May 30, 2012 at 16:04 PM EDT
Market Wrap-Up for May 30 (DB, C, GS, DRI, CVX, more)

Yesterday’s rally seemed like a distant memory today as continuing concerns surrounding Europe’s debt and the Spanish banking crisis linger. Several economic data points here in the U.S. this morning also weighed on the markets. Visa (V) reporting lower payment volume in April surprised some analysts. Also, pending home sales data showed the biggest drop we have seen in a year. This new data of course runs counter to the constant bottom calls surrounding real estate prices.

Looking at the sectors leading the way lower, financials were pacing the losses with names like Deutsche Bank (DB), Citigroup (C), Morgan Stanley (MS), and Goldman Sachs (GS) trading in the red. Wall Street analyst downgrades also pulled down shares of Agnico-Eagle Mines (AEM), Chevron (CVX), and Darden Restaurants (DRI). Looking deeper, we are also seeing energy prices resume their recent pullback. We have maintained a low exposure to the energy sector for the past several months, as we anticipated oil prices would eventually join in on the general state of global economic weakness (which it has — oil prices are down 20% in the past three months).

Two Dividend Stocks Removed from Recommended List

We removed two dividend stocks from our “Best Dividend Stocks” list this morning. We still like both names long-term, but we are cautious in the short-term. Check out the names removed here.

“Compounding” Investor Behavior to Avoid

You’ve probably read plenty of anecdotes about how compound interest is the ultimate investor weapon in building long-term wealth, but here’s a twist on how a different kind of compounding behavior can work against investors. In the last month or so, we have seen the markets pull back much more than in the past 6-12 months. As enticing as it may be to cut and run (selling stocks and moving to the sidelines in anticipation of better price entries), the idea anyone can successfully pull off selling at the top or buying at the bottom is always easier said than done.

This behavior of trying to time the markets tends to compound over the course of weeks, and even months. All the while, you could have been targeting the best income-producing assets (Best Dividend Stocks) with your capital. For the “safety and security” of earning almost nothing, individuals continue to forfeit their ability to create better returns for themselves. High-yield dividend stocks (think in the 3% to 7% range) are clearly a better option than CDs and savings accounts in the current environment — and will continue to be for several years to come.

You can see from our actions above (removing dividend stocks we think could potentially have more downside than the others we currently like) that we are not oblivious to the current market environment and are not afraid to pilot through whatever situations arise. As I mentioned days ago, markets that race higher day after day tend to get us more nervous than overall market pullbacks. Investors that get too frothy tend to be the ones who feel the most pain when the inevitable corrections come.

The Myth of Making the “Right” Decision

We all face big choices throughout the course of our lives. Whether the decision involves career, business, investing, or family, I find that many people place too much emphasis on that one specific choice as the be-all, end-all. In reality, following through on our decisions is the most important step in the equation. It’s not so much about making the “right” choice, but instead about choosing the option we feel will work out best — as long as we pay attention to and put our greatest effort forth.

Remember, no one succeeds in every single aspect of their lives. I know people who are great with money but their family life is a mess. I also know people who are financially unstable but have an extremely healthy family life. I even know people with great careers who earn good money, but fail time and time again in their investing. Many of these folks could greatly benefit from a mentor or advisor — be it for their career, investing, or personal lives. The problem is, most people are generally reluctant to accept help (or even seek it out).

The question then becomes, is it that these folks are making wrong choices, or that they’re just not following through with their decisions? I find that in majority of cases, the latter is true. Deciding to put money to work in dividend stocks is a great choice, but if you don’t actually put your will into action, what have you really accomplished? Even if you make the “wrong” decision, your future actions can turn the tide to the positive side of things.

In the end, you must hold up your end of the bargain. Do everything you can to make sure your life decisions work out for the best — in your career, investing, and personal life.

Income, Income, Income

At Dividend.com, we maintain our focus on the best income-producing investments the markets have to offer during time of heightened volatility. We want to make sure we have only the most pullback-resistant names on our Best Dividend Stocks List. Also, if we see the market putting in what looks like a decent bottom, we will be prepared to scale up the list of stocks we like. Stay tuned and be sure to look for Dividend.com Premium member alerts along the way. Don’t count on the government or your employer to set you up for a remarkable retirement. Take control, do your own research, and achieve your goals yourself!

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.

We don’t ask for a credit card to use our free trial, and we don’t bill you when your trial ends. No obligation whatsoever! So keep enjoying the newsletter, but please give Dividend.com Premium a shot if you haven’t already subscribed!

Thanks for reading everybody. I’ll see you tomorrow!

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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