Dividends Can Help When Value Trails Growth

Dividend stocks maybe help “narrow the performance gap for a value investor,” according to a recent article in Barron’s. But the article adds, “whether a company pays a dividend isn’t the only factor to consider.” It cites comments from T. Rowe Price Dividend Growth fund Tom Huber, who warns investors to be mindful of sectors before “diving in to add dividend investments.” Huber cites utilities, real estate investment trusts and consumer staples as examples of… Read More

The Case For Dividend Investing Via The Dividend Aristocrats

Investors looking for high-quality stocks to own for the long-term should consider investing in dividend stocks, particularly high-quality dividend stocks like the Dividend Aristocrats. To be a Dividend Aristocrat, a stock must be in the S&P 500 Index, have a float-adjusted market capitalization of at least $3 billion, and a track record of at least 25 consecutive years of dividend growth. Of the 505 stocks that comprise the S&P 500 Index, just 57 of them… Read More

Why Stock Dividends Are Slowing Down Around the World

The latest installment of the quarterly Janus Henderson Global Dividend Index shows that while second-quarter global dividends hit a new record, they grew at a slower rate as a result of a strong dollar. This according to a recent article in Barron’s. The report shows that global dividends for the second quarter of this year totaled $513.8 billion compared to $508.1 billion one year ago—a growth rate of 1.1% compared to a 14.1% increase last… Read More

Some Buyout Firms Taking Debt-Laced Dividends

A new Moody’s report shows that certain aggressive buyout firms are taking debt-financed dividends from the companies they own, and “potentially jeopardizing their ability to navigate a downturn,” according to an article in Institutional Investor. The report shows that, since the end of 2009, Leonard Green & Partners, American Securities, Golden Gate Capital, TPG, and Apollo Global Management “have most frequently taken debt-financed dividends from companies they’ve bought,” with Apollo standing out because the dividends… Read More

In Volatile Times, Investors are Wooed By Cash

“In a year of rising interest rates, resurgent stock volatility and creeping political risk, many investors are taking solace in dividends,” says a recent article in The Wall Street Journal. As the market becomes increasingly unsettled, the capacity of companies to shell out cash in the form of share buybacks and dividend payments is becoming of key importance to investors, the article says. This is further fueled by the fact that U.S. companies are enjoying the… Read More

Record Dividends for S&P 500 in First Quarter of 2018

Companies in the S&P 500 “spent a record amount on dividend payments in the first three months of the year,” according to a recent article in MarketWatch. The article cites data from S&P Dow Jones Indices that showed an $18.8 billion net increase in U.S. common stock dividends in the first quarter of 2018, compared with a $10.9 billion rise over the same period in 2017. According to Howard Silverblatt, senior index analyst at the… Read More

Cautious Dividend Investing a Must

Given the historically low interest rate and return environment, investors hungry for yield have been gravitating toward dividend stocks, but the valuation advantage of this asset class has diminished. This according to an article in this week’s Forbes by Validea CEO John Reese. “Since yield no longer provides a reliable valuation tool” writes Reese, “investors in search of such dividends must be sure to use other metrics to gauge value.” He emphasizes the importance of… Read More

The Weakest Link in Today’s Market

Expending more than you take in works for a diet, but it doesn’t for the stock market. That’s the upshot of a recent Wall Street Journal article by Steven Russolillo, who writes that today’s ultra-low interest rate market is allowing share prices to “stay higher for longer than under more normal circumstances.” What could “end this game” he argues, is the amount of cash companies are paying out to investors–which is now exceeding the earnings… Read More

Shopping for Dividend Yield Without the Traps

While high dividend yields (yield defined as dividend divided by stock price) are appealing, they become less so if they’re a function of a low stock price that reflects underlying financial weakness. In a recent Forbes article, Validea CEO John Reese says to look for those stocks that show higher-than-average yields along with a history of low dividend payout ratios and high dividend growth. He also offers the following warning signs when a dividend yield… Read More

Avoiding the Value Trap when Shopping for Payout

Shopping for yield when interest rates are at rock bottom levels can attract an investor to low-priced stocks that may not be the best prospects. A recent Barron’s article cautioned investors that high-yielding stocks could be “value traps”. Analysts at Evercore’s ISI Team (a research arm of Evercore Partners, an investment bank and money manager) explain, “Dividend yield as a factor for stock selection [must] be combined with other factors.” These other factors include payout… Read More