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:
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.
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.
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.
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.
If asked to list as many Stock Exchanges as possible in thirty seconds, I bet many would struggle after naming five. I personally would start with the two major US Exchanges, the Nasdaq and the New York Stock Exchange (NYSE). The next three would be made up of the London Stock Exchange (LSE), The Tokyo Stock Exchange (TYO), and The Toronto Stock Exchange (TSE). At least, these are the Exchanges that first come to my mind. If I’m quick enough, I may be able to blurt out The Hong Kong Stock Exchange (HKG), The Shanghai Stock Exchange (SSE), and the Australian Securities Exchange (ASX).
The exchanges listed above are reasonably popular and represent only a fraction of the Exchanges that can be used to trade Stocks and other Equities. We will be doing a disservice to our investing journey if we limit ourselves to only the most popular Exchanges.
Let us tackle this issue of diversity with a list of some of the lesser-known Stock Exchanges and explore some of the opportunities that can be found away from the most common finance Meccas.
The Tadawul (TADAWUL) is the only licensed Stock Exchange in Saudi Arabia, the largest Stock Exchange in the Middle East, and the twelfth largest in the world by market capitalisation. According to Statista, The aggregate market cap of the 200 companies listed on The Tadawul is approximately US $2.6 trillion (July of 2021).
Contributing to an outsized portion of The Tadawul’s market capitalisation is Saudi Aramco (TADAWUL: 2222), the fourth-largest company in the world (market cap as of Sept 2021, US ~$1.9 trillion). Perhaps unsurprisingly, a vast swath of the listings on The Tadawul are companies concerned with crude oil and chemical products. Saudi Basic Industries (TADAWUL: 2010) is the Exchange’s second-largest listing, with a comparatively modest market capitalisation of US $99 billion.
Financial institutions and banking groups help to diversify the offerings of the Stock Exchange. The Exchange’s former largest listings, Al Rajhi Banking & Investment (TADAWUL: 1120) and Saudi National Bank (TADAWUL: 1180 ), are currently the third and fourth largest with market caps between US $70 and US $80 billion.
The Tadawul All Share Index (TASI), which tracks the performance of all stock listed on The Tadawul, has recorded a 30.34% increase since the beginning of 2021.
However, the TASI is sitting at a peak level, which appears to be a repetition of the previous boom and bust cycle. The TASI was in a comparable position in late 2014 and late 2007, before wiping out more than half its value over the proceeding months. If past performance is any indicator, the TASI might be overdue a correction.
In the world of Exchanges, the New Zealand's Exchange (NZX) is a relative minnow. The 180 companies listed on the NZX have a combined market cap of US $280 billion (or NZ $403 billion).
But it might be foolish to discount the NZX due to its size. The NZX is one of the best performing Stock Exchanges globally, with the NZX 50 Index exceeding returns from the NYSE Composite over 10 years.
The largest companies on the NZX are Australian owned banks Westpac Banking (NZX: WBC) and Australia and New Zealand Banking (NZX: ANZ), with market caps of US $68.0 billion (NZ$ 97.0 billion) and US $57.5 billion (NZ $82.0 billion), respectively. Yet, the most significant contributor to the NZX performance in the past ten years is A2 Milk Company (NZX: ATM), growing 3,000% since September 2011. Followed by Ryman Healthcare (NZX: RYM), increasing its share price by 480% in the same time period. More recently, the cancer diagnosis Company, Pacific Edge (NZX: PEB) has outshone all else, increasing in value by 1,100% since February 2020.
Korea Exchange (KRX), with a market cap of 2.33 Trillion, is the fourteenth largest Stock Exchange globally.
KRX hosts more than ten times the number of companies of the NZX or The Tadawul. Over 2000 companies comprise the KRX, with technology companies leading in terms of market cap. Samsung Electronics (KRX: 005930), SK Hynix (KRX: 000660), and Kakao (KRX: 035720) are the Exchange’s three largest listings. Two other Samsung companies help fill out the Exchange’s top-ten rankings. Samsung Biologics (KRX: 207940) and Samsung SDI (KRX: 006400).
The Index that tracks the KRX, the Korea Composite Stock Price Index (KOSPI), has performed admirably over the past ten years, up by 80% since September 2011. However, as a tech-rich economy, the growth in the Index could arguably be better. The KOSPI trails both the NZX and the NYSE Composite.
Last Friday (20-08-21), Cristiano Ronaldo announced that he would be leaving Juventus FC (BIT: JUVE) and returning to play for the club where he started his professional career, Manchester United (NYSE: MANU). While I’m not a football fan or follower, I understand that Ronaldo is one of the most recognisable faces on the planet and one of the highest-paid athletes. Hence, this transfer can have huge financial ramifications for Ronaldo and associated clubs, apparel makers, and sponsors.
Coincidently, both Juventus and Manchester United are two of the few football clubs publicly listed and traded on open exchanges. Here we can see the Ronaldo effect in action. In the hours immediately preceding the transfer announcement, MANU shares jumped 8% before subsiding, ending the Friday session up 5.8%.
Meanwhile, JUVE rose 1.2%, presumably on the notion that the club will now be able to acquire younger (and less salary heavy) substitutes to help them to return to championship contention.
There are surprisingly few ETFs centred on sport-based equities. I assumed the popularity of sports would translate into the popularity of stocks and funds comprised of sporting teams and sporting gear makers. However, there are very few available. One that fits the bill is Roundhill Pro Sports, Media & Apparel ETF.
The selection of equities in the fund will impress football fans more than followers of other sporting codes. The ETF consists of all the major listed Football franchises, including AFC Ajax (AMS: AJAX), AS Roma (BIT: ASR), and Lazio Soc Sportiva (SSL: IM). MANU and JUVE are both included in the fund, each held at a weight above 5% of the total.
It should be noted, the stock prices of many of these Football clubs have performed rather poorly of late, compared to the overall market. One issue these clubs face is scaling further and gaining new fans while already at the pinnacle of the sport. This could be why their respective stock prices are relatively stagnant. Buying top-rated players, such as Ronaldo, could be one way to overcome limitations in reaching new fans. This strategy clearly worked for Juventus but is evidently not a great long term solution. JUVE has since retraced to below the 23.6% FIB level.
For the fans of other sporting codes, the fund includes holdings in the New York Knicks and New York Rangers (NYSE: MSGS), Ferrari (BIT: RACE), and Callaway Golf (NYSE: ELY).
Sports Apparel Companies such as Asics (TYO: 7936), Adidas (ETR: ADS), Nike (NYSE: NKE), Puma (ETR: PUM), and Under Armor (NYSE: UAA) are all included in the ETF and will undoubtedly be some of the better performers. For the past six months, Puma, NKE, and Asics are up 18.4%, 21.7%, and 31.6%, respectively.
In its short history (released March 2021), the fund is down 1.56%. This value is not hugely disappointing, but nothing to celebrate, considering the broader market (S&P500) is up 12.2% in this timeframe.
Arguably the fund is too young to judge in terms of returns. Interestingly, you will find several SPACs within the fund that has yet to acquire a suitable sporting-based company. Now, I don’t know how common it is for ETFs to be loaded with SPACs. At a glance, I count five SPACs, including the Alex Rodriguez associated, Slam Corp. Perhaps the number of SPACs included in this ETF indicates a lack of viable sports-based equities available. Either way, MVP’s success might be dependent on the future decisions of the SPACs included in the fund.