Displaying items by tag: dividends

(New York)

Retirement income is such an important aspect of a financial advisor’s job, that one could reasonably argue it is the main duty of the profession. With that in mind, here are a couple ways to create lasting retirement income for clients. The first tip is simple, and every advisor should know it—delay claiming Social Security until 70, which significantly boosts annual income. Social Security is uniquely built to help protect against many of the risks of retirement, with one specialist saying “It’s indexed for inflation, it protects against longevity risk, and if the stock market crashes, it doesn’t go down”. The second part of this two-part strategy is to invest like one is still young. Since once is more hedged by greater Social Security income, one can afford to be more aggressive in markets.

FINSUM: This is a good basic strategy, though it requires working longer and a good degree of self-control.

(New York)

The $36.6 bn Vanguard Dividend Growth fund (VDIGX) is finally reopening its doors to new investors. The fund has been closed to new investors for 3 years, but the manager says “After careful analysis of the fund’s current cash flows, we’re confident that there is ample capacity to reopen the fund”. The fund’s five-year annual return is 12.1%, besting the Russell 1000 by 1%. The fund’s average stock holding has a market cap of $110.6 bn, and its top five holdings are McDonald’s, Coca-Cola, American Tower, Medtronic, and Microsoft.

FINSUM: Vanguard funds are enormously popular for a reason, and this is an exceptionally well-performing fund that is finally reopening. Seems like a good buy.

(New York)

Beyond high valuations and a potentially worrying economy (not to mention a trade war), there is something else investors need to worry about. Goldman Sachs is warning investors that S&P 500 companies are engaging in unsustainable financial payouts. The bank shows that in the year ending in March, companies in the index spent about 104% of their free cash flow on buybacks and dividends. It is the first time since before the Crisis that companies spent more on payouts than they generated in free cash flow.

FINSUM: So far this behavior is not hurting companies because investors are okay with extra leverage given the likelihood of Fed easing, but this is definitely a warning sign of financial excess.

(New York)

It has been forecasted for some time, but now it is finally happening—US banks are hiking dividends. After getting the all clear from regulators after successful stress tests, US banks are beginning to hike their dividends. For instance, Morgan Stanley and Citigroup hiked their dividends by 13%+ recently, with both now yielding 2.5% or over. Bank stocks have been beat up over the last year, with Morgan Stanley down 10%, for instance.

FINSUM: On the one hand, bank stocks looked undervalued and now have attractive yields. On the other, if you think we are headed towards a slowdown, then it is not a good time to buy financial shares.

(New York)

Are you looking for a good dividend stock? Well, we have one for you. How about a stock that has risen 27% this year yet still has a 4% dividend yield and a very solid business? If that sounds good, take a look at Prudential Financial. The company is an asset manager and insurance provider, and has solid growth and financials and seeks to be financially prudent. “We believe in a very consistent and regular dividend that will be aligned with our earnings growth, says the CFO. The company has expected earnings growth of 8% this year.

FINSUM: Prudential is a pretty sleepy name, but there is nothing boring about a 4% dividend combined with earnings growth and market-beating price appreciation.