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   Know the Different Types of REITs   19/07/2018

The period following the 2008 financial crisis saw renewed interest in real estate investment trusts (REITs), which refer to a broad category of companies that own and operate income-producing real estate. Demand for REITs came to a head in 2016 when the S&P 500 Index added the sector to its ten existing categories.

 

Knowing about the different types of REITs can help investors decide if they want to invest in the S&P 500’s eleventh sector. This information can also help market participants evaluate potential players in the dozen sub-industries that comprise Wall Street’s real estate sector.

The Different Types of REITs

The classification of REITs was revised in 2016 as the category made its way onto the S&P 500 Index. Under the revised Global Industry Classification Standards (GICS), the broad Real Estate Sector houses the Real Estate Industry Group, which is comprised of two industries: Equity REITs Industry and Real Estate Management & Development Industry. These two industries are further broken down into two sub-industries for a four-tier classification system, which is discussed later in the article.

REITs differ from real estate development companies in tax treatment, distribution and strategy. For example, REITs do not pay corporate taxes insofar as they distribute 90% or more of their net income via dividends. Real estate management and development companies do not benefit from this special tax treatment.

As a trust, the REIT vehicle also has a larger business model and funding streams when compared with a general real estate development company. However, a REIT’s income distribution requirements often limit its ability to reinvest in the underlying business, which could hamper its growth. Real estate management and development companies, on the other hand, are usually geared toward long-term growth.

The GICS four-tier classification for real estate firms is shown below.

 

GICS 4-Tier Classification Chart

 


   Lockheed Martin Corporation: Banking on F-35 Produ   18/07/2018

Lockheed%20martin%20corp.

Lockheed Martin Corporation  is the world’s largest defense contractor and is engaged in the research, design and manufacturing of aeronautics, missiles, rotary and mission systems and space systems. The company is based out of Bethesda, Maryland, and has over 100,000 employees and over 400 facilities located across the globe.

 

For 2018, Lockheed Martin has underperformed and is down 4.51%. For the trailing one-year, Lockheed is up a lackluster 7.04%, but for the trailing five-year, it has a stellar track record of 171.07%. Northrop Grumman Corp. NOC is a major competitor of Lockheed Martin and by comparison, NOC has outperformed in all three time frames.

Lockheed Martin Stock Chart

 

FUNDAMENTALS

Over the last five years, Lockheed Martin has had very consistent revenue growth of 1.6%, with its last negative year in 2013. In 2017, Lockheed saw its total revenues grow 8.0% to over $51 billion, thanks to a 13% increase in the aeronautics division that was primarily attributable to higher net sales of $2.0 billion for the F-35 program. In the first quarter of 2018, Lockheed exceeded expectations with revenues of $11.64 billion versus $11.24 billion, again thanks to the aeronautics division got a nearly 7% boost over the same period last year, largely due to $185 million in sales related to F-35 fighter jets. However, analysts don’t see a stellar sales year for Lockheed in 2018, with estimates of only $51.33 billion, an increase of 0.6%. For 2019, analysts are more optimistic and expect a 4.70% increase to $53.77 billion.

From an earnings-per-share perspective, Lockheed Martin does not look good on paper with a negative five-year average growth of 4.5%. However, this was solely attributed to a 60.6% drop off in 2017, which was all due to the fourth-quarter earnings of negative $2.20 per share. This was attributed to the corporation recording a net one-time charge of $1.9 billion related to the estimated impacts of the Tax Cuts and Jobs Act. This dropoff looked to be a one-time event, as the first quarter of 2018 easily beat expectations of $3.40 per share with $4.02 per share. Analysts expect 2018 to finish out with a total of $15.47 per share, an increase of over 76%. Analysts also predict the 2019 earnings to total $18.03 per share, which is an increase of nearly 16.5%.


   PNC FinancialServicesGroup Increases Divided 26.6%   09/07/2018

Pnc%20bank%20sign

Each day, companies across the globe announce upcoming dividend payouts. You’ll find all of the dividend increases, decreases, initiations, suspensions, updates and regular dividend announcements for a given day.

We present an analysis of the stocks that increased dividends last week. The latest payout is compared to the most recent payout before the dividend increase.

Following is a snapshot of the 10 major securities that increased dividends last week. If investors simply purchase the stock prior to the ex-dividend date and then sell it either on the ex-dividend date or at some point afterward, they will be able to receive the dividend in their account.

To apply this strategy, you need to know when stocks go ex-dividend.

Get a complete explanation of the ex-dividend date, record date, payment date and declaration date here. This will help to broaden your understanding of the dividend capture strategy.

Find out which companies increased their dividends on July 2 here.

 

Ticker Company Previous Payout Next Payout Change* Ex-Dividend Date Yield
(FRD ) Friedman Industries $0.02 $0.03 50.00% 07/12/2018 1.37%
(PNC ) PNC Financial Services Group Inc $0.75 $0.95 26.67% 07/16/2018 2.79%
(CAC ) Camden National Corporation $0.25 $0.30 20.00% 07/12/2018 2.55%
(PKBK ) Parke Bancorp, Inc. $0.12 $0.14 16.67% 07/12/2018 2.36%
(RVSB ) Riverview Bancorp, Inc. $0.03 $0.04 16.67% 07/12/2018 1.58%
(MVO ) MV Oil Trust $0.37 $0.42 15.07% 07/13/2018 15.30%
(MMC ) Marsh & McLennan Companies, Inc. $0.38 $0.42 10.67% 07/10/2018 1.97%
(KWR ) Quaker Chemical Corp $0.36 $0.37 4.23% 07/16/2018 0.92%
(CBRL ) Cracker Barrel Old Country Store, Inc. $1.20 $1.25 4.17% 07/12/2018 3.15%
 

   What Is a Qualified Dividend?   05/07/2018

Magnify small

Not all dividends are created equal, and investors need to be aware of this fact. The seemingly minor differences can make a big impact on bottom line returns.

There are two different types of regular dividends: qualified and unqualified. Knowing the difference between the two is a big deal for investors around tax time as the tax implications can affect the maximum return on investment.

 

The Big Difference

A qualified dividend is a type of dividend that is taxed at the capital gains tax rate. Generally speaking, most regular dividends from U.S. companies with normal company structures (corporations) are qualified. For individuals, estates, and trusts, qualified dividends are taxed at the current capital gains rate of 15%.

For individuals whose income tax bracket is 10% or 25%, then the capital gains tax rate is zero. The landmark tax reform that was passed in December 2017 and implemented in the new year has direct implications for income investors. Under the new legislation, the dividend and capital gains tax rate is 20% for single investors making over $425,801 and households making over $479,001.

 

 

Ordinary Income Tax Rate Ordinary Dividend Tax Rate Qualified Dividend Tax Rate
0% 0% 0%
12% 0% 0%
22% 15% 15%
24% 15% 15%
35% 15% 15%
37% 20% 20%

 

Non-qualified dividends do not qualify for the lower tax preference and are thus taxed at an individual’s normal income tax rate. Regardless of your tax bracket, this difference means you will pay significantly higher taxes on a non-qualified payout.
 

 

 

 

 


   Low Returns & High Volatility Are Here to Stay   03/07/2018

 

Volatile%20stock%20chart

Over the last few months, we’ve been reminded that the stock market tends to be a roller coaster ride in the short-to-medium term.

 

Volatility has increased as the current market’s rally has gotten a bit long in the tooth. The recent swings have been especially jarring considering just how low volatility was in the preceding years.

But according to BlackRock, we shouldn’t be surprised by this. Today’s environment is much more like how the market should be acting. And that poses a bit of a problem for investors. Barring any major market catalysts, we could be looking at lower returns for the year. In the end, high volatility and minuscule gains go hand in hand.


   There Are Multiple Options to Access MLPs.   29/06/2018

Oil%20field

The fifteenth-century Dutch philosopher, Desiderius Erasmus, is said to have remarked that “In the land of the blind, the one-eyed man is king.”

 

The saying could not have been more apt for the yield-starved investment universe of the past decade. At a time when the yields of many income-producing assets languished, master limited partnerships (MLPs) offered some solace, yielding 5-7%. No wonder, MLPs were treated as kings by income-loving investors during the initial part of the decade.

MLPs, however, come in all kinds of flavors. Investors would do well to choose the one that suits their palette. This is important because how MLPs are accessed could have an implication on the risk and return opportunities for investors. What’s more? The type of MLPs you choose could also decide the fees and taxes you pay.

This article will help you differentiate between the various stripes of MLPs and the myriad vehicles through which you can gain exposure to them.

 

What Are MLPs?

Before taking a plunge into the world of MLPs, consider the following words about them. An MLP is a financial entity that combines the features of a corporation and a partnership. Like the share of a corporation, the ‘unit’ of an MLP is tradable and is accessible by a brokerage account. However, like limited partnerships, MLPs are not incorporated and can pass through incomes and gains directly to shareholders without being taxed at the entity-level. The MLP structure is a favorite among the energy sector, and oil and gas pipelines distributors often operate as MLPs.

This unique structure of MLPs comes with a quirk that is actually loved by income-seeking investors. They must pass on a majority of their cash flow as distributions to unitholders. As a result, they are considered as yield-oriented investments. In addition, MLPs yield additional benefits by enhancing total return and diversification potential. Nonetheless, there are two predominant ways – direct and indirect – to access this asset class.

 


   Deere & Company Increased Dividend by 15%   26/06/2018

John%20deere%20logoEach day, companies across the globe announce upcoming dividend payouts.

 

Below, we present an analysis of the stocks that increased dividends last week. The latest payout is compared to the most recent payout before the dividend increase.

Following is a snapshot of the 14 major securities that increased dividends last week. If investors simply purchase the stock prior to the ex-dividend date and then sell it either on the ex-dividend date or at some point afterward, they will be able to receive the dividend in their account.

To apply this strategy, you need to know when stocks go ex-dividend. 

Get a complete explanation of the ex-dividend date, record date, payment date and declaration date here. This will help to broaden your understanding of the dividend capture strategy.

Find out which companies increased their dividends on June 18 here.

 

Ticker Company Previous Payout Next Payout Change * Ex-Dividend Date Yield
(BOCH ) Bank of Commerce Holdings $0.03 $0.04 33.33% 07/02/2018 1.28%
(TRP ) TC PIPELINES LP Common Stock $0.53 $0.69 29.07% 06/28/2018 6.36%
(LII ) Lennox International Inc. $0.51 $0.64 25.49% 06/28/2018 1.28%
(RL ) Ralph Lauren Corp $0.50 $0.63 25.00% 06/28/2018 1.92%
(RJF ) Raymond James Financial, Inc. $0.25 $0.30 20.00% 06/29/2018 1.25%
(DE ) Deere & Company $0.60 $0.69 15.00% 06/28/2018 1.93%
(FITB ) Fifth Third Bancorp $0.16 $0.18 12.50% 06/28/2018 2.39%
(SLD ) Sutherland Asset Management Corp $0.37 $0.40 8.11% 06/28/2018 9.70%
(GPMT ) Granite Point Mortgage Trust Inc $0.38 $0.40 5.26% 06/29/2018 8.62%
(CAH ) Cardinal Health Inc $0.46 $0.48 3.01% 06/29/2018 3.54%
(NFG ) National Fuel Gas Co. $0.42 $0.43 2.41% 06/28/2018 3.23%
(MGP ) MGM Growth Properties LLC $0.42 $0.43 2.38% 06/28/2018 5.49%
(WPC ) WP Carey Inc $1.02 $1.02 0.49% 06/28/2018 6.14%
(O ) Realty Income Corp $0.22 $0.22 0.23% 06/29/2018 4.91%

    Starbucks Swoons on Sales Guidance Reduction   22/06/2018

 

Starbucks%20cup%20and%20coffee%20beans By sharing these trends,  hope to provide insights into what the financial world is concerned about and how to position your portfolio.

 

Starbucks has made the headlines in recent weeks as the coffee house chain seems to be losing some of its shine. The company has taken the first position in the list and is followed by telecommunications giant AT&T, which is on track to combine with Time Warner in a blockbuster vertical merger. Royal Dutch Shell is third on the list as the oil major is continuing its asset disposal program, while Realty Income closes the list.

 
Starbucks Worries Rising

 

Coffee chain Starbucks (SBUX ) has disappointed investors with a weak comparable sales guidance, raising questions about whether the company is losing its glory.

Starbucks, a cash cow that yields an annual dividend of 2.77%, has seen its traffic rise as much as 35% this week. In a single day on Wednesday, Starbucks dropped as much as 8% after the firm said that its global comparable sales for the third quarter will not rise more than 1%, citing a weaker-than-expected home market and slowing growth in China, where it traditionally grew by 4%. Indeed, due to a weakening home market, the firm plans to close 150 stores, which is about 100 more than in a typical year.


   What Are RMDs?   19/06/2018

 

If you’ve reached retirement age and have money sitting in an IRA or a workplace retirement plan, you’ve probably heard the term ‘required minimum distribution (RMD).

 

It’s an important concept to understand because failure to comply with the rules surrounding RMDs can cost investors hundreds, if not thousands, of dollars in taxes and penalties.

What is a Required Minimum Distribution?

The IRS requires that investors with retirement accounts begin taking withdrawals from them when they turn age 70½. The amount that must be withdrawn is based on the balance within these accounts and the owner’s remaining life expectancy, which is based on a table furnished by the IRS. Since these factors change every year, the required minimum distribution amount must be recalculated annually. The taxable portion of any amount withdrawn from an IRA or other retirement plan gets taxed as ordinary income. Since accurately calculating the required minimum distribution can be complex, many financial institutions will help you to determine your RMD.

 


   What Are Economic Moats?   15/06/2018

Warren Buffett once said: “In business, I look for economic castles protected by unbreachable moats.” Since Mr. Buffett uttered those words, investors have become more interested in the concept of economic moats.

 

As it turns out, the concept of an economic moat is a proprietary data point of Morningstar, a leading resource for investment research. It refers to the likelihood that a company can keep its competitors at bay for an extended period. For investors, these companies provide stability and superior returns over the long term.

It therefore comes as no surprise that investors want to know more about economic moats so they can incorporate them into their investment analyses.


   Gilead Sciences Moves up 3 Spots on Most Watched S   12/06/2018

Last week was quite uneventful on the Most Watched Stocks List as there was no major movement among stocks.

Consumer goods stocks are still holding strong, medical technology and biotech stocks are witnessing some northward movement, while utilities are slipping away from investors’ radar due to high interest rates. Investors continue to ignore trade wars and pushed the Dow above 25,000, which acted as a significant resistance level. An interest rate hike seems certain as the unemployment rate is at a record low of 3.8%.

Our focus this week is on a major drug manufacturer, which moved up five places due to a significant change in its DARS rating, a biotech stock that moved up ahead of its dividend payout, a small cap company that has had an incredible 61 years of consecutive dividend growth and Warren Buffett’s favorite beverage company.

The top 15 stocks on this list have rarely moved since the list was launched 18 months ago. By looking at how the top stocks in this list look, it’s easy to see that investors prefer a mix of growth and high dividend yields. DARS plays a significant influence on how stocks in this list move. Upgrades and rank improvement in the list go hand in hand, along with downgrades and falling rank deterioration.

Our Most Watched Stocks List is a user-generated, interest-based ranking of dividend-paying stocks, giving you a real-time snapshot of buying interest in the market. Generated by our Premium members’ watchlists, it’s aggregated and ranked by the most watched criteria.

The list has been designed to help income investors navigate the top dividend stocks being tracked by one of the world’s most advanced investing communities.


   Top Yielding Dividend Stocks in Warren Buffett   07/06/2018

When it comes to value investing, no investor compares to Warren Buffett. The Oracle of Omaha continues to inspire us with incredible worth ethic, sound investment advice and an immutable track record. However, for income investors, the best source of inspiration is Mr. Buffett’s stock holdings.

Buffett’s company, Berkshire Hathawa, owns 48 stocks, according to its latest 13F filing with the U.S. Securities and Exchange Commission (SEC). As it turns out, Berkshire’s holdings are filled with top dividend plays that can be used by income investors to generate passive earnings and consistent dividend growth.

In the following section, we present the top ten dividend stocks owned by Berkshire Hathaway. To ensure we adequately reflect the company’s holdings, we limit our picks to stocks in which Berkshire has a stake of $100 million or more.

Here is the list of the top 10 high-yielding stocks under Buffett’s banner.

 

Ticker Company Annualised Dividend Payout ($) Closing Price ($) * Dividend Yield (%) * Berkshire’s Ownership ($ million) **
(STOR ) Store Capital Corporation $1.24 $25.83 4.80% $462.19
(SNY ) Sanofi $1.86 $38.93 4.78% $148.34
(KHC ) Kraft-Heinz Company $2.50 $56.58 4.42% $20,283.79
(GM ) General Motors Company $1.52 $38.28 3.97% $1,816.99
(KO ) Coca-Cola $1.56 $42.25 3.69% $17,371.99
(QSR ) Restaurant Brands International $1.80 $56.95 3.16% $480.30
(WFC ) Wells Fargo $1.56 $55.26 2.82% $23,925.86
(PSX ) Phillips 66 $3.20 $118.75 2.69% $4,382.58
(WMT ) Wal-Mart Stores $2.08 $83.37 2.49% $123.98
(USB ) U.S. Bancorp $1.20 $51.06 2.35% $4,587.81

 

 
*Closing price and dividend yields are as of May 22, 2018

 


   Exxon Mobil Corporation: Yet to Benefit From Oil&r   06/06/2018

Exxon Mobil Corporation (XOM ) is one of the largest integrated oil and gas companies in the world. Exxon is involved in the exploration, production, manufacturing, and sale of crude oil and natural gas. Exxon Mobil was once the largest company in the world by market capitalization, but has seen significant drop-off even though it remains over $330 billion.

Oil%20rig%20in%20the%20oceanExxon has struggled over the last five years, with the price of oil seeing a major drop-off from over $100/barrel to a bottom of $27/barrel. As such, shareholders have seen almost no gain with only the consistent dividend to show for it. The new CEO Darren Woods, who has spent the bulk of his career at Exxon, has recently installed a strategy to invest for growth. This growth, which is fueled primarily by the recent tax reform savings, has lofty expectations of doubling the current level of earnings by 2025.

Check out our previous take on XOM here where we discuss the implications of the company entering 2018 on a positive note.

For 2018, Exxon had a very average start and is down 2.56%. The stock was up 4.38% for the month of January but in February the stock retreated to the tune of 13.24%. Since then, it has been trying to recover as it has been heading back to the even mark for the year. For the trailing one year, Exxon is slightly positive with a return of 0.49%. For the longer term, the stock is one of few that is down for the trailing five years with a negative return of 11.50%. Compared to its major competitor Chevron Corporation (CVX ), Exxon has underperformed. In the same three time periods, Chevron has outperformed with a year-to-date return of 0.04%, a trailing one year return of 20.28% and a trailing five-year return of 0.04%.


   The Market Glance for May 14: Betting on Home Depo   15/05/2018

Most large-cap companies releasing their Q1 earnings expect to dazzle investors with growth stories, but what kept stocks under pressure in the last few weeks were the worries over interest rates and trade – and those issues will continue to worry investors this week.

While there is a clear sign of a slowing economy, the U.S. labor market and the housing sector are two areas that provided investors with ample optimism in the last few weeks. These two areas are also keeping management at Home Depot, Inc. (HD ) pretty optimistic. Partly because analysts have been terribly wrong about the duration and magnitude of the housing recovery as it caused stocks of this home improvement retailer to soar by more than 500% over the last ten years.

Sure, HD is going to close a lot of its stores in the coming months, but its business will continue to boom as the company is planning to make massive investments in e-commerce to boost sales and margins. As long as the U.S. housing sector does well, HD will enjoy a tailwind – and that’s worth betting on.

To conclude, interest rates have gone north enough to keep markets trading sideways, but there are certainly some U.S. companies that can continue to perform despite the odds. Hence, look out for how individual stocks are doing instead of waiting for a rising tide to lift all boats.


   Microsoft Corporation Leads 155 Stocks Going Ex-Di   14/05/2018

There are 155 stocks going ex-dividend this week starting Monday, May 14. For income investors looking to generate more income as part of a dividend capture strategy, a stock must be purchased one day before the ex-dividend date to capture the dividend payout. This would make the individual a shareholder of record and would entitle the investor to be paid the dividend on the payable date.


   Phillips 66 Increases Dividend by 14%   14/05/2018

Each day, companies across the globe announce upcoming dividend payouts. In our Dividend Payout Changes and Announcements tool, you’ll find all of the dividend increases, decreases, initiations, suspensions, updates and regular dividend announcements for a given day.

Below, we present an analysis of the stocks that increased dividends last week. The latest payout is compared to the most recent payout before the dividend increase.

Following is a snapshot of the 15 major securities that increased dividends last week. If investors simply purchase the stock prior to the ex-dividend date and then sell it either on the ex-dividend date or at some point afterward, they will be able to receive the dividend in their account.

To apply this strategy, you need to know when stocks go ex-dividend. You can find the latest ex-dividend dates for the stocks that interest you in our Ex-Dividend Date Search tool.

Get a complete explanation of the ex-dividend date, record date, payment date and declaration date here. This will help to broaden your understanding of the dividend capture strategy.