Tag: Stocks


4 Tech Stocks Not Keeping Up With The NASDAQ Composite — and 1 That Is


[ad_1]

That the NASDAQ Composite index is about to touch the previous all-time highs (hit in the summer of 2018) is making the business and investment media news headlines — but it’s definitely different this time.

A few of the most well-known names in the tech and internet-related sectors are not quite keeping up. Stocks that used to lead the NASDAQ higher are no longer doing so. Names that used to dot the “new highs” list without fail under these circumstances are not making the grade this time around.

Facebook, Amazon, Apple and Netflix are still falling short of last summer’s higher levels. Let’s take a look at the evidence.

Here’s Facebook’s weekly price chart:

Facebook weekly price chart

stockcharts.com

The July, 2018 high was up there near 220. Today the price is 178. This, despite the NASDAQ as a whole now regaining those summertime highs. You can see that the Facebook price remains within the down trending Ichimoku cloud — even with the spectacular rally off of the Christmas Eve, 2018 lows. This is odd behavior for such a former giant of the index.

Her’s the weekly price chart of Amazon:

Amazon weekly price chart.

stockcharts.com

The summertime, 2018 high was up there near 2050. Today’s price is 1861. As with Facebook, it’s just not making it up to the previous all time high level. More positively, it looks as if the stock never closed below the Ichimoku cloud on a weekly basis — and has now closed above the cloud for at least 3 weeks in a row.

Here’s the Apple weekly price chart:

Apple weekly price chart.

stockcharts.com

Another strong recovery off of the late December, 2018 low prices, but the stock is clearly unable to hit higher all time highs here as the NASDAQ Composite index is about to get there. That Apple closed below the Ichimoku cloud for several weeks is a technical analysis problem. The same could be said for its failure, so far, to rise back above the cloud.

And here’s the Netflix weekly chart:

Netflix weekly price chart.

stockcharts.com

Same basic pattern: the previous peak last summer is much higher than today’s price.

To demonstrate the difference, here’s the weekly chart for one NASDAQ stock that’s actually come back stronger than the index:

Microsoft weekly price chart.

stockcharts.com

For whatever fundamental reasons, Microsoft just keeps outpacing — by far — these 3 other big NASDAQ tech stocks. The September/October previous peak was 115. Today the price is above that at 127. The stock never closed below the Ichimoku cloud level. It’s well above the cloud right now. The Microsoft upward trend from 2015 to the present day is an extraordinary move by any measure.

The Bill Gates operation is performing better than the NASDAQ taken as whole. Here’s the $COMPQ chart:

NASDAQ Composite index weekly price chart.

stockcharts.com

This difference is even clearer on the $QQQ and $XLK price charts, but I’ll let you look them up on your own.

I do not hold positions in these investments. No recommendations are made one way or the other.  If you’re an investor, you’d want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.

 

[ad_2]

Source link


32 Dividend Stocks That Could Double Your Money


[ad_1]

Growth or yield? Why choose when we can have both.

There are 32 dividend hikes on the way that are going to set up their investors for a big 12 months ahead. How? Simple–these payout raises are going to provide fuel to their attached share prices. The 10%+ raises (and there will be double-digit increases) in particular are going to position their shareholders for safe 10% to 12% returns in the year ahead regardless of what the broader stock market does.

Ever wonder why the yield on your favorite dividend aristocrat always looks low even though the firm is regularly raising that payout? Pull up its stock chart and you’ll see that its share price follows its dividend higher like a magnet. For example let’s consider this pair of “dividend doublers”.

Their soaring payouts and profits are about all they have in common. Texas Roadhouse (TXRH) is a mid-level steak restaurant chain that caters to the average American. Vail Resorts (MTN) is a “one percenter” stock that owns and operates high-end ski resorts, condos and lodgings. But both have raised their payouts generously every year, and both their stocks have more than doubled in less than five years.

This is why we keep a close eye on serial dividend raisers. Yield is nice, but doubling our money is even better! In this spirit here are 32 dividend growers to watch in upcoming months.

REITs

Real estate investment trusts (REITs) have no equal in retirement-focused accounts. Their very structure requires them to deliver the lion’s share of their taxable income to investors as dividends. If you’re an income investor, you need to be watching this sector like a hawk (if you aren’t already).

REITs have a couple “busy seasons” for dividend-increase announcements, including February and December. But the next couple months should see a decent handful of real estate plays hike their regular dividends.

Contrarian Outlook

Contrarian Outlook

Dividend Spotlight: CoreSite Realty (COR): CoreSite is a datacenter REIT with 21 operation centers across eight major communications markets in the U.S. That doesn’t sound like CoreSite is casting a wide net, but each of those locations packs a serious punch, allowing the company to service more than 1,350 customers.

CoreSite’s path over the past half-year or so is similar to the rest of the market’s, swooning at the end of 2018 only to rebound through the first few months of 2019. But COR is doing it better, up 27% to soar above both the S&P 500 (+16%) and the Vanguard REIT ETF (VNQ, +18%).

Credit CoreSite’s outstanding operations. The company reported a 20.7% improvement in net income that fueled a 14.2% boom in funds from operations (FFO, an important REIT profitability metric). CoreSite paid out 15.6% more in dividends, too, but FFO growth kept the payout ratio at a perfectly manageable 82%.

Up next is a likely dividend-increase declaration in the final week of May. And if history is any indication, look for another hike to be announced in early December.

MLPs

The last time I guided you through some likely dividend raisers, I pointed out many master limited partnerships (MLPs) that improve their distributions on a quarterly basis – not once a year, but four times a year. So the list of companies on tap for April and May are pretty similar, but a couple things have changed in the space since then.

For one, Western Gas Equity Partners LP and Western Gas Partners LP have combined to become Western Midstream Partners LP (WES). This follows a slew of mergers in the MLP industry following 2018’s changes to the tax law.

Also, Andeavor Logistics LP (ANDX) announced the same distribution it had for the prior two quarters, so its quarterly hikes appear to be a thing of the past.

Contrarian Outlook

Contrarian Outlook

Dividend Spotlight: Delek Logistics Partners LP (DKL): I wouldn’t be surprised if this is the first time you’ve read about small-cap Delek Logistics Partners LP. This roughly $815 million MLP was formed by Delek US Holdings (DK) just a few years ago to hold various energy assets.

For instance, its Pipelines/Transportation segment includes roughly 805 miles of crude and product transportation pipelines, a 600-mile crude oil gathering system in Arkansas, and storage facilities with 10 million barrels of active shell capacity. It also has light product terminals in Texas, Tennessee and Arkansas.

  • That business description won’t make your heart skip a beat. But let’s look at a few of its 2018 financial highlights:
  • Net revenues grew 22.2% year-over-year to $657.6 million.
  • Net income grew 30.0% YoY to $90.2 million.
  • Distributable cash flow (DCF, similar to free cash flow and an important metric for determining the health of the distribution) jumped 43% YoY to $121.6 million.
  • DCF coverage ratio of the distribution was 1.19x. (In other words, its DCF was 119% of what it needed to cover its regular payout.)
  • Fourth-quarter distribution grew 11.7% YoY to 81 cents per share.

That payout didn’t grow in a straight line, of course. DKL has been growing its distributions every single quarter for years, which is fantastic for investors because it only adds to the power of compounding.

Aristocrats

The Dividend Aristocrats are a group of 57 S&P 500 companies that have increased their dividends on an annual basis for at least 25 consecutive years, though many of them have done so for many years longer than that.

But they’re not all gems. I’ve recently pointed out a few Dividend Aristocrats that aren’t worth your time. Their business prospects are middling, and dividend growth has become downright begrudging, as if the only reason they’re raising them isn’t to reward shareholders, but instead to just keep their membership cards updated.

Contrarian Outlook

Contrarian Outlook

Dividend Spotlight: Johnson & Johnson (JNJ): Johnson & Johnson is one such Aristocrat laggard. The company is in the midst of serious legal issues related to one of its most famous consumer products.

As I pointed out at the start of the year:

J&J spent 2018 in court battling off cases related to claims that their baby powder contained asbestos and caused mesothelioma to a few people who were exposed to it. “We will continue to defend the safety of our product because it does not contain asbestos or cause mesothelioma,” the company said in May after losing a ruling in California.

But Reuters dropped a bombshell report in December saying that internal documents “show that the company’s powder was sometimes tainted with carcinogenic asbestos and that J&J kept that information from regulators and the public” for decades. JNJ tanked 13% in five trading days following Reuters’ report, and that very likely won’t be the last of it. Johnson & Johnson not only risks suffering a massive reputational hit to its consumer brands, but its legal path forward suddenly looks fraught with potholes.

These issues threaten to put a cap on Johnson & Johnson in the near-term. In turn, that could put some pressure on the company to please shareholders in any way it can – including writing significantly fatter dividend checks. Payout growth has been respectable, at about 28% since early 2015, but J&J might need to deliver something truly generous in mid-April, when it typically announces its annual dividend increase.

The Best of the Rest

There are still dozens more likely dividend increases coming in the next two months. But these are a few of the most intriguing companies, whether it’s because they’re at a pivot point, running hot or just not your run-of-the-mill company.

But the most interesting of the bunch right now is America’s largest company.

Contrarian Outlook

Contrarian Outlook

Dividend Spotlight: Apple (AAPL): Apple has been through this before. Back in 2015 and 2016, Wall Street was concerned that Apple had lost its innovative edge, that its product was to expensive for China, and that its other offerings would never make up for any weakness in iPhone sales.

Within a few years, it had doubled its market cap from a trench around $500 billion to a high above $1 trillion, making it the first American company to reach that lofty level.

Apple has found itself in the same position again recently, however. The stock lost about a third of its value on iPhone sales declines (caused in part by Chinese weakness!) and skepticism about its lack of other game-changing devices.

And yet, AAPL shares have defied logic by rebounding 40% off a big share dip after the company made a rare cut to its sales guidance on Jan. 2. What gives? Well, Morgan Stanley analysts recently said year-over-year growth to the iPhone “installed base” in China was its best in 15 months, and the tech giant has announced a series of product upgrades and new services, including Apple News+, streaming TV content and even an Apple credit card.

Don’t sleep on the dividend, though. Apple’s payout has nearly doubled since it restarted regular distributions in mid-2012. And considering a skinflint 23% payout ratio and renowned ability to generate free cash, Apple can afford to continue making significant hikes – even as it finds ways to grow and silence the haters.

[ad_2]

Source link


3 Weed Dividend Stocks Paying Up To 5.1%


[ad_1]

“Jenny, I can imagine. My wife makes fun of me when I ice my knees after basketball games,” I confided to my friend and favorite bartender.

Her husband, no “young chicken” anymore either she joked, was sore from his own martial arts contest. She bought him a CBD “bath bomb” to help with the aches of being active and middle-aged.

Always the sucker for natural remedies and bartender wisdom, I teed up an Amazon selection for pain and inflammation. Just 26 hours later, I was massaging hemp, turmeric and MSM into my patella tendon (about an hour before tipoff)

“You’re a terrible scientist,” my wife reprimanded me after I bragged about my patella’s comeback in my postgame recap. “You’re supposed to change one variable at a time. You changed everything.”

She was right, of course. I had new basketball shoes and wore a knee brace for the first time in years. I’d changed three variables, had no idea which was the miracle cure. I was left with no choice but to keep my three member “knee team” together! (Who knows how it’s working, as long as it is working, right?)

Hemp has been a popular free agent addition for many aging athletes since its increasing legalization. As you know the crop has other popular uses, too. Mine is more mundane, yet probably fitting for a dividend analyst!

The plant was used in China nearly 5,000 years ago and is enjoying a good old-fashioned American boom thanks to state governments. I live just a few blocks from our neighborhood dispensary yet I wouldn’t have thought to get a doctor’s note for the salve. Put it in on Amazon Prime, though, and it’s in my cart in minutes.

Now what about weed dividends? We’ve had plenty of readers write in asking and, with “pot holiday” April 20 just days away, I thought it’d be fitting for us to review the current crop of dividends.

The Horizons Marijuana Life Sciences Index ETF (HMMJ) just paid its seventh quarterly dividend last Wednesday. Its $0.3811 per share payout is good for a generous 5.1% trailing yield. Plus investors have been as high as a kite since inception, enjoying 160% total returns versus 22% for the S&P 500.

But where exactly do these dividends come from? Most of the stocks the fund holds are not profitable. And the lone dividend payer Scotts Miracle-Gro (SMG) in the fund is only 7.2% of assets.

HMMJ actually makes its money by lending its shares to short sellers. Remember, when you sell a stock “short,” you are actually borrowing shares so that you can sell them at their current market price. Later, you must buy back these shares to “cover” your short position.

Normally it doesn’t cost that much money to short a stock. But the mostly-unprofitable shares that HMMJ holds are in high demand by short sellers today, and the ETF itself holds much of the supply. So, the fund’s “side hustle” of renting out its holdings is booming.

But there is no actual cash flow backing up its distribution. Nor is there any guarantee that its “short lending” business will remain as robust in future quarters. To paraphrase Prince, this distribution is just a party and parties weren’t meant to last.

How about Scotts, which does manufacture actual products? It’s more of a “pick and shovel” play on weed. The company doesn’t peddle the crop directly but sells growing equipment. Scotts stock pays 2.7% today and, while the firm raises its dividend regularly to the tune of about 5% per year.

As much hype as there is around weed, the power of the “dividend magnet”—the gravity exerted by a payout on its stock price—is even stronger. While Scotts has hiked its dividend by 17% over the last three years, its stock price has risen by the exact same amount.

The firm’s subsidiary for cannabis growers has, troublingly, not been growing organically. It’s been more hype than hemp to date for this baked maker of lawn and garden products.

A better backdoor play on the sector is landlord Innovative Industrial Properties (IIPR). Remember, while many states have legalized pot, it remains illegal under federal law. Financing is challenging for weed peddlers, so many sell their properties to IIPR to get cash in the door for their operations. The firms then rent their former buildings back from IIPR.

Why IIPR? It’s the only real estate investment trust (REIT) that works with weed growers. As a publicly traded company, it gets to borrow money at much lower rates than it collects from its cannabis clients. As a REIT, IIPR is obligated to dish most of its profits back to its shareholders as dividends. The result is a good old-fashioned payout boom, a 200% increase in less than two years!

The only “problem” with the chart above is that, if you don’t yet own IIRP, it is now quite expensive to do so. Its price line has run away from its payout line, which is a sign that shares are dangerously overvalued. The stock now pays just 2.1% and trades for an extremely rich 31-times its annual cash flow.

Sure, you may be able to buy IIRP “high” and sell it higher. But that’s a different dividend drug altogether.

Forget dividends you say? Let’s not forget the example that money-losing, no-dividend firm India Globalization Capital (IGC) set for us. IGC found the magic investor formula when they put two investing buzzwords side-by-side:

  1. Cannabis, and
  2. Blockchain.

The savvy marketers at IGC then introduced an energy drink infused with hemp, and wow, what a rush!

We rational income investors fortunately avoided this clown show. I wrote to you as the blockchain-weed craze was peaking:

We level-headed contrarians should stay away from this circus. In fact, you need to be honest with yourself about the latest weed craze. If you’re tempted at all to buy this junk, it’s better if you change the channel.

Many marketers know that you and your peers are fixating on these parabolic charts. It’s going to end in tears, but they don’t care. They know they can get your attention now with a weed-fueled promise of 100% to 1,000%+ gains and get out while the getting is good.

The epilogue on IGC? Tears would be putting it mildly.

Disclosure: none

[ad_2]

Source link


5 Dividend Growth Stocks With Upside To Analyst Targets


[ad_1]

To become a “Dividend Aristocrat,” a dividend paying company must accomplish an incredible feat: consistently increase shareholder dividends every year for at least 20 consecutive years. Companies with this kind of track record tend to attract a lot of investor attention — and furthermore, “tracking” funds that follow the Dividend Aristocrats Index must own them. With all of this demand for shares, dividend growth stocks can sometimes become “fully priced,” where there isn’t much upside to analyst targets.

But we here at ETF Channel have looked through the underlying holdings of the SPDR S&P Dividend ETF (which tracks the S&P High Yield Dividend Aristocrats Index), and found these five dividend growth stocks that actually still have fairly substantial upside to the average analyst target price 12 months out. Which means, if the analysts are correct, these are five dividend growth stocks that could produce capital gains in addition to their growing dividend payments.

In the first table below, we present the five stocks. The recent share price, average analyst 12-month target price, and percentage upside to reach the analyst target are presented.

Stock Recent Price Avg. Analyst 12-Mo. Target % Upside to Target
Becton, Dickinson $268.50 18.87%
Chevron $120.27 $140.62 16.92%
Abbott Laboratories $72.88 $79.93 9.68%
National Retail Properties $50.76 $54.55 7.46%
Lincoln Electric Holdings $89.70 $95.78 6.77%

The average 12-month analyst targets are only targets for the share price however, and each of these stocks are expected to pay dividends during that holding period — so the expected total return if these stocks reach their analyst targets is actually the share price upside seen by the analysts plus the dividend yield shareholders can expect. To ballpark that total return potential, we have added the current yield to the analyst target price upside, in order to arrive at the 12-month total return potential:

Stock Dividend Yield % Upside to Analyst Target Implied Total Return Potential
Becton, Dickinson 1.36% 18.87% 20.23%
Chevron 3.96% 16.92% 20.88%
Abbott Laboratories 1.76% 9.68% 11.44%
National Retail Properties 3.94% 7.46% 11.4%
Lincoln Electric Holdings 2.10% 6.77% 8.87%

Another consideration with dividend growth stocks is just how much the dividend is growing. We looked up the trailing twelve months worth of dividends shareholders of each of the above five companies have collected, and then also looked up the same number for the prior trailing twelve months. This gives us a rough yardstick to see how much the dividend has grown, from one trailing twelve month period to another.

Stock Prior TTM Dividend TTM Dividend % Growth
Becton, Dickinson $2.96 $3.04 2.70%
Chevron $4.36 $4.55 4.36%
Abbott Laboratories $1.09 $1.2 10.09%
National Retail Properties $1.88 $1.975 5.05%
Lincoln Electric Holdings $1.48 $1.72 16.22%

These five stocks are part of our full Dividend Aristocrats List. Click here to find out the Dividend Growth Stocks: 25 Aristocrats »

[ad_2]

Source link


Yacktman Fund Gains 7 Stocks In 1st Quarter


[ad_1]

The Yacktman Fund gained seven new positions in the first quarter, though some came from changes in its existing companies.

Stephen Yacktman helms the $5.57 billion portfolio that was begun by legendary investor Donald Yacktman.

GuruFocus

The firm reported on Wednesday that its portfolio welcomed: The Walt Disney Co., Booking Holdings Inc., Brenntag AG, Alphabet Inc., Fox Corp., Beiersdorf AG and Fox Corp. Fox Corp. and The Walt Disney Co. came into the portfolio when the fund’s previous holding, Twenty-First Century Fox, sold many of its assets to Disney in the first quarter.

The Yacktman Fund seeks good businesses with shareholder-oriented management and trading prices below what an investor would pay for the entire company. At first quarter-end, it held 35 stocks valued at $5.57 billion. Consumer defensive stocks occupied the greatest space at 30.83% of the portfolio, followed by technology at 27.92% and consumer cyclical at 10.36%.

The risk-averse fund declined 3.8% versus the 13.52% drop in the S&P 500 for the fourth quarter. Since inception, it returned 10.17% versus 9.2% for the index. Founded by investor Donald Yacktman, the fund is now helmed by Chief Investment Officer Stephen Yacktman.

First-quarter new positions

The Walt Disney Co. 

The fund gained 2,040,441 shares of The Walt Disney Co., which occupied 4.07% of the portfolio.

The Walt Disney Co. has a market cap of $236.85 billion; its shares were traded around $131.76 Wednesday with a price-earnings ratio of 19.11 and price-sales ratio of 3.30. The trailing 12-month dividend yield of The Walt Disney Co. is 1.30%. The forward dividend yield of The Walt Disney Co. is 1.35%.

Booking Holdings Inc. 

The fund purchased 117,500 shares of Booking Holdings, giving it 3.68% portfolio weight. The stock’s fourth-quarter share price averaged $1,785.

Booking Holdings Inc. has a market cap of $82.81 billion; its shares were traded around $1,839.79 Wednesday with a price-earnings ratio of 22.08 and price-sales ratio of 6.08. Booking Holdings Inc. had an annual average earnings growth of 30.70% over the past 10 years. GuruFocus rated Booking Holdings Inc. the business predictability rank of 3.5-star.

Brenntag AG

The fund purchased 2.305 million shares of Brenntag AG, giving it 2.13% portfolio weight. The stock’s first-quarter share price averaged 43 euros.

Brenntag AG has a market cap of 7.42 billion euros; its shares were traded around 48.00 euros with a price-earnings ratio of 16.05 and price-sales ratio of 0.58. The trailing 12-month dividend yield of Brenntag AG is 2.29%. The forward dividend yield of Brenntag AG is 2.29%. Brenntag AG had an annual average earnings growth of 3.80% over the past 10 years. GuruFocus rated Brenntag AG the business predictability rank of 4.5-star.

Alphabet Inc. 

The fund purchased 100,000 shares of Alphabet Inc., giving it 2.11% portfolio weight. The stock’s first-quarter share price averaged $1,120.

Alphabet Inc. has a market cap of $861.15 billion; its shares were traded around $1,236.34 with a price-earnings ratio of 28.41 and price-sales ratio of 6.60. Alphabet Inc. had an annual average earnings growth of 15.30% over the past 10 years. GuruFocus rated Alphabet Inc. the business predictability rank of 3.5-star.

Fox Corp. 

The fund gained 2,693,333 shares of Fox Corp., occupying 1.73% of the portfolio.

Fox Corp. has a market cap of $23.91 billion; its shares were traded around $38.21 with a price-earnings ratio of 24.86.

Beiersdorf AG 

The fund purchased 4,305,280 shares of Beiersdorf AG, giving it 1.62% portfolio weight. The stock’s first-quarter share price averaged $20.

Beiersdorf AG has a market cap of $23.74 billion; its shares were traded around $21.01 with a price-earnings ratio of 29.16 and price-sales ratio of 2.94. The trailing 12-month dividend yield of Beiersdorf AG is 0.79%. The forward dividend yield of Beiersdorf AG is 0.76%. Beiersdorf AG had an annual average earnings growth of 5% over the past 10 years. GuruFocus rated Beiersdorf AG the business predictability rank of 2-star.

Fox Corp. 

The fund gained 1,333,333 of Fox Corp. A-shares, occupying 0.88% of the portfolio.

Fox Corp. has a market cap of $23.95 billion; its shares were traded around $38.84 Wednesday with a price-earnings ratio of 24.92.

This article originally appeared HERE.

[ad_2]

Source link


Citigroup’s Rising Credit Losses Highlight The Stock’s Unattractiveness


[ad_1]

The market’s reaction to Citigroup’s first quarter earnings report has been a muted yawn, with Citi shares down less than 1 percent as of this writing.  While Citi’s first quarter earnings per share of $1.87 and revenues of $18.60 billion slightly exceeded the Street’s consensus estimate for EPS of $1.80 and revenues of $18.59 billion, that is a phenomenon that occurs for more than 70% of the S&P 500 in any given quarter.  After the market’s wild run to start 2019–and Citigroup has participated with C shares up 29% year-to-date through Friday versus a 16% gain for the S&P 500–it is going to take more than a narrow earnings “beat” to get the market excited.

Citigroup’s earnings had all the hallmarks of a company that has reached its peak earnings power for an economic cycle.  While Citi’s credit losses remain quite low compared to historical averages, they did increase markedly sequentially, especially in North America, with that business unit posting a net credit loss figure of 2.97% for 1Q2019 versus 2.60% for 4Q2018 and 2.77% for 1Q2018.  So, Citi shares today sit $3 below their level April 15, 2018 level of $70.07, and I see no reason to add them to any of my clients’ portfolios.

Citi’s stock price decline in the trailing 12-month period is actually a very accurate representation of the diminution of its tangible common equity.  Yes, Citi’s book value per share rose year-on year to $65.55 at March 31, 2019, but that was entirely due to the impact of share repurchases.  On a gross basis, City’s tangible common equity stood at $151.690 billion at the end of the first quarter of 2019 versus $155.602 billion a year ago.  

Hanoi, Vietnam – August 22, 2017: Citibank sign and logo in Hanoi, Vietnam. Citibank is a major international bank

Getty

Is Citi shrinking because it has no more attractive investment opportunities than to buy back and retire its own stock?  It seems that way. With the U.S. economy posting its first 3% GDP growth rate in 14 years in 2018, it would seem that Citi’s U.S. business should be rockin’, but that was far from the case in the first quarter.

Citi’s North American business unit posted an almost invisible 0.5% gain in revenues in the first quarter, and that division’s earnings before taxes actually fell 10% year-on-year, owing to the 8% increase in credit costs in the period.  

So, there’s just nothing attractive about Citigroup stock here.  The time to buy money center banks is when they are trading at a discount to book value.  While Citi is afforded a much lower premium than best-in-breed JPMorgan, Citi is trading today at about a 2% premium to tangible book value.  

Yes, Citi shares fell below $50 in December’s market rout, and, yes, in retrospect that was a buying opportunity.  I reloaded my firm’s JPMorgan position at the time instead, and of course I am kicking myself that I didn’t buy more.  Investors must concentrate on the view ahead, not behind, though, and it would seem that Citi just doesn’t have much going for it right now.  The stock’s 2.71% yield is quite safe, but I am regularly investing in stocks that are yielding one to two percentage points higher than that without eroding conditions in their core business (as Citi’s rising credit losses indicate,) and also preferred stocks that double or triple C’s yield with no equity market risk.

So, as the yield curve remains inverted, I remain concerned about the ability of money center banks to grow their key profitability metric–net interest margin–and I believe the 2.72% NIM that Citi posted in the first quarter will represent a cycle-peak level.  I am not sure what Citi management could do to get Wall Street excited this late in the economic cycle, but I am quite sure that the Fed and the Office of the Controller of the Currency–who are still fighting to protect America against another once-in-70-years crash–wouldn’t let Citi management do it, anyway.  Avoid Citi shares at these levels.

[ad_2]

Source link


5 Dividend Growth Stocks With Upside To Analyst Targets


[ad_1]

To become a “Dividend Aristocrat,” a dividend paying company must accomplish an incredible feat: consistently increase shareholder dividends every year for at least 20 consecutive years. Companies with this kind of track record tend to attract a lot of investor attention — and furthermore, “tracking” funds that follow the Dividend Aristocrats Index must own them. With all of this demand for shares, dividend growth stocks can sometimes become “fully priced,” where there isn’t much upside to analyst targets.

But we here at ETF Channel have looked through the underlying holdings of the SPDR S&P Dividend ETF (which tracks the S&P High Yield Dividend Aristocrats Index), and found these five dividend growth stocks that actually still have fairly substantial upside to the average analyst target price 12 months out. Which means, if the analysts are correct, these are five dividend growth stocks that could produce capital gains in addition to their growing dividend payments.

In the first table below, we present the five stocks. The recent share price, average analyst 12-month target price, and percentage upside to reach the analyst target are presented.

Stock Recent Price Avg. Analyst 12-Mo. Target % Upside to Target
Caterpillar $141.20 $153.43 8.66%
MDU Resources Group $25.79 $28.00 8.57%
United Technologies $135.30 $145.12 7.26%
RPM International $60.63 $64.83 6.93%
International Business Machines $144.35 $151.73 5.11%

The average 12-month analyst targets are only targets for the share price however, and each of these stocks are expected to pay dividends during that holding period — so the expected total return if these stocks reach their analyst targets is actually the share price upside seen by the analysts plus the dividend yield shareholders can expect. To ballpark that total return potential, we have added the current yield to the analyst target price upside, in order to arrive at the 12-month total return potential:

Stock Dividend Yield % Upside to Analyst Target Implied Total Return Potential
Caterpillar 2.44% 8.66% 11.1%
MDU Resources Group 3.14% 8.57% 11.71%
United Technologies 2.17% 7.26% 9.43%
RPM International 2.31% 6.93% 9.24%
International Business Machines 4.35% 5.11% 9.46%

Another consideration with dividend growth stocks is just how much the dividend is growing. We looked up the trailing twelve months worth of dividends shareholders of each of the above five companies have collected, and then also looked up the same number for the prior trailing twelve months. This gives us a rough yardstick to see how much the dividend has grown, from one trailing twelve month period to another.

Stock Prior TTM Dividend TTM Dividend % Growth
Caterpillar $3.11 $3.36 8.04%
MDU Resources Group $0.782 $0.802 2.56%
United Technologies $2.76 $2.87 3.99%
RPM International $0.94 $1.34 42.55%
International Business Machines $6 $6.28 4.67%

These five stocks are part of our full Dividend Aristocrats ListClick here to find out the Dividend Growth Stocks: 25 Aristocrats »

[ad_2]

Source link


Stocks This Week: Short IBM And Mattel


[ad_1]

Photocredit: ASSOCIATED PRESS

The S&P 500 is likely to decline as this week begins so we seek short selling candidates. The S&P gapped up on Friday and is close to a new high. Friday was a projected turning point. I would go with the direction of the market on Monday, likely down. One reason for this conclusion is short-term sentiment. The American Association of Individual Investors poll was posted on Thursday. There were 40.2% bulls, the most since the 41.6% reading on March 3rd. That date preceded a 60-point one-week drop in the S&P. We may see a short, sharp decline in the S&P before the index reaches a new high.

The weekly price cycle for IBM hits a peak as earnings are reported after the close on April 16th. The stock has been closely tracking the cycles; 100% of the buys and 80% of the sell signals have been accurate. Technically, the weekly graph reveals that the share price is nearing resistance and is overbought. Note that April 19th has been one of the weakest days of the year for Big Blue in the month of April, down 82% of the time.

Chart 1

The weekly cycle tops as the company reports earnings.

Cycles Research Investments LLC

Chart 2

Price is up against resistance.

Cycles Research Investments LLC

The weekly Mattel cycle peaks. In the last 12 months, five of six sell signals have been correct. In addition, April 18th has been the high point in the average April for this stock. So, the seasonal cycle and the dynamic cycle will be in agreement from the 18th through to early May. The stock is likely to retrace half of its recent rally to $13.3.

Chart 3

The Mattel cycle has peaked.

Cycles Research Investments LLC

Chart 4

The shares price may fall closer to $13.3.

Cycles Research Investments LLC

 



[ad_2]

Source link


Two Great Dividend Stocks You Should Buy Before May (Like This FTSE 100 Giant)


[ad_1]

Harry Potter publisher Bloomsbury is scheduled to release next results in late May.

Getty

These companies have plenty of chance to deliver strong share price growth next month. Now’s a great time to go shopping, then.

Bloomsbury Publishing

Full-year numbers for Bloomsbury Publishing are scheduled for Tuesday, May 21, and if March’s trading update is anything to go by I’m expecting another cheery market reception.

The House of Harry (Potter) can still rely on the escapades of the boy wizard to keep earnings rising year after year and for cash flows to continue impressing. But Bloomsbury isn’t a one-trick pony and it has a broad range of global bestsellers to drive the top line across its fiction and non-fiction titles.

What really gets me excited, though, is the vast investment the small cap is devoting to its Academic and Professional division, an area which is ripe with potential and which the company declared put in another “strong performance” in the 12 months to February 2019.

It’s not a shock to find that City analysts are expecting profits growth at Bloomsbury to rev from low-single-digit percentages in fiscal 2019 to 14% in this year, then, and for dividends to keep rising through this period. Thus an 8.3p per share annual dividend is forecast for the present period, resulting in a chubby 3.7% yield.

The publishing colossus looks in great condition to make good on these forecasts as well. Not only are predicted rewards covered by anticipated profits by two times, bang on the widely-regarded security benchmark, but Bloomsbury’s position as a terrific cash creator — net cash leapt to £27m as of February from £16.9m six months earlier — also sets it in good stead to keep hiking shareholder payouts.

Reckitt Benckiser

Another great income share to buy today is Reckitt Benckiser Group as I believe a set of strong trading first-quarter figures will be forthcoming on Thursday, May 2.

The household goods company saw its share price fall below £60 per share last week following news that charges of illegal marketing were being brought against its Indivior by the US, raising speculation that the Footsie firm could be facing hefty legal bills related to the heroin-treatment manufacturer which it spun off five years ago.

I would consider this to be a decent dip-buying opportunity for long-term investors, though, and particularly as those forthcoming trading details could well remind the market of its brilliant defensive qualities and the subsequent likelihood of solid and sustained earnings and dividend growth. It certainly did this when full-year results were unveiled back in February,

Now City analysts aren’t expecting earnings at Reckitt Benckiser to blow anyone away in the immediate future at least, a bottom-line increase of only 2% being predicted. What the calculator bashers do believe, though, is that provides the base for dividends to keep on improving as well — a total annual reward of 176.6p per share is estimates, a target which yields a decent-ish 3%. An added bonus: this projection is covered two times over by predicted earnings.

Clearly larger yields can be found, but the ubiquity of its beloved products means that Reckitt Benckiser can be relied on to keep increasing profits and thus bumping dividends higher year after year, too. And this makes it a great selection for income investors, in my opinion.

[ad_2]

Source link


3 Value Stocks In The Insurance Sector Now Hitting 2019 Highs


[ad_1]

Insurance value stocks making new highs for 2019: all 3 of these can be called “value” because of their low price/earnings ratios and because they trade below book. That’s the beginning of the classic approach to identifying value as described by Warren Buffett’s mentor at Columbia University, Benjamin Graham.

You can read about his approach in his book, Security Analysis, or in the much more direct version, The Intelligent Investor. My screen for these only includes those with a steady stream of earnings, which are paying regular dividends and where debt does not reasonably constitute a threat to long-term viability.

Here’s what came up after markets closed for the week:

AXA Equitable Holdings, Inc. trades on the New York Stock Exchange under the symbol EQH. The insurance broker, based in New York City, was established in 1859.

AXA Equitable Holdings, Inc. daily price chart.

stockcharts.com

The stock’s price/earnings ratio sits at 6.9 — this, at a time when the current p/e of the S&P 500 has reached 21.7. AXA Equitable Holdings now trades at a 13% discount to its book value.

Earnings over the last year have been excellent and the 5-year record of earnings is positive as well. Right now, long-term debt slightly exceeds shareholder equity, a concern. The company pays a 2.33% dividend.

AXA Equitable has moved from 15 at the Christmas Eve, 2018 low to its present price of 22. That’s about a 50% gain in a very short period of time, not the kind of move you might typically expect in a low p/e stock in the insurance business.

Lincoln National Corporation is Radnor, Pennsylvania headquartered and trades on the New York Stock Exchange. According to the company’s website, they’ve been around since 1905.

Lincoln National Corporation daily price chart.

stockcharts.com

You can buy a share of the company today at a 4% discount to book value. The price/earnings ratio is down there at 8.77. Lincoln’s long-term debt is exceeded by shareholder equity. The dividend yield comes to 2.28%. This last year’s earnings have been quite good and the record on the 5-year time frame is positive as well.

In late December of last year, Lincoln traded as low as 48 and at the close on Friday had rocketed up to just under 65. This is an extraordinary upward move in a very short time for a staid, old insurance stock.

MetLife, Inc. is New York Stock Exchange listed and based in New York City. This is another insurance company which has been around for awhile — their website says 145 years.

MetLife daily price chart.

stockcharts.com

This well-known insurance company can be purchased for 85% of its book value. The price/earnings ratio is a meager 9.29. The earnings record is positive for this last year and also looks good on the 5-year look. MetLife pays a 3.66% dividend. Shareholder equity is greater than long-term debt. The stock hit as low as 39 late last year and now trades at about 46.

It’s peculiar to see these old school value stocks in this typically sleepy sector moving up so quickly. It’s almost as if something unusual is up.

I do not hold positions in these investments. No recommendations are made one way or the other.  If you’re an investor, you’d want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.

 

[ad_2]

Source link




Categories