Displaying items by tag: dividends

Thursday, 26 July 2018 09:31

5 Stocks with Accelerating Dividends

(New York)

Alongside rising rates and yields, accelerating dividends are a nice feature to have right now. The S&P 500’s dividend growth over the last five years has averaged 13.4%. However, every stock on this list has seen growth north of 20%. The five stocks, which come from quite varied sectors, includes UnitedHealth Group, AO Smith, Zoetis, Mastercard, and Nvidia.


FINSUM: The only catch for this group is that dividend yields, on average, are low, with UnitedHealth Group having the highest at 1.4%, well behind the average S&P 500 yield. The advantage, however, is that a stock with strongly rising dividends is more likely to see capital appreciation.

Published in Eq: Large Cap
Thursday, 19 July 2018 08:24

The Dilemma for Income Investors

(New York)

Those seeking to buy income-focused investments have a dilemma on their hands right now. Is it safer to buy high-yielding blue chips like AT&T, or better to buy a diversified high yield fund? Barron’s tries to answer this question and gives a definitive opinion—the bond fund. While both may offer similar yields of between 5-6%, holding money in just one or a small handful of blue chips offers much more risk. Not only could dividends be cut, but underlying businesses could deteriorate. And without the benefit of diversification that a broad ETF offers, a portfolio could see heavy losses.


FINSUM: This is a good, basic article to share with any clients who ask why they are buying debt instead of just owning a few stocks.

Published in Bonds: Total Market
Thursday, 12 July 2018 10:12

Take Another Look at These Dividend Payers

(New York)

If there was one subset of stocks that looks deeply out of style right now, it has to be utilities. Back a few years ago, they were immensely hot as the stock market’s bond substitutes in an insanely low-yield era. Now, you can earn almost 2% on a short-term Treasury bond. However, it might be time to take another look at the sector. Most utilities are yielding about 3.3%, and have been supported over the last few weeks by the fact that bond yields have stopped rising. The sector’s stock prices have fallen just short of 10% since last September, but that means valuations look attractive, as do yields.


FINSUM: If you think yields won’t climb that much further—which we don’t, at least in the short to medium term—then utilities do seem like a good-yielding bargain.

Published in Eq: Large Cap
Wednesday, 11 July 2018 08:40

Despite Buybacks, Shares are Stagnant

(New York)

One of the really worrying parts of this year’s stock market is that buybacks are booming to new records, yet share prices remain flat. US companies are on pace to buy back $800 bn of stock this year, a figure which would even eclipse 2007’s bonanza. But worryingly, 57% of the more than 350 component companies that have bought shares back this year are trailing the S&P 500’s return. That is the highest share to fall short of the index since the 2008 Crisis.


FINSUM: Aside from the worries about share prices not responding, the other concerning factor is that companies are buying their shares back at very high prices, which seems like it might portend the end of the bull market.

Published in Eq: Large Cap
Thursday, 05 July 2018 09:28

The Dividend Trade-Off

(New York)

Investors turned heavily towards income-producing stocks prior to Trump’s presidency. With yields so low, they offered income which was very hard to find elsewhere. More recently, though, high yielding stocks have been losing out as rates move higher. This has caused an exodus from some areas, such as telecoms, which have lost 16% over the last 18 months. However, one important thing to bear in mind as one watches yields fall on stocks is that this is often caused by rising prices. For instance, yields have fallen in six S&P 500 sectors over the last 18 months, but the market has returned 25% in that time frame—a nice pay off for losing some yield.


FINSUM: The key point of this very basic article is to remember that falling yields in equity can mean that the sector is doing very well.

Published in Eq: Large Cap
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