We heard lots of buzz this morning about the latest real estate-related report. Data points showed that U.S. builders broke ground on the most new homes and apartments in nearly four years last month.
Ironically, I was watching the show “House Hunters” last night on HGTV. The episode showed a person looking to buy a home right outside of the Las Vegas strip area. The home prices varied from $75K to $130K for homes most people would find quite desirable. Here’s the hook: all of the homes were short sales. Clearly, real estate’s rebound is heavily localized, and those who believe the rally will lift all boats will likely be disappointed. From an real estate investment standpoint, the deals seem obvious. However, problems for landlords still persist. Will tenants that can’t afford to buy ultra-cheap homes be able to pay their rent anyway?
Getting back to the equity markets, earnings were front and center today. We saw earnings-related rallies for the likes of Honeywell (HON), W.W. Grainger (GWW), and Stanley Black & Decker (SWK). SWK also boosted their dividend payout 19.5%. On the flipside, investors reacted tepidly to results from banking plays Northern Trust (NTRS), Bank of America (BAC), and PNC Financial (PNC). Elsewhere, oil prices moved back to the $90 per barrel level, as commodity prices continue to spike on any buzz that further bailouts may be coming.Has the Bond Market Stopped Mattering?
The bond market here in the U.S. is nearly impossible to decipher these days. The 10-year yield continues its downward spiral (1.47% to 1.50% yield last I checked), but the lack of effect the apparent rising demand for bonds (more people buying bonds means lower bond yields) has had on the equity markets is truly baffling. I’ve begun to wonder how relevant bonds are as an overall indicator anymore.
Granted, we know the government is purchasing its own bonds to fund its bloated operations. However, our concern is the effect these tactics will eventually have on stock prices. How far will investors go to buy up yield in the face of stretched valuations? So far, the better bet has been to chase yield, regardless of rising stock prices. But we all know how that game can eventually end.
Trading volume continues to decline (giving more credence to the conspiracy theorists who believe there is a consistent manipulation to keep share prices from falling), and we scratch our heads about what the technical ramifications will eventually amount to. Stocks rising on declining volume and dropping on increasing volume (a concept known as “distribution”) almost always leads to lower stock prices. However, this scenario simply hasn’t happened in the past year or two. So you see, we are forced to maneuver very carefully when it comes to the stocks we’re recommending.
We will not let strange market occurrences throw us off the path to wealth. We will continue to seek the best possible dividend stocks regardless of the current environment. Despite the recent lack of new moves on our Best Dividend Stocks List, we can assure you we are looking very carefully each and every day at several new upgrade candidates. Earnings season tends to provide better clarity about how companies will fare in the coming months and years, so stay tuned!Dividend Stock Removed from Recommended List
We removed another dividend stock from our Best Dividend Stocks List this morning. We still like the name, but would wait to add new money to the shares for now. Check out the name we downgraded along with a full explanation here.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.
I hope everyone had a chance to check out our Dividend.com Premium members-only weekend articles , including new features that highlight some of the biggest winners and losers from the week that was, such as analyst upgrades/downgrades and earnings/story stocks. These articles are a great way to catch up on the week that was in the markets. We also have a rundown of how various Dividend ETFs performed on the week.
Thanks for reading everybody. I’ll see you tomorrow!