March 2011 Dividend Report

Although March didn’t set a new multi-year high as we’ve become used to over the past few months, it wasn’t a terrible month, either. If the Dow had closed just 75 points higher, it would have been a four-month run. For the most part, stock prices increased moderately or held their own. Investors continued to be watchful and conservative due to uncertainty over the continued unrest in the Middle East and the rapidly increasing gas prices. The general public, including investors, are watching closely to see what this will mean to the current level of US military involvement in the region.

One Up and Two Slightly Down for March 2011

March was a fairly good month for the Dow Jones Industrial Average, but both the NASDAQ Composite Index and the Standard and Poor’s 500 Index were slightly down for the month. The Dow closed at 12,319 for the month, up from February’s 12,226 numbers. The NASDAQ finished at 2,781, slightly down from February’s closing number of 2,782. The S&P performed in a similar manner. This number was slightly down with a 1,325 finish compared to February’s 1,327 final figure. Commodity prices were up. Gold finished the month of March at 1438.30 compared to February’s ending price of 1411.90. Oil was also up at 106.59 over February’s 96.84 closing numbers, and natural gas finished at 4.37, slightly up from the previous month’s 4.04 closing price.

The Japanese Nuclear Disaster

With the tragic disaster in Japan, possibilities of supply disruptions in the global marketplace caused a drop mid-March, but the market quickly recovered. The automotive and electronics sectors of the economy operate using “just-in-time” inventory models for the most part. This means that any disruption in the supply chain can mean these sectors will not perform as otherwise expected. The fact that Toyota has already announced that there could be a parts shortage until Japanese operations recover could be an indication of things to come.

Consumer Confidence Down for March

As typically happens when gas prices rise along with other prices, consumer confidence and spending dropped for March 2011. In February, we saw a three-year high with a consumer confidence rating of 72. By the end of March, this number had dropped to 63.4, although the experts only expected the consumer confidence rating to drop to 65. In contrast, the Present Situation Index, a measurement of the public’s confidence in the current business environment and job opportunities rose from 33.8 to 36.9 during this same period of time. To make things even more confusing, the Expectations Index, a measurement of how the general public expects the economy as a whole to change over the next six months, dropped from 97.5 to 81.

March’s Dividend Paying Stocks

Although the last day of the month ended slightly down for the Standard and Poor’s 500 Dividend Aristocrat stock listing, it was up for the month of March and the year as a whole. Total returns were up .77% for the month, 3.99% for the quarter, and 3.99% for the year. Price returns were also up. These numbers were .54% for the month, 3.32% for the quarter, and 3.32% for the year. Total returns over the past five years were 15.86% at the one-year point, 8.79% for the three-year point, and 6.11% for the five-year point. The same numbers for price returns were 12.47%, 5.29%, and 2.98%. At the end of March 2011, these were the top performing stocks in this category:
• Cintas Corp from the Industrials sector trading at $30.27
• PPG Industrials from the Materials sector trading at $95.21
• Leggett and Platt from the Consumer Discretionary sector trading at $24.50
• Ecolab Inc from the Materials sector trading at $51.02
• VF Corp from the Consumer Discretionary sector trading at $98.53
• Coca-Cola Co from the Consumer Stapes sector trading at $66.35
• Chubb Corp from the Financials sector trading at $61.31
• Pitney Bowes Inc from the Industrials sector trading at $25.69
• 3M Co from the Industrials sector trading at $93.50
• Bard, C.R. Inc from the Health Care sector trading at $99.31

A Mix of Ups and Downs for the Industrial Sectors in March
Although six of the 10 industrial sectors were up for the month, the overall average was slightly down. The telecommunications sector led the pack with a 5.19% gain in March, while the financials sector was the clear loser with a 2.68% loss. Looking at longer-term numbers, the year-to-date, one-year, and two-year averages are all positive with many double digit gains. Investors have to go back at least three years to see any time of average, long-term loss. Let’s take a look at how each sector performed for the month of March:
• Energy sector, up by 1.49% for March, up by 36.95% for the year
• Materials sector, up by 1.68% for March, up by 21.86% for the year
• Industrial sector, up by 1.73% for March, up by 19.23% for the year
• Consumer Discretionary Spending sector down by 0.63% for March, up by 19.21% for the year
• Consumer Staples sector, up by 1.12% for March, up by 7.19% for the year
• Health Care sector, up by 1.71% for March, up by 2.77% for the year
• Financials sector, down by 2.68% for March, up by 2.77% for the year
• Information Technology sector, down by 2.66% for March, up by 10.81% for the year
• Telecommunication sector, up by 5.19% for March, up by 23.21% for the year
• Utilities sector, down by 0.21% for March, up by 7.44% for the year
• Total, down by 0.11% for March, up by 13.37% for the year