Yahoo Finance's Myles Udland discusses the new normal of lower volatility and firm, consistent buying of any market dip and what that means for bulls and bears. On Thursday Comcast, Southwest, and Procter and Gamble are among the notable companies set to report quarterly results.WATCH »
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In an unpredictable market, dividend and distribution payments are one of the few things investors can reliably count on. Unfortunately, many stocks that have the highest dividend yields come with a catch. When a stock drops, dividend yields rise given they are calculated as a percentage of share price.
Futures: After Wednesday's stock market rally pause, Texas Instruments, Teradyne, Citrix moved on earnings. PayPal and Paycom Software rose on other news.
Growth and dividends are the sure-fire ways to find profit in your investments. The hard part is finding stocks that combine the two. It’s not that they are necessarily incompatible – rather, it is just that the highest growth stocks tend to achieve their appreciation by plowing profits directly back into the company. Dividend payments dilute this, by paying some or all of the profits back to investors. Still, there are investment sectors where growth and dividends walk hand-in-hand.The natural place to look is in sectors with high cash flows and essential products. Energy comes to mind. Without energy, our modern digital economy will grind to a quick halt. Energy companies – whether they extract oil from the ground or generate electricity for commercial use – earn a profit buy fueling modern life. Investors can piggyback on that, drawing profits from the sector’s cash flow.Investment bank JPMorgan released a special report on the North American energy industry, emphasizing just these attributes – the rising production, the high cash flow, and the fundamental strength of the industry to survive a prolonged period of low prices. On US natural gas production, JPM “sees ~3% US onshore growth in 2020, driven largely by [Permian basin] production,” while noting that, for crude oil, “[Texas’] Midland remains the most economic shale play in the US as breakevens have drifted lower over the last year, largely due to increased oil pipeline capacity.”JPM’s final point, on increased pipeline capacity, brings us to the midstream sector, a vital component of the energy industry. Midstream companies move the oil and gas that extraction companies pull out of the ground; without the midstream segment, fuel would not reach the customers. JPMorgan sees room in midstream for investment activity, saying, “We believe yield-hungry investors will continue to gravitate towards quality midstreamers with strong business models and corporate governance.”In this article, we’ll look at three JPMorgan dividend stock recommendations from the energy sector. As you can see from the TipRanks Stock Comparison tool, all three offer excellent dividend yields, affordable cost of entry, and a genuine upside potential. Let's take a closer look.Plains All American Pipeline (PAA)Start with Plains All American, a pipeline company based in Houston, Texas. The company operates across much of North America, with oil pipelines across the US, natural gas storage facilities in Michigan and Louisiana, and liquid petroleum gas facilities in Canada. The company owns and operates over 17,000 miles of crude oil and gas pipelines, as well as rail, trucking, and river transport assets, along with 109 million barrels of storage capacity.In Q3 last year, the most recent quarterly report on record, PAA showed an adjusted EPS of 52 cents, beating the expectation by an impressive 33%. That number was also up 20% year-over-year. Revenues, at $7.89 billion, were in line with expectations, but down 10% year-over-year. The company’s Transportation, Facilities, and Supply and Logistics segments all showed yoy increases. Forward guidance predicts full year 2019 earnings at $2.35 – investors will have to wait until February 4 for the Q4 and full year numbers to find out.PAA does have an immediate treat for shareholders, however. The company pays out a dividend of 36 cents quarterly, or $1.44 annually per share. This translates to an impressive yield of 7.75%. Considering that the average dividend yield among S&P 500 listed companies is only 2%, this gives PAA shares a strong return on cash invested. The payout ratio, a comparison of the dividend with the earnings, stands at 69%, indicating that the dividend is easily sustainable at current rates.JPMorgan analyst Jeremy Tonet reviewed this stock and he's clearly bullish. In his comments, the 4-star analyst said, “We see PAA as well-positioned for pipe competition with lower leverage and S&L expectations, as well as JV strategic partner alignment. As such, we favor PAA's Permian torque & solid project backlog.”Tonet reiterated his Buy rating on PAA alongside a $25 price target, which indicates confidence in a 34% upside potential. (To watch Tonet’s track record, click here)PAA’s Strong Buy consensus rating is based on 14 reviews – including 11 Buys against just 3 Holds. The stock sells for an affordable price of $18.59, and the $22.79 average price target suggests an upside of 22%. (See Plains All American’s stock analysis at TipRanks)Targa Resources Corporation (TRGP)Targa is a midstream company, like PAA above. These are the companies that provide the infrastructure needed to get oil from the wellheads to markets. Targa operates mainly in the states Texas-New Mexico-Oklahoma-Louisiana, with over 28,000 miles of natural gas pipelines, moving over 3.9 trillion cubic feet of gas and 415,000 barrels of natural gas liquids.Late last year, Targa sold off its West Texas Permian oil gathering assets, in a move that allows the company to focus on pipeline operations. The move was intended to compensate for high overhead and somewhat disappointing Q3 earnings. TRGP missed badly on revenues, with the $1.9 billion reported coming in well below the $2.17 billion forecast. Worse, from an investor perspective, the company gave forward guidance on capex for 2020 of $1.3 billion, higher than expected.With all of that, however, TRGP maintained its hefty dividend. The yield, at over 9%, is 4.5x the average on the S&P, and the annual payment is $3.64. This comes out to 91 cents paid out per share quarterly. Targa has held that dividend steady since 2H15, providing investors with a reliable, high-yield income stream.JPMorgan's Jeremy Tonet, quoted above, also examined Targa in his energy industry report. Seeing the company as a Buy proposition, Tonet wrote, “Targa possesses top tier leverage to liquids rich production and downstream NGL logistics, with attractive exposure to the Permian. While TRGP's commodity price exposure represents a double-edged sword, we believe executing on the current portfolio of attractive NGL logistics projects will deliver the 'pig through the python' and drive de-leveraging and positive re-rating.”Tonet gave TRGP a $49 price target, implying an upside of 22%. (To watch Tonet’s track record, click here)Targa has received 10 recent analyst reviews, and the split reflects both the company’s strong position and worries over the Q3 revenues. The stock’s 4 Buys, 5 Holds, and 1 Sell rating combine to give a Moderate Buy consensus view. Shares are selling for $40.22, and the $42.44 average price target indicates a 5.5% upside potential. (See Targa’s stock analysis at TipRanks)Williams Companies (WMB)Tulsa-based Williams is a utility provider, dealing mainly in natural gas processing and transport. The company also owns assets in the petroleum industry and in electricity generation. Williams handles – through provision or transport – as much as 30% of the natural gas used daily in the US. Customers range from residential to commercial to power generation companies.WMB was showing mixed results in 2H19. For the third quarter, the company’s revenues missed the forecast by 4.3%, coming in at $2 billion. Worse, that performance was also 13% below the year-ago number. Earnings, however, rose, and the 26 cent EPS reported was 8.3% better than expected. And even better, for income-minded dividend investors, distributable cash flows rose 8% to $822 million.Williams uses its cash flow to fund a 6.6% dividend. That yield is impressive – it’s 3.3x the S&P average – even though the absolute number is low. The quarterly payment of 38 cents annualizes to $1.52 per share. The company has been slowly – but steadily – increasing the dividend since 2017.Once again, we have a review from Jeremy Tonet for this stock. Tonet says of WMB, “Williams owns one of the largest integrated natgas infrastructure positions in North America... We believe that WMB as a single security, IG-rated energy infrastructure c-corp with a strong yield will attract significant generalist investor interest.”Tonet’s Buy rating is backed by a $28 price target, suggesting a strong 22% upside potential. (To watch Tonet’s track record, click here)Overall, WMB shares have a Moderate Buy from the analyst consensus, based on 5 Buys and 3 Holds recently assigned. The stock sells for $23.01, and the $30.71 average price target indicates a premium potential of 33% from that selling price. (See Williams’ stock analysis at TipRanks)
Tesla stock shot up to a record high as the electric-car company reached a market valuation above $100 billion for the first time and gets set to report fourth-quarter earnings next week.
As you invest for retirement, becoming a millionaire might be a reasonable goal. Yes, millionaire status is no longer rarefied air, and depending on your income needs, having at least $1 million in the bank might be necessary to last … Continue reading ->The post How To Invest $100,000 (and Turn It Into $1 Million) appeared first on SmartAsset Blog.
For the year to date, IBM shares have rallied a solid 7.4%. Steve Milunovich, tech strategist at Wolfe Research, took a look at IBM shares (ticker: IBM) in a research note Wednesday morning and advised investors to put the fourth-quarter performance into perspective. Ten years later, Microsoft’s valuation is 10 times higher than IBM’s.
J.P. Morgan chief Jamie Dimon says negative interest rates in Europe and Japan are his top concern and warns that the U.S.government is to blame for slow economic growth
The term 'buy when there's blood in the streets' was coined in the 18th century by Baron Rothchild. The contrarian act, as most investors know, is a preemptive call to load up on shares of downtrodden and badly performing companies that have recently taken a severe beating in the market but present the perfect timing to invest. While some investors automatically avoid underperforming names, the ones willing to take the risk can often receive handsome reward once the company at question executes a turnaround.Wall Street pros know the system well and are often on the lookout for such opportunities. With this in mind, We'll open up the TipRanks database and take a look at three beaten down stock which those in the know think are ripe for a trend reversal. We used TipRanks’ Stock Screener to get the lowdown, and we also noticed that currently all three boast Strong Buy consensus ratings from the Street. Let’s check them out.World Wrestling Entertainment (WWE)Talk about bloody and beaten down stocks leads us nicely into the first name on our list; World Wrestling Entertainment. In contrast to the S&P 500’s record breaking performance last year, WWE lost almost 13% of its share price in 2019. The drop was reflected in WWE’s waning popularity – lower live attendances and TV ratings on top of less streaming subscribers are all worrying trends for the company.That’s the bad news, then. The good news is that WWE has taken care of TV revenue for the next 5 years. The company’s new US deal for its Raw and SmackDown programs should see it pocket in the region of $500 million annually over the period, which is approximately double what it made in the past year. Furthermore, its NXT brand brings in from Comcast an additional $30 million a year. With more international deals in place, the question is whether the company can turn around the declining figures to ensure its longevity once the current deals expire.Needham’s Laura Martin thinks WWE has what it takes. The 5-star analyst recently interviewed WWE’s management and came away confident in its prospects. Martin said, “WWE believes it can continue to grow US subs, even in the context of more fragmentation of audiences, suggesting that super-fandom niche OTT service are largely immune from the Streaming Wars between deep-pocketed general entertainment SVOD services. If true, this has positive implications for WWE's pricing power. Also, WWE uses social media and its linear TV air-time to lower its customer acquisition costs for its new OTT subscribers."Martin, therefore, reiterated her Buy rating on WWE. The 5-star analyst’s price target comes in at $88 and represents potential upside of 40%. (To watch Martin’s track record, click here)The Street agrees. A unanimous 10 Buy ratings dished out over the last 3 months presents WWE with a Strong Buy consensus rating. The average price target of $81.56 implies possible upside of 30%. (See WWE stock analysis on TipRanks)Ollie's Bargain Outlet (OLLI)Ollie's Bargain Outlet stock had quite a ride last year, increasing by over 50% before crashing back down whilst shedding 40% of its value. 2020 hasn’t kicked off all that well either; Ollie’s is down by nearly 18% year-to-date.The sell-off comes despite a better than expected F3Q19 report. Net sales of $327 million represented an improvement of 15.3% year-over-year and resulted in adjusted (non-GAAP) net income of $26.8 million, an increase of 28% over the same period in the prior year.Ollie’s has also been expanding opportunistically; last year the company bought 12 Toys R Us locations and leased six others around the country following the former toy giant’s bankruptcy. It also purchased almost $200 million dollars of toys from Toys R Us suppliers’ excess inventory.So, with Mr. Market being unkind to Ollie’s, should investors stay away? Not according to RBC analyst Scot Ciccarelli.The 5-star analyst believes the recent sell-off spells opportunity, noting, “We think Ollie’s has one of the best long-term store growth profiles in the Hardlines/Broadlines Retail sector. Further, the company’s stores generate strong cash-on-cash returns of ~60%+, with 4-wall EBITDA of $585,000–600,000 ($630,000 in most recent vintages) on an initial $1 million investment. In addition, its constantly changing/treasure hunt-oriented shopping experience, coupled with its steep clearance-level prices, should help insulate the company against e-commerce cannibalization.”Accordingly, Ciccarelli reiterated an Outperform rating on Ollie’s, while raising his price target from $69 to $76. The new price target represents possible gains in the shape of 42.5%. (To watch Ciccarelli’s track record, click here)Based on the consensus breakdown, the majority on the Street also back the discount retailer’s prospects in 2020. 4 Buys and a single hold assigned over the last 3 months amount to a Strong Buy consensus rating. At $72, the average price target presents possible upside of ~36%. (See OLLI stock analysis on TipRanks)Madrigal Pharmaceuticals Inc (MDGL)Completing our trio of beaten down stocks is Madrigal Pharmaceuticals, which saw its shares falling nearly 20% in 2019.In mid-December, the drugmaker's shares responded negatively to the announcement that a few investment funds affiliated with Bay City Capital are heading for the exits. The funds offered 1,200,000 Madrigal shares at $107.85 apiece -- a 9% discount to the previous closing price. In other words, the funds probably had to price the offering at a discount simply to entice investors.But things aren’t as bad as they may seem, argues Evercore analyst Joshua Schimmer.Madrigal is one of several companies hoping to bring a therapy for NASH disease (Non-Alcoholic SteatoHepatitis), a fatty liver disease that due to the obesity epidemic has been attracting lots of investment capital in search of a possible treatment. NASH medications are expected to increase into a massive market over the next decade, and as there are currently no NASH-specific drugs available, whoever brings a viable solution to the market will likely be well rewarded.Madrigal's lead drug candidate is resmetirom (MGL-3196), an orally administered, thyroid hormone receptor (THR) β-selective agonist. The drug is currently in a Phase 3 trial, after showing positive data in the 2 prior trials.Schimmer thinks “2020 is an execution year” for Madrigal. The 5-star analyst said, “We continue to believe that resmetirom may have a differentiated profile, as a clean, oral therapy… the company’s P2 dataset continues to stack up well to the competition which has seen multiple recent disappointments in the field. We continue to believe that resmetirom (MGL-3196) has a strong chance of success in P3, with results expected in ~2021.”To this end, Schimmer reiterated an Outperform rating on Madrigal along with a price target of $250. This implies upside potential of a massive 192%. (To watch Schimmer’s track record, click here)On the Street, Madrigal’s Strong Buy consensus rating breaks down into 6 Buys and 1 Hold. The average price target of $169.67 implies upside potential in the shape of 100% over the next 12 months. (See Madrigal stock analysis on TipRanks)
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(Bloomberg) -- AT&T Inc.’s obsession with paying down debt has led to some financial creativity.Right before the end of 2019, AT&T took a collection of cell-tower rent payments that it will receive in the future, rolled them into a subsidiary, then sold shares of the unit to investors for $6 billion.The new entity is called AT&T Investment & Tower Holdings LLC, and the preferred shares pay as much as 5% annually, according to a filing last month. The proceeds will go toward general purposes and paying down debt, AT&T said.The move is the largest in an ongoing effort by AT&T to turn assorted assets into cash that it can use to whittle away at its borrowings. AT&T has set a goal to lower its leverage ratio to between 2 and 2.25, a target it promised shareholders, including activist investor Elliott Management Corp.In this case, with the tower receivables, AT&T raised $6 billion up front, which requires an interest payment of 4.75% to 5%. While that’s a higher interest rate than nearly any loan AT&T could have received, the one significant advantage is that the $6 billion doesn’t add to its $165 billion debt pile.“This is a bit of a surprise for a high-grade-debt company like AT&T,” said Dave Novosel, an analyst with Gimme Credit.AT&T representatives declined to comment on the tower-receivables entity, citing a quiet period ahead of its earnings report later this month.$200 BillionAT&T’s mountain of debt reached $200 billion after its 2018 purchase of Time Warner. The deal was part of the phone company’s strategy to transform into a modern media colossus. In the past year, the Dallas-based company has sold at least $7 billion worth of assets. Some were easy castoffs, such as its stake in Hulu and its office space in New York’s Hudson Yards.It’s all part of the plan AT&T Chief Financial Officer John Stephens pitched anew to investors earlier this month at a Citigroup conference in Las Vegas.“I’ve got to find some assets to monetize, whether it’s selling out Hudson Yards or selling Hulu or whether it’s finding these tower-company receivables,” Stephens said. AT&T has to “go out and figure out a way to monetize those things that people didn’t pay much attention to. That was a significant part of what we did in the fourth quarter.”The timing was ideal if AT&T wanted to stay below the radar, Novosel said.“December is a time when people are focused on other things,” he said. “It’s a good time to avoid attention.”\--With assistance from Miles Weiss.To contact the reporter on this story: Scott Moritz in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Nick Turner at email@example.com, John J. Edwards IIIFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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