Market Wrap-Up for June 28 (JPM, DB, C, FDO, PAYX, COH, more)

With the EU Summit and the Supreme Court ruling on the President’s healthcare plan leading the headlines today, investors spent most of the morning and early afternoon making a quick dash to the sidelines. However, late-day buying pushed the averages well off the lows.

Part of the investor concern we saw was certainly tied to the news JP Morgan (JPM) may have underestimated the trading loss that shook the markets several weeks ago. There is some chatter the loss could be closer to $9 billion and not $2 billion as was previously thought. This news hurt fellow global bank names such as Deutsche Bank (DB) and Citigroup (C). Elsewhere, earnings results pushed stocks like Family Dollar Stores (FDO) and Paychex (PAYX) lower. Also, cautious Wall Street analyst commentary is putting a damper on shares of Seagate Technology (STX) and Coach (COH).

Earnings Season Approaches

The beginning of earnings season is upon us, and investors should expect the unexpected. Some companies’ reports will disappoint, but the shares will rise anyway. Others will report blowout earnings, but shares will pull back on the news. We will be sorting out the winners and losers throughout this process as we look for new candidates to add to our Best Dividend Stocks List, and re-evaluate names we currently like to see if they should remain on the list.

Earnings season is often the most dangerous time to be a trader. For dividend investors, however, the market’s reaction to earnings reports can present a welcome opportunity. If a stock gets beat up for just meeting analyst estimates, we’ll sometimes see momentum traders scamper for the exits over several days, making stocks we’ve been watching much more enticing.

Now here’s a word of caution when it comes to analyst calls during earnings season. I’ve seen many instances where analysts like to play “catch-up” as far as earnings estimates go, either by raising or cutting numbers just before a particular company’s report, only to see the stock move in the opposite direction (stock rallies on a bad report or declines on a good report). So again, just keep this factor in mind as you evaluate stocks that may be on your watch list.

Getting an Investment Strategy That Fits

For investors, perhaps the most important factor is finding reliable sources of information that help you formulate your investing strategy. The mainstream business media is loaded with all sorts of “gurus” — from those who advise on how the markets will perform in the next 5 hours, to those who specialize in specific industries or sectors. And then you have the economists, whose aim is to predict how consumers will be affected from the recent monetary twists and turns.

If you wind up listening to the wrong guru for your overall investment strategy, i.e. one who doesn’t fit your personal objectives, you’ll undoubtedly be disappointed by your results. The same concept applies to life in general. Surround yourself with people who spew shallow opinions with little relevant facts to back up their take, and sooner or later you will likely become a member of this traveling band of misguided observers.

Our users are a very hands-on bunch, as we found out from a recent survey we did on the website. We asked how many of our subscribers handle their own investments, without the aid of an investment advisor or full-service broker. An overwhelming 80.5% indicated they did not use an advisor to help guide their investments.

Our stance has always been that most people are fully able to make their own investment decisions, especially when they use the simple dividend investing strategy we advocate here at Of course, that doesn’t mean you should never consider speaking with a financial planner or estate attorney during times when their particular expertise can be of great use.

You’d be surprised at how people well people can do for themselves when they put the right strategy and knowledge into practice!

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 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 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 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 Premium a shot if you haven’t already subscribed!

Thanks for reading, and 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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