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- The Dividend Investor's Edge Newsletter - June 6th 2022
The Dividend Investor’s Edge is a weekly newsletter designed to give you, the investor, a full picture of where the stock market is, and to equip you with important information I came across during the week, and what to look for in the week ahead, all constructed in an easy to understand format.
This newsletter is designed for investors of all levels.
Each Week I will discuss:
• An update on the Stock Markets major averages
• Stock Market: On The Horizon
• Notable Upgrades/Downgrades
• Dividend News
📈 Quick Look At The Markets 📉
Hey everyone, great to be back with you. I apologize for the pause in weekly newsletters as a lot has gone on over the past month. Roussin Financial continues to expand and grow, which has been quite exciting and we have a lot in the hopper, which I look forward to discussing with you more in the near future.
As a reminder or for those of you new readers, in the “Quick Look At The Markets” section I plan to give you a recap on the prior week for the S&P 500 as a whole as well as the top performing and worst performing sectors. In addition, I will touch on volatility and fear in the market currently, which are important factors to consider when investing.
Over the past month, since we last spoke, the stock market has been volatile, but all in all, we are relatively flat. Over the past month, the S&P 500 us UP 1%.
The market as a whole seems as if we are nearing and inflection point. Inflation continues to put pressure on consumers and businesses alike. The Federal Reserve is taking an aggressive approach to rising interest rates and are also now selling off the bonds they had purchased over the past few years, which brought liquidity into the markets.
The Real Estate market is seeing mortgage rates tick up over 5% and we are seeing higher inventory. Some economists believe this could be the beginning of some tougher days and years ahead in the real estate market. Is the inventory uptick due to sellers worried on missing the peak or is this just a normal inventory uptick?
Mortgage applications have slowed to its lowest levels since 2018 as homeowners have less purchasing power due to rising prices and interest rates. Housing starts and supply will be key figures to watch going forward to see how the real estate market is doing.
Here is a look at the heat map over the past week for the S&P 500. Year-to-date the S&P 500 is down 14.0%, after falling 0.7% last week.
Top Sectors For The Week
Consumer Discretionary +3.47%
Energy +2.87%
Communication Services +2.47%
Worst Sectors For The Week
Health Care -1.47%
Consumer Staples -0.65%
Financials -0.39%
Fear Factor
Volatility levels have calmed a bit in recent weeks, but are still a bit elevated.
Fear and uncertainty is often expressed in the stock market through volatility. One way for investors to understand where the market as a whole is in terms of volatility is by monitoring the CBOE Volatility Index (VIX). The VIX represents the market’s expectations for near-term price changes within the S&P 500 index. The index is derived from index options with near-term expiration dates, projecting a 30-day forward projection.
The VIX ended the week with a reading of 24.79 with the 50-day moving average finishing at 26.12. A reading under 20 is when I consider things to be closer to normal, which is where things stand currently.
Here is a look at the VIX chart with the 50-day moving average:
Another resource you can look at is the Greed and Fear Index that measures market sentiment based on the following seven factors: put/call ratios, junk bond demand, stock price breadth, market volatility, stock price strength, safe-haven demand, and market momentum.
When it comes the the Greed and Fear Index, things have turned negative yet again and have gone from a neutral rating to a FEAR rating. Currently, the index has a reading of 30, which is slightly higher than where things were last week when the rating was 28.
📰 Stock Market: On The Horizon 📰
In this section labeled “Stock Market: On The Horizon” I will discuss a variety of different topics that have gone on in the market and are on the horizon.
Although it is not a dividend stock, I would like to highlight that today marks the first day of Amazon (AMZN) stock trading at their new 20-1 stock split price. AGain, with a stock split, nothing fundamentally changes in terms of value.
For example: 1 share of Amazon at $2,250 is the same as 20 shares of Amazon at $112.50. Both still equal $2,250.
However, stock splits do make WHOLE shares more available to retail investors plus it brings more options players into the equation, but from a value perspective there is NO CHANGE.
The market sell-off has the majority of stocks in the red trading at prices last seen in 2021 or even 2020 for some stocks. Right now is a great time to find quality entry prices on blue-chip dividend stocks.
There are plenty of great places to park your money right now in companies that will perform well regardless of whether we go into a recession or not. Think of something like Johnson & Johnson, all the products they sell are mostly needed REGARDLESS of the economic backdrop.
If you have not done so yet, definitely check out my growing YouTube community where I publish weekly videos on Dividend Stocks I am looking at.
Here is a look at my latest Dividend Portfolio update:
Do you prefer ETFs instead? Check out my Top 5 Dividend ETFs For 2022:
I will be releasing a new video on Wednesday, so make sure you are subscribed so you do not miss it.
Another way I have been adding WEEKLY income to my portfolio has been through options. Options trading is a great way to add income, but one must be educated due to the fact if done wrong, it could set your account back.
Covered Calls and Cash Secured Puts are two ways I trade options on a weekly basis. I take a very conservative approach to options and the key is to only do these on stocks you like.
New to options? Here are 2 GREAT resources to introduce you to Covered Calls or Cash Secured Puts:
Click here for your copy of Turbocharge Your Dividends. Learn how to SELL COVERED CALLS.
Click HERE to learn how to SELL PUTS for income.
Let me know in the comments section down below what stocks you are looking at buying.
⏫ Stock Upgrades/Downgrades ⏬
In this section moving forward, I will add any notable analyst Upgrades or Downgrades I came across during the previous week.
Costco (COST) PT lowered to $560 from $645 from Raymond James but maintains Outperform rating. PT raised at $580 at Jefferies.
Nike (NKE) PT lowered to $150 at Wells Fargo
Proctor & Gamble (PG) PT lowered to $170 at Wells Fargo
Eli Lilly (LLY) PT raised to $355 at JPMorgan
Bank of America (BAC) named a TOP PICK at Wells Fargo. Subscribe to my YT channel where I will be covering BAC shares this week
💰 Dividend News
In this section I will detail what I am watching and any Dividend related news.
Lowe’s (LOW) increased the dividend by 31%
Medtronic (MDT) increased the dividend by 8%
Deere (DE) increased the dividend by 8%
Other Resources
Here are a few of my latest YouTube videos to watch:
New to investing or looking for a new brokerage? Check out M1 Finance where they are giving away $10 FREE for any new account. Click HERE to receive the promotion.
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Thank you for reading my newsletter! Please comment down below and share the newsletter with someone that may find it useful.
I love hearing from those of you that have reached out. If you want to see certain improvements, please let me know. You can email me directly at [email protected].
Have a Great Week!
Mark
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