There was certainly no surprise as far as today’s QE3 announcement becoming official out of the Federal Reserve. It appears they are now looking to keep rates low into 2015 as well. The beat goes on for those being hurt the most, which is primarily savers and those looking to avoid much of any risk with their nest egg. Inflationary costs that are eating into consumers’ pockets will continue to be a burden, despite the benign economic data we tend to get whenever inflationary data is broken down.
We were following some of today’s early movers on the back of several Wall Street analyst calls. On the positive side, stocks like Apple (AAPL) and Limited Brands (LTD) generated nice gains on upgrades. Gold (GLD) prices, along with Oil (USO) prices spiked on news of further Fed accommodation. Financial sector plays, especially the big banks like Citigroup (C), JP Morgan (JPM), and Wells Fargo (WFC) jumped higher as well.
As we got set to hear what the Federal Reserve had to say — and what kind of sustained damage they will have decided to inflict on savers regarding low interest rates — the investor in all of us must remain wary of doing much portfolio shuffling on days like today. The business media will tend to be dramatic and the headlines will likely raise blood pressures for those folks glued to the television set or scanning the headlines online. If you are a fan of volatility however and love to gamble, you live for days like this.
I’m not quite sure our audience profile falls under the “needing action” category, but you can count on plenty of active players jumping on the initial move. As the headline above says, listen all you want, but avoid shuffling your entire wealth-building plan on any one event.Doing More With a Lot Less
It wasn’t much of an attention grabber this morning from a big business story headline, but USG Corp (USG) announced it will make about 4,700 job cuts this year, and is also being cautious about rehiring. The twist to the story here is the company’s stock is currently trading at 52-week highs and is in the building materials business (they make drywall used in construction).
This development makes for quite a counter argument to the growing chorus of real estate bulls making headlines with every housing data blip. USG is certainly a company that would know the building industry as well as anyone, and yet they are still looking to get leaner.
Despite the headlines of an improving unemployment rate (as calculated by convenient means), I believe there are wholesale changes happening in today’s workforce. With that, I see job opportunities to make big money dwindling for the masses, unless you acquire and develop a special skill set that is needed in today’s world. With declining education-based scores in the U.S., many of our younger generations may be on the outside looking in when it comes to global opportunities — if there is not enough emphasis placed on schoolwork and education.
This message needs to come from the home front as much as from anywhere else. Average workers are going to be in financial danger, whether it is from a wage standpoint or employment opportunity standpoint.
From our research, we haven’t seen any meaningful hiring plans from any of the big-name companies that reported earnings this quarter. The only job growth we’ve seen came from the retail sector (i.e. lesser-paying burger-flipping jobs), while most of the other industries have been silent for the most part. In fact, a good number of companies have been looking to put in “productivity” measures to optimize profits and keep margins strong. Job cuts seem to still be the norm in corporate America, as companies continue to do more with less.
From an investing perspective, you cannot ignore the changes taking place today, especially if you’re looking to achieve great investment results from your dividend holdings. As always, we’ll do our best here at Dividend.com to keep readers abreast of all the economic developments we notice coming down the pike.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.
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- 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!