![]() ![]() Nowadays, it’s difficult to distinguish your mobile offering, and customer switching costs are low, so wireless companies compete mostly on price, eroding margins. That reflects the market’s concern about Verizon’s ability to compete in the mobile market. Some of this is due to a 30% share price decline over the past year. Verizon (NYSE: VZ) is no exception, with a dividend yield of over 7%. However, Pfizer has a strong history of successful drug development, so this could be a suitable entry point.Īnother sector to find stocks for long-term dividends and any buybacks is communications. Pfizer stock is lowly valued compared to some of its Pharma peers, reflecting uncertainty about the group’s ability to push out new drugs to plug the gap left by falling vaccine sales. The group’s payout ratio is less than 50%, which means there should be plenty of wiggle room as management copes with the more challenging environment ahead. The group pays out a dividend yield just shy of 4.5%, making it a good choice for income investors. ![]() This investment has set the group up to navigate difficult waters ahead as some of its blockbuster drugs lose their patent protection. But the group put the cash to good use, beefing up investment in research & development. The group benefitted from an enormous cash windfall from vaccine sales, which have now dropped off a cliff with the pandemic behind us. Thanks to its early vaccine candidate, pharmaceutical giant Pfizer (NYSE: PFE) was a huge winner during the pandemic. The pharmaceutical sector is a good place to find some of the top stocks for dividends and buybacks. ![]() It means shareholders automatically own a larger chunk of the company. Buying back shares reduces the number on the market, often leading to a bump in the share price as a result. Whereas companies have to cut their dividend if times are tight, buyback programs offer a way to return excess cash to shareholders on a one-off basis. The latter offers a bit more flexibility. Both dividends and buybacks are ways that companies return cash to shareholders. Investors can also look at cash flow compared to dividend payouts to understand how difficult it is for a particular company to cover or increase its dividend payments.įinally, income investors may want to consider the top stocks for dividends and buybacks. A number greater than 1 means the company pays investors more than it makes, suggesting those dividend payments are unsustainable. The first is to look at the payout ratio, which compares a company’s dividend payouts with its net income. There are a few ways to work out whether a company’s got the financial fortitude to continue paying and expanding its dividend. Dividends aren’t guaranteed and are often the first thing to hit the chopping block when financial trouble strikes. Typically, a low share price reflects low confidence in the market and could suggest the company’s financials aren’t strong enough to cover its expected payouts. Second, it can be artificially inflated by a low share price. First, it’s backward-looking- so it measures the previous dividend payments against the current share price. It offers a touchpoint for investors, but it’s an imperfect measure. This tells you the percentage of that company’s share price paid out in dividends. The obvious starting point to locate these types of investments is by looking at yield. Validea offers both stock analysis and model portfolios based on gurus who have outperformed the market over the long-term, including Warren Buffett, Benjamin Graham, Peter Lynch and Martin Zweig.Income investors often search for stocks for long-term dividends and buybacks to round out their portfolios. When he combined that measure with price momentum, he was able to double its outperformance.Ībout Validea: Validea is an investment researchservice that follows the published strategies of investment legends. He showed that stocks in the top 20% of the universe according to that measure outperformed the market going forward. In the paper, he identified seven fundamental variables (earnings, return on equity, return on assets, accrual operating profitability to equity, cash operating profitability to assets, gross profit to assets and net payout ratio) that he combined into a single fundamental momentum measure. His paper "Twin Momentum" looked at combining traditional price momentum with improving fundamentals to generate market outperformance. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy's criteria.Ībout Dashan Huang: Dashan Huang is an Assistant Professor of Finance at the Lee Kong Chian School of Business at Singapore Management University. The following table summarizes whether the stock meets each of this strategy's tests. ![]()
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