Dow Rises; 1 Stock Paying a 25% Dividend Soared 7% Today

Stocks returned to their winning ways on Wednesday, though the day's gains were anything but emphatic. Volume was light as investors bide their time for the most-anticipated economic data of the week, Friday's nonfarm-payroll employment report. Analysts are looking for the economy to add 213,000 jobs in May, down from April's 288,000 advance. As Wall Street waits until Friday to bet big, shares of McDonald's (NYSE: MCD  ) made their own move, finishing as the second-best performer in the Dow Jones Industrial Average (DJINDICES: ^DJI  ) on Wednesday. The Dow tacked on 15 points, or 0.1%, to end at 16,737.

McDonald's added 1% today, as finance geeks around the globe applauded the company's capital allocation strategy. Most investors get excited when a particular product sells more units than it was supposed to, their favorite company signs a lucrative contract, or traditional cost-cutting moves filter more money to the bottom line. Finance geeks, on the other hand, go nuts when companies do things like what McDonald's is doing, according to a recent Bloomberg report. Mickey D's plans on raising over $1.5 billion in three different currencies (pounds, euros, and dollars) to take advantage of globally low interest rates to finance a $20 billion buyback program.

Source: DryShips website.

Greek drybulk shipping company DryShips (NASDAQ: DRYS  ) , which pays a whopping 25% annual dividend, saw its stock rally 6.9% on Wednesday, as its majority-owned subsidiary Ocean Rig announced a contract worth potentially $165 million over 260 days. Ocean Rig conducts deepwater drilling, and its rig the Erik Raude will spend roughly 260 days trying to extract black gold somewhere offshore the Falkland Islands. DryShips stock also got a little help from the Baltic Dry Index, an index used to approximate shipping rates for cargo along a number of commonly used trade routes. The Baltic Dry Index was up 1.5% at last check.

Lastly, shares of E-Commerce China Dangdang (NYSE: DANG  ) ended as another big gainer on Wednesday, jumping 5.7%. Large intraday swings like this typically mean that investors have just caught wind of some great news (see: DryShips), but Dangdang is anything but a typical stock. The stock's beta, which is a measurement of volatility, is 4.9, meaning that Dangdang shares are theoretically about five times more volatile than the larger market. On top of that, Dangdang's trading volume was about 60% lighter than normal today, making the 5.7% move even less meaningful. Taking a look at the business itself, Dangdang has, up to this point, failed to distinguish itself from its competitors as a force to be reckoned with, so I'd think twice before betting that it'll outperform.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2983106, ~/Articles/ArticleHandler.aspx, 7/28/2014 5:12:52 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.


Advertisement