Latest news with #DanLefkovitz
Yahoo
2 days ago
- Business
- Yahoo
The case for investing in emerging markets, despite underperformance
In an industry known for its veritable alphabet soup of acronyms, the lower or even vanishing usage of "BRIC" — that's Brazil, Russia, India and China — is a sign of the times. Amid "a state of deep outflows" in mutual funds and ETFs tied to emerging markets, research firm Morningstar retired its BRIC category last year because "those strategies were relics of an age when the hot investment theme was the growth" in those countries and South Africa, Morningstar Indexes Analyst Dan Lefkovitz wrote in the firm's second-quarter magazine. The substantial underperformance of emerging markets compared to U.S. stocks in the past 15 years reflects the complete opposite scenario from 2000 to 2009. In that time, U.S. stocks had a "lost decade," while emerging markets were providing "an oasis of strong returns," he wrote. As one tangible yet ironic example of the completely different landscape, it's common to see ripoffs of Pop Mart's Chinese toys in New York's Union Square today, according to John Dance, the portfolio manager for Fidelity Investments' Emerging Markets Fund. About 20 years ago, knockoffs of American goods were prevalent in China, he noted. Dance and other portfolio managers speaking in a panel at last month's Morningstar Investment Conference acknowledged the complexity of investing in emerging markets, whether in terms of their current low returns at the macro level or the inevitable political factors involved with the asset class. If President Donald Trump's ongoing trade negotiations aren't causing some volatility on a particular day, any number of unforeseen events could do so. READ MORE: Billions flood into active ETFs in hunt for cheap emerging market stocks As Dance put it, there is always "something going on somewhere," and "I'm pretty used to losing sleep as a consequence." Still, he and other investing experts argue that international holdings offer diversification and potential for outsize returns with the right level of granular expertise tapping into, say, China or India. At the macro level, popular demographics dictate that developing economies will give rise to more consumers and investors worldwide in the future. "I'm trying to look at where those transitions are happening," Dance said. "There are buckets of opportunity there, and you just have to get the magnifying glass out and do the work on the ones that make sense." Morningstar data comparing indices covering more than 3,500 stocks in over 20 countries to one tied to U.S. equities display why active management remains so important to emerging markets. From March 2010 to this past March, the emerging markets index had a gross return of just 81%, while Morningstar's U.S. index jumped by 515%. On the other hand, the emerging markets index notched a gross return of 156% between January 2000 and December 2009, while the U.S. stocks lost 1%. So the emerging markets may be undervalued today: They're trading at a price-to-earnings ratio of 14, but U.S. stocks' P/E is 24. The "structural story around emerging markets remains intact," Morningstar Investment Management Chief Investment Officer Philip Straehl said in comments included in Lefkovitz's analysis. "Emerging markets represent 80% of the world's population and nearly 70% of the world's GDP growth but only 10% of the total global equity market cap. A burgeoning middle class continues to develop in emerging markets and should prevent interesting opportunities for investors, albeit with higher volatility." READ MORE: The top 20 emerging market funds of the decade The panelists echoed that view, with some caveats of their own. After a time of "almost hyper-globalization," no one can say for sure "how far the reversal will go" and affect the economy and particular companies in places like India, Vietnam, Mexico and China, noted Lisa Thompson, an equity portfolio manager with Capital Group, the parent firm of American Funds. India represents "one of the true great emerging market growth stories out there," but investors should be price-sensitive in "a real stock-pickers' market" in that country, Thompson said. In fact, the trade uncertainty and other political trends in China are adding to that trend. "China is very complex," Thompson said. "There are ways to get exposure to the growth in China, there are ways to minimize exposure and you can choose companies wisely." For financial advisors and their clients, one other takeaway is the simple fact that "things do change," said Rohit Chopra, a portfolio manager and analyst with Lazard Asset Management. He noted that, "What sometimes the market takes as given often doesn't prove to be right." That means investors need an expert-level research focus on the most relevant information in every country, which could amount to political subtleties and monetary policies affecting the performance of, say, a bank in Turkey. "No moment in emerging markets is a dull one," Chopra said. "That gives us the ability to have conviction around where some of the mispricing or some of the anomalies exist." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
19-03-2025
- Business
- Globe and Mail
The Best Vanguard ETF to Invest $1,000 in Right Now
What to invest in now -- that may seem like a tough decision, given the current economic uncertainty in the U.S. including ongoing tariff-related concerns. Investors are worried about inflation, about stock market declines, and even a potential recession. Let's say you have $1,000 to invest right now. The Vanguard International Dividend Appreciation ETF (NASDAQ: VIGI) is a strong option to consider investing in with that amount -- or any other amount. (Remember that an exchange-traded fund (ETF) is a fund that trades like a stock.) Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Dividend appreciation First off, the "dividend appreciation" in the title likely refers to the fund's goal of focusing on stocks that not only pay dividends, but that pay growing (i.e., appreciating) dividends. But let's take a moment to simply appreciate dividends. Per S&P Global: Numerous academic studies have shown that dividend-paying stocks have historically outperformed non-dividend payers. However, much of the available dividend research focuses on the U.S. and other developed markets. A study published by Morgan Stanley Research showed that there is a strong relationship between dividend yield and total return in developed and emerging markets, with this link being the strongest in emerging markets. And per Dan Lefkovitz at Morningstar in February: Both the Morningstar Global Markets ex-US High Dividend Yield Index and the Morningstar Global ex-US Dividend Growth Index have outperformed the broad market for developed- and emerging-markets stocks outside the US. Whereas their US counterparts have failed to keep up, the international dividend benchmarks have been on top for the past five years. This is great news for anyone worried about the U.S. market and looking into deploying dollars abroad. Note that one reason dividend payers outperform is that they have generally grown to a meaningful size and are generating fairly reliable income before they commit to paying a dividend. Meet the Vanguard International Dividend Appreciation ETF The ETF "seeks to track the performance of the S&P Global Ex-U.S. Dividend Growers Index." Its primary focus is on large-cap stocks from both developed and emerging markets that have been hiking their dividend payouts regularly. It excludes U.S. stocks, so any portion of your portfolio that you devote to this ETF will fully expose you to foreign companies. How has the fund performed over time? Well, as of this writing, it's up 4.5% year to date, and up 5.57% over the past year. Its three-year and five-year average annual returns are 4.18% and 7.83%, respectively. The ETF's expense ratio (annual fee) is a very modest 0.1, meaning that you'll pay $10 annually per $10,000 you have invested in it. (Vanguard is known for ultra-low fees.) The Vanguard International Dividend Appreciation ETF recently held about 327 stocks, with between 16% and 20% of its assets in healthcare, industrial, and technology stocks. Nearly half of its assets were recently in European companies, with 30% in Pacific companies, close to 9% in emerging markets, and 12.6% in North America -- excluding the U.S., of course. Here are its recent top holdings: Stock Percent of ETF SAP SE 5.85% Roche Holding AG 4.56% Novartis AG 3.85% Nestle 3.16% Sony Group 3.13% Data source: as of Jan. 31, 2025. So what's this Vanguard ETF's dividend yield? Well, it's 1.85%. That's not huge, but it's not paltry, either. It's actually well above the S&P 500 's recent yield of 1.23%. Better still, it's designed to grow. The S&P 500, for example, encompasses dividend payers and non-payers, and payers that are growing their payouts regularly along with those that are increasing their dividends minimally or not at all. So give this fund some consideration -- especially if you're worried about the state of the U.S. economy and/or you think that companies based outside the U.S. have a lot to offer. Don't miss this second chance at a potentially lucrative opportunity Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $315,521!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $40,476!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $495,070!* Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon. Continue » *Stock Advisor returns as of March 17, 2025 Selena Maranjian has positions in Novartis Ag and Roche Holding AG. The Motley Fool has positions in and recommends S&P Global. The Motley Fool recommends Nestlé and Roche Holding AG. The Motley Fool has a disclosure policy.
Yahoo
04-03-2025
- Business
- Yahoo
Johnson & Johnson (JNJ): Among the Best S&P 500 Dividend Stocks to Buy Now
We recently compiled a list of the . In this article, we are going to take a look at where Johnson & Johnson (NYSE:JNJ) stands against the other stocks. Stock market investors have enjoyed strong annual returns over the past two years, but analysts caution that 2025 may not deliver a repeat performance. In 2024, the broader market posted a 23% gain, following a 24% increase in 2023. When factoring in dividends, total returns for those years reached 25% and 26%, respectively. However, such sustained high returns are uncommon. According to Scott Wren, senior global market strategist at the Wells Fargo Investment Institute, US stocks have only recorded three consecutive years of 20%-plus total returns once since 1928, during the late 1990s. Analysts do not expect the market's strong run to persist this year. A report from Morgan Stanley points out that while the third year of a bull market tends to deliver only modest returns on average, it is usually not negative. READ ALSO: The report mentioned that one possible scenario for 2025 is that earnings-per-share growth outpaces market gains, leading to a decline in overall price-to-earnings valuations. Factors such as prolonged high interest rates and geopolitical uncertainties could contribute to a lackluster year, causing some of the recent optimism to fade. However, if this happens, the market could regain momentum in 2026, making 2025 more of a temporary pause rather than a deeper downturn. Dividends are a key component of the investment market, with nearly 80% of companies in the broader market distributing payments to shareholders. However, maintaining steady dividend increases is a difficult achievement. Only about 13% of companies in the index qualify for the Dividend Aristocrats Index, which includes corporations that have raised their dividends for at least 25 consecutive years. Investors are often drawn to dividend growth stocks, as they have demonstrated strong long-term performance, especially during times of elevated interest rates. According to data from Abrdn, it was noted that between December 2002 and December 2022, companies that either increased or initiated dividends achieved a compounded return of 10.68%. In contrast, firms that reduced or discontinued their dividends saw a significantly lower return of 2.70%. In addition, it was highlighted that companies not paying dividends also lagged behind dividend growers, generating a return of 9.25% over the same timeframe. When assessing the reliability of dividend stocks, analysts suggest that investors should emphasize dividend growth rather than being lured by high yields that may not be sustainable. Dan Lefkovitz, a strategist with Morningstar's Index team, underscored the significance of dividend growth as a strategy distinct from high-yield investing. He pointed out that companies with consistent dividend growth often have strong competitive advantages and promising future outlooks. A portfolio focused on dividend growth generally mirrors the broader market in terms of sector allocation and the balance between growth and value characteristics, including price-to-earnings ratios. While it leans toward a value-driven approach, it remains more balanced and core-oriented compared to portfolios concentrated on high-yield stocks. Although dividend stocks did not experience the same level of gains as tech stocks in 2024, they still delivered impressive returns. That year, companies across the broader market that distributed dividends returned approximately 35% of their net income and 45% of their free cash flow to shareholders, according to Bloomberg. On average, these companies had a dividend yield of around 2.3%, while the market capitalization-weighted yield was about 1.5%. Given this, we will take a look at some of the best dividend stocks in the broader market. For this list, we scanned the list of the companies in the broader market and picked dividend stocks with dividend yields of about 2%, as of February 27. From that list, we picked 15 dividend stocks with the highest number of hedge fund investors, according to Insider Monkey's database of over 1,000 hedge funds, as of Q4 20234. The stocks are ranked in ascending order of the number of hedge funds having stakes in them. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (). A smiling baby with an array of baby care products in the foreground. Number of Hedge Fund Holders: 98 Johnson & Johnson (NYSE:JNJ) is a New Jersey-based pharmaceutical company that operates through its subsidiaries to develop, manufacture, and market a wide range of healthcare products. Its diverse portfolio includes more than 10 high-performing drugs across various therapeutic areas, such as infectious diseases and oncology. Beyond pharmaceuticals, the company is also a key player in the medical device sector, providing additional diversification. Its financial performance has remained stable and consistent over time. The stock has surged by more than 14% in the past 12 months. In the fourth quarter of 2024, Johnson & Johnson (NYSE:JNJ) reported revenue of $22.5 billion, reflecting a 5.2% increase year-over-year. As a leading healthcare company, it continues to focus on addressing diseases with significant unmet medical needs, including multiple myeloma, lung cancer, inflammatory bowel disease, and heart failure. The MedTech segment saw global operational sales rise by 6.2%, with acquisitions and divestitures accounting for 1.5% of this growth. Increased demand for electrophysiology products and Abiomed contributed to growth in the Cardiovascular division, while sales of wound closure products supported gains in the General Surgery segment. Johnson & Johnson (NYSE:JNJ)'s quarterly dividend stands at $1.24 per share, offering a dividend yield of 3.01%, as of February 26. With a 62-year track record of consecutive dividend increases, the company remains one of the most consistent dividend payers in the market. Overall JNJ ranks 3rd on our list of the best S&P 500 dividend stocks to buy now. While we acknowledge the potential for JNJ as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than JNJ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stock To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Yahoo
04-03-2025
- Business
- Yahoo
Medtronic plc (MDT): Among the Best S&P 500 Dividend Stocks to Buy Now
We recently compiled a list of the . In this article, we are going to take a look at where Medtronic plc (NYSE:MDT) stands against the other stocks. Stock market investors have enjoyed strong annual returns over the past two years, but analysts caution that 2025 may not deliver a repeat performance. In 2024, the broader market posted a 23% gain, following a 24% increase in 2023. When factoring in dividends, total returns for those years reached 25% and 26%, respectively. However, such sustained high returns are uncommon. According to Scott Wren, senior global market strategist at the Wells Fargo Investment Institute, US stocks have only recorded three consecutive years of 20%-plus total returns once since 1928, during the late 1990s. Analysts do not expect the market's strong run to persist this year. A report from Morgan Stanley points out that while the third year of a bull market tends to deliver only modest returns on average, it is usually not negative. READ ALSO: The report mentioned that one possible scenario for 2025 is that earnings-per-share growth outpaces market gains, leading to a decline in overall price-to-earnings valuations. Factors such as prolonged high interest rates and geopolitical uncertainties could contribute to a lackluster year, causing some of the recent optimism to fade. However, if this happens, the market could regain momentum in 2026, making 2025 more of a temporary pause rather than a deeper downturn. Dividends are a key component of the investment market, with nearly 80% of companies in the broader market distributing payments to shareholders. However, maintaining steady dividend increases is a difficult achievement. Only about 13% of companies in the index qualify for the Dividend Aristocrats Index, which includes corporations that have raised their dividends for at least 25 consecutive years. Investors are often drawn to dividend growth stocks, as they have demonstrated strong long-term performance, especially during times of elevated interest rates. According to data from Abrdn, it was noted that between December 2002 and December 2022, companies that either increased or initiated dividends achieved a compounded return of 10.68%. In contrast, firms that reduced or discontinued their dividends saw a significantly lower return of 2.70%. In addition, it was highlighted that companies not paying dividends also lagged behind dividend growers, generating a return of 9.25% over the same timeframe. When assessing the reliability of dividend stocks, analysts suggest that investors should emphasize dividend growth rather than being lured by high yields that may not be sustainable. Dan Lefkovitz, a strategist with Morningstar's Index team, underscored the significance of dividend growth as a strategy distinct from high-yield investing. He pointed out that companies with consistent dividend growth often have strong competitive advantages and promising future outlooks. A portfolio focused on dividend growth generally mirrors the broader market in terms of sector allocation and the balance between growth and value characteristics, including price-to-earnings ratios. While it leans toward a value-driven approach, it remains more balanced and core-oriented compared to portfolios concentrated on high-yield stocks. Although dividend stocks did not experience the same level of gains as tech stocks in 2024, they still delivered impressive returns. That year, companies across the broader market that distributed dividends returned approximately 35% of their net income and 45% of their free cash flow to shareholders, according to Bloomberg. On average, these companies had a dividend yield of around 2.3%, while the market capitalization-weighted yield was about 1.5%. Given this, we will take a look at some of the best dividend stocks in the broader market. For this list, we scanned the list of the companies in the broader market and picked dividend stocks with dividend yields of about 2%, as of February 27. From that list, we picked 15 dividend stocks with the highest number of hedge fund investors, according to Insider Monkey's database of over 1,000 hedge funds, as of Q4 20234. The stocks are ranked in ascending order of the number of hedge funds having stakes in them. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (). A surgeon in a modern operating room holding advanced medical devices with a sense of purpose and accuracy. Number of Hedge Fund Holders: 67 Medtronic plc (NYSE:MDT) ranks tenth on our list of the best dividend stocks in the broader market. The global medical device company operates across four key segments: medical-surgical, neuroscience, cardiovascular, and diabetes, offering a diverse portfolio of products. In fiscal Q3 2025, Medtronic plc (NYSE:MDT) reported revenue of $8.3 billion, marking a 2.5% increase from the previous year, though slightly below Wall Street's estimate of $8.33 billion. The company posted GAAP diluted earnings per share (EPS) of $1.01, while adjusted EPS rose 7% year over year to $1.39, exceeding analysts' projections of $1.35. Roughly half of Medtronic plc (NYSE:MDT)'s revenue comes from the US, the world's most profitable healthcare market, while the remainder is derived from international markets, including high-growth emerging economies. The company's core revenue is driven by its cardiovascular, neuroscience, and surgical divisions, while the diabetes segment represents a smaller portion. This diversified model enhances financial stability. Notably, the company experienced a rare decline in trailing 12-month sales of 10% during the early pandemic years when medical procedures were postponed or canceled—an event not seen since the mid-1980s. Medtronic plc (NYSE:MDT) demonstrated a strong financial position in its latest earnings report. Over the first nine months of the fiscal year, the company generated more than $4.5 billion in operating cash flow and reported free cash flow of $3.1 billion. This solid cash position has enabled the company to increase its dividend payments for 47 consecutive years. The company's quarterly dividend comes in at $0.70 per share and has a dividend yield of 3.09%, as of February 27. Overall MDT ranks 10th on our list of the best S&P 500 dividend stocks to buy now. While we acknowledge the potential for MDT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MDT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stock To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
