Well it turns out that the analysts covering companies on Wall Street and economists were all entirely too optimistic about the first quarter. The major markets were up yesterday, 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, this shouldn’t have come as a surprise to you. 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 500, 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. The best strategy for investing in this market is to target and own dividend-paying companies. As I’ve said many times before, during volatile times, dividend stocks are an oasis. 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 Co. (NYSE:ANF) is one company I could name. Abercrombie & Fitch pays a 3.7% dividend and is a $1.5 billion company, but ANF stock is down more than 40% in the last 12 months.
Abercrombie & Fitch would have to raise its dividend of 80 cents per share by 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 stocks. So, if you’re in the market for high-yielding dividend stocks, I recommend you check out my free Dividend Grader site.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
