Dividend Power

Dividend Power

Dividend Power is a self-taught investor and blogger on dividend growth stocks and financial independence. Some of his writings can be found on Seeking Alpha, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial blogs. He also works as a part-time freelance equity analyst with a leading newsletter on dividend stocks. He was recently in the top 3% out of over 8,116 financial bloggers as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.

Nasdaq 100 posted a new one year high. S&P 500 ended the day unchanged

3 Income Stocks for 2023

Dividend Power Dividend Power 30.01.2023 10:25
The New Year usually brings about changes because people make resolutions. They may try a new hobby, cut spending, lose weight, etc. Similarly, investors may direct money into new stocks or add to existing positions. A place to look is the annual Dogs of the Dow list published at the end of the prior year. These Dow Jones Industrial Average (DJIA) stocks have the ten highest dividend yields at the end of the previous year. The approach assumes the ten stocks are momentarily mispriced, resulting in a high dividend yield. Furthermore, the ten stocks are growing blue-chip stocks with good reputations. Therefore, they make good choices for retail investors seeking high dividend yields. We focus on dividend yield, payout ratio, and reasonable valuation in our three picks. These three stocks make great choices for investors wanting income. 3 Income Stocks for 2023 Walgreens Boots Alliance Walgreens Boots Alliance (WBA) has been on the Dogs of the Dow since 2020 because of its repeated elevated dividend yield. Moreover, the stock price peaked in 2015 and has been on a long downward trend since then. The pharmacy retailer has been challenged with operational missteps, opioid lawsuits, and rising competition from e-commerce. In addition, the 2015 merger between Walgreens and Boots Alliance was arguably not well executed. Walgreens replaced its CEO, and the new one is moving the firm into healthcare through tuck-in acquisitions. The company acquired Summit Health for primary care, Shields for specialty care, and CareCentrix for post-acute care. That said, these are minor efforts for now. However, Walgreens is performing better with rising organic sales growth and higher full-year sales guidance. The firm consistently raises the dividend each year. Walgreens has a 47-year streak of increases and is a Dividend Aristocrat. It should become a Dividend King in three years. The forward dividend yield is ~5.3%, bolstered by an approximately 42% payout ratio. Walgreens is trading at a valuation of about 8.1X times earnings within the range of the past five years but below the range in the past ten years. The company is reliably profitable, and investors may want this stock for income with the potential for capital appreciation. International Business Machines The third stock on this list is International Business Machines (IBM). It is a company that investors dislike because of many years of revenue declines. That said, in 2022, IBM has a positive total return, while many other tech stocks struggled during the bear market. Moreover, the firm beat Q4 2022 expectations and announced it would trim its workforce by 1.5%. IBM's Software, Consulting, and Infrastructure segments all grew revenue. Cash flow rose too, and net debt is down. The CEO's strategy of focusing on hybrid cloud, software, and consulting is working. Also, divesting Kyndryl has helped with profitability and cash flow. Read next: Inflation Is Falling, But Does It Mean That The Fed's February Decision Will Be Dovish?| FXMAG.COM IBM's stock price dropped after it released earnings, pushing the dividend yield to nearly 5% and the valuation down to 14.2X. The dividend grows very slowly because the company is deleveraging and conducting tuck-in acquisitions. That said, IBM did not cut or freeze the dividend during its challenging stretch. Moreover, IBM has paid dividends for over 100 years and is a Dividend Aristocrat. IBM is probably fairly valued at the moment, but it is undervalued compared to its tech peers, which often trade at a much higher P/E ratio. As a result, the stock is a good choice for income investors. Verizon Communications Verizon Communications (VZ) is a stock that investors seeking a combination of high yield and modest dividend growth should like. The yield is nearly at an all-time high, and the stock price has dropped significantly in the past year. Verizon is one of the largest telecommunications companies in the United States. At the end of 2022, it had 114.5 million wireless retail connections, of which 91.8 million were postpaid, and 22.7 million were prepaid. In addition, Verizon has 7.9 million broadband including 6.7 million FiOS connections. Verizon has been spending more on capital expenditures because of its 5G rollout. The firm is trying to catch T-Mobile (TMUS) and AT&T (T) in speeds. Because of lower speeds and less geographic coverage, the firm has struggled with gaining subscribers. But the trend of flat or declining numbers recently reversed for at least one quarter. Also, Verizon is cutting capital spending and expenses, which should improve cash flow. Currently, Verizon’s dividend yield is about 6.5%, well above the average for the broader market. It is also more than the trailing 5-year average of 4.68%. Verizon’s dividend growth rate is roughly 2% per year. But the stock is a Dividend Contender, and the dividend payout ratio is only 50%. Verizon is undervalued based on the historical price-to-earnings (P/E) ratio. It currently trades at a forward P/E ratio of 8.6X, below the range in the past decade. Hence, Verizon is a solid dividend stock for people seeking income at a sensible price. Disclosure: Long VZ and IBM Disclaimer: The author is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.  Author Bio: Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.
The Japanese Yen Retreats as USD/JPY Gains Momentum

2 Undervalued Dividend Growth Stocks

Dividend Power Dividend Power 27.11.2022 12:37
Investors following a dividend growth investing strategy have outperformed the broader market indices. The difference is stark. For instance, the Dividend Champions are up 1.7% in 2022, considerably better than the S&P 500 Index or the Nasdaq. The S&P 500 is down ~16.1%, and the Nasdaq has dropped ~28.6% and is still in a bear market. High-quality stocks paying a growing dividend annually are doing well, allowing investors to add to existing positions or start new ones. We consider two worthy undervalued dividend growth stocks. 2 Undervalued Dividend Growth Stocks Lowe’s Companies Lowe’s Companies (LOW) was founded more than one hundred years ago in 1921. Today, it is one of two market leaders in North America's home improvement retailing segment. The company has approximately 2,220 stores in the United States and Canada and an e-commerce website. Lowe’s carries national brands, and its stable of private label brands like Allen + Roth, Kobalt, Harbor Breeze, Holiday Living, Stainmaster, Moxie, and Origin21. Lowe’s sells to the do-it-yourself retail and professional markets. It carries almost everything needed for home improvement projects, including lumber, hardware, appliances, flooring, lawn and garden items, lighting, plumbing, etc. Total revenue was $96,250 million in fiscal 2021 and $95,953 million in the last 12 months, broken down into ~75% to 80% from retail consumers and about ~20% to 25% from professional contractors. Lowe's services approximately 10% market share of the nearly $1 trillion North American home improvement market, making it No. 2 after Home Depot (HD). Lowe’s grows by adding stores and selling to more home buyers. The company benefits from new home construction because professional contractors buy more lumber, flooring, plumbing, electrical, etc. That said, rising mortgage rates, like in 2022, typically cause new home construction to decline. But this slowdown is offset by homeowners remodeling their homes, helping sales. Lowe's is a Dividend King and Dividend Aristocrat with 61 years of consecutive annual increases. The retailer is recognized for its high dividend growth rate of ~17.32% in the trailing five years and ~18.8% in the past decade. In addition, the conservative payout ratio of 23.3% allows many more dividend increases. Currently, the forward dividend yield is approximately 1.99%, above the 5-year average of 1.73%. Lowe’s stock price is down roughly 17.4% in 2022 because of recession fears and higher interest rates. Hence, this may be a good opportunity. The forward price-to-earnings (P/E) ratio is ~15.3X, below the range in the past five years and ten years. Pfizer Pfizer was founded in 1849 in New York City. Today, the company is one of the largest global pharmaceutical companies. Pfizer’s current CEO has reorganized and transformed the company in the past few years into an R&D pharma company. In 2019, the over-the-counter business was placed in a joint venture with GlaxoSmithKline’s consumer healthcare business. In addition, Pfizer divested its Upjohn segment merging it with Mylan and forming Viatris for its off-patent, branded, and generic medicines in 2020. Sales have more than doubled because of Pfizer’s success with the COVID-19 vaccine, Cominranty, and anti-viral drug, Plaxlovid. Total revenue was $81,288 million in 2021 and $99,878 million in the past twelve months. Moreover, Pfizer has several drugs with $1+ billion in annual revenue, including the Prevnar vaccine, Ibrance, Elquis, Xtandi, Vyndaqel/Vyndamax, Xeljanz, and Enbrel. Pfizer grows by adding indications for existing drugs and R&D for new therapies. Additionally, Pfizer acts as a consolidator in the industry, buying many smaller companies with new molecules or drugs at varying stages of development. Since 2021, Pfizer has purchased Trillium for its cancer drug candidates, Arena for its autoimmune candidate, ReViral for its RSV programs, biohaven for its CGRP assets (migraines), and GBT for its sickle cell disease treatments. Pfizer is trying to expand its leadership in the oncology, respiratory, and vaccine franchises. Pfizer has raised the dividend for 12 years, making it a Dividend Contender. The forward dividend yield of about 3.28% is supported by a 35.3% payout ratio and strong free cash flow from sales of the COVID-19 vaccine and anti-virals. As a result, Pfizer tends to raise the dividend between 5% and 7% per year. Pfizer's success during the pandemic resulted in a substantial increase in revenue and earnings. COVID-related sales will probably slow in 2023, but the firm has spent its cash wisely, acquiring companies and therapies, positioning it for growth. The forward earnings multiple is 7.6X, well below the 5-year and 10-year ranges. The solid yield and low valuation make Pfizer a favorite of many dividend exchange-traded funds, like SCHD or VYM. Disclosure: None Disclaimer: The author is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.  Author Bio: Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.
FX: GBP/USD - Possible Scenarios For British Pound To US Dollar

What Is An ETF? Vanguard VOO ETF vs Invesco QQQ ETF: Which is Better for You?

Dividend Power Dividend Power 29.04.2022 08:38
Investing in mutual funds and ETFs is a fundamental part of long-term investing. In addition, when comparing ETFs to individual stocks, they are typically seen as safer investments since they are more diversified. Many of these funds aim to track specific indexes. Two examples of this are VOO which seeks to track the S&P 500 Index, and QQQ, which follows the NASDAQ 100 index. However, it can be hard to figure out which might be a better investment. Below is a comparison of these two popular funds to help you reach a decision. VOO vs. QQQ: Issuer When it comes to VOO vs. QQQ from an issuer standpoint, you're dealing with two very large firms. VOO is issued by Vanguard, the largest issuer of mutual funds globally. They are also the second-largest issuer of ETFs. So, needless to say, you don't become that large without knowing what you're doing. QQQ is issued by Invesco, another large and well-known issuer of mutual funds and ETFs. With more than $1.6 trillion in managed assets, it’s safe to say investing with an Invesco fund is a pretty safe bet. VOO vs. QQQ: Underlying Index Followed As mentioned early, VOO aims to track the S&P 500 Index. The S&P 500 Index seeks to track the 500 leading publicly traded US companies. Market capitalization is the primary criterion for a company to be included in the S&P 500 Index fund, but it is not the only criterion. QQQ aims to follow the NASDAQ 100 Index. The NASDAQ 100 Index includes 100 of the largest domestic and international non-financial companies based on market capitalization listed on the Nasdaq Stock Market. VOO vs. QQQ: Expense Ratios Expense ratios can be vital information when deciding what fund to invest in. Even a tiny difference can become thousands of dollars over the course of investing in a fund for 10 to 20 years. Essentially, with managed funds, there are expenses that go along with it. These expenses could be salaries to pay analysts or portfolio managers, management fees, rent for office space, and many others. Many funds will pass some or all these expenses on to you, the investor. The amount passed to you is shown as the expense ratio. When looking at VOO and QQQ, there is a stark difference in their expense ratios. While VOO maintains a meager 0.03% ratio, QQQ has a much higher ratio of 0.2%. For QQQ, that's more than six times that of VOO, which can add up to a lot of money paid to the fund over the long term. VOO vs. QQQ: Minimum Initial Investments Minimum initial investments (MII) will vary per fund and firm. The minimum initial investment only applies when you initially invest in a fund. Many funds require $100 - $5000 or more for your first investment. After that, you are free to invest any amount you wish on subsequent investments with the same fund. VOO’s current MII is the asking price of one share on that trading day. To give you an idea, as of writing this, VOO stands at roughly $387 per share. QQQ, however, has no minimum initial investment. QQQ is currently sitting at a share price of about $320, but you can essentially invest $1. VOO vs. QQQ: Net Assets and Holdings Comparing VOO vs. QQQ, each fund's top ten holdings are identical; see below. The main difference here is that while holding the same funds, VOO has roughly 24.7% of its $1.3 trillion ($321.1. billion) total assets in these stocks. In comparison, VOO holds about 29.5% of its $808.8 billion in the top ten holdings, roughly $238.6 billion. VOO vs. QQQ Top Holdings: Although tracking different indexes, VOO and QQQ have similar holdings in their top 10. Seven of the top holds are the same with: Apple (AAPL) Microsoft (MSFT) Amazon (AMZN) Tesla (TSLA) Alphabet Class A and C (QQQ holds both, while VOO does not) NVIDIA (NVDA) Meta (FB) QQQ rounds out its top 10 with Costco (COST) and PepsiCo (PEP), while VOO holds UnitedHealth Group (UNH), Johnson & Johnson (JNJ), and Berkshire Hathaway (BRK.A, BRK.B). While sharing similar stocks as their top 10, the amount invested in each varies slightly. VOO vs QQQ: Compositions One of the areas in which the VOO vs. QQQ comparison will differ is the fund composition. As mentioned earlier, VOO aims to track the S&P 500 Index, while QQQ seeks to track the NASDAQ 100 Index. As you might imagine, the number of stocks held in each is very different. QQQ currently has 102 different stocks. There are about 507 stocks in VOO, mostly large-cap and geared toward growth. Fewer stocks could generally be more volatile when there is more market volatility. VOO vs. QQQ: Overall Performance Of course, what most investors will put at the top of their criteria when determining which fund to invest in will be the performance! When looking at the performance of both VOO and QQQ, they both have very similar returns to the indexes they aim to track. Even though we say they have similar top 10 holdings, QQQ's returns over the past 1, 5, and 10 years have been much higher. It should be noted that NASDAQ tends to hold more Technology and tech-related stocks, a booming market sector over the past decade. QQQ Performance: VOO Performance: It should still be noted that the return over each fund's lifespan is better for VOO. It could also be a less volatile fund with more stocks being held meaning it is probably more diversified. VOO vs QQQ: Which is better? When making any investment, it comes down to your comfort level. The significant factor in VOO vs. QQQ is the performance, with QQQ winning out during the tech boom era. However, overall, VOO has had better long-term returns. VOO also has a much lower expense ratio, which should not be taken lightly as QQQ will need to continue outperforming VOO significantly to make up for its fees. VOO also holds more stocks, probably making it a less volatile fund to invest in. VOO vs. QQQ: Final Thoughts Both funds are backed by large asset managers in Vanguard and Invesco. Either ETF would make good additions to an investor's portfolio. While QQQ has better recent performance, the tech boom could be over since technology stocks are struggling in 2022, and the expense ratio is higher. On the other hand, VOO has better long-term total returns and would probably be less volatile. It can also serve as a core holding in some version of the Bogleheads 3-Fund portfolio. In the end, both have strengths and weaknesses. You'll need to determine which better fits your investment style and needs. Disclosure: None Author Bio: The author is the founder of the Dividend Power site. He is a self-taught investor and blogger on dividend growth stocks and financial independence. Some of his writings can be found on Seeking Alpha, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, FXMag, and leading financial blogs. He also works as a part-time freelance equity analyst with a leading newsletter on dividend stocks. He was recently in the top 100 and 1.0% (81st out of over 9,459) of financial bloggers as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha. Disclaimer: The author is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money. 
Tesla Will Struggle To Recover In The Coming Years

(TSLA) Tesla Stock Split: Should You Buy Tesla Shares?

Dividend Power Dividend Power 01.04.2022 14:53
In recent weeks there have been several companies announcing stock splits. First, there are the big tech giants such as Alphabet (GOOGL), Amazon (AMZN), and now Tesla has jumped up to make their announcement of a stock split, the second stock split in two years. Tesla has not announced the split ratio yet but will do so after shareholder approval. You may be wondering why these mega-cap tech companies are doing so many stock splits. These companies use stock splits in many ways. For example, they use stock splits to get into a different Index like the Dow 30, which is based on the stock price. Or they may be trying to get a lower share price to entice retail investors to invest. Many of these companies stocks have gotten a little expensive for retail investors. They could easily buy more shares through fractional shares, which can be purchased through some investing apps. However, the appeal of buying cheaper shares may bring in more retail investors to hold whole shares of a company. The EV Market Impact There are many reasons why Tesla could be doing a stock split, but one of the biggest reasons is its control over the electric vehicle (EV) market. With the growing inflationary prices of gasoline and petrol worldwide, people are looking for other options to combat these prices. One way is to drive less, but in a car-centered culture like the USA, that is not an option taken very seriously. The second option would be to drive an EV. In the 4th quarter of 2021, car buyers bought 21% fewer vehicles. However, the vehicles shoppers did buy were EVs, and sales boomed 72% higher than usual in the US. EV car sales usually make up 1% - 2% of the car sales, but between October and December of 2021, EV car sales made up 4.5% - 5% of all car sales. Out of around 148,000 EV cars sales reported in the US in the 4th quarter of 2021, 72% came from Tesla. Of course, many companies besides Tesla are making EVs, but Tesla has been innovating and marketing continuously, allowing the company to remain the market leader. The Expansion of Tesla Tesla is in a growth phase with many people purchasing their vehicles; they see the high demand. Consequently, the company is opening a new Tesla factory in Germany to provide over 500,000 Teslas to Europe. In addition, Tesla is about to open a new factory in Austin, Texas. With the opening of the new factories, you can see that demand is increasing for EVs and especially Tesla cars. People want a vehicle that can save them money. Tesla vehicles are answering the call of consumers. Why is Tesla Splitting Their Stock The year 2022 seems to be the year for stock splits, and almost every mega-cap tech company is starting to do it. Since Tesla is once again splitting its stock, here are some reasons they may be doing so. To Help Retail Investors As you may have noticed, their company is doing well on all the fundamentals. They are producing quality products and dominating the sector; revenue and earnings are increasing. With the rise in popularity of Tesla and its vehicles, more retail investors would like to own this company. At more than $1,000 per share, the stock price is still too steep for most regular retail investors. Of course, they could buy a diversified S&P 500 Index fund or ETF like SPY or VOO, but it is not like holding whole shares of Tesla. Splitting the stock allows average retail investors to purchase shares at a lower price in the stock market and be a part of this significant growth. Adding Value to the Price Announcing a stock split doesn't happen often. For example, Amazon did a few of them from 1997 to 1999 and has not split the stock again until 2022. Tesla is doing it for the second time in 2 years, and the last time they split the stock, the price rose to $2,000 per share. After this most recent announcement, the price went up 8% on March 29th when it was announced the split would happen. Teslas added $84 billion to its market capitalization in that one day alone. That is approximately the market cap of Volvo. Think about that. The value of Telsa has gained so much. They want the company not to be just owned by their employees but allow the retail investors to have more ownership of the company. As that happens, the value of the company will continue to rise. Become Competitive for Employees Another reason for the stock split could be the employee stock options. Many employees have stock options, and with the high prices of the stock, it can be challenging to exercise some of these options without having significant tax implications. With a lower price, the employees can have an opportunity to exercise some of their options and continue to diversify their wealth and portfolio allocations. With many other tech giants doing the same, Tesla creates a more competitive atmosphere in retaining good employees. Nicholas Colas, a co-founder of DataTrek Research, said, "A lower-priced stock makes it easier for employees with equity as part of their compensation to sell a more specific amount to satisfy tax liabilities and manage their personal wealth," After one company starts doing stock splits, many others will do the same to compete or retain similar talent. So it is not just a competition over the market cap in the stock; it is a competition over the best talent to create a thriving company. What Should You Do? There are many options that you could do. Stock splits are happening more often now than they have in recent years. Many companies are growing in market cap higher than they had ever imagined. For instance, Apple (APPL) became a $3 trillion stock earlier this year. You could start by buying some of these companies' stocks or keep it simple and invest in a nice index fund that holds these companies. If you are a retail investor, then the news of stock splits can be good news. You can add more shares of your favorite companies to your portfolio at a lower price per share. Author Bio: Dividend Power is a self-taught investor and blogger on dividend growth stocks and financial independence. Some of his writings can be found on Seeking Alpha, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, FXMag, and leading financial blogs. He also works as a part-time freelance equity analyst with a leading newsletter on dividend stocks. He was recently in the top 1.2% (98 out of over 8,252) of financial bloggers as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha. Disclaimer: Dividend Power is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money. 
Alphabet (GOOGL) To Split Its Stocks (20:1) The Simplest Question Is... Why?

Alphabet (GOOGL) To Split Its Stocks (20:1) The Simplest Question Is... Why?

Dividend Power Dividend Power 14.02.2022 15:34
Recently, Google (GOOGL) announced that it would conduct a stock split. Inspired by an excellent 4th quarter earnings report and a high share price, Google has decided to split the stock to help more new investors acquire shares. The split would be a 20-for-1 stock split. How Has Google Grown Over the Years? In 2015, Google rebranded itself into the Tech giant Alphabet. Larry Page sought to make Google something more than a search engine. The company had ambitions of working on healthcare, hardware, and drones, which was a bit different from having a search engine-focused business. It would help create something more than the internet. So, Google changed its name and vision to the holding company Alphabet, allowing them to create, experiment, and invest in new opportunities. People continue to see the growth in a stock like Alphabet. After the 4th quarter, Alphabet announced their earnings, which grew over 32%. This revenue growth sent the stock soaring another 7.5% in after-hours trading. Due to the continued growth of Alphabet, their stock has become too pricey for everyday retail investors. A split can solve the problem. For instance, both Apple (AAPL) and Telsa (TSLA) split their stock allowing more investors to buy at lower prices. In addition, splitting their stock to lower the cost enables new investors to jump on board and become owners of the company. Alphabet has three classes of stock, class A, B, and C. Class A gives each shareholder one vote. Class B is for some of the founders and early investors into the company, and they have ten votes per share. Lastly, Class C has no votes. Each of these classes will conduct a stock split. One of the great things about Alphabet is that it continues to grow. Since May of 2020, Alphabet's value has doubled. Earlier this year, Alphabet posted a 62% revenue growth for the 2nd quarter. Right now, the company is worth just shy of $2 trillion, making it one of the world's largest companies by market cap. So naturally, investors want to be a part of a growing company. A stock split allows more people to be invested for the long term with Alphabet. What Exactly is a Stock Split? A stock split is when a company splits a stock dividing it up and giving the shareholder additional shares. For instance, if a share of stock was worth $1,000, a company could do a 10-for-1 split. This split would give each shareholder ten shares for every share they currently own. Each share would now be worth $100 apiece. However, the total market capitalization does not change before or after the split. Companies may split the stock when the share price rises too quickly, making it unattainable for new customers to hold that share. The price gets too high. Why is Alphabet Splitting Its Stock? Alphabet is the most expensive stock on a per share basis in Silicon Valley, and there are other opportunities to explore as an investor. Alphabet's stock is nearly $3,000 per share. At this stock price, many new investors cannot own a part of Alphabet unless they go the route of fractional shares or do index investing. Other authors have speculated that Alphabet is seeking to join the Dow Jones Industrial Average. The Dow Jones is a price-weighted index, and with the high price of Alphabet stock, the Index would not want to bring them on board. In August of 2020, Apple did a 4-for-1 split of their stock, and it lowered their weight by about 3% in the Dow 30. Companies like Alphabet and Amazon are too large to be added into the Dow. Their stock prices would have an uneven weight due to the high cost. If those companies split their stock to lower prices, it gives them more advantages, and they can join the Dow 30. As Alphabet wants to continue to grow, it will want to add new investors and reach broader audiences. By potentially joining the Dow 30, Alphabet can make this happen by going through the various index funds and mutual funds that track the Dow Jones. Will the Split Affect the Value of the Stock? What happens when a split is announced? The total value of the shares will not drop. Instead, the new stock price will fall by 1/20th of the old stock price. Typically, shares increase in aftermarket trading like we saw the day after Alphabet announced the split. The total value will not be reduced in any way after the stock split. Each Class A and Class B shareholder will now have more votes but in the same proportion as before the split, and the Class C shares will continue to be the cheapest avenue to owning a piece of Google. When Will This Stock Split Take Place? Alphabet has announced that everyone that owns sarees on July 1st will receive their new shares on Friday, July 15th. That price should be around $150 per share, which is 1/20th of the cost of $3,000. The trading at the new stock price will take place on July 18th. What Does This Mean for the Regular Investor? Typically, a stock split is neither good nor bad. The stock will usually rise with the new interest from investors, and eventually, the buzz will fade away. However, if this is a worry for you as an individual shareowner, then maybe owning an index fund or ETF is the way to go for you to improve diversification. As Alphabet grows, it will continue to grow its revenue streams and bring more value to the shareholder. Growth is an excellent thing for an investor. We see many companies declining, like GE (GE) or even AT&T (T). For instance, AT&T (T) cut its dividend due to continued weakness and a change in strategy. As companies like Apple, Microsoft, and Alphabet continue to innovate and create, investors will want to be a part of the journey as shareholders. Should you worry about Google's stock split? Again, there is nothing to worry about; just keep to your investing strategy and keep investing. Author Bio: Dividend Power is a self-taught investor and blogger on dividend growth stocks and financial independence. Some of his writings can be found on Seeking Alpha, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, Entrepreneur, FXMag, and leading financial blogs. He also works as a part-time freelance equity analyst with a leading newsletter on dividend stocks. He was recently in the top 1.5% (126 out of over 8,212) of financial bloggers as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha. Disclaimer: Dividend Power is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money. 
Tech Stocks: (MSFT) Microsoft Stock, Facts About Microsoft

Tech Stocks: (MSFT) Microsoft Stock, Facts About Microsoft

Dividend Power Dividend Power 24.01.2022 15:51
As stocks have trended higher, especially the tech stocks, soared in 2021, we must be reminded that Microsoft is once again one of the top companies in the world by market cap. Apple is number one in the world by market cap, and Microsoft continues to be right behind them. In October of 2021, Microsoft had bypassed Apple as the largest company by market cap globally, but Apple soon passed them once again. Microsoft is not the same old company we had known back when Bill Gates was in charge. They have changed and have created a more diverse brand and product portfolio leading that change. Bill Gates stepped down as CEO in 2000 and officially left his full-time role in Microsoft in 2008. Since then, Microsoft has diversified its portfolio to include many more products, including gaming, cloud services, and making Office more business-friendly. Microsoft under Gates was known for two big things: Microsoft Office and Windows; that was the entire portfolio. Satya Nadella, the current CEO of Microsoft, has revolutionized the software company and has made it a software company with a vision of working with businesses, making gaming a priority, and expanding Azure, its cloud network. How Does Microsoft Make Money? A diverse portfolio of many more products allowed Microsoft to branch out from only MS Office and Windows software and adapt to software technology's future. Microsoft has adapted to the world of sales in its subscription-based software model. They sell their Microsoft Office products to businesses and consumers, creating a pay-as-you-go subscription-based business model. Productivity and Business In 2020, Microsoft Office made a significant amount of their revenue from subscription-based software compared to 0% in 2000. MS Office at one point brought close to half of the revenue in 2000, but Office is not even 25% of the revenue that Microsoft takes in now, having over $35 billion in revenue each year. The new software has been revolutionizing businesses. First, they pay for Microsoft Office, and with that, they get Microsoft OneDrive, Teams, and Dynamics. Teams is just a fancy business video chat software like Zoom Video Communications (ZM), but you can only have Teams with Microsoft business accounts. Dynamics is another software that helps with business computing. It helps with business efficiency and works with customer relationship management or CRM, but it is not one of the top competitors to Salesforce (CRM). However, it has over $3 billion in revenue. Windows continues to be one of the most widely used software globally. That domination is starting to penetrate other parts of their customers giving them opportunities to dominate other businesses. With the subscription-based model, they will continue to bring in significant revenue, earnings, and cash flow. Before the proposed acquisition of Activision Blizzard (ATVI), LinkedIn was Microsoft's largest acquisition. It came in at $26 billion in 2016. Today, LinkedIn makes over $8 billion annually in revenue, up from the $3 billion pre-acquisition. LinkedIn has no major competitors and creates most of its money from job offer advertisements, other advertisements, and cash for LinkedIn premium. The Cloud Cloud software has become a bigger space for companies. It has led Microsoft to enter the space and business opportunities through the Azure Cloud system. Microsoft has thus gained a foothold in the cloud space. Azure Cloud system by Microsoft came out in 2009, and in 2021 the platform had become the second-largest cloud-based service in the world behind Amazon Web Services (AWS). With the cloud service, Microsoft's revenue grew by 48% in quarter 3 of 2021. It has reached a 21% market share and continues to gain more traction in the cloud space.   Azure consists of public, private, and hybrid cloud service products that help to power modern businesses. Dynamics and Azure are contributing to over 31% of Microsoft's revenue. In addition, customers are reaping many benefits through the cloud as it enhances the user experience with Microsoft products. The Gaming Industry Microsoft is becoming one of the leaders in the gaming industry. The Xbox is leading the charge with gaming, and Microsoft just made a deal to acquire Activision Blizzard for $69 Billion; if government regulators approve the sale, this acquisition will occur in 2023. The purchase would make Microsoft one of the largest gaming companies in the world. They would then own games like Call of Duty, War of Warcraft, and Candy Crush. In addition, making the deal would put them behind Sony and China's Tencent as a top-three gaming company globally. Microsoft is putting their company in a position to take on the Metaverse. Apple (APPL), Google (GOOG), Meta (FB), and Microsoft are creating technologies for the Metaverse. Satya Nadalla has emphasized that gaming technologies are part of the Metaverse. Is Microsoft a Good Stock to Buy? If we look at the price-to-earnings (P/E) ratio, we end up with an overvalued stock compared to Apple and Google. The P/E ratio is 32.0X, making it a bit more overvalued than Apple, which is trading at a valuation of 28.5X, as of this writing. They are close in the P/E ratio, but you would like to see the P/E ratio lower as an investor. Microsoft is a dividend growth stock that has raised the dividend for 19 consecutive years. The most recent quarterly dividend increase was $0.62 per share from $0.56 per share. The forward annual payout is now $2.48 per share with a conservative payout ratio of about 27%. The question is whether the hype of Microsoft is worth a buy as this company continues to create a diverse portfolio moving from one business to another. You can see the company dominating competitive markets like gaming and cloud systems. It has also innovated different types of software to help other businesses. Microsoft's future looks excellent if you are an investor, but the stock is likely overvalued based on the P/E ratio. In addition, the dividend yield is low at 0.84%. This value is less than the average dividend yield of the S&P 500 Index. Suppose individual stocks are too risky for you. In that case, an alternative is to try an excellent ETF or even a tech ETF to gain exposure to Microsoft and other overvalued tech companies. In many cases, ETFs are market cap-weighted, and Microsoft is one of the top holdings. You can always own a piece of Microsoft, Apple, Google, and Meta through an excellent ETF like an S&P 500 ETF. Microsoft is also a top 10 holding in some of the best dividend growth ETFs. These index funds will help you own a selection of some of the most profitable and most prominent companies in the US. Author Bio: Dividend Power is a self-taught investor and blogger on dividend growth stocks and financial independence. Some of his writings can be found on Seeking Alpha, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, Entrepreneur, FXMag, and leading financial blogs. He also works as a part-time freelance equity analyst with a leading newsletter on dividend stocks. He was recently in the top 1.5% (126 out of over 8,212) of financial bloggers as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha. Disclaimer: Dividend Power is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money. 
Apple’s Near a $3 Trillion Market Cap: Is it Right for You?

Apple’s Near a $3 Trillion Market Cap: Is it Right for You?

Dividend Power Dividend Power 22.12.2021 12:55
Apple’s Near a $3 Trillion Market Cap: Is it Right for You?   Apple (AAPL) is one of the best innovative tech companies around. However, its market cap is getting close to the $3 Trillion mark, and people must wonder if this is the right stock to invest in for your future.   Having a slice of the Apple company may do wonders to you. A couple of days ago, Warren Buffett’s stock holdings hit a record of $152 Billion in Apple stock. His investment of $31 billion continues to grow and surpass all his other companies.   Right now, Apple has the largest company by market cap in the world. When Apple’s stock price (AAPL) hits $182.86 per share, the company will have a market cap of $3 trillion. The next largest company would be Microsoft (MSFT), with a market cap of $2.43 billion.   Why Would Investors invest with Apple?   Since November 11th, Apple’s stock price has soared, and investors are trying to get a piece of the pie. This company is no ordinary company. It is a company that runs on innovation and excellence.   During the 4th Quarter, iPhone has increased in revenue 47% year over year to almost $39 Billion. The revenue has increased 29%, up to $83.9 billion. In addition, sales of the services Apple offers like Apple Music, Apple Pay, Apple TV+, and others have increased by over 25%.   For yearly revenue, Apple has reported combined sales of $365.8 billion, which is 33% higher than they took in 2020 at $274.5 Billion with gross margins up to 45%.   Most people think Apple is a company that has the iPhone and Macbook computers. However, this company always creates excellent products for its users that surpass most other companies.   A couple of years ago, Apple created the AirPods. AirPods are a simple Bluetooth earbud that can connect with your device. As of 2020, AirPods brought over $10 billion of revenue. That amount of revenue is more considerable than most tech companies. If you compare this with companies like Twitter (TWTR) or even Netflix (NFLX), you will see AirPods itself can bring in more sales. For instance, Twitter had revenue of $3.74 billion in 2020.   AirPods could be its own stand-alone sound company that brings in more revenue than Bose and JBL combined. That speaks volumes to Apple's products and how each product could be divested as its own company.   Apple is innovating, and you can see this through the new products they are getting ready to launch, such as the Apple Car and an augmented reality/VR set. These innovations give investors confidence that Apple is not just a phone company or computer software. Instead, they create and make more products that will dominate the new sectors.   Is Apple a Risky Investment?   With an almost $3 Trillion market cap and being the largest company in the world, you must wonder if it could all fall apart. That is not something you should worry about. Go to a coffee shop, gym, or mall and look at which devices people use.   Consumers usually use iPhones; they have AirPods in their ears and use MacBooks for business and work. So, it is hard not to see why the company brings in more revenue each year.   In the 4th Quarter of 2021, earnings have gone from $0.73 to $1.24 per share compared to the prior year. This company is working to bring in more revenue while creating value for its customers and shareholders.   If you think Apple is a bit riskier, there are ways to minimize the risk. You could invest in Microsoft (MSFT) as a less risky company. They have a stable subscription style business bringing them up as the second-largest company in the world. It is hard not to put these two companies together.   The other option is to find a nice index fund you can invest in, like VTSAX or VFIAX or another suitable Vanguard Index Fund. They can capture the stock market with less risk associated with owning a more significant portion of a single stock. Often, Apple stock is the number one investment for these index funds since they invest based on market capitalization. In this way, an investor can own Apple as part of a more diversified portfolio.   Is Apple Right for You?   Looking at the finances, you must wonder, is Apple right for me? The company continues to innovate and grow. Apple’s market cap is nearing $3 Trillion, and no one could have thought this was possible even a few years ago. Apple stock is not just a 10 bagger meaning that it is increased ten times but a rare 100 bagger twice over. If an investor had bought Apple stock in 2001 and reinvested the dividends, $10,000 would have turned into over $3.6 million.   In 2018, Apple hit a $1 Trillion market cap. It took two more years to double it. So far this year, the stock price has risen over 30% on top of the 80% the stock price rose in 2020. Now compare that to the S&P500, which has only increased 25%. In 2021.   Apple is a company to invest in at the right price. The company is innovative, has a solid balance sheet, and grows the top and bottom lines. Apple continues to grow behind a brand that means excellence and perfection. People may not always enjoy the price of the products, but you cannot deny they are built with quality and are in high demand.   Author Bio: Dividend Power is a self-taught investor and blogger on dividend growth stocks and financial independence. Some of his writings can be found on Seeking Alpha, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial blogs. He also works as a part-time freelance equity analyst with a leading newsletter on dividend stocks. He was recently in the top 1.7% out of over 8,182 financial bloggers as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.   Disclaimer: Dividend Power is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.   
Why Consider Dividend Growth Investing?

Why Consider Dividend Growth Investing?

Dividend Power Dividend Power 22.11.2021 08:31
Why Consider Dividend Growth Investing? Dividend growth investing is increasingly popular in the US and worldwide. The concept is simple and easy to understand. An investor buys a basket of stocks that annually increases the dividend. This strategy is a long-term buy-and-hold strategy. In contrast, it is the opposite of a trading strategy where an investor rapidly buys and sells stocks. Some investors think of dividend stocks as something that only retirees buy for income. However, some of the largest tech companies pay dividends, including Apple (APPL) and Microsoft (MSFT). Hence, investors can buy growth stocks that also pay a growing dividend. Why Dividends? Do dividends matter to investors? The short answer is yes for a few reasons. First, over time, stocks that pay dividends tend to outperform ones that don't pay dividends with lower volatility as measured by beta. The difference in total return is even more significant for comparing stocks that pay growing dividends and stocks that don’t pay dividends. Furthermore, research has shown that dividend and dividend growth stocks significantly outperform stocks that cut or eliminate dividends. The reason for this is that companies that cut or eliminate dividends are often performing poorly. In some cases, this poor performance is due to changing economic conditions. For instance, energy companies performed poorly in 2020 due to the COVID-19 pandemic. Lower revenue and earnings caused many energy companies to stop paying a dividend. However, in many cases, it is because the company is facing increasing competition or changing technology. For example, Kodak's core technology was film, and digital cameras and smartphones made film obsolete. Another reason why dividends matter is dividends can be used to determine valuation. An estimate of a fair value can be calculated using the dividend per share and the expected constant growth rate. Dividends also indicate if the company is doing poorly or well since cash must be used to pay the dividend. Research has also shown that dividend stocks perform better than non-dividend-paying stocks in down markets. Types of Companies Not all companies pay a dividend or a growing dividend. In the US, there are over 6,000 stocks listed on stock market exchanges. Of these, more than 3,500 pay a dividend, and only about several hundred pay a growing dividend for 5+ years. The fact points to the difficulty a company has for growing the dividend over a more extended period. There are lists of companies that pay a dividend for extended periods. One group of stocks that are well known as dividend growth stocks are the Dividend Aristocrats. The stocks on this list have raised the dividend for 25+ years. In addition, the stocks must meet other criteria, including being a member of the S&P 500 Index and having a market capitalization of $3 billion or more. Currently, there are 65 stocks on the Dividend Aristocrats list. Investors can buy the individual stocks or buy an exchange-traded fund (ETF) that owns the entire list. A Top Dividend King Today An even more exclusive club of dividend growth stocks is the Dividend Kings 2021 list. These are stocks that have paid a growing dividend for 50+ years. There are only 32 stocks on this list. It is challenging for a company to raise the dividend for 50 or more years. Typically, a company must have a substantial competitive advantage to overcome economic cycles and competition. One top Dividend King today is Johnson & Johnson (JNJ). The company is a global healthcare company with three primary business segments: Consumer Health, Pharmaceutical, and Medical Devices. Most investors know the company through its consumer health business. Major brands include Band-Aid, Neosporin, Tylenol, Zyrtec, Sudafed, Motrin, Benadryl, Pepcid, Listerine, Aveeno, Neutrogena, Stayfree, Carefree, o.b., and Clean & Clear. However, Johnson & Johnson's other two segments are much larger. For example, some of the drugs that Johnson & Johnson sells are blockbusters, with over $1 billion annually in sales. Johnson & Johnson’s stock price is relatively flat for the year, with a gain of ~3.5% year-to-date. However, results impacted by COVID-19 have pressured the stock price. In addition, Johnson & Johnson is faced with lawsuit risks from opioids and talcum powder that are also pressuring the stock price. The current quarterly dividend rate is $1.06 per share for an annual rate of $4.24 per share. The forward dividend yield is about 2.6%. The company’s dividend is relatively safe. The forward payout ratio is approximately 43%, a good value. Furthermore, Johnson & Johnson is one of two triple-AAA-rated companies from credit agencies. For this reason, Johnson & Johnson is often considered one of the best dividend growth stocks. Johnson & Johnson recently announced that it would split into two companies. The Consumer Health business will be divested, leaving the Pharmaceutical and Medical Device business. Johnson & Johnson will continue to grow organically through R&D and approvals for new medications and indications. The company will also probably buy smaller companies adding to its growing portfolio of products. Market Capitalization: $428.82 billion Stock Price: $162.89 Dividend Yield: 2.6% Payout Ratio: 43.3% Summary Dividend growth stocks should be considered by all investors, not just those in retirement. The reason is that they can provide excellent long-term returns with lower volatility. There are hundreds of stocks to pick from using this investment strategy, including many well-known ones. Author Bio: Dividend Power is a self-taught investor and blogger on dividend growth stocks and financial independence. Some of his writings can be found on Seeking Alpha, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial blogs. He also works as a part-time freelance equity analyst with a leading newsletter on dividend stocks. He was recently in the top 3% out of over 8,116 financial bloggers as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha. Disclaimer: Dividend Power is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money. 

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