Volatility is back, as investors are seeing the first quarter begin to wind down with a bit more anxiety than has been the case recently. Ironically enough, the volatility comes as U.S. economic data continues to show favorable housing anecdotes, not to mention a continued drop in jobless claims and better employment data (although we know the data can get skewed fairly easily, and still we need to see income levels start to show an uptick).
Looking at the markets, earnings results didn’t help matters much, with stocks like Oracle (ORCL), Guess Inc. (GES), and Jabil Circuit (JBL) seeing red following their quarterly reports. Wall Street analyst calls were also making waves, with cautious commentary weighing on shares of Cisco Systems (CSCO), Parker-Hannifin (PH), and Burger King Worldwide (BKW). Baby formula maker Mead Johnson Nutrition (MJN) bucked the overall selling, however, following some positive analyst chatter.
If you have ever watched CNBC’s series called American Greed, you will often see endless stories of investors getting burned by what seems to be the classic ponzi scheme of guaranteed double-digit returns. Whatever the investing strategy is focused on, these hucksters put much of the emphasis on the appearance of their success: fancy car, fancy office, glamorous marketing brochures, etc. They also rely on word of mouth to keep the scheme running, which never seems to fail since people love to talk about how well they are doing in their investments.
The message tends to focus on specific current events, which entices people invest their money with the scammer. For instance, they may focus on how people have been burned in real estate, but they have a magical solution to help those folks dig out of the hole they’re in. There was one investor who decided to make a move because he had little growth in his portfolio over a two-year period, not realizing the time period he referred to was awful for the markets (and being flat was actually better than being down 20-30% or so). As you can see, it’s someone’s perspective that ultimately pushes their button to “need” to make a move.
When bull markets get sloppy is when we see usually conservative investors decide they must buy into the hype of whatever momentum stock is making headlines. They may not be satisfied with just good returns — they want to match the numbers they are hearing from friends or pundits that are waxing about the “killing” they are making in the market.
Investors must understand the perspective they take will ultimately push them in a direction that could make for rough waters. If you don’t believe this could happen, be sure to check out the American Greed series, and you will be shocked at how many people get “taken” financially. For many unfortunate souls, it’s often a sad ending to what was a life of hard work.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!
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.
- 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!