We saw a bit of a replay of yesterday’s global economic concerns for the markets today. Equities and commodity prices ended lower across the board, but we did close off the day’s lows.
Some top commodity-related names seeing red included Schlumberger (SLB) and Halliburton (HAL), which caught some cautious analyst commentary this morning. This move comes on the heels of competitor Baker Hughes (BHI) making cautious comments about the oil-services space Tuesday. Elsewhere in the commodity space, shares of Freeport McMoran (FCX) and Cliffs Natural Resources (CLF) also experienced a fair share of investor selling.
Big news out of McDonald’s (MCD) this morning that its CEO Jim Skinner will step down this summer after leading the company’s turnaround beginning in 2004. Mr. Skinner’s career is quite an amazing story. He started with the company in 1971 as a restaurant manager trainee after spending 10 years serving in the U.S. Navy. He never even graduated from college, but quickly rose through the ranks and became arguably the company’s greatest top executive in history. The company’s current COO (chief operating officer), Don Thompson, is set to take over on July 1.
On the earnings front, shares of FedEx (FDX) fell 3.5% on the company’s mixed guidance, while shares of credit card services play, Discover Financial Services (DFS) bucked the overall selling, ending the day 3% higher following their earnings release.Local News — Where Not to Turn for Financial Information
Anyone that has read my work knows that I am not the biggest fan of how the business media portrays investing (they tend to cater only to manic day traders). Well, my biggest pet peeve is how off-target local news coverage is when it comes to discussing or covering the economy. Whether it’s local or national finance stories, these folks are often just plain clueless.
Here’s a great example. I was reading my local paper today, and noticed a front page story story claiming that housing sales had risen both nationally and locally. I then read the article and found these nuggets: “in January and February we had back-to-back 7 percent increases in the listings coming onto the market” — which was described as a positive. When does more inventory ever equate to a positive when existing inventory is already too much to handle? Then came the reality factoid: “February homes sales were about 1 percent lower than January.”
I get the fact that papers want to paint a positive picture of the local economy, particularly from a real estate standpoint. Papers need those advertising dollars from realtors more than ever. But if anyone is just skimming headlines and not reading the details, they’ll be steered in the complete wrong direction.
I always urge investors to consult multiple sources of financial/economic information. For these particular topics, I suggest you keep your local press coverage at the bottom of your list. Local papers can often times be the most biased — in fact, many local presses didn’t realize real estate had been plummeting until a few years after the fact. When it comes to stocks and investing, many local editions are realizing they can’t bring much new to the table, and are in fact cutting out much of the national coverage/opinion/stock prices sections these days. At least they realized these topics aren’t something they should be toying with.What Holds You Back From Becoming Financially Independent?
Let’s look at some key factors that stand in the way of many people seeking financial independence.
1. The “Dilly Dally” effect – Too many of us are always putting off the necessary changes that need to be made regarding how we manage our money. I often talk about automating money from your paycheck into a brokerage account each week so you are positioned to get money to work for you in income-producing dividend stocks.
2. Overspending – We all know someone that overindulges on the latest tech gadget or fashion piece. Unfortunately this is part of an overall addiction that has been built up and is tough to snap. If you are around a group of people that just worship at the altar of Tommy Hilfiger and Polo Ralph Lauren, it tends to be impossible to not want to feel “left behind.” Friends and family have a big impact as to how you will perceive money.
3. Slow to Pay off Debts – Spending with plastic is easy, but once the “minimum due” invoices come in, you start the bad process of extending out your debt every month. Credit card companies just love this and you become a slave to their process in no time.
4. Trying to Get Rich Quick – often times this is the disaster event that knocks someone’s finances for a loop. The no-brainer business/stock investment with a friend who promises they have the golden ticket to riches. The sure and steady way is to get compound interest to work as your weapon.
When I was on Stu Taylor’s Equity Strategies radio show a while back, we discussed the options if you are older and have not saved a dime yet. Let’s say you just turned 50 and you looked at your income statement and there is nothing but a $0 at the bottom of the page. You actually still have plenty of time to build a solid nest egg. For instance, you can start maxing out a Roth IRA contribution ($5K/year currently, but in addition to the “standard” contribution limits, taxpayers age 50 and over are eligible to make a Roth IRA catch-up contribution of an additional $1K/year). If you were to invest $5K per year for every year in your 50s, each $5K you invest would turn into more than $40K after 20 years (Based on an historical 11% average annual return for dividend-paying stocks). So you see, it’s never too late to get started as long as you’re investing in the right dividend-paying stocks!New MLP Report Just Released!
In The Essentials of Investing in MLPs, we outline the do’s and don’ts of investing in high-yield Master Limited Partnerships (MLPs). Our exclusive new MLP report outlines everything you need to know about these popular high-yield investments, including:
- Understanding their unique company structure
- What you absolutely need to know about their special tax treatment
- Why MLPs may not be suitable for retirement accounts
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Head to the Dividend.com Premium page to download this brand new report today!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.
- 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!