Dividend stocks are companies that pay out a portion of their earnings to a class of shareholders on a regular basis. These companies usually are well established, with stable earnings and a long track record of distributing some of those earnings back to shareholders. These distributions are known as dividends, and may be paid out in the form of cash or as additional stock. Most dividends are paid out on a quarterly basis, but some are paid out monthly, annually, or even once in the form of a special dividend.
While dividend stocks are known for the regularity of their dividend payments, in difficult economic times even those dividends may be cut in order to preserve cash. One useful measure for investors to gauge the sustainability of a company’s dividend payments is the dividend payout ratio. The ratio is a measure of total dividends divided by net income, which tells investors how much of the company’s net income is being returned to shareholders in the form of dividends versus how much the company is retaining to invest in further growth.
If the ratio exceeds 100% or is negative (meaning net income is negative), this indicates the company may be borrowing to pay dividends. In these two cases, the dividends are at a relatively greater risk of being cut.
Below, we look at the top 5 dividend stocks in the Russell 1000 by forward dividend yield, excluding companies with payout ratios that are either negative or in excess of 100%. Each of the dividend stocks listed below significantly underperformed the Russell 1000’s total return over the past 12 months of 19.7%, as of December 21, 2020.1 All data below is as of December 22, 2020.
Lumen Technologies, formerly known as CenturyLink, is an integrated communications company that offers services including local and long-distance voice, broadband, Ethernet, colocation, hosting, data integration, video, network, information technology, and more.
Brookfield Property is a real estate investment trust (REIT) that owns, develops, builds, manages, and leases various commercial properties. Among the company’s portfolio of properties are restaurants, malls, entertainment facilities, and parking areas. On November 6, the board of directors declared a quarterly dividend of $0.3325 per share on its Class A Stock payable on December 31, 2020, and a quarterly dividend on the 6.375% Series A Cumulative Redeemable Preferred Stock of $0.39844 per share payable on January 1, 2021.2
New York Community Bancorp is a holding company with multiple banking subsidiaries, including Queens County Savings Bank, Roosevelt Savings Bank, Atlantic Bank, and others. Through these subsidiaries, New York Community Bancorp offers a full range of banking products and services to businesses and consumers. The company primarily serves customers in the New York City metropolitan area.
Brandywine Realty Trust is a REIT that owns, manages, leases, acquires, and develops urban, downtown, and suburban office properties primarily on the East Coast and in Texas. Its services include asset management, development and construction, investment, marketing and leasing, and property management. On December 8, the board declared a quarterly cash dividend of $0.19 per common share and OP Unit payable on January 20, 2021. The quarterly dividend is equivalent to an annual rate of $0.76 per share.3
TFS Financial is a holding company engaged in retail consumer banking, mortgage lending, and similar services through its subsidiaries. The company’s businesses include originating and servicing residential real estate mortgage loans and attracting retail deposits. Its main business is retail consumer banking.
The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors.
Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
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Top 10 Dividend Stocks – January 2021! In this video I show the top 10 stocks in January of 2021 that the thousands of dividend investors on my discord server (https://discord.gg/kkSr5FY) had the opportunity to vote for that they were buying or planning to buy. Then I’ll end this video with a powerful life story that is worth hearing and reflecting on, so I recommend you watch this entire video. Referral Link to M1 ➜ https://m1.finance/AUzJllYh-gGh To get access to my Spreadsheet 2.0 then please sign up as a Patreon Aristocrat or King (and double check my Patreon site to ensure I’m still offering access, as I only have limited seats available). You also get other perks for signing up including the ability to watch my videos on my Discord before I release them to the public, and the ability to vote on what thumbnail I’ll use in some of my future videos, and you gain direct access to me.
Special Dividend A special dividend is a non-recurring distribution of company assets, usually in the form of cash, to shareholders. more
Dividend Yield Definition The dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. more
Dividend Payout Ratio Definition The dividend payout ratio is the measure of dividends paid out to shareholders relative to the company’s net income. more
Dividend Clientele Dividend clientele refers to a group of shareholders that have a common preference for a company’s dividend policy. more
Dividend Definition A dividend is the distribution of some of a company’s earnings to a class of its shareholders, as determined by the company’s board of directors. more
By now we are all keenly aware of the near-devastating impact that the novel coronavirus has had on oil markets and the fossil fuel industry around the world. (If this is news to you, what rock do you live under and is there room for one more?) But while a lot of the narrative here in the West has been about the historic oil price crash in what some are now referring to as Black April, the oil trading catastrophe actually started much earlier and can largely be traced back to the bad bet of just one man, Singapore’s commodities tycoon Lim Oon Kuin.
The story of the oil market instability that ripped through Asia starting in China is not so much one of struggling oil companies, but a story of banking – that unsexy, behind-the-scenes sector that all too often gets none of the headlines and all of the control. It started way back in January, when most of us were just starting to gain some awareness of a strange and scary illness devastating the Chinese city of Wuhan.
Lim Oon Kuin, sitting in his office 2,000 miles away in SIngapore, watched as this news unfolded and made a decision. He decided that China would gain control of this epidemic before it turned into a pandemic and began stockpiling fuel, quietly adding to his already vast reserves. It should come as no surprise that that bet didn’t work out.
As the coronavirus spread around the world and tanked global crude demand, as well as oil prices, a chain reaction of defaulted loans, was set off in Singapore that is still reverberating in global markets today.
“Banks tried to recover loans from Lim’s company, Hin Leong Trading Pte, triggering one of the biggest scandals in the oil industry this century,” Bloomberg reported about the bad deal that has left a permanent mark on oil trading.
“Lim’s empire collapsed, owing $3.5 billion to 23 banks, and the fallout from the debacle is still reverberating into 2021, shaking out large tracts of the vast and often opaque $4 trillion global oil-trading industry.”
While this may sound like an outright, unmitigated disaster, as with most financial meltdowns, there are winners as well as losers here.
The losers, as always, are the little guys:
“hundreds of small trading firms, many of them employing only a handful of people, who will find it expensive, if not impossible, to meet the increased demands for information from banks that have become wary of lending them money.”
This is to say that the big guys like Trafigura Group and Vitol SA will be gaining business lost by their small competitors, shoring up their oligopoly on trading. They not only benefit from increased confidence from finance companies who have become increasingly risk averse in this environment, they also have the capital to adapt to increased operational costs.
And, as usual, less developed countries will bear the brunt of the economic fallout from this sea change. As banks become more risk averse, re-prioritize their business models, and scale down, it’s going to impact small companies in small economies the most just while they are struggling with all of the other economic hardships related to this pandemic. In this case, the big banks truly were too big to fail. The same can’t be said for the little guys.
This is true, of course, for many market sectors, not just commodities trading. Across the world we’re seeing a sweeping consolidation as big companies are able to weather the financial storm of the COVID-19 pandemic and the little ones are folding. Look no further than the main street of your own town: as mom and pop restaurants struggle to make a sale, lines are down the block at the McDonald’s drive thru. As local shops shut down, Amazon becomes ever more of the globalized goliath it already was.
More than anything, however, the story of Lim Oon Kuin and his bad oil bet is an object lesson in the butterfly effect and outsized might of the all-too opaque trading sector. His will never be a household name, but the impact of his oil gamble will continue to be felt around the world for years to come.
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For more than two years, Facebook has found itself at the center of a string of controversies, from privacy and data concerns to accusations of democracy-destroying behavior and antitrust investigations from the Federal Trade Commission. CEO Mark Zuckerberg has been called to testify in Washington not once but twice over his company’s policies. For most companies, a string of shaky headlines might affect the company’s outlook.
For Facebook, the company’s stock continues to rise.
After climbing over 50% last year, Facebook’s stock is already up over 5% so far in 2020. Despite a number of looming investigations from U.S. government agencies over competition and antitrust issues, the stock has hit several new all-time highs in recent weeks. The company saw its market cap rise by more than $200 billion in 2019, and is now worth nearly $630 billion today.
Facebook appears to be making a comeback from its historic slump in mid-2018, when the company unexpectedly warned of slower user and sales growth. A day after that announcement, the stock plunged 20%. The forecast of slowing profits also came amid wider concerns over data privacy. Facebook for months faced backlash over its handling of users’ privacy, as well as its role in not stopping the spread of “fake news.” Among mounting criticism, Facebook was lambasted for damaging democracy after British consulting firm Cambridge Analytica was able to leverage personal user data from millions for its political advertising strategies.The criticism caused Facebook stock to undergo an extended sell-off during the rest of 2018, where it lost nearly half of its overall market value.
The stock largely recovered in the first half of 2019, but plunged again nearly 10% in May, amid calls for the company’s breakup. The Federal Trade Commission then opened an antitrust probe into the social media giant in June, with many Wall Street analysts predicting that growing calls for regulation would be damaging for the company. Facebook was eventually slapped with a $5 billion fine from the FTC, its largest penalty in history, for violating consumers’ privacy.
Facebook also faced criticism over the launch of its new digital currency, Libra, last year. And as the 2020 U.S. election draws nearer, the world’s largest social media network is under intense pressure to adjust its policies on fake news and political advertising. But Facebook recently confirmed that it won’t change its policy of allowing false political advertisements on its platform. That contrasts with other social media companies, like Twitter, which banned all political ads from its site last October. What’s more, last September, 47 state attorneys general announced an investigation into Facebook for antitrust violations, sending the stock down 4%.
Despite the recent criticism and increased calls for regulation looming on the horizon, Facebook stock’s recent momentum and new record highs may signal that investors are so far unconcerned by the regulatory fears. Indeed, Wall Street is predicting a big year ahead for Facebook.
Facebook for months faced criticism and backlash over its handling of users’ privacy, as well as its role in the spread of fake news.
The company has in recent quarters continued to grow revenue by adding news users to its core platform as well as to its family of apps, like Instagram, Messenger and WhatsApp. Optimism is reportedly growing over Facebook’s ability to monetize those apps, like they have been with Instagram through video ads and commerce.
The stock’s most recent rally came on the back of stronger-than-expected earnings in the third quarter. Revenue growth actually accelerated in 2019, with the company reporting a year-over-year revenue growth rate of 26% in the first quarter, 28% in the second quarter and 29% in the third quarter. Even as Facebook tries to improve its reputation, it continues to dominate the digital advertising market: Businesses continue to use Facebook’s advertising platform, with analysts on average expecting its revenue from ads to increase 26% in 2019, according to Refinitiv.
In a recent note, Deutsche Bank analysts predicted “renewed strength in the core Facebook app” in 2020, thanks to company initiatives like reworking the core Newsfeed, rolling out Stories, scaling Marketplace and building its Groups product. Bank of America analysts, on the other hand, recently argued that Facebook’s Messenger and WhatsApp offerings are still undervalued and not fully reflected in the stock price, which they think can rise 20% higher. “While the firm remains under scrutiny and faces regulatory risks, it continues to execute exceptionally well,” writes Morningstar analyst Ali Mogharabi in his analysis of Facebook’s latest earnings report.
Even as Facebook tries to improve its reputation, it continues to dominate the digital advertising market.
Despite facing another year of criticism for allowing fake news on Facebook, Zuckerberg said in an annual blog post that “One of the big questions for the next decade is: how should we govern the large new digital communities that the internet has enabled?” The Facebook CEO, who is now worth almost $82 billion according to Forbes’ estimates, suggested that the best way to address this would be “by establishing new ways for communities to govern themselves.”
Since Trump’s inauguration day, Zuckerberg’s net worth has increased by an estimated $27.8 billion—the fifth-most of anyone in the world and the third-most of any American over that period, according to Forbes’ calculations.
Facebook’s fourth-quarter earnings and full-year results for 2019, which will be reported after the market closes on January 29, are a key indicator of whether the company can continue its momentum in 2020. But if 2019 was anything to go by, turbulent political times for Facebook may not have much effect on the ability of its stock to climb higher.
I am a New York—based reporter for Forbes, covering breaking news—with a focus on financial topics. Previously, I’ve reported at Money Magazine, The Villager NYC, and The East Hampton Star. I graduated from the University of St Andrews in 2018, majoring in International Relations and Modern History. Follow me on Twitter @skleb1234 or email me at sklebnikov@forbes.com
Shares of New York-based Datadog rose 39% to close at $37.55 after opening at $40.35 in the cloud company’s market debut Thursday. The successful IPO cements Datadog’s position as an East Coast counterweight to Silicon Valley’s dominance of the enterprise software realm.
“Initially when we started fundraising for Datadog, it was really not that easy,” CEO Olivier Pomel told Forbes after the market closed Thursday. “We were not based where most of the companies were based, so it was hard to get trust from investors on the West Coast. And the investors in New York were not really specialized in the type of company we were building.”
Pomel said this underdog tale worked to the advantage of Datadog. By relying on small checks and angel investors at first, the company was forced to build an efficient business, he said. That’s become a huge asset to the nine-year-old company as it ballooned to a $10.9 billion valuation at the end of Thursday. It reported a net loss of $10.8 million, after posting a $2.6 million loss the year prior—good numbers for a fast-growing company of its stature.
Higher net losses usually accompany recent enterprise tech IPOs with comparable revenue figures, such as with Medallia ($82 million), Dynatrace ($116 million) and Crowdstrike ($140 million). “One thing investors reacted to was the fact that we run a healthy business from a profitability perspective,” Pomel said.
“What helped the most by being in New York was that we’re a little bit closer to customers—there’s more of them here. And, you’re out of the echo chamber in the Silicon Valley so here you can get ahead on what the customers think,” he said. One early investment came from Index Ventures, which has backed Datadog beginning with the Series A funding round. Shardul Shah, a partner at the firm who also sits on Datadog’s board, says he bought in because of Pomel’s “relentless focus on delivering customer value from the very beginning.”
The successes of MongoDB and now Datadog could spur the growth of an enterprise ecosystem in New York. Prior to its market debut, Datadog had raised $147.9 million on what Pitchbook estimates as a $640 million valuation. The IPO is New York’s largest venture capital-backed tech IPO in two decades, according to Renaissance Capital.
Now trading on Nasdaq under the “DDOG” ticker, the company priced 24 million shares at $27 on Wednesday. That’s higher than the $24-to-$26 estimated IPO price listed in its latest filing to the Securities and Exchange Commission, which was already a huge boost from the $19-to-$22 range the company originally set. At its IPO price, Datadog raised $648 million to bring its valuation to $7.8 billion. Pomel said the added cash on hand will offer the company the flexibility to continue making acquisitions. He said he’s happy with Datadog’s acquisitions so far, including application tester Madumbo.
At Datadog’s opening stock price, CEO Olivier Pomel was on the cusp of billionaire status. Forbes calculates that the stock would need to surpass about $43 per share for Pomel’s net worth to cross the $1 billion mark—at the stock’s high point of $41.44, Pomel was $35 million short. After the stock price declined slightly over the course of Thursday, Pomel’s net worth settled at $874 million at the time of market close, but that doesn’t seem to bother him: “The stock, it’s up a good amount, but not too much. I think that’s what we were looking for.”
Datadog offers a cloud analytics platform that also provides log management and monitors infrastructure and application performance. Its software is primarily used by IT and developer teams and cuts across industries—it boasts customers including Samsung, 21st Century Fox, the University of Pennsylvania and the Washington Post. In its S-1, the company identified IT operations management as its primary opportunity market. Research firm Gartner predicts the market will be worth $37 billion by 2023.
The IPO reflects continued investor demand for cloud analytics and monitoring. In August alone, application performance management company Dynatrace’s stock jumped 49% in its public debut, while cloud monitoring vendor SignalFx was acquired by Splunk for more than $1 billion. In its S-1 filing, Datadog lists both Dynatrace and Splunk as direct competitors. The company also counts IBM, Microsoft, Cisco, New Relic and Amazon as rivals across fields such as infrastructure monitoring, application performance management and cloud monitoring.
Datadog jumped to No. 5 on this year’s Forbes Cloud 100 list, which was released last week, up from the No. 19 spot in 2018. As of last Wednesday, half of last year’s top 20 sold or went public, with eight taking the latter route amid a busy couple of months for cloud IPOs. Although most of these stocks—such as Zoom, Slack and Crowdstrike—had strong public debuts, some including Slack and Eventbrite have failed to maintain this momentum. Stripe, the No. 1 company in 2018 and 2019, announced a new funding round Thursday that brings its valuation up to $35 billion.
Datadog filed with the SEC in anticipation of its IPO at the end of August. Revenue increased 97% to $198 million in 2018, according to its S-1 filing. The cloud company reportedly rejected an eleventh-hour acquisition offer from Cisco at a figure “significantly higher” than $7 billion, according to Bloomberg. The move would have paralleled Cisco’s 2017 acquisition of AppDynamics for $3.7 billion, just two nights prior to the application performance management company’s IPO.
This article was updated to include the closing stock price, additional context on finances and comments from Pomel and Shah.
I am a San Francisco-based assistant editor for technology and innovation. As my beat, I cover Juul Labs. I also write other general tech news. Previously, I made stops at The Ringer and the Raleigh News & Observer. I graduated in 2019 from Duke University, where I spent time as news editor for The Chronicle, the university’s independent news organization.
The interest rate on the U.S. Treasury 10-year bond just fell below the rate on the 3-month bill in response to the Fed’s March announcement. This is called yield curve inversion as defined by Arturo Estrella and Frederic Mishkin. It implies a 25%-30% probability of a recession on a 12-month view. Their research can be found here.
As economic relationships go, the yield curve has a good track record. You can see the data below going back to 1982. Per the chart, using this series over recent history, the yield curve inverts before a recession reliably with no false positives. An impressive record. The blue line shows the spread between 10-year and 3-month interest rates. The black line is the zero bound. The shaded grey periods are historical recessions. Note that there is a lagged relationship here, recession historically occurs 6-18 months after inversion. So today’s yield curve suggests a fair chance of a 2019-2020 recession.
Federal Reserve Bank of St. Louis, 10-Year Treasury Constant Maturity Minus 3-Month Treasury Constant Maturity
Federal Reserve Bank of St. Louis
Risks Of Interpretation
Nonetheless, there are some risks with this approach. The first is we’re looking at a limited run of data. There are only a few decades in the sample and a handful of recessions. We’re making a forecast here based on less than ten recessionary events, per the initial research and subsequent out-of-sample data. Plus there are countless pieces of economic data out there. Combining two of them and creating a good recession forecast is possibly due to data mining. For example Tyler Vigen’s site illustrates the problem, showing how correlations can be found between many things that have little basis in reality, such as an apparently strong relationship between mozzarella cheese consumption and sociology degrees. So even though the yield curve relationship looks robust, it has been plucked from hundreds of other relationships that could exist, but don’t look as meaningful. The human brain is adept at creating patterns where none exist.
Also, a 25-30% chance of recession is not that high. Going back from 1960 to 2018 we have 59 years of data. We’ve had U.S. recessions during 16 of those years. So even before any more sophisticated forecasting methods, your chance of being in a recession in any given year are 27%. There’s some auto-correlation there too, as recession years come in clusters, but still, saying the chance of recession coming within a year or so is around one in four isn’t that different from what history tells us regardless of what the economy is doing. Of course, even at a 30% probability the chances are roughly twice as high that a recession does not occur.
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Also, the Federal Reserve (Fed) has a key target of avoiding a recession in order to maintain full employment. This one of their key policy targets. The Fed are quite capable of learning. The increasing emphasis on the yield curve has not gone unnoticed by the Fed. In fact, the initial research here was published by the New York Fed itself. So unlike in the past, the Fed may be able to take corrective action, which was exactly what Chairman Powell was looking to stress in the Fed’s March meeting release. The Fed’s challenge is obvious but not simple, a few quarters ago the markets were spooked by a potential stack of rate hikes in 2019 that could risk recession, so the Fed changed course. Yet, in doing so they have helped create an inverted yield curve, introducing another set of recessionary fears.
However, the risk here is the markets are capable of learning too, and there is some evidence that recessions are self-fulfilling, meaning that if enough decision makers expect a recession they may then take the very actions actions, such as temporarily cutting back on spending, that cause a recession to happen. In that light, yield curve inversion gaining more attention is bad news if it causes people to anticipate a recession, which then makes one more likely.
So yield curve inversion is not a positive sign for markets, but we may be overstating its importance. Also if the indicator is to be believed, we should watch out not just for inversion, but when the 3-month yield falls 1% or more below then 10-year yield, then our confidence in a recession around the corner should be quite a bit higher.
Articles educational only, not intended as investment advice.
Follow @simonwmoore on Twitter. Simon is Chief Investment Officer at Moola, and author of Digital Wealth (2015) and Strategic Project Portfolio Management (2009).