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美股估值高企,2025关注高股息投资

U.S. stock valuations are high, focus on high dividend investments in 2025.

Balen Chinese ·  Jan 14 01:26

Source: Barron's Chinese
Author: Lawrence C. Strauss.

The S&P 500 has increased by over 20% for two consecutive years, the first time since the late 1990s, making dividends particularly important in this context.

An important question facing the U.S. stock market in 2025 is whether the strong upward momentum can expand from the technology "seven giants" that have dominated in recent years to other stocks.

However, when it comes to dividends, most stocks are expected to see growth of 4% to 6% in dividends in 2025.

Ben Snider, Senior Strategist of the U.S. Investment Portfolio Strategy Macro Team at Goldman Sachs, said: "From a macro perspective, the main driver of dividends has always been earnings growth. Last year's earnings growth was strong, and we believe earnings growth in 2025 will be even better."

Goldman Sachs expects that by 2025.$S&P 500 Index (.SPX.US)$The EPS of component stocks is expected to grow by 11%, higher than the estimated 8% for 2024. Goldman Sachs believes this will drive a 7% increase in dividends in 2025, above 6% in 2024.

Bank of America Securities U.S. stock strategist Ohsung Kwon's predictions are more optimistic. He expects that driven by accelerating earnings growth, dividends for S&P 500 Index components will increase by 12% in 2025.

In 2023, the earnings growth of S&P 500 Index components has been weak, but rebounded since last year. Kwon noted that there is usually about a three-quarter lag between earnings growth and dividend increases.

He stated: "Given the accelerated EPS growth of S&P 500 Index components over the past year, we expect dividends may increase accordingly."

Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, expects the average dividend increase in 2025 to be around 8%. He believes that total dividends in 2025 will set a new record, reaching around 685 billion dollars, with an anticipated total of 630 billion dollars in 2024.

Silverblatt pointed out that supporting dividend growth is the "current record earnings and the potential for future records, as well as falling interest rates, strong job markets, and potential economic growth momentum."

Looking ahead, Kwon expects the role of dividends in total stock returns to be more important than in the past decade, as dividends "have not contributed significantly to total returns in the past decade."

Total stock returns mainly come from capital appreciation and dividends.

Dividend Growth

It is expected that most of the 11 industries in the S&P 500 Index will achieve solid dividend growth by 2025, partly due to better earnings growth.

Source: Bloomberg

Some companies among the "seven giants" of Technology do not distribute dividends, for$Microsoft (MSFT.US)$and $Apple (AAPL.US)$ companies that do distribute dividends, the price increase – rather than the dividend – accounts for the largest portion of their total stock return.

However, a study by Bank of America Securities at the end of last year showed that from 1936 to 2012, dividends contributed 40% of the total return of the S&P 500 Index, but this proportion has dropped to only 16% in the past 10 years.

The S&P 500 Index has risen more than 20% for two consecutive years, the first occurrence since the late 1990s, making dividends particularly important in this context.

The relatively low payout ratio is also bullish for dividend growth. Kwon pointed out that the current payout ratio is 29%, far below the historical average of 50%, and he said, "Companies still have plenty of room to increase dividends."

Kwon noted that more and more baby boomers are seeking alternative income after retirement, which is another strong pillar for dividend investing. He stated, "The yield on Cash / Money Market products is around 4%, and nowadays people want to Hold Cash, so investors demand that companies distribute dividends."

This includes companies in the Technology Industry.

Although the Technology Industry is not known for high dividend yields, they distribute a considerable amount in dollar terms. For example, Apple, with a dividend yield of 0.4%, distributed $15.2 billion in dividends in the 12 months ending last September.

Data from FactSet shows that the recent dividend yield of the S&P 500 Information Technology industry is 0.6%, but Goldman Sachs data indicates that the Technology Industry recently accounted for about 15% of the total dividend distributed among S&P 500 Index component stocks, second only to the Financial Industry's 17%.

Large technology companies that began paying dividends last year include those with a dividend yield of 0.3%.$Meta Platforms (META.US)$With a dividend yield of 0.5%,$Salesforce (CRM.US)$ The AI giant$NVIDIA (NVDA.US)$'s dividend yield is only 0.03%, but last year the company slightly increased its dividend.

Snyder stated when discussing the broader and smaller environments: "Whether top-down or bottom-up, the outlook for dividend investing is good."

Snyder also mentioned that some investors oppose his view, as they believe that more significant dividend growth is limited to large technology stocks, but Snyder pointed out that the median dividend growth for S&P 500 Index constituents in 2024 is 6%. He expects that dividend growth will remain a common occurrence, including in the Technology and Financial Industries.

Snyder said: "Due to the positive outlook for profit growth this year, financial stocks have performed very well recently, and they are 'dividend payers'."

For example, banking giant JPMorgan's (JPM) dividend yield is 2.1%, and its total stock return, including dividends, over the past year was about 45%. Last fall, JPMorgan announced an increase in its quarterly dividend from $1.15 per share to $1.25, an increase of nearly 9%.

Asset management company Blackrock (BLK) has an annual total return of about 30% and a dividend yield of about 2%, with a current quarterly dividend distribution of $5.10 per share.

Large regional banks$U.S. Bancorp (USB.US)$ have a dividend yield of 4.1% and an annual total return of about 17%, with the company raising its quarterly dividend to $0.50 per share last year.

$Chubb Ltd (CB.US)$The annual total return is about 20% with a dividend yield of 1.4%, and the company raised its quarterly dividend from $0.86 to $0.91 per share last year.

Bloomberg data shows that, based on the Select Sector SPDR ETF products tracking various Industries (which provide investors a way to invest in the S&P 500 Index's 11 Industries), financial stocks' dividends are expected to grow by an average of 20% this year compared to last year.

Dividends for Real Estate stocks and Medical Care stocks are expected to grow by 24% and 9% respectively, which demonstrates the widespread potential for dividend growth across various Industries.

Editor/Rocky

The translation is provided by third-party software.


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