The Return of Dividends
In 2020, the Covid-19 crisis and geopolitical tensions with the war in Ukraine led to turbulence in the financial markets. These factors were the main drivers behind the global rise in inflation. In response, central banks implemented their monetary policies to combat inflation.
The latest macroeconomic indicators confirm the effectiveness of this monetary policy in the fight against inflation. These rate hikes have prompted investors to turn to short-term Treasuries, reaching their highest level since 2007, at 5% on July 27, 2023. This event has made high-dividend stocks less attractive to investors who favor bonds.
However, the Federal Reserve's outlook suggests that the end of rate hikes is near, supporting the stock market. To remain defensive, we favor high-dividend stocks, which investors often appreciate during uncertain phases. Indeed, between 1993 and 2021, dividends accounted for 40% of the cumulative performance of the S&P 500 over the period. This, explains why investors prioritize high-dividend stocks to improve the overall yield of a portfolio.
To illustrate this, in the United States, dividend growth has exceeded inflation by 5% per year over the last 20 years until October 30, 2022, and by 2.1% per year over 100 years studied, as shown in Figure 2. This trend suggests that high-dividend stocks could be attractive choices for structuring yield products.
In 2022, despite economic uncertainties, nearly 88% of companies increased or maintained their dividends, resulting in a total dividend payout of 1,560 billion dollars to their shareholders (+8.4% compared to 2021). This, demonstrates their commitment to shareholders and confidence in the company's future financial health. According to the asset management company "Janus Henderson," global dividends are projected to reach 1,640 billion dollars in 2023, compared to 1,560 billion dollars in 2022, representing an overall growth of 5.2%.
Generally, investing in dividend-paying stocks offers potential for stable and attractive returns, with companies committed to their shareholders, showcasing quality management and demonstrating a long-term growth perspective.
- Dividends > 2%
- Debt/EBITDA ratio
- Equity capital
- Free Cash Flow
- Payout ratio <65%
Phoenix Memory | Product Snapshot
For informational purposes only. Not investment advice.
In 2020, the Covid-19 crisis and geopolitical tensions with the war in Ukraine led to turbulence in the financial markets. These factors were the main drivers behind the global rise in inflation. In response, central banks implemented their monetary policies to combat inflation.
The latest macroeconomic indicators confirm the effectiveness of this monetary policy in the fight against inflation. These rate hikes have prompted investors to turn to short-term Treasuries, reaching their highest level since 2007, at 5% on July 27, 2023. This event has made high-dividend stocks less attractive to investors who favor bonds.
However, the Federal Reserve's outlook suggests that the end of rate hikes is near, supporting the stock market. To remain defensive, we favor high-dividend stocks, which investors often appreciate during uncertain phases. Indeed, between 1993 and 2021, dividends accounted for 40% of the cumulative performance of the S&P 500 over the period. This, explains why investors prioritize high-dividend stocks to improve the overall yield of a portfolio.
To illustrate this, in the United States, dividend growth has exceeded inflation by 5% per year over the last 20 years until October 30, 2022, and by 2.1% per year over 100 years studied, as shown in Figure 2. This trend suggests that high-dividend stocks could be attractive choices for structuring yield products.
In 2022, despite economic uncertainties, nearly 88% of companies increased or maintained their dividends, resulting in a total dividend payout of 1,560 billion dollars to their shareholders (+8.4% compared to 2021). This, demonstrates their commitment to shareholders and confidence in the company's future financial health. According to the asset management company "Janus Henderson," global dividends are projected to reach 1,640 billion dollars in 2023, compared to 1,560 billion dollars in 2022, representing an overall growth of 5.2%.
Generally, investing in dividend-paying stocks offers potential for stable and attractive returns, with companies committed to their shareholders, showcasing quality management and demonstrating a long-term growth perspective.
- Dividends > 2%
- Debt/EBITDA ratio
- Equity capital
- Free Cash Flow
- Payout ratio <65%
Phoenix Memory | Product Snapshot
For informational purposes only. Not investment advice.