Sunday, December 22, 2019

The Week Ahead; Dividend Update

Investors are due for a light period of action with Christmas landing right smack in the middle of the week. The markets close at 1:00 p.m on December 24 before taking a day off on Christmas. Despite the holiday vibe, intriguing economic reports will come in this week on new home sales and durable goods, although the earnings calendar and corporate events schedule are both bare.

Across the Pacific, the latest update on China trade data could be interesting, while Chinese, Japanese and South Korean leaders are gathering in southern China to work on a potential free trade deal. Finally, even if you don't believe in Santa Claus, you can believe in the Santa Clause rally. The S&P 500 Index has posted an average gain of 1.3% during the final five trading days of the year and the first two tradings days of the new year over the last 70 years. 

However, markets in general are overvalued based on the Shiller PE Ratio (chart below), but are no where like it was during the boom in 1999, so markets can go higher. This is not predictive of any market turn, but is based on average inflation-adjusted earnings from the previous 10 years. 

Dividend Update

There are no projected dividend changes this week due to the holiday week so let's take a quick look at the dividend yield leaders heading into 2020. 

Some of the highest yielding stocks on the Dow Jones Industrial Index are Exxon Mobil (NYSE:XOM) at 5.02%, Dow (NYSE:DOW) at 5.14% and IBM (NYSE:IBM) at 4.82%. 

On the S&P 500 Index, yield leaders include Duke Energy (NYSE:DUK) at 4.20%, People's United Financial (NASDAQ:PBCT) at 4.19% and Valero (NYSE:VLO) at 3.81%. 

On the Nasdaq 100, Kraft Heinz (NASDAQ:KHC) at 5.02%, Gilead Sciences (NASDAQ:GILD) at 4.29% and Western Digital ((NASDAQ:WDC) at 3.40% are at the top the list.

Before investing in individual stocks for dividends, please see Dividend Safety and Using Dividends to Improve Returns.

I generally look for dividend paying ETFs (and many are now paying dividends monthly, instead of quarterly) for the diversification, though I've been know to own individual stocks also.

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