Rising Dividend
Dividend investing allows investors to focus on fundamentals rather than becoming distracted by the stock market’s constantly changing mood. This premise has been repeated decade after decade by some of the greatest market scholars who ever lived. This perspective lies at the heart of what we do at Washington Crossing Advisors (WCA). The WCA Rising Dividend portfolio strategy centers on dividend increases from solid, high-quality companies at reasonable prices. Consistent dividend payments from fundamentally strong companies (low debt, profitable assets, consistent business) allow us to look through short-term market noise and stay focused on the long-term prospects of a business….
Our recent lag versus the S&P 500 reflects a market led by lower-quality and extremely highly valued companies. While challenging, this is a well-understood dynamic of quality investing. Low-quality phases can last for a time, but history has shown they were followed by renewed leadership in high quality. The current low-quality phase is already longer than average and may be nearing exhaustion. Credit and valuation signals now suggest downside risks are rising even as the economy continues to expand. Where We Are Now This has been a speculative stretch: lower rate hopes, and pro-growth policy expectations have pulled the leadership…
Please see the attached PDF for a new Rising Dividend Portfolio Dividend Behavior piece. This document highlights Dividend Per Share Growth, Annualized Dividends, and Payout Ratios, among other portfolio statistics. It is also available on our website: https://washingtoncrossingadvisors.com/wp-content/uploads/2024/08/WCA-Rising-Dividend-Portfolio-Dividend-Growth-Rates-2024.pdf
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…
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Dividend Investing
