Eddy on Bloomberg

I was invited on Bloomberg’s market-wrap show this afternoon. I don’t think there’s a video clip, but I’ll look some more.

Here are the notes I wrote beforehand. Whenever I’m on TV, I try to have a list of things I want to say.

The dividend story has been a quiet but important one. Yes, dividends are boring they’ve been working lately.

Go back to the January 2018 peak, what’s the best performing sector? Not tech though it’s close. REIT and Utes have both done better even without adjusting for dividends. They’re both up about 13% while the S&P 500 is mostly flat. Interestingly, the S&P 500 High Beta Index is still below its January 2018 peak.

Some of this is certainly due to change of stance from the Fed. Powell’s “long way from neutral comment” was only in October (it seems like it was forever ago). Since November, the two-year yield is down 60 basis points. The three-year is down 75 basis points. The futures market currently sees a decent chance of a rate cut by the end of the year. I’m not so convinced, but if it’s correct, that makes dividend- paying stocks more attractive.

Last year, dividends for the S&P 500 were up 10% while the index fell 6.24%.

For Q1, dividends were up 9.3%. We’ll probably an increase of 8% to 10% this year. In index adjust numbers, that’s about $58 to $59. That’s almost exactly a 2% dividend yield. Except for the financial crisis, the S&P 500 has (mostly) tracked a 2% dividend yield for the last 15 years.

Even some blue chip stocks have some nice yields. Coke is about 3.5%. I doubt the dividend is in danger; they’ve raised it every year since JFK. Raytheon, a stock I own in my ETF, yields about 2%. They raised their dividend for the last 14 years.

Posted by on April 8th, 2019 at 9:29 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.