It was another Ben Bernanke to the rescue day for the markets as the latest Federal Reserve commentary has rates likely remaining low till the end of 2014 now. Again, more bad news for savers and investors that remain sitting mostly in cash.
We continue to monitor earnings season closely, and despite today’s Fed announcement, we remain super-selective in our recommendations. As much as we would like to add a bunch of new names to our Best Dividend Stocks List, we’re still wary of how many companies continue to offer cautious guidance (as well as lowered guidance). If valuation was a concern before, you can bet we’re even more alert now that these lower earnings numbers are coming in.
Looking at some of the big movers on earnings-related news today, shares of Textron (TXT), Occidental Petroleum (OXY), and Polaris Industries (PII) jumped higher on better-than-expected earnings news, while shares of Wellpoint Inc. (WLP) (earnings here), W.W. Grainger (GWW) (report here), Corning (GLW) (more here), and Hess Corp (HES) all ended lower following their results. It was a big day for Gold (GLD) prices as investors see the printing press effect on U.S. dollars as a reason to get long the yellow metal.Can Apple Sustain its Momentum?
The big name that the markets were glued to last night was tech titan Apple Corporation (AAPL), which easily blew away earnings estimates in their latest report. Many dividend investors are probably eying these shares, wishing Apple would pay a dividend. With nearly $100 billion in cash sitting in its coffers, we’ll likely see some form of a dividend initiated by Apple, but only time will tell.
From a share price standpoint, the company’s valuation is actually attractive at around ten times 2012 earnings. When disregarding AAPL’s massive cash hoard, its valuation could even be closer to eight times earnings.
I urge investors to exercise caution around the shares, however. Remember, this is a stock that has run up from $7 a share in 2003 to now $450 a share. This precipitous rise has made many top company executives multi-multi-millionaires, and at some point, it becomes very difficult to keep extremely rich people motivated. Without the godfather-like presence of the late great Steve Jobs to rule with an iron fist at the company, don’t be surprised to see Apple stumble at some point within the next few years.
Apple competitor Microsoft (MSFT) is a recent example of this sort of downturn. Once founder Bill Gates shifted his focus to philanthropy (a noble move, no doubt), the stock’s share price soon began to suffer. For more than a decade now, MSFT has underperformed the markets. Eventually, the company initiated a dividend and has now raised its payout substantially in recent years. Similar to Apple, the dividend move came while MSFT was generating tons of cash.
Apple is under significant pressure to report record earnings every single quarter. It’s possible they could continue to knock it out of the park for years, but likely improbable. Initiating a dividend payout wouldn’t necessarily light a new fire under the stock should it begin to flounder, but we certainly wouldn’t mind the opportunity to initiate coverage on the company here at Dividend.com.Finding a Great System that Works for Others
I have mentioned in the past that we spend very little on marketing when it comes to growing our Dividend.com business. That doesn’t mean we’re not looking to gain greater exposure, but I’d say a good portion of our new users come from word of mouth from our current subscribers. The best possible marketing you can have is when customers refer your product or service to family and friends.
I’ve always believed that results are what matter the most when evaluating different systems. Is it set in stone that what works for one person will automatically work for another? No, but having a referral makes people more open to at least trying a new approach.
Our Dividend.com Premium service is pretty unique in the stock world. Our focus is on long-term results, not short-term trading. Our recommendations are made very carefully and thoughtfully, and we’re not afraid to tell subscribers when we believe the market has run a bit too far. The feedback we’ve received from our subscribers has been tremendous, and we thank those subscribers who’ve shared the story of their successes with us.
Anyway, nothing beats trying out something new for yourself. Here’s one more tip I urge you never to forget: always consider the source of where a recommendation or advice (of any kind) comes from. Remember, successful people tend to make smarter choices with the long term in mind than those who constantly seek “get rich quick” and similar systems.Working Your Brain “Muscle”
A couple of years ago, I read an article on thedailybeast.com which talked about the debate of whether or not the brain acts like a muscle. An interesting part in the article described a program that was set up for a low-performing elementary school in Oakland. Over the course of eight weeks (twice a week), kids would go into one of two rooms to play board games, video games, and card games. Each room had a particular function, one was to challenge kids’ reasoning ability and the other to challenge their processing speed.
At the end of the program, the results were incredible. The group that trained for reasoning ability saw their non-verbal intelligence scores leap 32%, while the group that trained for processing speed saw their brain speed scores jump 27%. So in just a total of 20 hours, the games had a drastic impact on the kids’ IQ.
It would seem that these sort of game activities are just what today’s generation could use. We now live in a distracting, tech-enabled society, where many cognitive skills are massively undeveloped. Texting, tweeting, etc. are very much in vogue, but aren’t making our younger folks any much smarter. In fact, one could argue these methods of communication are counter-productive in children’s development, as many kids these days can barely carry a real-life conversation.
The easiest way to build up one’s brain muscle is by reading. I am an advocate for reading as much as you can about the issues that are important to us, especially as we get older. Whether you’re trying to better yourself financially, professionally, or shape up your health, reading up on these topics is no doubt the best way to fill the information void. It’s easy to kick back and watch movie after movie, or browse the latest celebrity gossip, but if you don’t take the time to read, your brain will certainly begin to contract. At some point, my guess is your wallet will soon follow suit.2011 Was a Big Year for Dividend Stocks!
It is always great to see the media tip their hat to what has been a great year for dividend-paying stocks. We’ve been seeing several major media outlets publishing articles about how dividends were a big investing theme in 2011 and likely in 2012.
The truth is that we tend to see solid years more often than not in the dividend world, but the business media focuses their attention instead on the high-risk momentum action. Only in times of extreme duress does the media seem to focus on our dividend niche. Regardless, we won’t be distracted from our job of finding the best dividend names to put fresh capital into.
I’d like to thank all our Dividend.com Premium subscribers and newsletter readers for helping spread the word about our service. It means a lot to us, and telling loved ones about Dividend.com is the best possible gift you can give to us this holiday season.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!