Despite a big miss from durable goods orders — there was a 7.3% decline in July versus an estimated 4.9% decline — stocks rallied into positive territory early this morning. Though stocks were mostly higher throughout the day, a big sell-off caused the major indices to fall into the red in late afternoon trading. It will be interesting to see how investors and traders react to various economic data points and other events this week as we finish out August and head into what is expected to be an increasingly volatile September.
The big news on the Street today was Amgen Inc.’s (AMGN) announcement that it will be acquiring Onyx Pharmaceuticals (ONXX) for about $10.4 billion in cash. Because of this acquisition, investors pushed AMGN shares up more than 7% in the day’s trading.
Other stocks moving higher today due to some bullish news were drug company Sanofi (SNY), logistics company C.H. Robinson Worldwide (CHRW), and oil company Anadarko Petroleum (APC). Furthermore, shares of Wolverine World Wide (WWW), Altera Corp (ALTR), Hasbro (HAS), and EOG Resources (EOG) also rose higher today due to Wall Street analyst upgrades.
However, not all stocks were on the rise in the day’s trading. Shares of Tyson Foods (TSN) headed lower due to a major analyst downgrade.
Be sure to check the Dividend Daily for all the latest earnings reports, analyst moves, and much more.High Growth Doesn’t Always Equal Long-Term Returns
While I was skimming through Twitter this morning I noticed a lot of comments from traders and some analysts about how the NASDAQ Composite Index has been “smoking” the Dow Jones Industrial Average and S&P 500 indices as of late. These traders are noting how most, if not all, of the components in the NASDAQ are from high-growth sectors, while the Dow specifically consists of mature, slow-growth, dividend paying companies. As such, these traders and analysts seem to be mocking those investors seeking out investments with attractive yields in more stable sectors because they might not get the greatest share price appreciation in the near term.
Yes, the NASDAQ has been performing well as of late, with stocks like Facebook (FB) and Tesla (TSLA) skyrocketing to all-time highs over the past month. However, dividend investors should not get caught up in the hoopla surrounding these high-growth tech names. While they may be performing well over a short-term period, it does not mean that it will last over the medium- to long-term period (which should always be our main focus). High, short-term growth doesn’t automatically result in long-term returns that we desire.
Slower-growth, high-value companies that pay dividends at attractive yields might be less sexy than some of the names in the NASDAQ composite, but over the long-term these lower beta names will provide you with stable dividend payouts that you can reinvest, taking advantage of compounding interest to build up a substantial retirement nest egg. Try to avoid falling into the trap of obsessing over daily, monthly, or quarterly market moves just because you see or hear traders doing it in the media and on blogs. Remember that those less sexy dividend stocks will be the key to living comfortably during your golden years.
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