Well it turns out that the analysts covering companies on Wall Street and economists alike were entirely too optimistic about the first quarter. The major markets are up today, but it has certainly been a bumpy ride for investors this quarter; earnings misses and disappointing economic data have really increased the market’s volatility.
Now, as a regular reader on NavellierGrowth.com, this shouldn’t have come as a surprise. I warned my readers several times and even discussed my first quarter slow-down forecast in depth back in March when I appeared on Fox Business’s show, “Making Money with Charles Payne.”
I stated that the market would have an earnings problem in April and the first quarter. And that has certainly been the case. For stocks in the S&P, sales are flat year over year. Earnings were initially expected to be down 2% but are now looking like they will be up 3% or so. The reason for the shift is largely because of stock buybacks from the big companies. Last year $904 billion was returned to shareholders via stock buybacks and dividends.
This brings me to my main point today. The best strategy for investing in this market is to target and own dividend-paying companies.
I’ve said many times before, during volatile times dividend stocks are an oasis. And the foundation of this market is getting better and better because of dividends and buybacks and they’re here to stay.
Certainly, this doesn’t mean that all dividend stocks are created equal. Just because a company has a yield, doesn’t make it a gem for every retirement account. Abercrombie & Fitch (ANF) is one company I could name. It pays a 3.7% dividend and is a $1.5 billion company. But shares are down more than 40% in the last 12 months. ANF would have to raise its $0.80 dividend 2,000% to make up for losses in capital gains. And I could give you countless examples just like that.
This is exactly why I’ve created Dividend Grader; a tool that utilizes key metrics that determine whether a company and its dividend are worth investing in now. This tool gives each dividend stock a score and ranking in clear to understand language so you can make the right call right now.
And adding dividend stocks to your portfolio is an excellent strategy right now. As the market gets bumpy now and in the summer months, buying pressure will remain strong for solid dividend companies. So if you’re in the market for high dividend yielding stocks I recommend you check out my free Dividend Grader site.
I’ll be in touch again tomorrow with the latest economic news.