The market continued to exhibit skittish behavior in its reaction to economic headlines. Despite what would have appeared as bearish data points coming out this morning in Europe, the indices all managed to close higher. Not that we’re complaining, but the tape action once again expresses the notion of how hard active trading can be. There was also a late-day rumor being floated that central banks stand prepared to offer coordinated actions if additional liquidity is needed, which did help secure the gains.
Kroger (KR) shares ended higher on positive earnings news. Elsewhere, shares of Home Depot (HD), Costco (COST), and Mead Johnson Nutrition (MJN) all gained nicely as investors focus on consumer brands. We did however see some red on the screen in shares of Qualcomm (QCOM), possibly related to news of layoffs/plant closures in competitor Nokia (NOK). Also, shares of Tiffany & Co. (TIF) lagged for much of the day. If you remember the company disappointed investors with its recent quarterly results/outlook.
The latest data from Spain shows Spanish house prices fell at the sharpest pace since current records began in 2007. The average Spanish property selling price dropped 12.6 percent year-over-year. Most of us here in the U.S. tend to focus in on the real estate slump we’ve experienced, but with unemployment rates even worse overseas, financial plays that have overseas exposure could be in for some rocky months (or years) ahead if the proposed bailouts don’t contain the economic problems abroad.
We tend to hear a recurring theme from analysts that bank stocks are “cheap.” I’d say they’re “cheap for a reason.” Instead of lining up to call the first turn up, we prefer to see a bit of evidence real estate prices here and abroad are finished falling. Outside of hot areas (of which there are few), real estate prices on the residential side continue to struggle.
I personally prefer to own my home rather than rent, but renting in the short-term makes sense as well, especially where career flexibility is concerned. You’d be stunned at how many people are tied to a specific geographical region because of a property they own.
I’m not here to beat up on real estate, but from an investment standpoint, I suggest folks look at homes only as places you want to live in. Only if real estate prices stabilize over the long term can a home purchase really be considered any sort of “investment.” The only proven investment tied to real estate are properties that throw off positive cash (multi-family buildings, office buildings, other commercial property). Most seasoned real estate investors look mainly at the cash flow when evaluating a property’s investment potential. In some areas, you may see a premium added to the equation due to an expectation of price appreciation, but those are few and far between.
In conclusion, the housing market — both in the U.S. and abroad — clearly has a lengthy recovery period ahead of it. As a result, how this recovery plays out will have a huge impact on our investment strategy as we continue to look forward.Watch Out for Substitutes
You often hear the tag line above in product advertisements. I think in this day and age, it is much harder for those who try and replicate a service to make as big a dent as we used to see.
When you’re in the content/research business like we are at Dividend.com, the focus should be on putting out the best effort possible. We try and raise the bar as much as we can to separate ourselves from our competition. While a rival can try and replicate the look or structure of our site, they’ll never be able to duplicate the quality of our research and the effort we put forth each and every day. Our exclusive content and original voice really set us apart from others in the dividend niche.
It doesn’t matter what business you’re in, you need to set the pace and avoid playing catch-up. Every industry is filled with numerous competitors, and if you watch the comings and goings in today’s startup landscape, it’s fairly obvious how many “knock-off” services there are out there. Amazingly, these companies are able to raise substantial capital to compete in a space where they’ll only be playing catch-up to their more established competitors. While it’s not impossible for a new company to spring up and disrupt the status quo, if you can create a platform that produces results consistently, you will soon have a wider moat around your business.
So if you are an entrepreneur or are thinking about becoming one, get in the game to be a leader and leave those who can only replicate in the dust.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
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!
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