Stock market falls bring up dividends of up to 6.7% in the US

The US has not traditionally been a market characterized by its large dividends. The returns that the investor can catch they are much more modest among its listed companies than among the European ones, and also among the Spanish ones in particular (in Spain, the dividend is well rooted in the investment mentality and in that of companies). In the US, by contrast, they are more likely to make share buybacks, another form of compensation. Check here the dividend schedule.

It remains to be seen if this continues to be the case after the approval of the President Biden’s Inflation Reduction Act, which includes a 1% tax on the repurchase of securities. “This measure threatens a key pillar of the US equity market“, warned Ben Laidler, global markets strategist at eToro, after knowing this new rate at the end of last August. Share buybacks are important, he explained, since companies are the largest buyers of securities in the market: “Buybacks are at record levels […]. Given that US stocks account for more than 60% of the global total, this worries everyone,” he warned. Although, on the bright side, Laidler was confident that this new rate encourages the payment of more dividends. “The US is a big outlier globally in favoring buybacks 2-to-1 over traditional dividends, but many investors would prefer cash on hand,” he noted.

While waiting for the confirmation of this possible increase in ‘constant and hard’ dividends, among the members of the Dow Jones we currently find 11 listed companies that offerwith your expected payments for this entire year, yield greater than 3%. And five of them allow you to pocket 5% or more.

Let’s start with the most attractive: the telecommunications and broadband group stands out above all Verizon, with its traditional four payments: in February, May, August and October. The first three are for the same amount (0.65 dollars) and the fourth for 0.67 dollars. All of them rent around 1.7% at current prices. In total, these four payments together allow to the shareholder of Verizon pocket a not inconsiderable 6.66%. But be careful: it is no longer possible to collect the first of these installments if you do not have the value in your portfolio, since on Monday, January 9, it will trade without the right to the dividend. Even so, the three remaining payments offer 4.6%.

It cannot be forgotten that, in 2022, the titles of the main US stock indices plummeted which makes their shareholder remuneration attractive. The S&P 500, which is starting 2023 with timid rises (with data at the mid-US session on Friday, January 6), sank 19.6% last year. Verizon fell even more than the index, 24.6% (now, unlike the indicator, it is starting the year higher).

Intel: profitable after falling 49%

The brutal fall he suffered Intel on the floor in 2022 -49%-, in a dramatic year for the Nasdaq 100, has a lot to do with the fact that the dividend yield that will be paid this year is the second highest of all the Dow Jones. Its four installments (almost all US companies pay four times a year) add up to $1.52, offering a return of close to 5.7%. The integrated circuit manufacturer always rewards its shareholders in March, June, September and December. Whoever positions himself now in the value does so, yes, in a company that carries a sell recommendation by the market consensus that FactSet collects.

Dow is placed as the third listed with the most profitable dividends taking into account their expected payments for the current year. Based in Midland (Michigan), it is one of the world’s largest chemicals, along with other names as well known as Basf. With a schedule very similar to that of Intelwill distribute a total of 2.80 dollars in the whole of the year, which rents 5.5%.

After suffering a stock market decline of close to 28% in 2022, Walgreens Boots The year also begins with decreases, which exceed 5%. This retail pharmacy operator, with payments similar to those of the two previous companies, at the end of each quarter, will distribute four dividends of the same amount, $0.48. Total, 1.92 dollars whose yield amounts to 5.1%.

5% offer the four dividendsone per quarter, of 3M in the present year. The multinational – whose name is the abbreviation of Minnesota Mining and Manufacturing Company – is dedicated to developing products and services in various areas, including industrial equipment. Like Intel, it gets a sell from analysts.

Jane Shoemake (Janus Henderson): “The pandemic had the positive effect of forcing many companies “to readjust their dividends to more sustainable levels”

The technological multinational IBM allows you to catch 4.7% thanks to its four installments, of around $1.66 per share each. In total, 6.6 dollars to hunt 4.7%.

Identical quarterly calendar to that of the previous ones, it has Chevron, with four installments of $1.50 each. The joint return amounts to 3.3%. Oil companies have been able to distribute record profits in recent months thanks to the global energy crisis, as can be seen from the latest edition of the Janus Henderson Global Dividend Index, which collects data at the close of the first nine months of 2022. “The increase in dividends from the oil sector boosted distributions worldwide to 415.9 billion dollars, which is a record figure for a third quarter,” the firm’s analysts highlight. In the case of Chevron, that $1.50 represents an increase in shareholder remuneration of 5.6% with respect to what was delivered last year (1.42 dollars each quarter).

With percentages that exceed, although by little, 3%, we still find Cisco Systems (3.25%), the biotech company Amgen (3.24%) and the banks Goldman Sachs (3,1%) y JP Morgan (3,02%).

Jane Shoemake, Team Client Portfolio Manager Global Equity Income of Janus Henderson, warns that, looking to 2023, “slowing global economic growth is likely to impact profits and on the ability of some companies to increase payments“. The pandemic, adds Shoemake, also had a positive effect on remuneration: it forced many companies “to readjust their dividends to more sustainable levels”, which “will provide some support even in the event that earnings are under pressure in 2023”. The expert also highlights a “fundamental” aspect: that dividends “vary much less throughout the economic cycle than profits, as companies try to maintain a sustainable level of income for their investors,” she adds.

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