The connection between gender and corporate profitability does not appear to be so obvious, but empirical research shows that higher participation of women in corporate management is good for the company's bottom line. While the share of women chief executives at the helm of the world's 1000 largest companies remains low at 4% and the percentage of women as executive officers hovers around 14.6%, companies managed by women tend to outperform their peers based on several profitability metrics. Moreover, among the most prominent corporations run by women, several pay attractive dividend yields.
Evidence from empirical studies of the positive effect from women's participation in executive decision-making on corporate bottom lines is plentiful. According to a... Read more
The holiday shopping season is starting officially this week. Hence, while it may be a good time to look for bargains, is it really a good time for investors to shop for stocks of dividend-paying toy retailers? Mattel (Nasdaq: MAT) and Hasbro (Nasdaq: HAS), the world's largest toy makers, are currently paying relatively high dividend yields of 3.4% for the former and 3.8% for the latter. Both have beat earnings expectations in the past two quarters, and their forward valuations are attractive relative to historical trends. However, general trends in toy retailing in the developed markets cloud the sales outlook, despite the overly bullish expectations about future industry growth. With this in mind, a closer look at the two toy retailers suggests... Read more
The outlook for American integrated oil and natural gas giants, namely Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX) and ConocoPhillips (NYSE: COP), has just brightened. In its latest 2012 World Energy Outlook, the International Energy Agency predicts that the U.S., which for the first time since 1949 has become a net exporter of petroleum products, will be the leading oil producer by 2020. This is made possible by new conventional discoveries and technological advances that are boosting production from shale formations. The nation's largest companies are taking advantage of this boom and elevated oil prices, which are likely to be supported in the future by growth in emerging markets, especially in China and India. The leading market... Read more
The asset management industry is often overlooked as a sector that pays attractive dividends. In fact, several asset managers have demonstrated ample free cash flow generation over a number of years, which provides for lush dividend yields, sustainable dividend coverage, and robust dividend growth. Despite some concerns about the poor market prospects and shrinking margins due to competitive pressures that could cut into revenues and earnings, several asset managers continue to show notable resilience and promise to continue generating strong cash flow in the future. The latter aspect is particularly important in the current low-yield environment in which “cash flow is king” and dividend-yielding investments are particularly appealing, according to a renowned economist and... Read more
The Chairman and CEO of BlackRock (NYSE: BLK), Larry Fink, was recently quoted as saying that he is bullish about U.S. banks. Until recently, many investors shied away from banking stocks due to fears of contagion associated with the EU banking and sovereign debt crises and concerns about the impact on the industry from the recent JPMorgan Chase & Co. (NYSE: JPM) loss on a botched derivatives trade. Now, while concerns remain about tight interest-rate spreads due to the Fed's continued low interest-rate policy, the rebound in the housing market, improving credit quality, and a higher demand for commercial and industrial (C&I) loans are making some banking industry stocks attractive investments. Investors should particularly consider several dividend-paying... Read more
U.S. defense budget (see chart below) will shrink in the coming years, with some $487 billion in cuts already planned for the next decade. According to the Pentagon, “U.S. defense spending in 2012 will total $612 billion, down slightly from 2010’s $691-billion peak” due to lower spending on the Iraqi and Afghan wars. The Pentagon budget excluding the cost of these wars is $531 billion in 2012. In the current fiscal year, which started on October 1, that core budget will slip to $525 billion. The so-much-feared sequestration, a process of automatic across-the-board budget cuts, scheduled for January 2, 2013, would trim about 11% from the Pentagon’s spending, according to estimates cited by Reuters.
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This summer, the worst U.S. drought in 56 years pushed grains prices to record highs. Prices of commodities such as corn and soybeans surged to all-time records as crop yields were decimated amid the unseasonably dry weather (see charts below). While the current surge in grains prices will stimulate farmers to boost production for the coming year, the grains supply shortages, which drive surges in grains prices, could become a routine because of the projected increase in the global population and an expected deterioration in global weather conditions. Some renowned investors, such as Jim Rogers and George Soros, are betting big on this new trend in agricultural commodities. Based on analyses of climate, agriculture and water resources, a renowned value investor, GMO's Jeremy Grantham,... Read more
The pharmaceutical industry has bright prospects for the future. Given the aging populations around the world, spending on prescription medications is set to grow rapidly over the next several decades. For the reference, the pace of growth in medication spending per senior person increased more than five-fold between 1992 and 2010, according to the PRIME Institute for Families USA (see chart below). The pace of spending increases is likely to be sustained going forward. This trend bodes well for the pharmaceutical majors, including those that generate substantial cash flows and pay attractive dividends.
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Stocks in the cyclical industrial sector fare well when the economy enters an expansionary cycle. While the global economy is currently moving through a soft patch, a rebound in the economic activity expected after the resolution of the European sovereign debt crisis and re-acceleration of growth in the United States and China will bode well for the cyclical industrial stocks. Companies selling gases for industrial uses stand to benefit from the expected new trend. Although industrial gas companies are cyclical by nature, some of their business customers, such as food and healthcare services companies, are shielded from cyclicality. The biggest industrial gas players thus have stable revenue streams (and cash flows) based on long-term contracts with a broad range of clients, which enables... Read more
Natural gas-related stocks in North America have been a focus of investor interest in recent years due to a tremendous impact that the shale gas boom has had on the market for natural gas. The application of new technologies to access unconventional reserves of natural gas in shale rock formations has produced a surge in supply of natural gas (see first chart below). That supply spike caused a plunge in natural gas prices to multi-year lows earlier this year (see second chart below). Still, notwithstanding the current market dynamics, many predict that the clean-burning commodity will be the key energy source in the future, which should bode well for natural gas producers, transporters, processors and distributors.
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