Eq: Large Cap
The airline market has not been doing very well this year. Fuel prices and expanding capacity have weighed on the stocks. United is up big, but the rest of the pack is either in the red or up single digit percentages. Recently, there has been clear winners and losers, with United Continental, Delta, and Spirit being outperformers, and American, Alaska, and Southwest being laggards.
FINSUM: Airlines are an interesting sector, as each has its own unique characteristics, but they are all subject to similar woes. American Airlines has been a big loser this year, but some analysts think it could be the biggest gainer in the medium term.
Nike’s stock has been cruising this year, easily outpacing the broader market thanks to good earnings, new products, and the continued strength of “athleisure”. Shares are up 35% this year, and now it looks like they might head much higher as today’s earnings release is expected to be very strong. Many analysts are boosting their target prices, especially because gross margins look likely to expand on the back of less discounting and a shift towards the higher-margin direct-to-consumer business.
FINSUM: About a year ago, when Nike was going through a rough patch and losing market share, we thought investors should stick around. That has paid off.
Retirees are looking for dividend stocks that can pay them steadily and over the long term. The higher the yield, the better, but generally one wants stable underlying companies that are not going to spend too high a percentage of cash. With those factors in mind, here are three names to consider: Verizon (4.3% yield), master limited partnership MPLX (6.85%), and mining giant Rio Tinto (~6%).
FINSUM: Verizon seems like a good bet to us, and we expect they might raise the dividend given that it is at an all time low relative to AT&T.
Rates and yields are rising as the Fed hikes and the outlook for the US economy improves. However, that will have a major effect on many stocks, which makes investors nervous. Accordingly, here are five stocks that should thrive in this rising rate period. JP Morgan believes investors should shift out of defensives and into cyclical stocks, like capital goods, financials, auto, and semiconductors. Five stocks to look at are: Applied Materials, BorgWarner, Caterpillar, KeyCorp, Parker-Hannifin.
FINSUM: This is a direct bet that we are not headed toward a bear market and recession. Given the market’s momentum lately, that could be a good change of tact.
One of the biggest surprises of the summer has been the outperformance of dividend stocks. Despite rates and yields rising, dividend stocks have done very well. With that in mind, here is a list of 7 of the best cheap high dividend yield ETFs: iShares Core High Dividend ETF (HVD, 3.51% yield), SPDR Portfolio S&P 500 High Dividend ETF (SPYD, 3.71%), Invesco Dow Jones Industrial Average Dividend ETF (DJD), Invesco S&P 500 Quality ETF (SPHQ, 1.73%), Vanguard High Dividend Yield ETF (VYM, 2.87%), JPMorgan U.S. Dividend ETF (JDIV, 3.76%), Xtrackers MSCI EAFE High Dividend Yield Equity ETF (HDEF).
FINSUM: All of these funds have very low expense ratios, and varying (but generally high yields). If you are looking for dividend income, these are a good place to start. That said, these are non-hedged, so there a good deal of rate risk.
Utilities, telecoms, consumer staples, and REITs, all sectors that should get hurt as rates rise, right? Think again. Dividend stocks are doing well, and telecoms, in particular, look like they have a lot of upside for investors. According to Oppenheimer, the price war in the sector is coming to an end, which means telecoms, which have trailed the market this year, could be in for a good run. Also notable is that the dividend yield spread between AT&T and Verizon is now at its highest ever, with the former at 6% and the latter at 4%.
FINSUM: Favorable bundling and higher per user revenue seem likely. Those drivers, combined with the fact that dividend stocks have a lot of momentum, could mean the sector might strongly outperform the market.