Market Wrap-Up for Oct. 18 (GE, HON, STI, MS, CF, More)

With the markets continuing to add to their historic five-and-a-half-year rally, finding reasonably-valued dividend stocks is becoming more and more difficult.

You may have noticed that our flagship Best Dividend Stocks List has dwindled in recent months down to just 11 “Recommended” names. Most of our recent downgrades have come as a result of valuations being stretched too far for our liking, to the point where stocks’ yields are no longer attractive enough to warrant a “Buy.”

You see, our aim is to populate the list with only the highest-quality names that are ripe for investor cash right now. So if you have money to put to work, those are the ones we feel comfortable recommending at current price and yield levels.

The Rally Continues
The benchmark S&P Index closed at another all-time high today, and there’s really no indication the rally will end anytime soon; we’ve got a new ultra-dovish Fed Chairperson ready to take the helm next year, debt ceiling worries were packed in a can and kicked to at least February, interest rates are still near historic lows, and with stocks like Google gaining 100 points in one day (check a stock quote if you don’t believe me), it’s clear that Wall Street is still in a buying frenzy.

So what is a right-minded dividend investor to do? The answer is: stay the course.

Fundamentals have been essentially thrown out the window as of late, which isn’t really a problem for momentum traders. Those folks just want the markets to keep posting big moves in either direction. We dividend investors, on the other hand, need to always be conscious of price levels we’re buying at, because of the direct effect price has on yield. For example, is Honeywell (HON) a good company? Yes. Is it a good buy at under a 2% yield? Absolutely not. The landscape of dividend stocks is littered with similar names in the same predicament.

Time to Widen the Scope?
Our research team is working feverishly to uncover some great new potential recommendations for our loyal readers. Not all stocks are up 20%, 30%, or 40% on the year, and we think there might still be some solid valuations to be had out there in the 3% to 6% yield range.

Rest assured, we’re crunching the numbers and doing our due diligence to ensure these potential upgrades meet our rigorous criteria. Once we get the “all-clear” signal, I feel confident we’ll have some new recommendations in the not-too-distant future. In the mean time, you can always check out our weekly Top 50 High-Yield Dividend Stocks on Our Watchlist article for some of the names we’re examining closely.

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