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Based out of Auckland, New Zealand, we bring an institutional trading experience to the retail market.

Investors acquire Stocks for a variety of reasons. A widespread consideration in stock investing is whether the stock/company you are buying issues dividends. Suppose a Company is a regular dividend issuer. In that case, investors would like to know:

First; what exactly is a dividend?

In its most simple form, a dividend is a cash payment made by a company to its shareholders. The payment is derived from a portion of the company's earnings, typically after covering its expenses.

Dividends are typically issued by large established corporations that are cash positive but limited in their opportunities to scale. These corporations seek to return value to their investors via cash rather than increasing their stock price.

Some of the most popular dividend stocks are well-known brands with strong, predictable cash flow or high dividend yield. As a general rule, the riskier the stock, the higher its dividend yield should be to compensate for the risk.

Keep reading to learn about some of the most popular dividend stocks in the US and other major stock markets.

What are 10 of the most popular dividend stocks?

Company: The Coca-Cola Company

Extra Note: The Coca-Cola Company's solid and dependable sales record and healthy profit margins make up for its dividends' relatively low yield compared to other stocks mentioned on this list.

Company: AT&T

Extra Note: Oligopolies such as US telecommunication companies make attractive dividend stocks for investors. The small pool of competition for these companies means the risks for investors is smaller than for companies that have to rely purely on competitive strengths.

Company: British American Tobacco

Extra Note: While a contentious and vilified industry, tobacco companies have a reputation for charitable dividends. This is why British American Tobacco and Imperial brands remain popular dividend stocks, even with reduced smoking rates in developing countries.

Company: Imperial Brands

Company: Deutsche Lufthansa

Extra Note: Deutsche Lufthansa has temporarily suspended its dividend payments due to global air travel receding to unsustainable levels since the beginning of the Covid-19 pandemic. Before 2020, Deutsche Lufthansa would distribute approximately 20% to 40% of net income in dividend payments to its shareholders.

Company: Telefónica

Extra Note: The original Spanish branch of Telefónica issues dividends twice annually, in June and December of each year. Telefónica engages in several methods to return value to its shareholders, including cash and scrip dividends (i.e., issuing shares in place of a delayed cash dividend).

Company: Novo Nordisk

Extra Note: The Danish Pharmaceutical company's dividend yield is the lowest on this list, yet the company remains an attractive option for investors. The yield, while small, is not altogether inadequate for the industry in which it operates and is seen as tolerable due to the companies domination over diabetic therapies.

Company: BHP Group

Extra Note: Of course, as Australia dominant industry, two of the country's most popular dividend stocks are from companies operating in the mining industry. The attractive yields signify the sector's risk to commodity price movements beyond the control of the miners.

Company: Rio Tinto

Company: Japan Post Bank

Extra Note: One of Japan's favoured dividend stocks, Japan Post Bank seeks to return 50% to 60% of its retained earnings in the form of dividends. By Japanese standards, yields of ~5%, of which Japan Post Bank conforms, is higher than the market average.

​Europe is home to some of the largest companies in the world, with market capitalisations in the hundreds of billions of dollars. However, these large European companies are not as well-known as they could be by investors outside of the Eurozone. Sexier, fast-growing US and Chinese tech stocks will generally hog media headlines and investor portfolios, shoehorning European stocks into investor blind spots. Yet, as Kiplinger has recently pointed out, overlooked markets, such as Europe, are ripe for investment opportunities.

Even the largest, most attractive companies in the Eurozone are relatively cheap compared to their US counterparts. Comparing the average Price/Earnings (P/E) ratios of European companies to US and Chinese companies can help demonstrate this assertion.

Get To Know Europe’s 5 Largest Stocks

1#. LVMH (EPA: MC)

Largest Stocks LVMH

Stock Exchange: Euronext Paris
Market Cap: 396.2 billion USD
P/E ratio: 34.95

Comparison: Nike (NYSE: NKE), Market Cap: 264.8 billion USD, P/E ratio: 45.07

LVMH, short for Louis Vuitton Moët Hennessy, is Europe's largest stock. Headquartered in France, the Company has built and acquired a portfolio of more than 70 luxury brands over thirty years. It's safe to say that many of its brands are household names in Europe and worldwide. In addition to its namesake, LVHM also owns Sephora, Dior, Bulgari, and Tiffany and Co., helping the Company generate 44.2 billion euros in 2021 YTD.

The dynamism of LVMH's portfolio is the reason for the Company's positive outlook. LVMH expects to strengthen its market-share moving forward, just as it has done over the past couple of years. For the first nine months of 2021, the Group has recorded organic revenue growth of 11% compared to the corresponding period in 2019.

#2. Nestlé SA (SWX: NESN)

Stock Exchange: SIX Swiss Exchange
Market Cap: 362.8 billion USD
P/E ratio: 27.70

Comparison: Kweichow Moutai (SHA: 600519), Market Cap: 358.9 billion USD , P/E ratio: 45.75

The Swiss conglomerate is the Eurozone's second-largest Company and the largest food company in the world. Nestlé owns more than 2000 brands, including Fast-moving consumer goods (KitKat, Smarties, Häagen-Dazs, Mövenpick, Lean Cuisine, Maggi, Hot Pockets), supplements (Boost), pet-care (Purina, Friskies, Fancy Feast), and baby foods (Gerber, Ceralac).

Producing Fast-moving consumer goods exposes Nestlé to the risk inherent in the current bout of inflation currently occurring in the Eurozone. However, the Company is confident that its margins are padded and are expecting organic growth across the whole business to lift by 6% to 7% in 2021.

#3. ASML (AMS: ASML)

Largest Stocks ASML

Stock Exchange: Euronext Amsterdam
Market Cap: 336.0 billion USD
P/E ratio: 51.57

Comparison: Cisco Systems (NASDAQ: CSCO), Market Cap: 236.1 billion USD , P/E ratio: 22.39

ASML is a Netherlands-based manufacturer servicing the semiconductor industry, supplying equipment and software to the likes of Taiwan Semiconductor Manufacturing (NYSE: TSM), Intel (NASDAQ: INTC), and Samsung Electronics (KRX: 005930).

At the start of 2019, ASML's P/E ratio was under 22.0. In two years, its P/E has more than doubled as the semiconductor industry, and its peripheries became a favourite of investors. In this way, ASML doesn't conform to the lower P/E comparison that the rest of this list does.

What ASML does have in its favour is almost complete domination of its industry. ASML is estimated to control 90% of the market for Semiconductor equipment and software. While ASML isn't predicting a lift in market share in the medium term moving forward, its main clients are expected to lift their investment in production lines significantly.

#4. Roche (SWX: RO)

Stock Exchange: SIX Swiss Exchange
Market Cap: 335.5 billion USD
P/E ratio: 21.60

Comparison: Johnson & Johnson (NYSE: JNJ), Market Cap: 428.8 billion USD , P/E ratio: 24.49

Roche, another Swiss conglomerate, is Europe's largest healthcare company, generating 46.7 billion CHF in revenue in 2021 YTD.

Roche is at a critical juncture, as patent protection lapses for many of its legacy drugs. Herceptin, Avastin and Rituxan, which used to generate one-third of the Company's revenue, are all sliding in sales as off-patent brands hit the market.

However, several new drugs from the Company are hoped to bolster growth prospects moving forward. Drug development and approval are typically glacially slow. Yet, in one 2021 case, Roche has been approved fast-track approval by the US Food and Drug Administration for an Alzheimer's drug.

#5. L'Oréal SA (EPA: OR)

Largest Stocks Loreal

Stock Exchange: Euronext Paris
Market Cap: 257.0 billion USD
P/E ratio: 35.84

Comparison: Revlon (NYSE: REV), Market Cap: 550 million USD , P/E ratio: 38.87

L'Oréal is a French cosmetics, beauty, and consumer goods Company and the second-largest stock on Euronext Paris. A household name itself, L'Oréal, also owns Maybelline, Lancôme, and Garnier, among a handful of other brands. The cosmetics giant projected a "roaring 20s" in respect to 2021 revenue and has not disappointed YTD. Sales over the entire Group for 2021 are up by more than 18.0%.

Moving forward, the outlook for L'Oréal is potentially just as rosy, with the Group set to benefit from an uptick in demand from China consumers, as well as customers preferring a higher-margin direct-to-consumer (DTC) experience. L'Oréal has noted that DTC will account for 50% of its sales in the future. However, it hasn't set a timeline to achieve this milestone.

I like to refer to the current retail investing frenzy as a 'DIY investor revolution', powered by the likes of Robinhood Markets (NASDAQ: HOOD), Interactive Brokers (NASDAQ: IBKR), and BlackBull Markets. Within this revolution, we have seen retail investors adopt derivatives trading with a level of sophistication on par with 'professional' traders.

For those that haven't caught on to the revolution, I thought it would be a good idea to detail the basics of a couple popular derivatives. I hope to show what many retail investors have already found out for themselves; CFDs and Options are not all that complicated or mysterious.

What is a derivative?

Derivatives, such as CFDs and Options, are 'derived' from traditional financial instruments such as stocks, commodities, and foreign exchange. Typically, derivatives take the form of a contract that takes its value from an underlying asset, such as the spot price for one troy ounce of Gold (XAU/USD).

Derivatives are used by investors worldwide to take advantage of investment opportunities or hedge efficiently against uncertainty.

What is a CFD?

CFDs Derivatives

CFD stands for 'Contract For Difference'. As the name denotes, a contract's buyer and seller agree to compensate the other the difference between the current price of an asset and its future price.

The buyer of the CFD is said to be taking a long position in the underlying asset (i.e., believes the asset's price will rise). In contrast, the seller of the CFD is said to be taking a short position (i.e., thinks the asset's price will fall). If the price of the asset rises, the seller of the CFD will compensate the buyer. If the price of the asset falls, the buyer of the CFD will compensate the seller.

CFDs exist for various securities, including stocks, indices, commodities, and, most popularly, foreign exchange.

There is one primary reason investors choose to trade CFDs over other derivatives such as Options and Futures. With CFDs, traders can generally trade with greater leverage than other derivatives, allowing larger positions with smaller deposit sizes. Consequently, gains and losses can be magnified more easily when trading CFDs.

What is an Option?

Options Derivatives

The handy thing about derivatives is that their titles aptly describe what they are and do.

An Options contract gives the buyer the 'right', but not the 'obligation' to buy or sell a set quantity of an asset from/to the contract's seller before a given expiration date.

Option contracts exist for various securities, the most popular being Indices and Stock Options (i.e., an Options Contract for 100 shares of Tesla (NASDAQ: TSLA)).

Options come in two flavours; Calls and Puts. Calls give the contract buyer the right to buy an asset, while Puts give the contract buyer the right to sell. Either way, the contract buyer will pay the contract seller a fee (known as the premium) to enter into the contract. Additional costs to the buyer can exist depending on other factors, but we can ignore them for clarity.

It is good to remember that generally, as secondary market instruments, the spreads on Options can be much smaller than the traditional assets on which they are based. Smaller spreads are one primary reason retail investors are attracted to trading Options.

Breaking down an Option with an example:

When Trader X sells a Put contract to Trader Z, Trader Z buys the right to sell an asset to Trader X before the contract expires. Whether Trader Z exercises this right mostly depends on the movement in the price of the asset.

Trader X will pocket the premium paid by Trader Z as compensation for offering the Option.

Trader X has sold the Put contract because they believe the price of the underlying asset will rise. In contrast, Trader Z thinks the asset price will fall. Thus, if Trader Z is correct, they will be able to sell the asset to Trader X at the agreed contract price (known as the Strike Price) rather than the asset's current value (Spot Price). Effectively, Trader Z will pocket the difference between the lower Spot Price of the asset and the higher Strike Price stated in the contract.

If Trader X is correct, Trader Z will not exercise their right to sell the asset at the contract's Strike Price, and the Option will expire unexercised.

The Australian Dollar (AUD) is commonly referred to as a commodity currency. As in, the relative strength of the currency is correlated with the price of certain commodities. For the AUD, Iron Ore and precious metals are the commodities that significantly impact its value.​

Be that as it may, there is more to the AUD than commodity prices. The actions, or inaction, of the country's Central Bank is also a decisive variable affecting the price of the AUD. Therefore, a well-rounded analysis of the events concerning the AUD is helpful for traders of commodity currencies.

With this in mind, let us look at some of the key events likely to affect the commodity currency next week.

Is AUD sentiment about to turn positive?

commodity currencies AUD

A critical economic report is due from the Reserve Bank of Australia (RBA) on Monday, and traders will be watching and folding the results into their own trading decisions.

Australia Reserve Bank Governor, Philip Lowe, will be speaking on Monday. However, the RBA's public announcements have recently fallen down the rankings of importance for traders. The RBA is stubbornly dovish, and no one is expecting them to make any changes to its base interest rate or asset purchasing any time soon. Yet, the 15-day SMA closing in on the 50-day SMA in the AUDUSD chart supplied indicates the bearish disposition of the AUD may reverse.

Iron Ore can only support the AUD for so long

commodity currencies Iron Ore AUD

The price of Iron Ore has famously hit record prices this year, contributing to record Australian export values and the AUD reaching USD 0.79.

However, the high prices Iron Ore fetched in May have since evaporated, and with it, the AUD has fallen from its lofty perch. Currently, Iron Ore is priced at US $132.5 per tonne, a 2021 low representing a 40% decrease from its 2021 high. The price drop has been sharper than its rise, as China's stockpile of Iron Ore kept rising and demand from Chinese manufacturers declined.

The price of Iron Ore is expected to remain somewhat robust for the remainder of 2021 before falling to US$100/T by March 2022. At least, according to Goldman Sachs and the Australian government's commodity forecaster. However, the forecasts available were made before the slowdown in the Chinese economy became undeniable. The drop in Iron Ore could come sooner rather than later.

Countering the prediction that Iron Ore prices will fall

Countering the prediction that Iron Ore prices will fall is the developing political upheaval in the African nation of Guinea. The West-African country is a young up and coming Iron Ore producer. Its Simandou Iron Ore Project is expected to rival one of Western Australia's most prolific mining regions. As such, the pricing prediction of Iron Ore moving forward into 2022 and beyond considered Guinea's fresh supply of Iron Ore hitting global supply chains. Needless to say, if political strife in Guinea were to continue, prices might remain inflated for longer. In such a case, the AUD could rely on Iron Ore supporting a higher baseline.

"If you have more than 120 or 130 I.Q. points, you can afford to give the rest away. You don't need extraordinary intelligence to succeed as an investor"

Warren Buffett.

Forex trading is not rocket science.

A simple set of guidelines can empower aspiring traders to overcome the learning curve and become consistent in a relatively short time. These same guidelines have worked for generations. Back in the early 1900s, Jesse Livermore used the same guidelines to make his fortune. However, many would-be successes have failed for easily understandable reasons.

Most traders fail to respect these basic yet essential rules:

  1. Follow the trend
  2. Sit on your hands until there is a trend to follow
  3. Cut losses as soon as logically possible
  4. Let winners run as long as logically possible
  5. Know Your Indicator

In this article, we'll review the basics to convey how these guidelines keep traders out of trouble.

1. Follow The Trend

"Follow the trend. The trend is your friend"

Jesse Livermore

Most retail traders have trouble following trends. Often, when a trend is developing, retail traders fight it, attempting to pick tops and bottoms. It's a repetitive habit that a sentiment trader illustrates systematically.

Evidently, many traders have trouble identifying a trend. That's understandable, as depending on how a trader looks at their charts, multiple trends can coexist within the same currency pair simultaneously! It's rare to see currency trending in the same direction on all time frames. It does happen when momentum is strong or driven by news, but the ebb and flow of the market tends to confuse traders that use multiple time frames.

For example, a currency pair may simultaneously seem to be trending upwards on a daily time frame and trending downwards on a 1-hour time frame. The same pair may also appear to be largely range-bound on a 5-minute time frame.

When trading from the retail angle, keeping things simple is generally best. Here are three suggestions for identifying a trend:

 

2. Sit On Your Hands Until There's A Trend To Follow

"If most traders learned to sit on their hands 50 per cent of the time, they would make a lot more money"

Bill Lipschutz, Market Wizard.

The second essential guideline in trend trading is to "sit on your hands" and refrain from trading until there is a clear trend in place. Of course, there are other ways to trade that don't rely solely on trends for their edge. However, retail traders often have part-time or full-time jobs, restricting the amount of screen time they can get. Furthermore, the time constraint reduces the available time for pre-trade analysis.

The bottom line is that retail traders are better off being light on their feet. Keep the analysis method simple and keep the trigger criteria equally simple. Trend trading fits the bill because it only takes a few minutes each day to filter the quality trends in the market. It's key to avoid trading trendless charts where there's no edge.

 

3 & 4. Cut Losses as Soon as Logically Possible & Ride Winners

Have you ever held onto a losing trade, thinking that the market "had" to turn around sooner or later? Many traders have been there, but this is in direct violation of a rule we simply can't ignore: cut losses quickly.

We should always cut our losses quickly. Likewise, we should always hold onto our winning trades for as long as logically possible.

The process of monitoring your trade after the initial entry is called "trade management". Trade management is an area that is not covered in detail in classic trading books. It's all about entries and exits. But how do we formulate a plan that helps us cut losses as soon as logically possible, but not sooner? And how can we know when to hold?

The basic idea is to let the market dictate when it's OK to hold and when it's time to fold. Simple tools that can help with managing trades are:

Without a consistent structure for managing your trades, it will be a struggle to keep your emotions at bay and "trade what you see".

 

5. Know Your Indicator

"I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail"

Abraham Maslow.

Some traders rely solely on indicators such as support and resistance lines. But some traders prefer to overlay technical indicators on their chart to assist with decision-making. That's fine, but many traders fall into the trap of "covering" their charts with technical indicators without knowing:

Unfortunately, without knowing this, it's impossible to use any indicator properly. It's also hard to know when the indicator might be giving false signals. Technical indicators are just tools. Without a good understanding of what your "tool" does, you won't know when or how to use it.

Many traders attribute more importance to indicators than they deserve.

To make this point even clear, observe a "Donchian channel". A Donchian channel simply tracks the highest high and the lowest low of a lookback period. It wouldn't be any surprise that overbought/oversold readings on the stochastic would be accompanied by "touches" of the Donchian channel. Simply stated, both indicators are telling us when we're moving outside the range designated by the lookback period!

If you choose to use indicators, make sure you know them inside out. What are they helping you "see"? What is their strength, and what is their weakness?

By learning your indicators inside out, you'll gain much more insight than by simply overlaying them on the chart and "trusting them blindly".

What's Next?

In this article, we revisited five common trading mistakes and offered some easy solutions to fix them. Trading from the retail angle requires clarity of mind. It pays to keep the analysis process simple.

You can keep your trading logical and gain peace of mind when making decisions in the markets by: