I'm the Chief Investment Officer of Tematica Research and editor of Tematica Investing newsletter. All of that capitalizes on my near 20 years in the investment industry, nearly all of it breaking down industries and recommending stocks. In that time, I've been ranked an All Star Analyst by Zacks Investment Research and my efforts in analyzing industries, companies and equities have been recognized by both Institutional Investor and Thomson Reuters’ StarMine Monitor. In my travels, I've covered cyclicals, tech and more, which gives me a different vantage point, one that uses not only an ecosystem or food chain perspective, but one that also examines demographics, economics, psychographics and more when formulating my investment views. The question I most often get is "Are you related to…."
Recently I touched on the several new additions to the S&P Dow Jones Dividend Aristocrats, a group of S&P 500 constituents that have increased their dividends for at least 25 years. Now, I am circling back to the latest dividend payment from an existing Aristocrat: PepsiCo (PEP) .
Widely known for its products that include Pepsi, Lays, Mountain Dew, Doritos, Gatorade, Tropicana, and Aquafina water, the company has been paying consecutive quarterly cash dividends since 1965. Indeed, 2019 marked the company’s 47th consecutive annual dividend increase, which has the company approaching the rarified air of the Dividend Kings. As a reminder, a Dividend King is an S&P 500 company that has increased its dividend for at least 50 consecutive years, an incredible achievement, which explains why there were only 28 such names in 2019.
One of the time-tested strategies for investors is buying companies with an increasing dividend policy. To say it is one of the most loved and most watched strategies would be something of an understatement given the incremental income it generates for investors and the $6.7 billion in assets held by ProShares S&P 500 Dividend Aristocrats exchange-traded fund (NOBL) , which tracks the S&P 500 Dividend Aristocrats Index. If there was any question as to the results of the strategy of buying a portfolio of companies with a long history of boosting their dividends, the below chart should be enough of an answer:
The companies that comprise the S&P 500 Dividend Aristocrats Index are a cross-section of S&P 500 constituents that have increased their dividends for at least 25 years. The index is equal-weighted in nature, which means the position size for each is the same, and the qualifying universe of companies is reviewed each January. In addition, per the index’s methodology document, prospective index constituents must also have a minimum float-adjusted market cap of at least $3 billion at the time of the rebalance data and have an average daily value traded of at least $5 million for the three months prior to the rebalancing reference date.
Last year, four companies were added to the Dividend Aristocrats: Caterpillar (CAT), Chubb Limited (CB), People’s United Financial (PBCT) and United Technologies (UTX), which lifted the number of constituents to 57 up from 53 in 2018. With January 2020 having come and gone, the S&P has added…
First off, after a nail biter of a game heading into half time, the Kansas City Chiefs dominated the fourth quarter to win Super Bowl LIV. Before the game, the AFC and the NFC were tied for Super Bowl victories at 27 each. The last time both conferences had the same number of wins was back in 1990 at 12 a pop. In the prior five years when the 49ers won the Super Bowl, the S&P 500 was up for the remainder of the year every time by an average of 20.2%. The one time the Chief won the Super Bowl was in 1970 which saw the S&P 500 fall 0.3%. The one other time they made it but lost to the Packers, the S&P 500 gained 14.1% in the remainder of the year.
Before the big game, last week we closed the books on January and to say it ended on a weak note would be a bit of an understatement. Coronavirus contagion fears dominated not just the stock market, but the global economy. Last Friday stocks fell sharply, with the major US indices falling between 1.5% and 2.1%. The hit from coronavirus fears has been so profound the S&P 500, the Dow Jones Industrial Average, the NYSE Composite and the Russell 2000 were all in negative territory YTD as of Friday’s close. The Nasdaq 100 and the Nasdaq Composite remained up 3% and 2% YTD, respectively, but even that is dwarfed by the near 37% jump in the CBOE S&P 500 Volatility Index.
And for context on the sharp shift in the markets last week, consider this: a week ago, every major global equity index was at least one standard deviation above its 50-day moving average. After Friday’s close most were in oversold territory except Australia and New Zealand, which were aided by currency declines.
As the Chiefs and their fans celebrate their victory…
Which stocks and sectors could see the most pressure today with Coronavirus spreading? Tematica’s Chris Versace joins Jay Coulter’s The Resilient Advisor Podcast to discuss that and discuss the week ahead’s economic data and earnings reports to watch.
This cybersecurity company will likely draw you in with its special $12 dividend, and then keep you for a while.
In the last few days, NortonLifeLock (NLOK), the company formerly known as Symantec before selling its enterprise business to Broadcom (AVGO), announced a $12 per share special dividend. Before discussing that eye-popping special dividend, let’s touch on what the “new” Norton Lifelock is — its remaining business is “dedicated to helping secure the devices, identities, online privacy, and home and family needs” for consumers. Needless to say, as the above connectivity expansion occurs and the number of vulnerable access points increase, in my view, Norton’s business will have a long-term tailwind behind it, especially as data privacy becomes a key issue following the European Union’s General Data Protection Regulation and similar laws that are developing in the U.S., including the California Consumer Privacy Act.
Circling back to the $12 per share special dividend…
The seemingly unstoppable upward movement of equity markets may have met its match last night. Yesterday, the first day of trading in 2020, saw the Nasdaq 100 rise 1.6%, the Nasdaq Composite gain 1.3%, the Dow 1.2%, and the S&P 500 0.8% driven in large part by the news that China’s central bank cut reserve requirements, unleashing a material level of liquidity.
This morning things have changed. US equity futures are in the red on the news that General Qassim Soleimani, Iran’s top commander who led a special forces unit of Iran’s elite Revolutionary Guards and has been a key figure in Middle East politics, was killed by a US drone strike in Baghdad. As we warned in yesterday’s piece, this comes after a New Year’s Eve attack by Iran-backed militias on the US Embassy in Baghdad. The Defense Department’s statement, issued last night at 10 pm ET, can be read here, and a response on Twitter from Iran’s Foreign Minister Mohammad Javad Zarif is here.
As 5G fires up across the nation and beyond, this chip-maker will likely be called on to let phones connect to new and old generations of networks.
As the smartphone market has matured, it has become increasingly tied to replacement demand.
Look at these statistics: As of December 2019, there are 5.175 billion unique mobile subscribers across the globe, according to the Global System for Mobile Communications, or GSM Association. As surprising as it may sound, the last big quarter for smartphone shipments was the fourth one in 2016. So, despite the seasonal pattern for stronger smartphone sales in the back half of the year, the 1.4 billion units shipped in 2018 was relatively unchanged year-over-year. Prospects for shipments in 2019 also point to modest growth year-over-year.
As we move through 2020, mobile operators will light up their next generation 5G networks that will likely be…
Bristol-Myers Squibb, Amgen and Abbott Labs all recently raised their dividends and should prosper amid the aging population.
One of my investment themes, as I look for structural changes tied to the evolving economic, demographic, technological and psychographic landscapes, is the Aging of the Population. It’s no secret that several countries are experiencing a demographic shift in their populations that skews older. Here in the U.S., the first baby boomers started turning 70 in 2016, but in the coming years, the percentage of the U.S. population that is 65 years or older will explode.
By 2030, all baby boomers will be older than age 65. This will expand the size of the older population so that one in every five residents will be retirement age. At the same time, we are living longer, with the most recent data published by the Census Bureau showing average U.S. life expectancy rose to 78.6 years in 2017, up from 68 years in 1950. According to data published by Care Patrol, which focuses on safer senior living, by 2020 roughly 15 million of the elderly population in the U.S. will have some form of disability and by 2030, “more than 6 of every 10 boomers will manage more than one chronic condition.”
More people living longer is a development that will give rise to greater and in some ways different demands…
As investors get ready to close the books on 2019, we will, of course, review those stocks that beat the S&P 500’s year-to-date return. Those winning stocks go hand-in-hand with the common investor phrase “generating alpha.” One of those alpha generators is…
This is the last full week of trading in 2019 as the markets will slow considerably after that given the Christmas and New Year’s holidays.
Following Friday’s developments that have likely taken a meaningful amount of uncertainty out of the market, odds are investors will once again turn to assess the speed of the global economy and earnings prospects in 2020. With that said, let’s take a more granular look at what’s on tap over the next five trading days.
Before we take a gander at the domestic economic data…