(MoneyWatch) Many investors prefer dividend-paying stocks, especially people who take an income, or cash flow, approach to investing -- as opposed to a total return approach, which I believe is the right approach. However, new research from Dimensional Fund Advisors shows that investors who expect dividends to protect them in tough times might be in for a rude awakening (Disclosure: My firm, Buckingham Asset Management, primarily uses DFA funds in constructing client portfolios.) The current era of historically very low yields on safe bonds has attracted many new adherents to the strategy of favoring dividend-paying stocks, especially the stocks of companies with either high or rapidly growing dividends. Why a high dividend strategy is dangerous Should you follow a high dividend strategy? Why a high-dividend strategy is not a good approach Today, we'll take a look at the findings of a March 2013 study, "Global Dividend-Paying Stocks: A Recent History," produced by the research team at … [Read more...] about Why chasing dividends is a mistake
Why stock dividend
This is one of those times that investments have crossed the Rubicon, with Treasury notes paying better than stocks. It’s normally the other way around. If that situation remains, the fear is this could act as a brake on stocks, holding them to low-single-digit growth or even booking losses. The usual pattern, in which the benchmark 10-year Treasury yields less than the S&P 500, occurs because government bonds aren’t as risky as stocks. Treasury paper has the full, taxpayer-backed power of the federal government behind it, and missing a Treasury interest payment is almost unthinkable. So Washington doesn’t have to pay you as much as stock-issuing companies do. Stocks are riskier -- they fell almost 40 percent in the 2008 financial crisis. Plus, they have no obligation to pay dividends to investors, and companies can lower or eliminate them at will. (Yield is determined by dividing bond interest or stock dividends by the securities’ underlying price.) With … [Read more...] about Why rising bond rates may be a threat to stocks
United Technologies (NYSE: UTX) has an apt name, because you'll find a wide variety of different industrial technologies under its corporate umbrella. From its pioneering Pratt & Whitney aircraft propulsion business to its Otis elevator unit and its climate and security business, United Technologies serves a wide swath of the sector with an emphasis on defense, aerospace, and building infrastructure.United Technologies is a cyclical company, and its stock has gone through cycles as well. The industrial conglomerate has a long history of doing stock splits at regular intervals, but it's been a while since United Technologies last pulled the trigger. Some look at its share price and say a move is overdue, while others believe that times have changed and that the company isn't likely to do a stock split in the near future. Let's look more closely at United Technology's history to see what it can tell us about what could happen.Image source: United Technologies.United Technologies' … [Read more...] about United Technologies Stock Split History: Is Another Split Overdue?
What happened Shares of Sanchez Energy Corp. (NYSE: SN) fell on Tuesday and were down more than 11% at 11:00 a.m. EST. Several factors weighed on the Eagle Ford shale driller's stock today, including the fallout from releasing its fourth-quarter results yesterday. So what Sanchez Energy reported its financial results before the market opened yesterday. All things considered, they were pretty good, with the company earning an adjusted profit of $21.8 million, or $0.28 per share, beating the consensus estimate by $0.09 per share. Production averaged 82,000 barrels of oil equivalent per day, which came in at the midpoint of the guidance range. Those results initially sent Sanchez Energy's stock skyward yesterday, rising more than 10% in the morning before giving back most of those gains and closing about 4% higher. Image source: Getty Images. Those gains have now completely evaporated as investors digested that report further as well as some other news items over the past … [Read more...] about Why Sanchez Energy Corp.’s Stock Is Sinking Today
With earnings season well under way, lots of companies are announcing dividend increases. If you're looking for companies with strong dividend growth, here are three tech stocks to consider. Intel, Cisco, and Corning all announced double-digit increases to their dividends recently. More importantly, each of them looks poised to see more dividend growth in the coming years. Here's a look at each of these tech stocks' dividends. Image source: Getty Images. Company Dividend Increase 5-Year Average Annualized Dividend Growth Dividend Yield Intel (NASDAQ: INTC) 10% 4% 2.4% Cisco (NASDAQ: CSCO) 14% 31% 2.6% Corning (NYSE: GLW) 16% 15% 2.1% Data source: Morningstar and company quarterly press releases. Table source: author. Intel Recently finishing out a record year and record fourth quarter, Intel was more than ready to announce a dividend increase. Fourth-quarter and full-year revenue were $17.1 billion and $62.8 billion, … [Read more...] about 3 Tech Stocks With Fresh, Double-Digit Dividend Increases