FINSUM
The Dividend Aristocrats Look Attractive Right Now
(New York)
Dividend stocks usually don’t fare as well in periods of rising yields, but guess what, yields have been largely paused for some time. Further, investors may be wise to stay away from tech for awhile as it seems the sector is going through a reckoning. Well, interestingly, the famed Dividend Aristocrats—a group of companies who have raised their dividends for 25 straight years—has just one tech company in it, ADP, the payroll processor, so it is a very good way to earn income and hideout from the tech turmoil. Furthermore, and somewhat surprisingly, the average P/E ratio of the group is 18.1x, below the S&P 500’s average of 18.8x.
FINSUM: This seems like a nice stable group to buy into, and the ever rising dividends provide a nice cushion for any potential losses.
Gold Demand is Plummeting
(New York)
Those hoping the current turmoil in the technology sector may turn around the fate of gold will be upset by new data. Gold has suffered its worst start to a year in almost a decade despite the fact that the US equity market was in a correction for much of it. Now, economic data shows that demand for the shiny metal is at its lowest since 2009. The big drop in drop demand did not stem from industry, but instead from investment markets, with ETFs buying ~60% less gold in the last year than the year prior.
FINSUM: Gold is in a tough and interesting spot. On the one hand, it is easy to see why rising rates have depressed gold prices. But on the other, it seems gold have should have benefitted from all the geopolitical and market instability of this year.
Will This Capital Gains Cut Really Happen?
(Washington)
There is a lot of excitement right now about the possibility of the new capital gains tax cut. The Treasury is looking into whether to effectively cut the capital gains tax rate by allowing investors to account for inflation when reporting their gains. The cut is estimated to amount to $100 bn over the next decade. However, the Treasury is uncertain if it has the authority to make the cuts on its own, a move it would undertake by simply redefining the meaning of “cost”.
FINSUM: So evidently the first Bush administration looked into this in the early 90s and decided that the Treasury did not have the legal authority to make this change on its own.
Stocks with High and Rising Dividends
(New York)
Are you looking for high yielding stocks that also appear to have good upside? Look no further than this handful of picks. Market Watch has picked a group of stocks with solid dividends that are also seeing dividend hikes. This is a key feature to have not only as a way of offsetting any losses from rising rates, but also a means to drive price appreciation. All the names on the list have dividends of over 4% and have seen recent dividend hikes of 10%+. These stocks include CareTrust REIT, Six Flags Entertainment, AbbVie Inc, and Janus Henderson Group.
FINSUM: Dividend hikes have been rarer lately than one would expect given the good spell of earnings we have had. The reason why seems to be the prevalence of buybacks. All of which makes these shares unique.
Brokers Panicking as SEC Rule Echoes DOL
(Washington)
The US broker community is currently growing increasingly concerned about the SEC’s new “Regulation Best Interest”. On top of anger over the rules governing the use of titles, brokers have become increasingly worried about a part of the SEC rule which essentially mirrors the DOL’s best interest contract exemption (BICE). The problem is that there are rules governing conflicts of interest that are very similar to the DOL’s, such as brokers having to take steps to resolve conflicts, and minimize compensation incentives for certain products. According to one lawyer representing brokerages, “We believe the commission should replace the DOL rule-based preamble provisions on mitigation and elimination of conflicts with a simple principles-based statement”.
FINSUM: When the rule was first debuted, the general industry reaction was positive. However, the more everyone has dug into it, the more stringent the opposition has become.