THE TREND IN "HIGH END" SHOPPING IS STRONG... AND IT IS UP

The U.S. consumer is hitting the mall with gusto... And it's more evidence the economy "can't be doing that bad."

For proof, we submit the performance of Taubman Centers (NYSE: TCO)

Taubman Centers is one of America's largest shopping-mall operators.  But it's not your average mall operator.  Its properties are "high end" malls. It counts Macy's, Apple, Williams-Sonoma, and Nordstrom among its best tenants.  This makes Taubman's profits and share price an indicator of how the consumer is doing.

As you can see from our three-year chart below, the consumer is spending. Since mid-2010, Taubman shares have climbed from $40 to $85 per share... and just struck a new 52-week high.  The company's first-quarter results (reported last month) were great.  Considering all this, we have to say, "Sure, America has problems... but as long as Taubman is in a major uptrend, things can't be all that bad."

There's no denying that more often than not, the stock market can behave exactly like a 14-year-old: surprising and delighting at times but frustrating and inexplicable at others. You'll see a great stock with a solid business operation and a history of attractive dividend payments. Then, for whatever reason, the market decides it doesn't like the stock. Until it falls in love with it again.

In 1993, IBM was flat on the mat. It appointed Lou Gerstner as CEO to take over and begin the company's transition.

Two decades later, after selling its PC business to Lenovo in 2004, IBM's information technology services represent more than 50% of revenue. Smart investors who believed in the company's transformation have earned an annual average of 65% during the past 20 years before dividends.  Now Pitney Bowes is following the same model. In December 2012, Pitney's board hired Marc B. Lautenbach as president and CEO. Ironically, Lautenbach has spent the past 30 years of his career at IBM.

Out with the old and in with the new
Pitney's "new" business is hardly an old-line business. Primarily, it's software driven. The cornerstone is an e-commerce/cloud platform the company has been ramping up quietly but steadily. Pitney also provides geolocation software that powers Facebook's "check in" feature.

According to my source inside the company, there are no current or articulated plans to spin off or sell the postage hardware business. However, doing so would generate an enormous pile of cash the company could use to expand the software/service business or even return to the shareholders in the form of dividends or stock buyback.  Pitney's previous management also implemented a restructuring program in 2009 that is starting to bear fruit. Among the main changes, the company sold off its international mailing business to a private equity firm. I think that was a test run for the future.

The results of the turnaround
The company reported 2012 revenue of $4.9 billion, a decrease from $5.3 billion in 2011. This was mainly due to the continuing decline of physical mail as a communication medium. Its "new" business of software and services contributed 53.2% while hardware postage meters and related products from the "old" business contributed 46.5% to the cause.

And although these two divisions contribute about the same toward revenue, the real story is in the company's profit margins. The old business earned a gross profit margin of just about 2% in 2012, while the new business turned in gross margins of nearly 20%.

Take into account that Pitney has been able to retire more than $500 million in debt during the past two years. It has also bought back 4.7 million shares of its stock, a transaction worth up to $50 million. Its dividend has also been rising each year for the last 24 years. With all of this in mind, Pitney Bowes shares offer an excellent opportunity in the near and long term.

Risks to consider: Many factors could derail the company's future. Among them would be a softening of the country's evident economic recovery, failure to execute the turnaround plan, or just the sheer unwillingness of those within the organization to change. Luckily, the stock's low valuation, strong free cash flow and fat dividend offer some downside protection.

Action to take --> Having said that, with the IBM background the new CEO has, the odds look good for Pitney Bowes. The shares have had an amazing 44% climb in the first quarter of this year, but there's still room to move. The stock currently trades at around $15.40, yields close to 10% and has a forward price-to-earnings (P/E) ratio of 7.9, which is less than half that of the S&P 500.

Based on the turnaround strategy in place, shares could climb to $20 during the next 12 months, resulting in a forward P/E expansion to 9. That would be a nearly 30% upside from current levels. Throw in the dividend yield and the potential total return is closer to 40%. However, if the transition is successful, then the potential returns could be much richer in the longer term.

Tracing its roots to 1897, Dow has a market cap of more than $40 billion and is the nation's largest chemical manufacturer, making everything from dry-cleaning solvent to agricultural products.
The company's stock has been stagnant for nearly a decade. But that's about to change, thanks to Dow's exposure to two rapidly growing yet starkly different industries: electronic materials and agricultural sciences. Dow is also doing well in controlling internal costs and generating shareholder value.

Better Living Through Chemistry
As Gordon Gekko might have said: "Chemicals are good. Chemicals work." This is especially true when it comes to agriculture. While Dow's agriculture business contributed $6.3 billion of the company's $56.7 billion in revenue last year -- roughly 12% of the total -- that particular business line is projected to grow at a 10% clip through 2015. That's not bad.

However, an August 2012 survey by the Federal Reserve Bank of Chicago found that farmland prices in Iowa, Illinois, Indiana, Wisconsin and Michigan increased 15% from the previous year. A concurrent study from the Kansas City Fed showed a 26% increase in prices for the same period in the Great Plains.

Let's say U.S. GDP growth inches up at an annual rate between 2.5% to 3%. That would mean the growth of farmland as an asset class is nearly 10 times the rate of GDP growth. Meanwhile, as U.S. farming comes off of one of the worst droughts in decades, data from the Department of Agriculture show that net farm income increased just 4% last year, to $122 billion. Clearly, there's room for upside, and Dow is poised to surf that wave with pesticides, herbicides, seed technology and other agriculture-related chemical products.

"Plastics, Benjamin. Plastics."
Maybe the screenwriters of the 1960s film "The Graduate" were thinking of the main character's prospects of getting a job during the American postwar industrial boom, where the future is always now. That bit of dialogue proved prophetic. Dow Chemical may have even been the inspiration. Plastic is found in nearly everything, and there's a strong chance Dow had something to do with that.

The performance plastics business contributes nearly 25% of Dow's annual sales and is projected to grow at an impressive 14% rate over the next two years. But the more impressive number lies within its electronic and functional materials business. The segment contributed $4.4 billion to Dow's revenue last year, just under 8% of the company's total, and analysts project 17.5% growth over the next two years.

The electronics division produces raw materials for use in circuit boards and device manufacturing thanks to the tablet and smartphone revolution. Combined, the agriculture and electronics businesses should contribute 21% to the top line. And with a combined average growth rate of nearly 15%, expect that to contribute significantly to the bottom line as well.

Housecleaning
Under the leadership of CEO Andrew Liveris, Dow set its focus on identifying strategic options, primarily in the form of divestitures that will generate cash and unlock shareholder value.

Over the next 18 months, the goal is to generate nearly $1.5 billion in pre-tax cash from sales of what Dow considers non-core assets. The company is also expected to generate $1.6 billion in free cash flow after paying out $1.5 billion in dividends. That would be a 6% increase from free cash flow of $1.5 billion in 2012. That cash flow, plus cash from divestitures, could reduce Dow's long-term debt by an estimated 20% this year. Despite a challenging environment, Dow has increased free cash flow at an annual rate of 10.4%. Not bad for a gigantic company that is highly susceptible to cyclicality.

Risks to Consider: Dow is susceptible to the cyclical nature of the commodity chemical business, which represents 40% of the business mix, while 60% comes from less cyclical specialty and consumer staple products. This does give the stock a defensive bias. Another red flag comes from the fact that 64% of the company's sales last year came from outside of North America; Liveris recently made some bearish comments on data from China. In addition, the idea of increasing cash through the sale of non-core assets sounds to me like a rainy-day plan.

Action to take --> Dow currently trades in the mid-30s with a forward price-to-earnings (P/E) ratio of 14.7. The company also pays a generous annual dividend of $1.28, which equates to an attractive yield of nearly 4%. Based on the company's exposure to high-growth areas, excellent free cash flow, and shareholder value action plan, a 12-month price target of $42 would be reasonable. Adding the dividend would push the total return potential to near 24%.

From Bloomberg:

Forty-eight of 49 economists predict the Federal Open Market Committee will purchase Treasurys to bolster an existing program to buy $40 billion in mortgage bonds each month. The panel pledged in October to continue that plan until the labor market improves "substantially." 

"It's going to be massive and open-ended in size," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York and a former New York Fed economist.

Chairman Ben S. Bernanke and his FOMC colleagues will press on with purchases at least through the first quarter of 2014, according to the median estimate in the Dec. 7-10 survey. They are expanding the balance sheet beyond $2.86 trillion in a bid to spur growth and lower an unemployment rate of 7.7 percent.

"They view this stimulus as what's needed to sustain the economy" and reinforce improvements in industries such as autos and housing, said John Silvia, chief economist at Wells Fargo & Co., the biggest U.S. home lender.

Stocks rose today, with the Standard & Poor's 500 Index erasing its decline since Election Day, as investors speculated progress was being made in U.S. budget talks. The S&P 500 climbed 0.8 percent to 1,430.36, the highest since Oct. 22, at 11:02 a.m. in New York. The yield on the 10-year Treasury note climbed to 1.65 percent from 1.62 percent yesterday.

FOMC Statement 
The FOMC began a two-day meeting in Washington at 11 a.m. The committee plans to release a statement on policy tomorrow at around 12:30 p.m. That will be followed by forecasts for growth, unemployment and inflation. Bernanke is scheduled to hold a press conference at 2:15 p.m., after release of the forecasts.

The central bank this month is scheduled to end Operation Twist, in which it swaps $45 billion of short-term Treasurys each month for longer-term government debt. That program kept the total size of the balance sheet unchanged, while new Treasury purchases would expand it.

The Fed's latest round of quantitative easing will total $1.1 trillion, with about $620 billion in mortgage-backed securities and $500 billion in Treasurys, according to the median estimate in the survey.

Cut Rates 
By adding Treasury purchases, policy makers "would continue to lower mortgage rates and create conditions that would be favorable for a continued recovery in the housing market," said Roberto Perli, a managing director at International Strategy & Investment Group Inc. in Washington.

"It would also -- if house prices go up more -- mean more households would be able to refinance their mortgage," said Perli, a former economist for the Fed's Division of Monetary Affairs. "That's just like a tax cut or a pay increase because you have more disposable income in your pocket." 

Fed purchases of mortgage bonds have helped revive the housing market by pushing down the rate on a 30-year, fixed-rate mortgage last month to a record 3.31 percent.

New-home sales rose 17 percent in October compared with the prior year, while existing-home sales increased 11 percent. Home prices gained 3 percent from a year earlier in September, according to the S&P/Case-Shiller 20-city home-price index.

"Pent-up demand, rising home prices, low interest rates and improving customer confidence motivated buyers to return to the housing market," Douglas Yearley Jr., chief executive officer of Toll Brothers Inc., the largest U.S. luxury-home builder, said in a Dec. 4 earnings call.

Six-Year Slump 
Homebuilder stocks have risen after a six-year slump. The Standard & Poor's Supercomposite Homebuilding Index (S15HOME) of 11 homebuilders has surged 72 percent this year, compared with a 13 percent gain for the broader S&P 500 through yesterday. Even with the recent improvement, home prices remain 29 percent below their July 2006 peak.

Policy makers "do not want mortgage rates to climb much higher," said John Lonski, chief economist for Moody's Capital Markets Group in New York. "They will do their utmost to keep long-term borrowing costs on the low side." 

Bernanke said in a Nov. 20 speech that Fed stimulus shows no sign of fueling consumer-price increases beyond the central bank's 2 percent target. "Inflation over the next few years is likely to remain close to or a little below the committee's objective," he said in New York.

Housing Rebound 
The rebound in housing hasn't shown signs of enlivening the labor market. Payroll growth averaged 153,000 in 2011 and 151,000 so far in 2012. Employment climbed by 146,000 in November, the Labor Department said last week. The jobless rate fell from 7.9 percent the month before as the labor force shrank.

Economists don't predict growth will take off in 2013. Gross domestic product expanded at a 2.7 percent annual pace in the third quarter, according to Commerce Department data. Economists in a separate Bloomberg survey forecast growth of 2 percent in 2013.
Also weighing on the economic outlook are more than $600 billion of tax increases and spending cuts scheduled to take effect next year unless Congress acts. The Congressional Budget Office has said the fiscal tightening would probably push the economy into a recession next year.

Treasury purchases would constitute "insurance that if there's a failure to agree between Congress and the president, the Fed is out there to prevent an even bigger downdraft," Silvia said.

Probably Wait 
The FOMC will probably wait until its March 19-20 meeting before adopting thresholds on unemployment and inflation to indicate when it will consider raising the federal funds rate, according to the median estimate of surveyed economists.

Forty-eight of 49 economists say the Fed won't set the thresholds tomorrow. The Fed currently says it will keep its main interest rate near zero at least through mid-2015.
The Fed hasn't spelled out limits on the duration or size of its current accommodation, which was announced in September.

In the first round of quantitative easing starting in 2008, the central bank bought $1.25 trillion of mortgage-backed securities, $175 billion of federal agency debt and $300 billion of Treasurys. In the second round, announced in November 2010, the Fed bought $600 billion of Treasurys.
 
To contact the reporters on this story: Joshua Zumbrun in Washington at [email protected]; Catarina Saraiva in Washington at [email protected].

To contact the editor responsible for this story: Chris Wellisz at [email protected].

AMERICA'S "MOST LOVED" COMPANY IS BREAKING DOWN

Apple investors are learning an important lesson on the value of being a contrarian.  Apple remains one of the most popular brands in America this holiday shopping season.  The company will sell tens of millions of iPads and iPhones during the current quarter.

Buying popular names is fine for consumers.  But as today's chart shows, for investors... it's often a recipe for losses.  About three months ago, investor Steve Sjuggerud summed up why he wasn't buying Apple shares... "Apple shares will peak when there is nobody left to buy – when everyone who wants to buy has already bought... At least in the near term, we may be getting close to that point." 

In short, investors and Wall Street analysts were in love with Apple, making the stock a poor choice for contrarians.  Since peaking on September 21, Apple is down 27%, and shares are hitting a nine-month low. There's no telling when the downtrend will end, but contrarians should take note: Apple is much less loved today.

– Larsen Kusick

DIE LISTE

ABM Industries Inc. (ABM)
Abbott Laboratories (ABT)
Archer Daniels Midland (ADM)
Automatic Data Processing (ADP)
AFLAC Inc. (AFL)
Albemarle Corp. (ALB)
The Andersons, Inc. (ANDE)
A.O. Smith Corp. (AOS)
Air Products & Chemicals Inc. (APD)
Arrow Financial Corp. (AROW)
Alliance Resource Partners LP (ARLP)
Atlantic Tele-Network Inc. (ATNI)
Atmos Energy Corp. (ATO)
AptarGroup Inc. (ATR)
Avista Corporation (AVA)
American States Water Co. (AWR)
BancFirst Corp. (BANF)
C.R. Bard Inc. (BCR)
Becton Dickinson and Co. (BDX)
Franklin Resources Inc. (BEN)
Brown-Forman Corp. (BF.B)
Black Hills Corporation (BKH)
Badger Meter, Inc. (BMI)
Bemis Inc. (BMS)
Buckeye Partners LP (BPL)
Brady Corp.  (BRC)
Brown & Brown Inc. (BRO)
Bowl America Class A (BWL-A)
Cardinal Health, Inc. (CAH)
Cass Information Systems (CASS)
Casey's General Stores Inc. (CASY)
Caterpillar Inc. (CAT)
Chubb Corp. (CB)
Cracker Barrel Old Country Store (CBRL)
Commerce Bancshares, Inc. (CBSH)
Community Bank System Inc. (CBU)
Cullen/Frost Bankers Inc. (CFR)
Church & Dwight Co., Inc. (CHD)
Robinson (C.H.) Worldwide, Inc. (CHRW)
Cincinnati Financial Corp. (CINF)
Colgate-Palmolive Co. (CL)
Clarcor Inc. (CLC)
Clorox Company (CLX)
ConocoPhillips Co. (COP)
CARBO Ceramics Inc. (CRR)
Carlisle Companies Inc. (CSL)
Cintas Corporation (CTAS)
Community Trust Bancorp Inc. (CTBI)
Conn. Water Service (CTWS)
Chevron Corp. (CVX)
California Water Service Group (CWT)
Diebold Inc. (DBD)
Donaldson Co. Inc. (DCI)
Dover Corp. (DOV)
Ecolab Inc. (ECL)
Consolidated Edison Inc. (ED)
Energen Corp. (EGN)
Emerson Electric (EMR)
Eog Res Inc (EOG)
Enterprise Products Partners LP (EPD)
Erie Indemnity Co. (ERIE)
Essex Property Trust (ESS)
Eaton Vance Corp. (EV)
Expeditors International of Washington, Inc. (EXPD)
Fastenal Co. (FAST)
Family Dollar Stores Inc. (FDO)
Factset Resh Sys Inc. (FDS)
Franklin Electric Co., Inc. (FELE)
Flowers Foods, Inc. (FLO)
Federal Realty Investment Trust (FRT)
H.B. Fuller Company (FUL)
AGL Resources, Inc. (GAS)
General Dynamics Corp. (GD)
Graco Inc. (GGG)
Genuine Parts Co. (GPC)
Gorman-Rupp Co. (GRC)
Grainger (W.W.) Inc. (GWW)
HCC Insurance Holdings, Inc. (HCC)
HCP, Inc. (HCP)
Helmerich & Payne Inc. (HP)
Hormel Foods Corp. (HRL)
Harris Corporation (HRS)
International Business Machines Corp. (IBM)
International Flavors & Fragrances (IFF)
Illinois Tool Works Inc. (ITW)
Jack Henry & Associates, Inc. (JKHY)
Johnson & Johnson (JNJ)
John Wiley & Sons Inc. (Cl A) (JW.A)
Kimberly-Clark Corp. (KMB)
Kinder Morgan Energy Partners L.P. (KMP)
Coca Cola Co. (KO)
Lancaster Colony Corp. (LANC)
Lincoln Electric Inc. (LECO)
Leggett & Platt Inc. (LEG)
Linear Technology Corp. (LLTC)
Lockheed Martin Corp. (LMT)
Lindsay Corporation (LNN)
Lowe's Cos. Inc. (LOW)
Matthews International Corp. (MATW)
McDonald's Corp. (MCD)
Mercury General Corp. (MCY)
Meredith Corp. (MDP)
Medtronic, Inc. (MDT)
MDU Resources Group Inc. (MDU)
MGE Energy Inc (MGEE)
McGrath RentCorp (MGRC)
McGraw Hill Financial, Inc. (MHFI)
McCormick & Co. Inc. (MKC)
3M Company (MMM)
Magellan Midstream Partners LP (MMP)
Altria Group Inc (MO)
Monsanto Co. (MON)
Mine Safety Appliances Co. (MSA)
Middlesex Water Co. (MSEX)
Murphy Oil Corporation (MUR)
Maxim Integrated Products, Inc. (MXIM)
NACCO Industries Inc. (NC)
Nordson Corp. (NDSN)
NextEra Energy, Inc. (NEE)
National Fuel Gas (NFG)
New Jersey Resources Corp. (NJR)
Nike, Inc. (NKE)
National Retail Properties Inc. (NNN)
Norfolk Southern Corp. (NSC)
Northeast Utilities (NU)
Nucor Corp. (NUE)
Nu Skin Enterprises Inc. (NUS)
Northwest Natural Gas Co. (NWN)
Realty Income Corp. (O)
ONEOK, Inc. (OKE)
Owens & Minor, Inc. (OMI)
Old Republic International Corp. (ORI)
Occidental Petroleum Corporation (OXY)
Bank of the Ozarks, Inc. (OZRK)
Plains All American Pipeline LP (PAA)
People's United Financial Inc. (PBCT)
Pitney Bowes Inc. (PBI)
PepsiCo Inc. (PEP)
Procter & Gamble Co. (PG)
Parker-Hannifin Corp. (PH)
Polaris Industries Inc. (PII)
Piedmont Natural Gas Co. Inc. (PNY)
PPG Industries Inc. (PPG)
PPL Corporation (PPL)
Praxair Inc. (PX)
Raven Industries, Inc. (RAVN)
Republic Bancorp, Inc. (RBCAA)
Royal Gold, Inc. (RGLD)
RLI Corp. (RLI)
Rollins, Inc. (ROL)
Roper Industries Inc. (ROP)
Ross Stores, Inc. (ROST)
RPM International Inc. (RPM)
Southside Bancshares Inc. (SBSI)
SCANA Corp. (SCG)
Stepan Co. (SCL)
SEI Investments Co. (SEIC)
StanCorp Financial Group Inc. (SFG)
Sherwin-Williams Co. (SHW)
Sigma-Aldrich (SIAL)
South Jersey Industries, Inc. (SJI)
The J. M. Smucker Company (SJM)
SJW Corp. (SJW)
Tanger Factory Outlet Centers Inc. (SKT)
Senior Housing Properties Trust (SNH)
Southern Company (SO)
Sonoco Products Co. (SON)
1St Source Corporation (SRCE)
Questar Corp.. (STR)
Stanley Works (SWK)
Stryker Corp. (SYK)
Sysco Corp. (SYY)
AT&T Inc. (T)
Telephone & Data Sys. (TDS)
Target Corp. (TGT)
First Financial Corp. (THFF)
Tiffany & Co. (TIF)
TJX Companies, Inc. (TJX)
Tompkins Financial (TMP)
Tennant Co. (TNC)
Tootsie Roll Industries Inc. (TR)
T Rowe Price Group Inc. (TROW)
Urstadt Biddle Properties Inc. (UBA)
United Bankshares, Inc. (UBSI)
UGI Corp. (UGI)
Universal Health Realty Income Trust (UHT)
UMB Financial Corp (UMBF)
Unisource Energy Corp. (UNS)
United Technologies Corp. (UTX)
Universal Corp. (UVV)
Valspar Corp. (VAL)
V.F. Corp. (VFC)
Vector Group Ltd. (VGR)
Valmont Industries, Inc. (VMI)
Vectren Corp (VVC)
WestAmerica Bancorporation (WABC)
Walgreen Co. (WAG)
Weyco Group Inc. (WEYS)
WGL Holdings Inc. (WGL)
Westwood Holdings Inc. (WHG)
Westwood Holdings Inc. (WHG)
Wal-Mart Stores Inc. (WMT)
W. P. Carey & Co. LLC (WPC)
Watsco, Inc. (WSO)
West Pharmaceutical Services Inc. (WST)
Aqua America Inc. (WTR)
Exxon Mobil Corp. (XOM)
The York Water Co. (YORW)

From The Wall Street Journal this week: Prime office space rents increased 20% last year in the Asian city-state of Singapore.

We're not surprised by Singapore's current property surge… the tiny enclave recently announced its maximum corporate tax rate will be sliced to 18% in 2008, down from an already lean 20%. Only Hong Kong offers a friendlier tax code in Asia.

Like Singapore, Hong Kong's property market has soared in the past few years. These city-states are both in the top 10 of the world's freest economies. They both realize how low taxes, banking privacy, and light regulation attract the world's capitalists like bees to honey. With Asia producing 200,000 new millionaires each year, billions are flowing into their its property markets.

Let us be clear on this trend. Hong Kong and Singapore are entering the club of the world's great financial capitals. An investor is crazy to ignore them.

 When selecting income investments, the three most important questions to answer are : 1.) Is the investment increasing its dividend each year, 2.) Is the increase likely to continue into the future and 3.) Are you being compensated for the risk you are taking?  When you answer yes to all three of the questions, you just might have found an excellent income investment.

Below are several dividend stocks yielding 4%, or more, that recently rewarded their shareholders with increased cash dividends:

Campus Crest Communities, Inc. (CCG), a real estate investment trust (REIT), engages in the ownership, development, building, and management of student housing properties under the Grove brand name in the United States. January 29th the company increased its quarterly dividend 3.1% to $0.66 per share. The dividend is payable on April 10, 2013 to all stockholders of record on March 27, 2013. The yield based on the new payout is 5.5%.

Alliance Holdings GP, L.P. (AHGP) produces and markets coal primarily to utilities and industrial users in the United States. It produces a range of steam coals with varying sulfur and heat contents. January 29th the partnership increased it quarterly distribution 2.8% to $0.74 per unit. The distribution is payable February 19, 2013 to unitholders of record as of the close of trading on February 12, 2013. The yield based on the new payout is 5.9%.

CenterPoint Energy, Inc. (CNP) operates as a public utility holding company. January 25th the company increased its quarterly dividend 2.5% to $0.2075 per share. The dividend is payable on March 8, 2013, to shareholders of record as of the close of business on February 15, 2013. The yield based on the new payout is 4.1%.

CMS Energy Corporation (CMS) operates as an energy company primarily in Michigan. January 25th the company increased its quarterly dividend 6% to $0.255 per share. The dividend is payable Feb. 28, 2013 to shareholders of record on Feb. 8, 2013. The yield based on the new payout is 4.0%.

Below are several other companies that have recently increased their cash dividends to shareholders:

Apartment Investment and Management Company (AIV) is a real estate investment manager that engages in the acquisition, ownership, management, and redevelopment of apartment properties. January 31st the company increased its quarterly dividend 26% to 0.24 per share. The dividend is payable February 28, 2013, to stockholders of record on February 15, 2013. The yield based on the new payout is 3.5%.

Time Warner Cable Inc. (TWC) operates as a cable operator in the United States. January 31st the company increased its quarterly dividend 16% to $0.65 per share. The dividend is payable March 15, 2013 to stockholders of record at the close of business on February 28, 2013. The yield based on the new payout is 2.9%.

Tupperware Brands Corporation (TUP) operates as a direct seller of various products across a range of brands and categories through an independent sales force worldwide. January 29th the company increased its quarterly dividend 72% to $0.62 per share. The dividend is payable April 5, 2013 to shareholders of record as of March 20, 2013. The yield based on the new payout is 3.3%.

Arthur J. Gallagher & Co. (AJG) provide insurance brokerage and risk management services to various commercial, industrial, institutional, and governmental organizations. January 24th the company increased its quarterly dividend 2.9% to $0.35 per share. The dividend is payable on March 20, 2013 to stockholders of record as of March 4, 2013. The yield based on the new payout is 3.9%.

Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends; it is not a list of recommend buys. As always, due diligence should be performed before buying or selling any stock.

NEW HIGHS OF NOTE LAST WEEK

S&P 500... highest level since 2007 

Berkshire Hathaway (BRK)... Buffett's holding company 

American Financial Group (AFG)... insurance 

Travelers (TRV)... insurance 

Alleghany (Y)... insurance 

Medtronic (MDT)... medical device manufacturer

Becton-Dickinson (BDX)... medical devices & supplies 

Johnson & Johnson (JNJ)... drugmaker 

CVS Caremark (CVS)... drug stores 

Walgreens (WAG)... drug stores 

Pfizer (PFE)... Big Pharma 

Hershey (HSY)... chocolate

News Corp (NWS)... newspapers 

Constellation Brands (STZ)... booze 

Amazon (AMZN)... online retailer 

eBay (EBAY)... online auctions 

Monsanto (MON)... agriculture 

3M (MMM)... manufacturing 

Two Harbors (TWO)... mortgage REIT 

iShares Home Construction (ITB)... housing recovery 

Union Pacific (UNP)... railroads 

Plum Creek Timber (PCL)... timberland 

St. Joe (JOE)... real estate development 

iShares Germany (EWG)... German stocks 

iShares Italy (EWI)... Italian stocks 

iShares Australia (EWA)... Australian stocks 

iShares Hong Kong (EWH)... Hong Kong stocks 

iShares Mexico (EWW)... Mexican stocks 

Guggenheim Airline Fund (FAA)... good for America

A MARK OF INVESTOR COMPLACENCY

One of the surest bets in all of finance is ready to pay off again…

Everyone knows there are few sure bets in the financial markets.  There are few "this is the case, and it always will be" statements we're comfortable making.  The market is too random and too dynamic for those types of claims.

But one "this is the case, and always will be" statement we'll stick by is this: "Calm periods of rosy headlines and softly rising prices will always be interrupted by periods of wrenching volatility and vice versa."
That's just the way the world works.

For a picture of this "always the case, always will be" phenomenon, we consult the popular Volatility Index (the "VIX").  It's the most popular gauge of market volatility.  When the VIX is low (around 15), it indicates investors have few worries and see blue skies ahead.  When the VIX is high (above 30), it indicates panic and confusion.

As you can see, low VIX readings are regularly followed by big spikes in volatility.  And right now, we're seeing VIX readings below 13. In today's world of Flash Crashes and debt scares, these are "basement" level readings.  Expect a spike soon.