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 are a variety of topics, with the most-trending topic focused on several earnings reports. Costco stock dropped even though it beat earnings expectations after it made little effort to address the threat from Amazon. Netflix made the news after it decided to raise its U.S. subscriber rates. Finally, P&G fended off activist Nelson Peltz after shareholders voted at the annual shareholder meeting on Tuesday.
You can view our previous trends article here, which centered on REIT dividends, a cereal war, the possibility of Mars travel, and a potential covenant violation from Windstream Holdings.
Costco Falls, After Brushing Off Amazon Threat
Costco Wholesale Corporation (COST ) was the most-trending topic this week, up 79% after the company had its fourth-quarter earnings call last Friday. The company beat expectations on an earnings per share basis, reporting $2.08 per share versus the estimate of $2.02 per share. Sales also beat expectations and totaled $42.3 billion versus the consensus estimate of $41.7 billion. However, after the call, the stock plummeted nearly 6%. This was due to the fact Costco CFO Richard Galanti mentioned that amidst the noise around Amazon (AMZN), all COST can do is perform. This undoubtedly caused the sell-off, as the CFO and Costco’s management does not seem to be concerned about the looming threat Amazon is posing in the grocery and retail market. Galanti also noted that membership renewal rates were marginally down and that they expect this to continue for the next six months.
Over the last five days, the stock is down 4.02%, with the majority of the decline coming on Friday after the earnings call. On a year-to-date basis, Costco has certainly underperformed both the market and its peers by being down 1.51%. By comparison, Wal-Mart Stores Inc. (WMT ) is a major competitor to Costco and is up 24.08% for the same time period. Over the last trailing one year, Costco has also underperformed and is up a mere 4.41%. However, over the longer term, Costco has succeeded, with a 54.92% total return over the last five years. The company offers a current dividend $2.00 per share, or 1.27% yield. One benefit that shareholders have received is thirteen years of consecutive dividend hikes for owning the stock. However, if Costco does not figure out a way to combat the eventual threat that Amazon Inc. poses, it could have a very big problem.
For the best discount and variety store dividend stocks, click here.
Netflix Raises its U.S. Subscriber Prices
The second-most trending topic this week centers around the top video-streaming service in the world, Netflix Inc. (NFLX), which saw an increase of 61% in viewership. On October 5, Netflix announced that it would be raising subscriber prices for its U.S. customers across the board. The company raised the two-stream HD tier by $1.00 to $10.99 per month for new subscribers. Existing customers will be moved to the new rate over the next several months. Netflix also increased the monthly fee for its four-stream “family plan,” from $11.99 to $13.99 per month. This four-stream plan also includes the 4K higher-quality streaming option.
In the past week, Netflix has been on a tear and is up 7.5%, nearing the $200 per share mark, with investors believing that the rate hike was the best thing for the company to do ahead of the holiday season. Netflix has been one of the best-performing stocks over the last few years, up over 57% on a year-to-date basis and up nearly 86% for the trailing one year. What is more impressive is that over the last five years, Netflix is up a cumulative 1,949%+. However, like most internet-based technology companies, Netflix does not currently pay a dividend.
To view the list of the top 100 technology stocks that do pay a dividend, click here.
Procter & Gamble Fends off Activist Investor Nelson Peltz
The third-most trending topic this week revolves around Procter & Gamble Co. (PG ), which saw an increase of 33%. On Tuesday, Procter & Gamble had its annual shareholder meeting in which proxy votes determined whether billionaire activist Nelson Peltz of Trian Fund Management would gain a seat on the board of directors. Both Procter & Gamble’s current management and Peltz spent the last few weeks fighting the most expensive proxy war in U.S. history over Peltz’s potential place on P&G’s board. Peltz believes that P&G’s current management has done a lackluster job of running the company and that he can capture more value and create growth opportunities for shareholders. However, in a very close battle, shareholders ended up keeping Peltz out of the boardroom, even though he still holds a $3.5 billion chunk of the company’s outstanding shares.
After the announcement on Tuesday, P&G’s stock price fell by 2.5%, but then leveled out throughout the day to finish down only 0.59%. In the last week, the stock has shown little movement and is down 0.54%. P&G has underperformed compared to the S&P 500 over the near term, as it is up only 8.77% versus the S&P’s 14.11% on a year-to-date basis. Over the last year, P&G has only returned 1.62%, and over the last five years, a cumulative return of 31. 35%. However, P&G has always been known for providing a reliable and consistent dividend, as it has had sixty years of consecutive dividend hikes. The stock is currently paying an annual dividend of $2.76 per share or a 3.02% dividend yield.
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The Bottom Line
The biggest story of the week has been centered on Costco’s fourth-quarter earnings call where the CFO and management did not seem to be concerned about the potential threat from Amazon. Netflix’s stock is on the rise, after the company decided to raise its subscription fees for both existing and new customers. Finally, Procter and Gamble trended as activist Nelson Peltz failed to gain a seat on the board after the annual meeting on Tuesday.
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