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need to know
Apple loses key Beats1 radio executive
U.S. July goods trade deficit narrows to $59.1B
China stocks surge amid suspected govt buys
Oil falls, but still eyes weekly gain
European stocks pull back | FTSE 100 seesaws
Amgen gets FDA OK for cholesterol treatment
Student dies after shooting at Savannah State
Icahn discloses stake in Freeport McMoRan
Migrant death toll in truck near Vienna now 70

Core inflation eases in July and moves further away from Fed’s target
Core inflation moves away from Fed’s target

John Bogle sees promise in market pullbacks

In this Amazon Prime, not all goods ship for free

Roubini: Better early warning system is needed

Why you should worry and be happy that stocks aren’t a sure bet
Both worry, be happy that stocks aren’t a sure bet

Apple Watch shipments  surprise IDC

Apple to host Sept. 9 product event
Apple closes in on Fitbit in wearables

Democratic leaders frustrated by Clinton’s handling of email issue
More frustration with Clinton on email issue
Poll shows Biden running stronger than Clinton
Trump: I’m OK with raising taxes on myself

Poland looks next to turn against the EU

China wins the Battle of Mountain Pass
China just undermined the U.S. Defense Department

New Orleans 10 years after Hurricane Katrina
Hurricane Katrina: Then and now
Obama in New Orleans to mark 10 years


These are the best jobs for millennials
These are the best jobs for millennials


Instead of flavored vodka, flavored sake?

Craft beer acquisition by Duvel — stay small, stay beautiful
Duvel’s beer deal: stay small, beautiful


How momentum investing could go out of style
Momentum investing could be going out of style

Tesla Model S scores 103 on 100-point scale
Tesla Model S scores 103 on 100-point scale
Elon Musk retweets slow-driving Tesla owner
Colbert should ask Elon Musk, Kalanick this
$400,000 supercar goes up in flames

How to cope when you’re suddenly uninsured

/conga/frontpage.html 353555

Markets »

13.47MDow Volume:
Avg Vol: 111.57M
Unchanged
239
Decliners
2846
Advancers
2633
Price Chg %Chg 1 Day
Range: 1 Day
  • 1 Day
  • 5 Days
  • 1 Month
  • 3 Months
  • 6 Months
  • 1 Year
  • 2 Years
Dow
/quotes/zigman/627449/realtime 16,557 -98 0.59%
Nasdaq
/quotes/zigman/12633936/realtime 4,796 -17 0.35%
S&P 500
/quotes/zigman/3870025/realtime 1,979 -8 0.41%
GlobalDow
/quotes/zigman/629063/realtime 2,363 +3 0.11%
Gold
/quotes/zigman/662444/delayed 1,131 +9 0.78%
Oil
/quotes/zigman/2331095/delayed 42.56 0.00 0.00%
FTSE 100
/quotes/zigman/3173262/delayed 6,187 -5 0.09%
DAX
/quotes/zigman/2380246/delayed 10,242 -73 0.71%
CAC 40
/quotes/zigman/3173214/delayed 4,649 -9 0.20%
FTSE MIB
/quotes/zigman/1482176/delayed 21,922 -279 1.26%
IBEX 35
/quotes/zigman/2759620/delayed 10,274 -16 0.16%
Stoxx 600
/quotes/zigman/2380150/delayed 361 -2 0.48%
Asia Dow
/quotes/zigman/6959860/realtime 2,797 +45 1.62%
Nikkei 225
/quotes/zigman/5986735/delayed 19,136 +562 3.03%
Hang Seng
/quotes/zigman/2622475/delayed 21,612 -226 1.04%
Shanghai
/quotes/zigman/1859015/delayed 3,232 +149 4.82%
Sensex
/quotes/zigman/1652085/delayed 26,392 +161 0.61%
Singapore
/quotes/zigman/1709939/delayed 2,956 +11 0.36%
Euro
/quotes/zigman/16008136/realtime/sampled 1.13 +0.00 0.04%
Yen
/quotes/zigman/16008150/realtime/sampled 120.86 -0.17 0.14%
Pound
/quotes/zigman/16008140/realtime/sampled 1.54 0.00 0.29%
Australia$
/quotes/zigman/16008115/realtime/sampled 0.71 0.00 0.28%
DXY Index
/quotes/zigman/1652083/delayed 95.80 +0.04 0.04%
WSJ $ Idx
/quotes/zigman/41508961/realtime 88.36 +0.09 0.10%
U.S. 10yr
/quotes/zigman/15866666/realtime 2.13 -0.05 2.50%
German 10y
/quotes/zigman/15866409/realtime 0.69 -0.05 6.99%
Italy 10yr
/quotes/zigman/15866497/realtime 1.89 -0.04 1.84%
Spain 10yr
/quotes/zigman/15866444/realtime 2.04 -0.02 1.02%
U.K. 10yr
/quotes/zigman/15866328/realtime 1.79 -0.08 4.33%
Japan 10yr
/quotes/zigman/15866525/realtime 0.38 -0.01 2.48%
Crude Oil
/quotes/zigman/2331095/delayed 43 0 0.00%
Gold
/quotes/zigman/662444/delayed 1,131 +9 0.78%
Corn
/quotes/zigman/7599553/delayed 375 0 0.00%
DJIA F
/quotes/zigman/38649152/delayed 16,572 -78 0.47%
S&P F
/quotes/zigman/30356461/delayed 1,981 -8 0.42%
Silver
/quotes/zigman/3134148/delayed 15 +0 0.57%

Quotes

Symbol Price Change % Change
FB /quotes/zigman/9962609/composite 89.98 0.25 0.28%
AAPL /quotes/zigman/68270/composite 111.96 -0.96 -0.85%
GOOG /quotes/zigman/30194416/composite 627.74 -9.87 -1.55%
BAC /quotes/zigman/190927/composite 16.23 -0.21 -1.28%
C /quotes/zigman/5065548/composite 52.84 -0.60 -1.12%
F /quotes/zigman/264304/composite 13.59 0.03 0.20%
T /quotes/zigman/398198/composite 33.17 -0.27 -0.79%
BP /quotes/zigman/247026/composite 32.91 -0.12 -0.36%
GE /quotes/zigman/227468/composite 24.83 -0.19 -0.74%
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Rates »

5 yr CD
1.5%
2 yr CD
0.8%
1 yr CD
0.6%
MMA $10K+
0.3%
MMA $50K+
0.4%

National averages from Bankrate.com

You Don’t Need Another Credit Card, You Need A Better One.
Avg. APR Last Week 6 Months
Low Interest 11.62% 11.62% 11.53%
Business 12.85% 12.85% 12.85%
Student 13.14% 13.14% 13.14%
Balance Transfer 14.12% 14.12% 14.00%
Airline 15.10% 15.10% 15.15%
Reward 15.14% 15.14% 14.99%
Cash Back 15.27% 15.27% 15.26%
Instant Approval 18.00% 18.00% 17.93%
Bad Credit 22.73% 22.73% 22.48%
Source:CreditCards.com

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Trending Tickers
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Our real-time advice on how market shifts and news impact you and your money

The Hidden Appeal of Dinky Dividends

Don’t scoff at stocks with dinky dividend yields of 1% or so. Some of them may hold the key to handsome total returns in coming years.

The broad case for dividend-paying stocks rests on surging demand for yield, combined with a tight supply of it. Over the next 20 years, as the baby boomers retire, the percentage of the U.S. population the age of 65 and up will double, according to the Census Bureau. Many investors will look to convert savings into income by purchasing investments with cash yields.

Meanwhile, America’s core “Fed funds” interest rate has sat near zero since December 2008. That’s designed to stimulate the economy, but it has also served to collapse investment yields.

Consider: A retiree who puts $1 million into 10-year U.S. Treasury notes, which hit a record low yield Thursday, generates a yearly income of about $16,000, versus an average $62,000 since 1953. Treasury coupons, unlike stock dividends, don’t grow.

The obvious response for stock buyers is to scoop up shares with high dividend yields, but there are two problems with that approach now. First, it has already worked too well. Last year, a simple strategy of selecting S&P 500 stocks with high dividend yields returned 18.5%, the highest return of more than 30 strategies tracked each year by Bank of America Merrill Lynch.

Second, there’s at least some chance that dividend taxes will jump after this year, when a 15% rate cap is set to expire (see “Preparing for a Dividend Tax Hike”). It’s unclear whether higher taxes would reduce long-term demand for high-yield stocks, but it could spook investors in the short term.

Savita Subramanian, a stock strategist at BofA, recommends shifting to a different dividend strategy: Rather than simply targeting high-yield stocks, favor those with potential for payment growth, even if their current dividend yields are modest.

That approach offers some advantages. Stocks with modest yields are less likely to be sold off on fears of a tax hike. And ones with fast dividend growth tend to be thriving companies, as opposed to some high-yielders, whose prices are low because their growth prospects have dimmed.

It might seem counterintuitive to react to today’s low yields by seeking out stocks with dividend yields of 1% or so. But if a company increases its dividend by 15% a year, payments to investors double every five years — and share prices often rise, too. Plenty of companies have room for such increases, judging by high levels of corporate cash and low spending on dividends as a percentage of profits.

Ms. Subramanian recently ran a screen for potential dividend growers. Among the search criteria: limited debt, stable earnings and high free cash flow relative to dividend spending. Below are 12 of the companies the screen produced.

Comments

We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comments (5 of 15)

View all Comments »
    • Hi Keep up with the excellent posts. Thanks

    • Dividends don’t matter: on a stock’s ex-dividend date, the exchange lowers the stock price by the exact amount of the cash distribution–there is no gain. For example, Merck (MRK) sells for $37.50 and pays a quarterly dividend of $0.42. On the ex-dividend date, the NYSE will reduce the stock’s price by $0.42 to $37.08. Shareholders will then own two separate assets: $37.08 in stock and $0.42 in cash. Their wealth will not have changed at all.

      From the accountant’s point of view, the company’s book value will have declined by exactly $0.42 per share. That’s $0.42 per share that the company will not have for future investments, debt reduction, capital improvements, or stock buybacks.

      In sum, dividends don’t increase your return when stocks go up; dividends don’t cushion the blow when stocks go down; and dividends don’t pay you to wait when stocks go nowhere. A dividend payment is merely the company giving you back your own money–it’s a return of capital, even if the payment is not taxed as such.

    • Okay, let’s keep it civil, folks.

    • For that matter why not choose stocks that have dropped 20 or 30 % in value. They have an excellent chance of increasing in value and beating any combination of low dividends and growth. Then again they just might continue to lose value. A dumb solution to a senseless premise.

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MarketWatch - Stock Market Quotes, Business News, Financial News

New York Markets Close in:

need to know
Apple loses key Beats1 radio executive
U.S. July goods trade deficit narrows to $59.1B
China stocks surge amid suspected govt buys
Oil falls, but still eyes weekly gain
European stocks pull back | FTSE 100 seesaws
Amgen gets FDA OK for cholesterol treatment
Student dies after shooting at Savannah State
Icahn discloses stake in Freeport McMoRan
Migrant death toll in truck near Vienna now 70

Core inflation eases in July and moves further away from Fed’s target
Core inflation moves away from Fed’s target

John Bogle sees promise in market pullbacks

In this Amazon Prime, not all goods ship for free

Roubini: Better early warning system is needed

Why you should worry and be happy that stocks aren’t a sure bet
Both worry, be happy that stocks aren’t a sure bet

Apple Watch shipments  surprise IDC

Apple to host Sept. 9 product event
Apple closes in on Fitbit in wearables

Democratic leaders frustrated by Clinton’s handling of email issue
More frustration with Clinton on email issue
Poll shows Biden running stronger than Clinton
Trump: I’m OK with raising taxes on myself

Poland looks next to turn against the EU

China wins the Battle of Mountain Pass
China just undermined the U.S. Defense Department

New Orleans 10 years after Hurricane Katrina
Hurricane Katrina: Then and now
Obama in New Orleans to mark 10 years


These are the best jobs for millennials
These are the best jobs for millennials


Instead of flavored vodka, flavored sake?

Craft beer acquisition by Duvel — stay small, stay beautiful
Duvel’s beer deal: stay small, beautiful


How momentum investing could go out of style
Momentum investing could be going out of style

Tesla Model S scores 103 on 100-point scale
Tesla Model S scores 103 on 100-point scale
Elon Musk retweets slow-driving Tesla owner
Colbert should ask Elon Musk, Kalanick this
$400,000 supercar goes up in flames

How to cope when you’re suddenly uninsured

/conga/frontpage.html 353555

Markets »

13.41MDow Volume:
Avg Vol: 111.57M
Unchanged
236
Decliners
2864
Advancers
2613
Price Chg %Chg 1 Day
Range: 1 Day
  • 1 Day
  • 5 Days
  • 1 Month
  • 3 Months
  • 6 Months
  • 1 Year
  • 2 Years
Dow
/quotes/zigman/627449/realtime 16,561 -94 0.56%
Nasdaq
/quotes/zigman/12633936/realtime 4,796 -16 0.34%
S&P 500
/quotes/zigman/3870025/realtime 1,980 -8 0.39%
GlobalDow
/quotes/zigman/629063/realtime 2,363 +3 0.11%
Gold
/quotes/zigman/662444/delayed 1,131 +9 0.77%
Oil
/quotes/zigman/2331095/delayed 42.51 -0.05 0.12%
FTSE 100
/quotes/zigman/3173262/delayed 6,185 -7 0.12%
DAX
/quotes/zigman/2380246/delayed 10,236 -80 0.77%
CAC 40
/quotes/zigman/3173214/delayed 4,649 -9 0.20%
FTSE MIB
/quotes/zigman/1482176/delayed 21,916 -285 1.28%
IBEX 35
/quotes/zigman/2759620/delayed 10,274 -16 0.16%
Stoxx 600
/quotes/zigman/2380150/delayed 361 -2 0.48%
Asia Dow
/quotes/zigman/6959860/realtime 2,797 +45 1.62%
Nikkei 225
/quotes/zigman/5986735/delayed 19,136 +562 3.03%
Hang Seng
/quotes/zigman/2622475/delayed 21,612 -226 1.04%
Shanghai
/quotes/zigman/1859015/delayed 3,232 +149 4.82%
Sensex
/quotes/zigman/1652085/delayed 26,392 +161 0.61%
Singapore
/quotes/zigman/1709939/delayed 2,956 +11 0.36%
Euro
/quotes/zigman/16008136/realtime/sampled 1.13 +0.00 0.04%
Yen
/quotes/zigman/16008150/realtime/sampled 120.86 -0.17 0.14%
Pound
/quotes/zigman/16008140/realtime/sampled 1.54 0.00 0.29%
Australia$
/quotes/zigman/16008115/realtime/sampled 0.71 0.00 0.28%
DXY Index
/quotes/zigman/1652083/delayed 95.80 +0.03 0.04%
WSJ $ Idx
/quotes/zigman/41508961/realtime 88.36 +0.09 0.10%
U.S. 10yr
/quotes/zigman/15866666/realtime 2.13 -0.05 2.42%
German 10y
/quotes/zigman/15866409/realtime 0.69 -0.05 6.99%
Italy 10yr
/quotes/zigman/15866497/realtime 1.89 -0.04 1.84%
Spain 10yr
/quotes/zigman/15866444/realtime 2.04 -0.02 1.02%
U.K. 10yr
/quotes/zigman/15866328/realtime 1.79 -0.08 4.33%
Japan 10yr
/quotes/zigman/15866525/realtime 0.38 -0.01 2.48%
Crude Oil
/quotes/zigman/2331095/delayed 43 0 0.12%
Gold
/quotes/zigman/662444/delayed 1,131 +9 0.77%
Corn
/quotes/zigman/7599553/delayed 375 0 0.00%
DJIA F
/quotes/zigman/38649152/delayed 16,573 -77 0.46%
S&P F
/quotes/zigman/30356461/delayed 1,981 -8 0.40%
Silver
/quotes/zigman/3134148/delayed 15 +0 0.54%

Quotes

Symbol Price Change % Change
FB /quotes/zigman/9962609/composite 90.13 0.40 0.45%
AAPL /quotes/zigman/68270/composite 112.02 -0.90 -0.79%
GOOG /quotes/zigman/30194416/composite 628.22 -9.39 -1.47%
BAC /quotes/zigman/190927/composite 16.24 -0.20 -1.22%
C /quotes/zigman/5065548/composite 52.89 -0.55 -1.03%
F /quotes/zigman/264304/composite 13.62 0.06 0.41%
T /quotes/zigman/398198/composite 33.20 -0.24 -0.72%
BP /quotes/zigman/247026/composite 32.79 -0.24 -0.72%
GE /quotes/zigman/227468/composite 24.86 -0.15 -0.60%
Visit the quote page and your most recently viewed stocks will automatically be displayed here.
Please log in to view your watchlist
MarketWatch Portfolio

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Rates »

5 yr CD
1.5%
2 yr CD
0.8%
1 yr CD
0.6%
MMA $10K+
0.3%
MMA $50K+
0.4%

National averages from Bankrate.com

You Don’t Need Another Credit Card, You Need A Better One.
Avg. APR Last Week 6 Months
Low Interest 11.62% 11.62% 11.53%
Business 12.85% 12.85% 12.85%
Student 13.14% 13.14% 13.14%
Balance Transfer 14.12% 14.12% 14.00%
Airline 15.10% 15.10% 15.15%
Reward 15.14% 15.14% 14.99%
Cash Back 15.27% 15.27% 15.26%
Instant Approval 18.00% 18.00% 17.93%
Bad Credit 22.73% 22.73% 22.48%
Source:CreditCards.com

SPONSORED SECTIONS

Trending Tickers
  • /quotes/zigman/389699/composite GME-4.76%
  • /quotes/zigman/68719/composite ADSK-5.20%
  • /quotes/zigman/107036/composite ULTA+4.27%
  • /quotes/zigman/283891/composite BIG+11.81%
  • /quotes/zigman/617037/composite UAL+5.96%
X
Powered by StockTwits
Link to MarketWatch's Slice.

As of July 2, 2013, the SmartMoney content you loved now lives on MarketWatch.

MarketWatch will continue to provide the same important news and information you rely on every day. And, as a MarketWatch user, you will be able to enjoy:

  • Personalized news and quote email alerts
  • Editorial e-newsletters about personal finance, mutual funds and market-specific coverage
  • Premium newsletters by our market experts
  • Games, such as Virtual Stock Exchange and Beat the Darts
  • Free WSJ.com registration

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