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股息新机会:寻找未来的分红明星”

New opportunities for dividends: searching for future dividend stars.

Golden10 Data ·  Jan 16 08:45

The performance of dividend Stocks has been less than satisfactory in recent years, but now is the best time for investors to seek new opportunities.

Chris Senyek from Wolfe Research suggests that investors can focus on companies that have just started paying dividends or those that have recently reduced their dividends.

Dividend stocks are currently in a difficult situation. They should be performing better, but due to the strong job market and high government bond yields, the performance of dividend stocks has been suppressed.

Income-seeking investors can try some proven strategies to generate income while avoiding unnecessary risks.

Chris Senyek, Chief Investment Strategist at Wolfe Research, has tracked various dividend strategies, with two popular strategies being to hold 'Dividend Aristocrats' stocks—those that have raised dividends for 25 consecutive years or more—and to hold stocks with the second-highest dividend yield rather than those with the highest dividend payouts. Senyek states that companies with the highest dividends usually have their reasons, and it's best to avoid them.

Both strategies are affected by interest rate concerns. Katie Stockton, founder and market strategist at Fairlead Strategies, mentions that since September, dividend-paying stocks have been performing poorly, and she believes there won't be a reversal in the short term.Technical analysis.Stockton has not made judgments on the fundamentals of stocks but perceives investors' sentiment through chart patterns, indicating that they seem to be quite nervous.

For investors, there are other options. Senyek looks for companies that have just started paying dividends, as well as those that have recently reduced their dividends. Beginning to pay dividends indicates that management is confident in stable earnings and cash flow, and it also attracts a new group of investors to the stocks.

According to Bloomberg data, in 2024, S&P 500 dividend payers will distribute about 35% of net income and 45% offree cash flowthe dividends to shareholders, with an average yield of about 2.3%; market-cap weighted, it is about 1.5%.

Senyek states that companies that reduce dividends perform poorly before the cut, remain flat with the market in the first few months after the cut, and start to outperform the market about six months later. The key is to select those companies that are likely to reduce dividends and review the stocks of companies that reduced dividends a few months ago.

To predict dividend cuts, Senyek looks for companies with high dividend yields, high debt, and high payout ratios. He has a list of over 50 stocks, including six stocks that are currently not favored by Wall Street analysts: Kohl's Corp (KSS.N), Vail Resorts (MTN.N), The Wendy's Co (WEN.O), Huntsman (HUN.N), Kinetik Holdings (KNTK.N), and AArdagh Metal (AMBP.N).

These six stocks have an average yield of about 8%, and the dividends paid over the past 12 months far exceeded their earnings, with a debt to EBITDA ratio of about 5 times, while a ratio of 2 to 3 times is considered relatively safe. Less than 30% of analysts covering these stocks give a Buy rating, making these stocks appear to be higher risk.

In 2024, the two companies that have reduced dividends and are currently favored by Wall Street are 3M (MMM.N) and International Flavors & Fragrances (IFF.N). 3M reduced its dividend in May while divesting its healthcare division Solventum. International Flavors & Fragrances reduced its dividend in February. About 75% of analysts are bullish on International Flavors & Fragrances' stocks, while about 53% of analysts are bullish on 3M's stocks. With the dividend cuts, it is expected that 35% to 40% of net income in 2025 will be used for dividend payments.

Additionally, there are potential new dividend payers. To find them, Senyek seeks companies with strong free cash flow yield, stock buybacks, and low debt levels. His list includes over 70 stocks, of which six have received strong Analyst support: Skechers USA (SKX.N), Crocs (CROX.O), Regeneron Pharmaceuticals (REGN.O), Robinhood (HOOD.O), Mattel (MAT.O), and technology services company EPAM Systems (EPAM.N).

About 70% of Analysts have given these stocks a Buy rating. These six stocks have repurchased approximately 1.3 billion dollars in shares over the past 12 months and generated over 11 billion dollars in free cash flow. It is expected that earnings and free cash flow will continue to grow by 2025, and dividends may follow.

The translation is provided by third-party software.


The above content is for informational or educational purposes only and does not constitute any investment advice related to Futu. Although we strive to ensure the truthfulness, accuracy, and originality of all such content, we cannot guarantee it.
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