Displaying items by tag: dividends

Tuesday, 30 July 2019 09:41

Goldman Warns S&P 500 Becoming Unstable

(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.

Published in Eq: Total Market
Monday, 22 July 2019 10:06

A Good Time to Buy Financial Stocks

(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.

Published in Eq: Dividends
Thursday, 11 July 2019 08:17

Buy This Dividend Powerhouse

(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.

Published in Eq: Dividends
Tuesday, 02 July 2019 09:11

Dying Buybacks are Bad News

(New York)

Something the market has not had to deal with for some time is once again occurring. That change? Slumping buybacks. Hiked dividends and big buybacks have been staples of the this historic bull run, but the latter are starting drying up. Share repurchases shrank for the first time in seven quarters in the second quarter. The total amount of buybacks—over $200 bn—is still quite robust, but it is a sign that companies are tightening up, which could be indicative of the overall direction of the economy.


FINSUM: This is immaterial. In 2018, companies spent $800 bn on buybacks, so $205.8 bn (the 2nd quarter’s figure) is actually ahead of pace.

Published in Eq: Dividends
Monday, 01 July 2019 09:44

The Best Dividend Stocks for Right Now

(New York)

Dividend stocks have been an interesting case over the last few quarters. In the fourth quarter, when interest rates looked to be headed higher, they actually outperformed the market (counterintuitively). This year, as rates look to be headed lower, they have performed quite well (up 16%), but still lagged a bit behind the S&P 500. The question is where they go from here, and all signs point to higher given the prevailing rates environment and general anxiety. The trick is buying the right ones, as financials and healthcare offer better value than more traditional areas like utilities, real estate, and consumer staples.


FINSUM: We think these are good sector selections as they have not seen as much price inflation as the more common dividend choices. Healthcare seems particularly interesting given that it is quite recession-resistant.

Published in Eq: Dividends
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