Last week, leading US banks released their Q3 results. While the broader market has shown signs of slow recovery, the Fed’s decision to puts its rate rise on hold, coupled with economic concerns and doubts about trading revenues, has chained shares of the big banks.
Bank of America comfortably beat the earnings estimate on every level. Citigroup beat earnings estimates, primarily on the back of lower legal and repositioning costs. JPMorgan Chase & Co was a negative surprise, mainly due to weak trading activities. Wells Fargo was able to overcome industry challenges and achieve revenue growth.
This article discusses Bank of America, Citigroup, JP Morgan and Wells Fargo. Their average dividend yield is 1.81%, way below the magic 3%. However, all four competitors are... Read more
Over the last few months, the global economic environment has been challenging, forcing the Bank of Canada to cut interest rates twice within 2015. Forecasts for growth in the Canadian economy are modest due to the strengthening US economy and a weaker Canadian dollar that is expected to drive export growth. Also, declining commodity prices, especially oil, are sustaining economic uncertainty, creating a fairly volatile market.
The S&P/TSX Composite is an index of the stock prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization, serving as the basis for multiple sub-indices, including the S&P/TSX 60. The index comprises of many dividend-paying stocks with an average yield below or around 3%, yet with strong operating... Read more
Many investors believe that investing in large-caps can guarantee dividend sustainability, or that investing in small- or mid-caps may be a risky business. The bottom line of investing is to preserve capital in volatile markets, whether you consider a large-cap or not. In general, large-caps, doing business internationally, tend to have solid financial results and tend to generate large amounts of free cash flow. However, there is also a higher risk involved in the process, which slow-growing firms can leverage by taking advantage of small business opportunities.
This article performs a comparison between a small-, a mid- and a large-cap, all in the publishing industry. Their average D/E ratio is 0.82, their average dividend yield is above 3%, while their average payout ratio is... Read more
In recent years, UK-listed small- and mid-caps have outperformed large caps. Many international players, such as SABMiller and Unilever, have been hurt by exposure to emerging markets, while smaller, more locally-focused businesses have thrived capitalizing on the UK economic recovery. While UK companies are not the sole source of dividends globally, a well-diversified portfolio of FTSE 350 stocks can provide dividend investors with a sustainable income. From 2010 to 2015, the FTSE 350 index, a combination of FTSE 100 and FTSE 250 large- and mid cap stocks listed on the London Stock Exchange, has risen 37.4% compared to the 30.8% returns of the FTSE 100 over the same period.
The article discusses three FTSE 350 stocks that trade in the financial sector. All three companies are... Read more
Steel companies are facing challenges, given the declining steel prices and lower capacity utilization rates. However, companies with strong EBITDA and operating margins, manage to leverage their financial results, in spite of the volatility that is expected in the current market situation. Even better, as soon as the market conditions become favorable, these companies are likely to experience a sharp upturn.
This article discusses 3 steel and iron stocks with different market caps (a small-cap, a mid-cap and a large-cap). The average dividend yield is 3.6%, whereas the average payout ratio is 100% and the average beta is 1.52. Considering that the average payout ratio in the steel and iron industry is 304%, all three companies are financially strong and expected to continue... Read more
The debt-to-equity ratio (D/E) is an indication of a company’s reliance on creditors to finance its business. The higher the ratio, the higher the proportion of the firm’s capital that is derived from debt as compared to equity. Normally, a D/E ratio above 2 suggests a high risk, because it means that the company is generating more than twice the operating cash flow required to cover its debt obligations. Conversely, a low D/E ratio implies a secure dividend for shareholders as there is sufficient operating income to offset a potential lower liquidity position.
Another indicator of a secure dividend is the dividend payout ratio. Normally, a 100% payout ratio suggests that a company has zero retained earnings and it pays all its earnings as dividend to its shareholders.... Read more
There are several sectors that pay good dividends as reflected on their dividend yields. Energy, utilities and telecoms are on the lead, with a 15.3% average dividend yield for the oil drilling (energy) sector. Utilities average a dividend yield of 4.8% and telecoms have an average of 4.8% (as of February 2015). Considering that the S&P 500 yields 1.99% on average, these yields are attractive and could entice you to invest in the companies trading in these sectors. However, selecting a dividend-growth company requires looking further than the dividend yield. It should include factors like the sector stability and the dividend payout ratio. This is what dividend investing is about.
The article discusses three large-cap companies trading in the industrials, financials and energy... Read more
When investors consider financial ratios individually, they may put their money in stocks that do not really fit in their profile. For instance, a high EPS alone doesn’t say too much about a company, if one doesn’t look into the company’s revenues, net income, sustained dividend payments and so on. Conversely, a high EPS combined with a good dividend yield above 3% and consistency in good, strong financial results, may suggest a great investment.
The article analyzes 3 mid-cap stocks in the consumer goods sector, but in different industries. All three have outperformed the market on YoY comparison, whereas their average EPS is $1.05 and their average dividend yield is 3.80%. Additionally, their average beta of 0.53 offers the potential of a higher rate of return... Read more
For many investors, a bear market is quite intimidating. Their invested money is losing value and they’re losing interest in stock ownership. Conversely, a higher expectation in the growth and the future cash flows of a company is likely to raise investor confidence, especially if the company delivers dividends at a steady rate. Dividends imply a company’s growth potential and consequently how risky it is to invest in it. When a company can grow, the risk of losing investor capital is lower and the potential of delivering a dividend is higher. In volatile markets, dividend yield is widely viewed as an important metric, but, in reality, it is a misleading way to determine a stock’s investment value if the stock’s risk is not considered as well.
This article is... Read more
Dividend investing is an excellent strategy for big gains over time. While it doesn’t provide the instant capital appreciation of short-term investments and it may become boring in a rising bull market, it guarantees a steady investment strategy that can greatly benefit your portfolio. The question is: how do you select the best dividend paying stocks? Regardless if you’re a novice or a large-scale investor, the two key determinants when it comes to selecting the right dividend stock for your portfolio are the stock’s long-term prospect and its financial/valuation metrics.
This article discusses three low debt, high-yield dividend paying stocks trading in the asset management industry. The analysis shows that the average D/E ratio of all three companies is 0.69,... Read more