Rising Dividend
SimilaritiesIn both 1999 and today, the stock market exhibits strong momentum and a herd mentality, particularly among the largest, most valuable companies. This is evidenced by the significant valuation differential between the market capitalization-weighted S&P 500 index and its equally-weighted counterpart. Currently, this differential is as pronounced as it was in 1999, just before a significant technology stock correction. As we delve deeper, it’s crucial to remember that while trees do not grow to the sky, the same holds true for stock valuations. Valuations Adjusted for CyclicalityValuing stocks using long-run averages of earnings, such as those used in the graph…
From last October’s lows, the total value of stocks in the United States is up another $10 trillion. Sitting near $55 trillion, the U.S. stock market is now within a stone’s throw of record high valuations. At the same time, profits and profit margins for the largest public companies in the S&P 500 index are also at levels not seen before. There are few signs of stress in financial markets, despite much handwringing over the Federal Reserve’s (Fed) next move. If there were real concerns that high interest rates were about to sink the economy, it is highly unlikely that…
Imagine you have two options for investing your savings: keeping it in a piggy bank at home or investing in a local business. If the business can use your money to earn more than what it would cost you to lend it out (think of this as the interest you’d want if you just kept your money), it’s a sign that investing in the business might be worth considering. The key is the business must not just earn a profit but a sufficient profit to compensate for the cost of the capital invested in the business, both debt (borrowed money)…
Imagine this: The U.S. economy had a stellar year last year, outperforming Europe with a robust 2.5% growth rate. This is a far better performance than almost anyone imagined. It was better than most economists, pundits, and forecasters thought possible a year ago. Yet, not only did the economy grow far better than expected, but investors got hooked on risk again. Novel AI technologies captured investor imaginations, leading the tech-heavy Nasdaq Composite Index to trade at a near-record 60% premium to the S&P 500 based on enterprise-value to cash flow multiples (Nasdaq now trades at 24.3x versus S&P 500 at…
At Washington Crossing Advisors (WCA), we go to great lengths describing the high quality businesses selected in our Rising Dividend and Victory equity portfolios. We believe in buying quality companies at reasonable prices that have low debt, predictable cash flows, and are highly profitable and reinvesting back into their business. This follows an intuitive, common sense approach to investing, particularly when considering risk-adjusted return in a strategy. That said, quality investing often becomes convoluted and misunderstood by investors – mainly due to antiquated frameworks put into practice decades ago that have unintentionally become foundational to investing and financial planning. In…
17 November 2023 I Beaverton, OR The board of directors of Nike, Inc. (NYSE: NKE) has declared a regular quarterly dividend of $0.37 per common share, an increase of approximately 9% from the previous quarterly dividend of $0.34. For calendar year 2024, this marks the second dividend increase for the Washington Crossing Advisors Rising Dividend portfolio. Both changes were increases. The average dividend increase is 10.50% compared with December 31, 2023 indicated levels. Please contact your financial advisor for a complete list of all portfolio holdings that have, in the past 12 months, increased, decreased, or had no change in dividend. From the…
8 November 2023 I Roseland, NJ The board of directors of ADP (Nasdaq: ADP) has declared a regular quarterly dividend of $1.40 per common share, an increase of approximately 12% from the previous quarterly dividend of $1.25. For calendar year 2024, this marks the first dividend increase for the Washington Crossing Advisors Rising Dividend portfolio. Please contact your financial advisor for a complete list of all portfolio holdings that have, in the past 12 months, increased, decreased, or had no change in dividend. From the press release: “The board of directors of ADP (Nasdaq: ADP) approved a $0.15 increase in the quarterly cash…
7 November 2023 I St. Louis, MO The board of directors of Emerson (NYSE: EMR) has declared a regular quarterly dividend of $0.525 per common share, an increase of approximately 1% from the previous quarterly dividend of $0.52. For calendar year 2023, this marks the twenty fourth dividend change for the Washington Crossing Advisors Rising Dividend portfolio. All twenty four changes were increases. The average dividend increase is 6.24% compared with December 31, 2022 indicated levels. Please contact your financial advisor for a complete list of all portfolio holdings that have, in the past 12 months, increased, decreased, or had no change in…
Page through any investment brochure, factsheet, or presentation, and you’ll eventually get to the disclosure language claiming “All investing involves risk.” For fixed income investors, credit spreads over risk-free U.S. treasuries provide a sense of the interest rate, reinvestment, and credit risk they assume when buying corporate bonds. Along the same lines, stock investors must consider inherent risks in the equity markets when facing investing decisions. The Equity Risk Premium (ERP) indicates the price of risk in equities and is a key metric in determining the appeal of owning stocks versus bonds or other assets at any given time. What…
Many managers use textbook financial ratios such as return on equity, debt to equity, and earnings per share variability to evaluate the quality and value of a company. However, these metrics can be easily manipulated by a company’s management and misused by index providers and rating agencies. For example, the return on equity ratio can be increased overnight by issuing debt and using it to buy back stock rather than investing in the business to promote growth. This can create an illusion of higher profitability without actually improving the company’s business operations. Distortions Caused by Share Buybacks To better understand…
Consistency is a big part of quality. Our search for consistency leads us to companies that generate dependable growth. And the most consistent growth engine of the world’s economy — decade after decade — has been the consumer. Household consumption sits at the center of our economy, accounting for over 70% of all activity in the United States. When threatened, government intervention has been there to help shore up consumption, come what may, and from administration to administration. The reason for such policies are simple: employers all across the economy ultimately hire, invest, and produce to serve consumers. If consumption…
The only sure thing in investing is the uncertain. When we began the year, bearishness was rampant. Most Wall Street forecasters were expecting a recession, and the International Monetary Fund (IMF) warned the “worst is yet to come.” Thus far, the dismal outlook of these forecasters has yet to materialize. The lesson is that accurate and precise forecasts are rare. So how do we deal with uncertainty? We plan for the unexpected by continually focusing on quality. Fixing the roof when the sun is shining is far easier than when it rains! The S&P 500 is up 18% year-to-date, with…
Quarterly Report
Principles
Dividend Investing
