Berman’s Call for Thursday, April 2, 2020
INDA, FM, GLD
One of the market impacts from this crisis is a cut to dividends.
- From companies looking to save cash
- From legislation that will limit dividends and share buybacks until government money is paid back
The S&P 500 has futures contracts based on the expected dividend paid from the S&P 500 companies. The contract price is the dollar amount of dividend. So dividend of $62 on an index value of 3100 is a 2% yield. The expectations for dividend growth 3 months ago was for that to rise to over $70 by the end of the decade. Last month that expectation was for no dividend growth. Today, we see a negative hit to dividends and it will not return to $61 until the end of the decade.
The second chart is a sample of key dividend focused ETFs and how they have performed YTD. Dividends should still be a part of portfolios, but investors should consider this changing dynamic in the markets for the next decade and have this conversation with their financial advisors.
It’s time to have your plan to go shopping over the next few months. These will be the best valuations to own in more than a decade. Our Spring BNN Bloomberg Roadshow is being converted to weekly webinars (not live events) for this series. Please click here to register for free. If this unprecedented period of volatility does not convince you that one should be cautious when valuations are unstable so that you can get aggressive into periods of panic, you need to sign of for the upcoming series and learn more about the tools you need to use. We will host a weekly Berman’s Call online where Larry will update his thoughts on the market and have lots of Q&A and ideas to help you with navigating the markets.
As always, we ask for a voluntary donation in support of Dementia and Alzheimer’s research at the Baycrest Hospital to attend. We have raised more than $500,000 in the past decade thanks in part to BNN Viewers and a matching donation from Larry.