January 2011 Dividend Stock Report

Traditionally, the performance of the market during January often predicts the overall returns for the rest of the year. While the January barometer has failed a few times, it has been accurate 83% of the time, so far. If the odds are with us, 2011 could be a great year for investors! Most of us would say that it’s about time, too. With a Dow Jones Index showing the best January in 14 years, let’s hope that the rest of the year follows suit.

The Big Three Were Up for January

Along with the Dow, the S&P 500 and the NASDAQ were also up. The Dow Jones Industrial Average ended at 11,891 over December’s 11,577 showing. The Standard and Poor’s 500 Index rose to 1286, slightly up from the 1257 points shown at the end of December. The NASDAQ Composite Index was also up for the month. It ended at 2700, up from December’s final number of 2652. For those of you who watch the commodity markets, the numbers were also good. Gold closed at 1,333, oil at 91.86, and natural gas at 4.43. The blue-chip average was another indicator of a positive market; in January, this number rose by 2.7% for the first January gain since 2007 and the best January since 1997.

The Recent Unrest in Egypt

Although the market saw a dip toward the end of January as the media began its round-the-clock coverage of the political unrest in Egypt, it recovered well for the end of the month. Only time will tell the final outcome both abroad and at home due to the upheaval, but, so far, our financial indicators seem to be taking it all in stride. As worries about the conflict spreading into the neighboring oil-producing nations began to die down, the market also settled back into its previous upward trend.

December Spending Gives Manufacturing an Unexpected Boost

When the numbers were tallied, consumer spending over the holiday season exceeded the forecasted 0.6% number to reach a slightly higher 0.7% rate increase. Income rates increased as expected by 0.4%. Although this also meant that the personal savings rate fell from 5.5% to 5.3%, rising consumer spending levels along with wage and salary increases is a sign of a more stable economy. This combination is expected to drive our financial system into a clear, steady recovery. Already, the manufacturing sector is seeing an upswing in demand as consumers cleared inventory from retail shelves over the past few months.

A Few Surprises

Intel surprised investors by announcing a major design flaw in one of their newest chips. Production was to be immediately discontinued, but Intel raised their overall revenue expectations anyway. This resulted in a flat close for this tech company. Exxon Mobil’s shares soared after reporting a net income of over $9 billion, a whopping 53% increase. Earnings per share for Exxon Mobil stock were reported at $1.85 compared to the lower forecasted EPS figure of $1.62.

January’s Dividend Paying Stocks

Although the Standard and Poor’s 500 Dividend Aristocrats ended slightly down with overall numbers of -0.34% for the total returns and -0.43 for the price returns, there was an upswing at the end of the month. For long-term investors, the numbers look much better. For total returns, the one-, three-, and five-year numbers are 19.35%, 5.67% and 6.27% respectively. When looking at price returns, the numbers are 15.7%, 2.24%, and 3.16%. The current top performing Dividend Aristocrats are:

• Stanley Black & Decker from the Consumer Discretionary sector trading at $72.68
• Exxon Mobil Corp from the Energy sector trading at 80.68
• Dover Corp from the Industrials sector trading at $64.10
• Archer-Daniels-Midland Co from the Consumer Staples sector trading at $32.67
• Walgreens from the Consumer Staples sector trading at $40.44
• McGraw-Hill Cos Inc from the Consumer Discretionary sector trading at $38.98
• AFLAC Inc from the Financials sector trading at $57.58
• Sherwin-Williams Co Inc from the Materials sector trading at $84.73
• Kimberly-Clark from the Consumer Staples sector trading at $64.73
• Wal-Mart from the Consumer Staples sector trading at $56.07

Industrial Sectors Were a Mixed Bag for January

Unfortunately, December 2010’s wonderful showing for all industrial sectors didn’t continue into 2011. However, the good news is that the majority of industries were up. For January, the energy sector led the pack with a 7.32% gain, while telecommunications was far behind with a -3.84% showing. The great news is that the 3-month, one-year, and two-year figures are all positive with many topping a 10% return. The following list details January, 2011 price return changes compared to December, 2010 by industry along with the one-year figures.
• Energy sector, up by 7.32% for January, up by 32.46% for the year
• Materials sector, down by 0.15% for January, up by 31.10% for the year
• Industrial sector, up by 4.24% for January, up by 30.75% for the year
• Consumer Discretionary Spending sector down by 0.72% for January, up by 28.82% for the year
• Consumer Staples sector, down by 1.75% for January, up by 10.11% for the year
• Health Care sector, up by 0.38% for January, up by 0.67% for the year
• Financials sector, up by 2.76% for January, up by 15.60% for the year
• Information Technology sector, up by 4.21% for January, up by 24.22% for the year
• Telecommunication sector, down by 3.84% for January, up by 19.08% for the year
• Utilities sector, up by 1.06% for January, up by 7.41% for the year
• Total, up by 2.26% for January, up by 19.77% for the year