The markets caught a bid this morning following news ECB President Mario Draghi pledged to do whatever it takes to save the troubled euro zone. Will the rally be a one-day wonder? As many of you know, I tend to put more emphasis on the fundamental side of investing and not get too enamored with sensationalist headlines or catchy sound bytes.
Once again, today was a big day for earnings reports. On the upside, we had names like Whole Foods Market (WFM), Visa (V), Colgate-Palmolive (CL), Kimberly Clark (KMB), and 3M (MMM) pushing higher. On the flipside, stocks like Cliffs Natural Resources (CLF), Mead Johnson Nutrition (MJN), Dow Chemical (DOW), and Dunkin Brands (DNKN) all saw red following their reports.
As always, you can read all the earnings reports we’ve been covering over on The Dividend Daily.
Earlier this week, AK Steel (AKS) and Radio Shack (RSH) announced they would be suspending their dividends. These companies have been mentioned numerous times as takeover candidates or even private equity takeover targets. These purported rumors did nothing to get us excited to even consider the names for recommendation ideas. We know bad stocks when we see them, and will never be sucked in by such nonsense.
We continue to caution investors that the so-called “deep value” space is an extremely treacherous one to maneuver through. If you for some reason are attracted to single-digit (sub-$10) stocks, you’d better get over it fast — or be prepared to watch your portfolio value crumble over time.“Never Mind Earnings, It’s About Users!”
There it was today, front and center on Yahoo! Finance. The headline read “Facebook Earnings: Forget EPS, It’s All About the User Base.” This headline comes less than 24 hours after another former web darling Zynga (ZNGA) got blown up after reporting its latest earnings. Since Zynga represents a large portion of Facebook’s (FB) revenue, FB shares are also getting hit hard today.
As an investor, the further you veer away from fundamentals (earnings), the much more dangerous your investing strategy becomes. Sure, we see times in the markets when you can make money on bubbles, if traders (and business media) are drinking the “kool-aid.” Those times are very narrow, however, and most retail investors forget to take money off the table following these occasional rocket-like moves. Greed is a human attitude that we all possess. Some manage it well, but for the most part, many are overcome by green and end up seeing investment (trading) profits disappear right in front of their eyes.
So if you choose to invest based on an analyst’s opinion that focuses not on earnings, but on user base potential, be forewarned: the ending is almost never good.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.
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Thanks for reading, and I’ll see you tomorrow!
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