Dividend Investing Ideas Center
Have you ever wished for the safety of bonds, but the return potential...
Dividend.com analyzes the search patterns of our visitors each week. By sharing these trends with our readers, we hope to provide insights into what the financial world is concerned about and how to position your portfolio.
This week’s trending stocks center around the financial sector as all 34 banks passed the Fed’s annual stress tests. Bank of America was the biggest trending topic as the bank raised its dividend and Warren Buffet booked a paper profit of around $12 billion. JPMorgan raised its dividend 12% and continues to be a global banking powerhouse. Kroger looks to gain investor confidence with its ClickList technology and compete with Amazon and Wal-Mart. Finally, after last year’s checking account scandal, Wells Fargo is turning the corner with positive earnings and a marginal dividend growth.
You can view our previous trends article here, which highlighted Amazon’s purchase of Whole Foods, Cisco System’s new technology, Boeing’s debut of its new 797 airliner, and the lowest level of oil in the last 10 months.
Financial stocks saw a big increase, specifically Bank of America (BAC ), which gained viewership by 191%. Last week, the Federal Reserve issued its annual stress tests to 34 banks, all which passed for the first time since 2008. Bank of America passed, and in doing so, increased its dividend by 60% to $0.12 a share. The bank also announced it would be buying back $12.9 billion in common stock. Also making the news for Bank of America is that Warren Buffett is now the largest single shareholder. Last Friday, Buffett announced that Berkshire Hathaway would exercise warrants on over 700 million common shares of Bank of America, making the stake close to over $17 billion. The trade would hand over the Berkshire Hathaway (BRK-B) CEO a paper profit of around $12 billion.
Over the last five days, the stock has performed really well and is up 9.2%. On a year-to-date basis, the stock is up 12.76%, and up over 90% in the trailing one-year. Before the recent dividend increase announcement, Bank of America was paying shareholders an annual dividend of $0.30 a share, or a yield of 1.20%. The recent dividend increase would be the fourth consecutive year that the bank raised its dividends.
To view a list of the top 100 finance stocks, click here.
Like Bank of America, JPMorgan Chase (JPM ) saw an increase in viewership this week and is up 115%. Like BAC, JPM passed the Fed’s stress test with flying colors. This test, which uses the Comprehensive Capital Analysis and Review or CCAR method, measures the ability of a bank with over $50 billion in assets to survive through a financial crisis. With CEO Jamie Dimon at the helm, JPMorgan Chase has thrived and has become one of the world’s top banks. Upon passing, the Board of Directors announced they will pass an increase of 12% to the quarterly dividend. The bank also announced that it will add $19.4 billion to its share buyback program.
Like most of the financial sector, JPM has shown similar positive returns. The stock is up 7.8% for the week and up over 8.5% on a year-to-date basis. However, the stock has not performed as well as Bank of America and is up just over 52% for the trailing one-year. On a positive note, unlike Bank of America, JPMorgan has been more steady at handing over dividends. It has raised its dividend every year since 2010, when it was forced to pay a low $0.20 per share. The stock currently yields 2.13% based on its $2.00 per share dividend, prior to the recent announcement.
As the only stock that is not a bank this week, Kroger Company (KR ) was the third-most trending topic this week, up 68%. After missing second quarter expectations, the stock plummeted in the month of June and was down 21%. What’s worse is that Amazon Co. (AMZN) announced its plans to purchase Whole Foods Markets, making competition tighter for the traditional brick-and-mortar grocery chain. Kroger has been seeing competition from companies like Wal-Mart Stores (WMT ), which has seen recent success in its online grocery business through its grocery pickup feature. Kroeger intends to compete in the online ordering grocery space with its two-year old ClickList feature. This allows its customers to place orders online and pick up at the stores. However, only a quarter (or 700) of Kroger’s stores currently have this feature. It seems logical to extend this functionality across more stores if Kroger wants to stay in competition with Amazon and Wal-Mart.
In the last five days, the stock has done reasonably well and is up 2.79%. On a year-to-date basis, the stock has been hammered and is down over 32%. However, as big retailers like Amazon and Wal Mart try to compete for the large online grocery sales, Kroger may set itself apart by giving customers a plethora of options to choose from within the broader grocery segments of produce and meat. Even with the recent fall off, the company still pays a decent dividend of $0.50 per share, for a yield of 2.15%. The company has shown consistency and has raised its dividend every year since 2009. Investors who are looking for a grocery company that is trading near its 52-week low, Kroger could be worth a look.
To view other grocery stocks, click here.
Along the themes of the other banks listed, Wells Fargo & Company (WFC ) showed the fourth-most increase in viewership, up 59% for the week. After suffering a large scandal last year and the nearly forced resignation of CEO John Stumpf, Wells Fargo has been struggling to regain the faith of its customers and investors. Luckily, the entire banking sector has been booming since Donald Trump won the election and the Fed continued to raise interest rates. The market expects that both these factors should be good for the banking space. As part of the 34 banks, Wells Fargo passed the Fed’s stress test. However, unlike the larger dividend increases from BAC and JPM, Wells Fargo could only manage an increase in its quarterly dividend by $0.01 per share to a quarterly dividend of $0.39 per share. It also announced it would do a $11.5 billion share buyback program.
This is good news for investors who have held Wells Fargo for the long haul and is potentially a sign the company is turning the corner from its turmoil. After dropping over 14% from word of its scandal breaking, the WFC stock price has bounced back. Over the last five days, the stock is up 6.37% and up 18.61% for the trailing one-year. Even with the recent crisis, Wells Fargo has consistently raised its dividend since 2012 and is currently yielding 2.72% prior to the most recent announced raise.
Check out our Dividend University section to learn more about dividend investing.
Most of this article was based around the Fed’s stress test, which all 34 banks passed. Bank of America was by far the highest trending topic of the week, increasing its dividend by 60% as well as Warren Buffett-controlled Berkshire Hathaway becoming its largest owner. JPMorgan also saw a dividend increase of 12% after passing the stress test. After being down 21% in June, Kroger Company is trading near its 52-week low and pays a dividend of over 2%. Wells Fargo also passes the stress test and looks to be turning the corner after last year’s scandal.
For more Dividend news and analysis, subscribe to our free newsletter.