It was back to mixed signals and interpretations for the markets today, as the ECB President added some details about how the debt crisis procedures could pan out. The ECB also cut interest rates to 1% from 1.25% in hopes of spurring financial activity. Just as the market appeared to want to bounce, rumors swirled late in the session that Germany is balking at some of the bailout draft measures, pushing the indices to end the day at the lows.
Like the markets, the financials did not react too well to the headlines, especially shares of Deutsche Bank ( DB ), Citigroup ( C ), and Morgan Stanley ( MS ). Earnings results continue to be a very minimal factor this month, although shares of Costco ( COST ) saw a bit of weakness following their results .
Meanwhile, a bullish Wall Street analyst call had boosted shares of Halliburton ( HAL ) early in the session, but most of the gains washed away. Negative Wall Street commentary pushed stocks like Expedia ( EXPE ), AT&T ( T ), and Diamond Offshore ( DO ) to close in the red. Lastly, news broke at midday that Ford Motor Company ( F ) has reinstated its dividend - 5 cents quarterly, and equating to an approximate 1.80% dividend yield.
Defined Pension Plans Erode
Alicia Munnell, the director of the Center for Retirement Research at Boston College, recently published a great note about the continued erosion in defined pension plans for employees. In 1984, the majority of retirees had a defined benefit pension to provide a lifetime guaranteed income. By 2009, however, the share of older workers with this kind of protection had declined to about 25%. So for all the recent headlines that the elderly are in much better shape financially than ever, I'm skeptical about the validity of that argument.
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.
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An Important Note Regarding the Best Dividend Stocks List
We want to make sure everyone understands that the stocks on our Best Dividend Stocks List are the names we currently like for new investor capital, regardless of what date the stock was first recommended on. If and when a stock is removed from the list, we will clearly state whether the stock should be sold (which is rare but occasionally will happen), or simply held in one's account until we see a better entry point or catalyst.
And here's one last thing to remember about what we do here at Dividend.com. It's not just the names that we recommend that can help you build wealth, but also the things we try to steer you away from that are just as important. Forget about speculative or penny stocks, chasing unprofitable IPOs, and listening to the manic talking heads in the business media!
Thanks for reading, and I'll see you tomorrow!
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