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The Dividend Report - December 2020

By Charles Payne CEO & Principal Analyst

The two ways companies reward shareholders are through a quarterly dividend or buying back their shares, which makes the ownership pool smaller, and hence more valuable. Dividends are generally paid out of profits or reserves. Historically, older, and larger companies with strong cash flows pay dividends. While these companies often have slower revenue growth, the amounts taken in are substantial and usually shared generously with shareholders.

The problem is the stock market rewards changes in growth more than it rewards size and stability. For investors looking for steady cash flow from their investments without regard to the performance of principal, the daily, weekly, monthly, even yearly changes in the share price don’t matter. That is a small pool of investors, although millions have been misled into believing they belong in this category.

That said, there is room for a steady yield in every portfolio. The kind of exposure is not only determined by your personal investment goals and risk tolerance but also by market conditions and macro risk factors. 

The financial industry has sold investing households too many dividend and yield products. Under the guise of diversification, these products add  more risk to portfolios than imagined. I’ve gone over thousands of investment portfolios –  chock-full of dividend and yield funds.

They are often redundant, and many are confused when they verve off into certain foreign assets or other investments. There is no reason for investors to settle for owning stocks with high yields when the company’s share prices are moving lower. 

It negates the goal of investing.

Dividend Report

This report is based on a model portfolio of $100,000 minimum and additional annual investments of $25,000.

To read the full report, contact your account representative or email Research@wstreet.com

Charles Payne
Wall Street Strategies


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