Dividend Stocks in an Uncertain Macro-Environment

Dividend Stocks in an Uncertain Macro-Environment
<a href="https://pixabay.com/users/3112014/">3112014</a> / Pixabay


A recent report from Nomura Holdings, Inc. (TYO:8604) Equity Research has some interesting  analysis on dividend stocks. The report, entitled “Stock Ideas In A World Of Hurt” begins by defending that title and offering some rays of hope to investors fearful due to the recent downturn in economic recovery expectations and equity prices.

The first major section of the piece concentrates on companies that offer high dividend yields with little risk. These types of investments are highly sought after as an alternative to low yielding treasuries.

Brook Asset Management had a strong first quarter, is shorting This US education stock [Exclusive]

Brook Asset Management was up 7.27% for the first quarter, compared to the MSCI GBT TR Net World Index, which returned 3.96%. For March, the fund was up 1.1%. Q1 2021 hedge fund letters, conferences and more In his March letter to investors, which was reviewed by ValueWalk, James Hanbury of Brook said returns during Read More

Stocks chosen under the section “quality dividend yields” all offer yields of greater than 4.5% with some edging toward 9%. The list concentrates on firms that have relatively low uncertainty associated with their business, and have the cash flow to pay dividends.

Dividend Stocks in an Uncertain Macro-Environment

Some of the names included in the list include the telecommunications firm Frontier Communications Corp. (NASDAQ:FDR), which specializes in providing phones and internet to rural and smaller urban areas in the United States.

Firms from outside of North America include French natural gas and electricity supplier GDF Suez SA (EPA:GSZ), which sports a yield of 8.6%. Australian lottery operator Tatts Group Limited (AU:TTS) is projected to have a dividend yield of  8.3% going forward.

Nomura offers a steady stream of ideas that promote healthy investing even in a world where that seems improbable at best. The firm offers some quality ideas that should not be ignored as the Macroeconomic outlook does not look particularly welcoming in the coming months. It takes a value oriented approach, looking at companies and ignoring the macro environment.

For investors seeking a less risky investment which still generates income, dividend stocks are the way to go. Treasuries have ultra low interest rates, which have a negative yield after inflation. Foreign bonds are far too risky for most investors as Europe teeters on the brink of collapse. Distressed debt is an area for investors who are experts in the field, but should be avoided by the vast majority of both retail and institutional investors.

Outside of the dividend world Nomura promotes other kinds of investing that may be just as successful in notmalized economic times. The three other options that round out the report include “Growth Defensives”, “Organic Growth” and equities acceding to their “Structural Thematics”.

Growth defensives are firms that enjoy a stronger two year outlook than the market average. Nomura picks stocks with expected EPS growth of greater than 15% for 2013. Stocks under this heading include Kinder Morgan Inc. (NYSE:KMI), the energy logistics firm.

Organic Growth firms are firms that have access to endogenous sources of growth and so are not as vulnerable to the swaying market. The report includes Apple Inc. (NASDAQ:AAPL) as a contender in this category. Apple in a recent announcement, stated that the company will be paying  dividends going forward.
Firms undergoing structural thematics are more difficult to analyze. These are firms that will benefit from current global trends like urbanization and an arms race in Asia. In the case of an Asian Arms Race, Nomura picks Japan’s Mitsubishi Heavy Industries Ltd (TYO:7011) as a likely beneficiary.

Dividend Stocks in an Uncertain Macro-Environment

Nomura has ideas for equity investment even in a time when some are declaring the death of the stock market. Even when the market is under performing there are always key investments to look out for that can gain value.

This is key to the development of investors, and those investing in harsher times have a lot more to learn than those riding high on a bubble.


No posts to display