Dividends4Life: The Optimistic Investor

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The Optimistic Investor

Posted by D4L | Thursday, April 02, 2009 | | 0 comments »

For many investors, the glass is always half full. Even in the darkest of times, they always see the bottom just around the corner and it really doesn't take much good news to get them into the buying mood. The month of March provided those investors with a lot to celebrate, and they did!

The Dow was up 87 points in March, but even more surprising was just how long it had been since the Dow finished in the black. You have to go all the way back to August 2008 to find the last time the Dow finished up. It wasn't just the Dow that saw large increases, the Standard & Poor's 500 Index finished March with its largest gain since October 2002, while the The Nasdaq was up 11.4% recording its best month since November 2002.

The good news carried into April with the release of better than expected housing news. The National Association of Realtors (NAR) reported pending home sales rose a seasonally adjusted 2.1% in February. Economists expected the pending sales to remain unchanged. The NAR report, considered to be a leading indicator, is based on the number of contracts signed for sales for existing homes. "The sharp decline in prices is helping to improve affordability. There are small signs that the housing market is moving toward stability." Joseph Brusuelas, a director at Moody's Economy.com, told Bloomberg News.

The manufacturing sector, to a lesser degree, joined the party. The Institute of Supply Management's manufacturing index was 36.3 in March, up slightly from the reading of 35.8 in February. In addition, construction spending fell 0.9% in February, less than the 1.9% drop economists had expected.

So, how did the dividend stocks fare? Quite well, with some of the more beaten down names making a robust recovery. Here are 10 dividend stocks along with their double-digit March performance:

  • Royal Bank of Canada (RY) - Up 19.2% - Yield: 5.50%
  • Intel Corporation (INTC) - Up 18.0% - Yield: 3.72% (Analysis)
  • Paychex Inc. (PAYX) - Up 16.4% - Yield: 4.83% (Analysis)
  • AFLAC Inc. (AFL) - Up 15.5% - Yield: 5.79%
  • Eli Lilly and Co. (LLY) - Up 13.7% - Yield: 5.87%
  • Nucor Corp (NUE) - Up 13.4% - Yield: 3.67% (Analysis)
  • Illinois Tool Works Inc. (ITW) - Up 11.0% - Yield: 4.02% (Analysis)
  • Chevron Corporation (CVX) - Up 10.8% - Yield: 3.87%
  • Manulife Financial Corp. (MFC) - Up 10.3% - Yield: 7.38% (Analysis)
  • Commercial Net Lease Realty, Inc. (NNN) - Up 10.2% - Yield: 9.47%
It is not surprising that most of the above stocks are ones that have recently suffered the most. This highlights what all successful investors know - when stocks are down, that is your opportunity to buy them on sale, sometimes at a discount.

Finally, with this much good news, surely someone would call a bottom, and that is just what MSN Money author Tim Middleton did (sort of) in his article "Dig in: Market won't get much worse". He said "We may not have seen the absolute bottom of the bear market, but we're close enough that we can be comfortable having a lot of our money in stocks. The rally has confirmed the optimistic bent of my portfolio, and I'm going to stay this course. I expect it to blossom with the spring."

Full Disclosure: Long in all the aforementioned stocks.
- Surprising data on housing, manufacturing
- Dow up 87, sees first monthly gain since August
- Dig in: Market won't get much worse
(Photo Credit)

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