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Market Minute: Starbucks Milks Yogurt Deal; Apple Earnings Shine

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By DailyFinance Staff

starbucks greek yogurt dannon stocks investing earnings consumer spending

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Starbucks plans a big new product line, and a case of when bad is good. Those and more are what’s making business news Wednesday.

The Dow industrials (^DJI) rose 22 points Tuesday, enough for another all-time high. But the S&P 500 (^GPSC) lost 3 points, and the Nasdaq (^IXIC) fell 21.

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Starbucks (SBUX) continues to expand beyond coffee. It’s joining forces with Dannon to make Greek yogurt parfaits. The fast-growing yogurt business in the U.S. is worth more than $6 billion, and analysts say there’s still plenty of room to go. Last year, Starbucks expanded its tea business by acquiring the Teavana chain.

Apple’s (AAPL) quarterly earnings fell 22 percent from a year ago, but that wasn’t as bad as most analysts had forecast. Revenue edged higher as it shipped more than 31 million iPhones. That was well above expectations and the stock is likely to climb this morning.

AT&T’s (T) net edged slightly lower, but on the positive it reported the number of new customers signing long-term service contracts nearly doubled from a year ago.

Ford (F) reported better-than-expected second quarter earnings in part due to strong domestic demand for its F-Series pickups. The automaker earned $1.2 billion in the April-June period, propelled by a $2.3 billion profit in North America. Ford shares rose 3 percent in premarket trading.

Among other big names reporting this morning: Boeing (BA), Caterpillar (CAT), Delta Air Lines (DAL) and USAirways (LCC).

Other stocks likely to make big moves to the upside following earnings include video gamemaker Electronic Arts (EA) and software company VMWare (VMW); like to trade to the downside, chipmaker Broadcom (BRCM) and restaurant chain Panera Bread (PNRA).

The big report after the bell today comes from Facebook (FB). The focus will be on how much the company grew its revenue from mobile platforms.

The New York Times (NYT) reports officials in Louisiana are preparing to file suit against Exxon Mobil (XOM), BP (BP) and other oil producers, accusing them of damaging the coastal wetlands that help protect the region from hurricanes.

A new report shows that Google (GOOG) accounts for nearly a quarter of all the Internet traffic in North America. That’s more than Facebook and Twitter combined.

And Carl Icahn, one of those big time investors who can move stock prices, is offering a tease about what he’ll do next. CNBC reports that Icahn plans to give clues about his next big investment on Twitter. His handle is @Carl_C_Icahn.

–Produced by Drew Trachtenberg.
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Source: FULL ARTICLE at DailyFinance

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5 Dividend ETFs With 5 Very Different Strategies to Boost Your Income

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By Dan Caplinger

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Income-hungry investors have been turning more and more to dividend ETFs — exchange-traded funds that focus on stocks that pay out healthy amounts of income to their shareholders.

Although these funds share a common goal — boosting investors’ income — all dividend ETFs are not the same. In fact, they can have profoundly different methods for determining which stocks make the cut. Here’s a closer look at how five ETFs slice and dice the universe of dividend-paying stocks, and a few things you need to consider if you’re interested in adding them to your portfolio.

1. Vanguard Dividend Appreciation (VIG)
This Vanguard ETF seeks out stocks that have a long history of increasing their dividends over time. The index that the ETF tracks starts out by screening for stocks that have raised their dividends every single year for at least a decade, and then applies some additional tests to ensure the stocks it owns are liquid and easily tradable. Currently, the ETF owns almost 150 stocks that have passed those tests.

At just 2.1 percent, the Vanguard ETF‘s yield is fairly low compared to other dividend ETFs, as current yield is a secondary consideration for the Vanguard ETF. But over time, growing dividend payouts should give investors regular raises in their income levels in future years.

2. iShares Dow Jones Select Dividend ETF (DVY)
This iShares dividend ETF has the same goal as the Vanguard ETF of picking strong dividend stocks with histories of rising payouts. But the iShares ETF goes at it a slightly different way — first looking at the highest-yielding stocks in the market and then going down the list, picking only those stocks that have current dividends that are higher than their five-year averages and that pay out 60 percent or less of their earnings as dividends.

The result is a greater number of high-yielding stocks in the iShares ETF‘s portfolio, with the ETF carrying a current yield of 3.7 percent.

3. WisdomTree Emerging Markets High-Yielding Equity ETF (DEM)
This WisdomTree ETF takes dividend investors outside the U.S.: Its holdings are in promising emerging-market stocks that pay substantial amounts of dividend income. With stocks from China, Brazil, Russia and more than a dozen other countries, the ETF chooses companies whose dividends rank in the top 30 percent of WisdomTree’s broader index of dividend stocks and then buys them in appropriate amounts based on the total amount of dividends they pay.

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This method produces a mix of stocks of all sizes, and its current 3.4 percent yield as measured by the SEC rewards investors for taking on international exposure in their portfolios.

4. SPDR S&P International Dividend ETF (DWX)
This SPDR ETF also has an international focus, but it tracks a broader set of

From: http://www.dailyfinance.com/2013/04/17/dividend-etfs-strategies-Vanguard-iShares-spdr-wisdomtree/

Business, Finance, Occupation & Industry

Inflation Worries? Fight Back with Dividend Stocks

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By Chuck Saletta

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Inflation is back in the news these days, thanks to President Obama‘s new budget proposal. That proposal adjusts the way inflation gets calculated in an attempt to raise tax revenue and stem the rise of Social Security spending by slowing the rise in the Consumer Price Index.

No matter how it gets officially calculated, inflation is a real threat to your long-run ability to make ends meet. You need an effective way to fight that threat, especially now that potential changes to the official calculations are likely to slow the automatic benefits you’re used to getting from the old method.

Pick your Risk

In this era of abysmally low interest rates, there are no safe and surefire ways to protect yourself from the ravages of inflation. Even recent issues of TIPS bonds — the U.S. government’s Treasury Inflation Protected Securities, which are designed to help investors fight inflation — currently carry negative interest rates. That means investors will still lose money in real terms after those bonds adjust for inflation.

The real question these days isn’t whether you take risks with your money to try to keep pace with inflation — it’s what risks you take just to keep treading water in real terms.

In that light, owning the stocks of companies that pay dividends, have regularly increased their dividend payments, and look capable of continuing to raise their dividend payments just might be the best inflation fighter available to your arsenal.

Why Dividends May Be Your Best Bet

There are three key reasons to believe that successful companies can continue to raise their dividends at least as fast as inflation: accounting, real growth, and cost-cutting.

Accounting: Consider a company that likes to pay a dividend equal to 50 percent of its after-tax earnings to its shareholders as a reward for the risks of owning its stock. If its costs rise in line with inflation and it can pass a similar increase down the line to its customers (whose costs would also be rising in line with inflation), then it has an automatic gain in profits and dividends, in line with that inflation. The table below shows how it works:

First Year Second Year, After 3% Inflation
Costs $1,000,000 $1,030,000
Revenues $1,100,000 $1,133,000
Pre-Tax Profits $100,000 $103,000
Tax (35%) $35,000 $36,050
Profit After Tax $65,000 $66,950
Dividend (50%) $32,500 $33,475
Dividend Increase 3%

Data from author’s calculations.

In reality, not all costs or prices rise exactly in line with inflation, but the general concept still holds.

Real growth: Of course, most companies wouldn’t be satisfied to just keep pace with inflation; they’re trying to grow their businesses in real terms, as well.

From: http://www.dailyfinance.com/2013/04/17/inflation-worries-fight-back-with-dividend-stocks/

Business, Finance, Occupation & Industry

Short Sale Stocks: The 5 Companies Bears Love to Hate

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By Rick Aristotle Munarriz

WASHINGTON, DC - MARCH 05: Grover Norquist, President, Americans for Tax Reform, is interviewed by SiriusXM Patriot host Andrew Wilkow at SiriusXM Studio on March 5, 2013 in Washington, DC. (Photo by Leigh Vogel/Getty Images)

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The market hit a series of fresh highs this month, but there’s no shortage of bears betting that share prices will soon fall. A whopping 13.3 billion shares were sold short on the New York Stock Exchange as of the end of last month. Nearly 7.5 billion more shares have been shorted on the tech-heavy Nasdaq.

In a nutshell, selling short means reversing the traditional buy and sell order of a stock transaction. Therefore a short profits from falling prices — but takes a hit when the market heads higher. (For a bit more background, here’s how it works: An investor borrows shares from a broker through an order to sell short. The investor must, at some later point, close out that position by placing a buy order to cover the short. This sort of transaction can be dangerous given the unlimited downside if a stock shoots higher. But it can be lucrative if a shorted stock falls.)

So which stocks are on the most-shorted list?

With 20.8 billion shares sold short between the country’s two leading exchanges, there are plenty of prolific companies with huge bearish positions. Here are five with the largest short positions as of the end of February.

Feb. 28 Dec. 31
Sirius XM Radio (SIRI) 414.0 million 355.4 million
Nokia (NOK) 338.0 million 291.7 million
Frontier Communications (FTR) 227.6 million 212.5 million
Intel (INTC) 216.0 million 215.5 million
Bank of America (BAC) 161.3 million 186.6 million

Source: Barron’s.

Why these companies? Let’s dig a little deeper:

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Motley Fool contributor Rick Munarriz owns shares of Bank of America. The Motley Fool recommends Intel. The Motley Fool owns shares of Bank of America and Intel. Try any of our newsletter services free for 30 days.

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Source: FULL ARTICLE at DailyFinance

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5 Companies Slashing Their Dividends

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By Dan Caplinger

Telecom Italia

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If there’s one thing investors never tire of, it’s earning dividends. Over the past year, thousands of companies have been happy to comply, raising their dividends and rewarding shareholders with higher payouts.

But lately, we’ve seen a pullback, with some companies deciding to cut back on or eliminate their dividends altogether. Here’s a look at five companies that made this unpopular move, and why.

1. Cliffs Natural Resources (CLF): Cliffs Natural recently cut its dividend by 76 percent, from $0.625 per share quarterly to $0.15. The company produces both iron ore and metallurgical coal, two key ingredients for steel production. When the global economy was stronger, demand for steel from construction and infrastructure development projects was high. But weaker conditions recently, especially in high-growth areas of the world like China, have led to plunging prices for the raw materials that go into steel.

With huge amounts of debt on its balance sheet, Cliffs cut its payout in order to preserve cash and avoid adverse action from bond-ratings agencies on its outstanding debt. With the drop, the stock now yields just 2.4 percent.

2. CenturyLink (CTL): CenturyLink reduced its dividend by about 25 percent in February, cutting its quarterly payout from $0.725 per share to $0.54. CenturyLink is a major provider of telephone, Internet, and video services to customers in rural areas. Like its peers Windstream (WIN) and Frontier Communications (FTR), CenturyLink has struggled against the trend of customers giving up old-style landlines in favor of wireless services supplied by its competitors.

Although the company has had some success in finding growth from its more lucrative broadband Internet access, the steady stream of departing landline customers put enough pressure on CenturyLink’s cash flow that it chose to cut its dividend. Even after the drop, the stock still yields 6 percent.

3. Exelon (EXC): Utility company Exelon announced in February that it would cut its second-quarter dividend by more than 40 percent, with a new payout of $0.31 per share on a quarterly basis compared to the old $0.525-per-share dividend. Exelon has the most extensive stable of nuclear power plants in the country, and under ordinary circumstances, that has given the company a cost advantage over other power-generation alternatives.

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But with prices of coal and natural gas so low right now, Exelon’s margins have been squeezed. Moreover, due to the need to invest in capital improvements to boost the efficiency of its reactors, Exelon decided that keeping more of its cash was a smarter way to maintain its credit rating while still leaving the door open to future growth. When the cut takes effect, Exelon’s dividend yield will drop to about 4 percent.

4. Telecom Italia (TI): Italian phone giant Telecom Italia said last month that it would cut its dividend by half over the next three years. The move is part of …read more
Source: FULL ARTICLE at DailyFinance

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Dividend Stocks: The Best Raises You'll Never Earn

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By Chuck Saletta

General Electric

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If you’re like most of us, it has been far too long since you’ve seen a decent raise. In 2012, wages and salaries increased 1.7 percent on average, barely keeping up with inflation. Behind that slow wage growth is the unfortunate fact that unemployment remains stubbornly high — and has been stuck there for years. With so many people looking for the available jobs, competition for work is high, keeping wages down.

But even with high unemployment and stagnant wages, companies are still making money — and that money has to go somewhere.

In many cases, where it goes is straight into the hands of shareholders, in the form of dividends.

Go Where Raises Are Plentiful

While salaries have been stagnating, dividends have not.

According to S&P Dow Jones Indices, dividends increased by 18 percent in 2012. That’s a whopping 10 times the rate of salary increases — and it is some incredible money, if you can get it.

Fortunately, you can get your hands on some of that money — and the potential raises that come with it. All you need to do is transform yourself from an employee into an owner by becoming a shareholder of a company that pays, has raised, and has the potential to continue raising its dividends.

Invest in Future Raises

In today’s era of ultra-cheap commissions and brokers with low minimum starting balances, it’s incredibly easy to buy shares in companies that pay out dividends.

Better yet, once you’ve made yourself a shareholder of a company that pays dividends, you don’t have to do a thing to get those raises. It’s all the rewards of ownership. And for most people, these dividend payouts also come with the added benefit of lower taxes, as well.

As unearned income, dividends are not subject to Social Security tax, and unless you’re making enough to get caught by the new Medicare surtax, they’re not generally subject to Medicare taxes, either. Plus, in most cases, dividends are taxed at lower regular tax rates than earned income, as well.

Put it all together and, in a nutshell, it means that you can get faster raises and lower taxes with virtually no effort at all on your part, other than what it takes to save up enough to buy some stock.

That’s what makes dividend increases the best raises you’ll never earn — you can get them without having to earn them.

What’s the Catch?

Of course, like everything else in investing, there are risks attached.

Dividends are not guaranteed, and companies that fall on hard times can slash their payments. Even General Electric (GE), one of the largest companies around, was forced to cut its dividend in 2009 due to the financial meltdown and its own part in the subprime mortgage mess.

In fact, if a company …read more
Source: FULL ARTICLE at DailyFinance