Ex-Dividend Calendar , which is the best in the business, to search for upcoming payouts.
Speaking of dividend capture, Dividend.com Premium members can also access a 9-page report we published on the essential elements to any successful dividend capture strategy. Be sure to check it out here on the Premium homepage .
Thanks for reading everybody. I'll see you tomorrow!
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