Dividends on the decline
Dividends on the Decline
The Wall Street Journal reported today that 83 publicly traded US companies have suspended or canceled dividends in 2020 and 142 companies have reduced dividends thus far. This is more than the last 10 years combined, with energy and consumer discretionary being hit the hardest. Large cap value stocks, which overall pay a higher divided, have declined 17% year-to-date compared to the S&P 500 down 10% and large cap growth stocks are down 5%. The S&P 500 currently yields 1.9%, the value stocks within the index are yielding 2.75% and growth stocks are yielding 1.19%.
Despite the headwinds in value stocks, many ETF allocation managers are adding an overweight to value stock in their models. There is data to support this. Morningstar reports that value stocks have outpaced growth stocks up to three years after a recession every time since 1970. This would be quite a comeback in this recession for value stocks, as growth stocks have outpaced value stocks over the last ten years and are still underperforming year-to-date. Since 1970, value stocks have a slight edge on growth stocks. For most investors, the best practice is to not place a bet on either style, but to hold both in an S&P 500 index fund like IVV, SPY or VOO. For those looking to place bets, exchange traded funds like SPYV, IVE and VTV are good and cheap access to large cap value stocks.
Casey T Smith
Posted 4/30/2020
Recent posts
Share This Story, Choose Your Platform!
Wiser Wealth Management, Inc (“Wiser Wealth”) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). As a registered investment adviser, Wiser Wealth and its employees are subject to various rules, filings, and requirements. You can visit the SEC’s website here to obtain further information on our firm or investment adviser’s registration.
Wiser Wealth’s website provides general information regarding our business along with access to additional investment related information, various financial calculators, and external / third party links. Material presented on this website is believed to be from reliable sources and is meant for informational purposes only. Wiser Wealth does not endorse or accept responsibility for the content of any third-party website and is not affiliated with any third-party website or social media page. Wiser Wealth does not expressly or implicitly adopt or endorse any of the expressions, opinions or content posted by third party websites or on social media pages. While Wiser Wealth uses reasonable efforts to obtain information from sources it believes to be reliable, we make no representation that the information or opinions contained in our publications are accurate, reliable, or complete.
To the extent that you utilize any financial calculators or links in our website, you acknowledge and understand that the information provided to you should not be construed as personal investment advice from Wiser Wealth or any of its investment professionals. Advice provided by Wiser Wealth is given only within the context of our contractual agreement with the client. Wiser Wealth does not offer legal, accounting or tax advice. Consult your own attorney, accountant, and other professionals for these services.
