A good portion of the market was able to buck the huge drop in Apple (AAPL) shares today on the back of the tech giant’s disappointing earnings guidance. Several months ago, such an overall market move would have been thought impossible following any bad news out of Apple.
Looking at some of the earnings winners taking flight, we saw stocks like Bristol-Myers Squibb (BMY), Western Digital (WDC), Agrium (AGU), and W.W. Grainger (GWW) moving higher. On the flip side, joining Apple in trading lower following earnings were names like McCormick & Co. (MKC), Altera Corp (ALTR), Lockheed Martin (LMT), and Raytheon (RTN). Nokia (NOK) finished down 8% on the company’s results, but also on news the company has suspended its dividend. Finally, Wall Street analyst upgrades helped lift stocks like Ross Stores (ROST) and United Parcel Service (UPS).
For everyone that has been burned buying Apple as it was hitting new highs just six months ago, and riding the euphoria caused by the huge attention it was given by financial media outlets, know this: the media is not feeling your pain. They’ll discuss the huge drop, sure. But at the same time they will just move on to the next hot name that is spiking. This is the financial media in a nutshell, in case you haven’t been in the markets for very long. I learned that lesson early on in my former life as a trader. I started out paying very close attention to what the “experts” on TV had to say. Soon enough, I figured out that the concept of accountability was essentially non-existent for the pundits making appearances each day. It would burn me up to see guru after guru change their stripes at every little turn the markets would make. Soon enough, I learned that if I was going to attempt to trade the markets, I needed to develop my own systems.
If you have the desire to be an active trader (remember the odds of success are extremely low), be prepared to develop your own signals. Also bear in mind that those financial media outlets you can’t live without are not sharing the hurt with those who get burned buying the euphoric flavors of the day. At the end of the day, it really is up to you to decide what to buy and sell, regardless of how influential any pundit may be.
I’ll say it time and time again: trading is hard. It’s among the most stressful careers in the world. That’s why I much prefer investors stick to building portfolios that deliver consistent returns, with focus on quality dividend-paying stocks. Unlike the flavor-of-the-day momentum names, high-yield dividend plays put the power of compound interest to work for you over time. Building wealth is a long-term game, so why not invest for the long term?
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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!
We have much more about why Dividends are so awesome if you check out our “What is a Dividend?” page here.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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Thanks for reading, and I’ll see you tomorrow!