By: Dividend Daily
July 22, 2013 at 16:00 PM EDT
Market Wrap-Up for July 22 (MCD, HAS, HAL, KMB, more)
As we kicked off a new week of trading, stocks got off to a choppy start. Disappointing earnings from McDonald’s (MCD) and the release of economic data that showed a 1.2% month-over-month decline in existing home sales in June caused the major indices to stay relatively flat during the early portion of the day’s trading. Though stocks made attempts throughout the day to get into positive territory, the S&P 500 and Dow remained mostly unchanged by the close.
While McDonald’s disappointing financials received most of the coverage on Wall Street today, it was not the only company that took a hit after missing earnings estimates. Kimberly Clark (KMB), Halliburton (HAL), Gannett (GCI), Six Flags (SIX) and Bank of Marin (BMRC) shares fell after underwhelming earnings.
Some Wall Street analyst moves moved stocks as well today. Upgrades of Schlumberger (SLB), Sonoco (SON), and Dick’s Sporting Goods (DKS) caused those stocks to head into positive territory. Meanwhile, downgrades of TD Ameritrade (AMTD) and H&R Block (HRB) dragged those stocks into the red.
Be sure to check the Dividend Daily for all the latest earnings reports, analyst moves, and much more.Microsoft and Intel Magnify Some Potential Risks for Dividend Investors
Last week, earnings season really picked up steam as we received financial reports from a number of big-name companies. One of the major developments that Wall Street investors and traders have been focusing on as the earnings pour in is the disappointing earnings coming from some major tech companies, specifically Microsoft (MSFT) and Intel (INTC). Microsoft’s shares fell 11.4% on Friday after the company reported its earnings after the close on Thursday, while Intel shares have declined by about 5% since it reported underwhelming earnings after the close on Wednesday. What makes these two tech giants stand out is that they are both being negatively impacted by the declining PC market; Microsoft is taking a hit partially due to its PC-dependent Windows software segment and Intel is being dragged down by sluggish sales of its PC microprocessors.
For dividend investors, the problems facing Microsoft and Intel magnify some of the issues with investing in tech companies. Dividend investors invest with a long-term focus, ideally putting money into stocks that will perform well year-after-year for several decades, continuing to boost dividend payouts and see share price appreciation. However, the problems facing dividend paying tech companies like Microsoft, Intel, and PC makers Dell (DELL) and Hewlett-Packard (HPQ), show that the tech landscape is fluid, always changing. Often it is hard for these companies to keep up with the constantly evolving market. If they do not properly adapt then their earnings will suffer, leading to the stock taking a hit and subsequent dividend cuts; it’s a vicious cycle that dividend investors usually prefer to avoid. So just remember, while there is always a bit of risk regardless of the stock an investor initiates a position in, tech companies provide additional downside risks that may not be palatable for an income investor’s portfolio.
Thank you for reading. We’ll see you tomorrow!
Bank of Marin Bancorp DICK'S SPORTING GOODS, Inc. GANNETT CO., Inc. H&R BLOCK, Inc. HALLIBURTON COMPANY Hasbro, Inc. KIMBERLY-CLARK CORP. LENNOX INTERNATIONAL, Inc. MCDONALDS CORPORATION RPM INTERNATIONAL, Inc. SCHLUMBERGER LIMITED SIX FLAGS ENTERTAINMENT CORP. SONOCO PRODUCTS COMPANY TD AMERITRADE HOLDING CORP
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