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Brian Mathews Oct 27, 2017
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 on third-quarter earnings calls. Blackstone surpassed analysts’ expectations when it indicated that it might double its size in the next five years. IBM also had a successful earnings beat and was a key factor enabling the Dow Jones to cross the 23,000 mark for the first time. On the other hand, GE had a large earnings miss, leading to a significant drop in its share price. Finally, Energy Transfer Partners is in danger of being removed from the $1 trillion Norwegian Sovereign fund for its dealings with the Dakota Access pipelines.
You can view our previous Trends article here, which revolved around Costco’s earnings beat and Netflix’s decision to raise U.S. subscription rates.
Blackstone Group LP (BX ) was this week’s top trending topic with an increase in viewership by 160% after its third-quarter earnings call on October 19. The investment firm surpassed analysts’ expectations on every level. On an earnings per share basis, Blackstone reported $0.69 per share versus the consensus amount of $0.57 per share. On a revenue basis, Blackstone reported total revenues of $1.75 billion, which was 22% higher from the prior year quarter and the consensus estimate of $1.42 billion. The company’s CEO Steve Schwarzman said that he believes his firm can double its current asset base and surpass the $800 billion mark over the next five years.
After the news hit, the stock jumped nearly 3.3% for the day and is up 3.67% for the last five trading days. On a year-to-date basis, the private equity firm has outperformed the S&P 500, with a return of 26.3% versus the S&P 500’s 14.13%. It has also performed well over the long term and is up a cumulative 117.87% for the trailing five years. One of the most attractive features that Blackstone offers its shareholders outside of price appreciation is its hefty dividend. The company pays shareholders an annual amount of $1.76 per share, equal to 5.17%. It has also recently started a trend of raising its dividend every year since 2013.
To view a list of the top Asset Management Dividend stocks, click here.
International Business Machines Corp. (IBM ) was the second-most trending topic this week, up 55% after the company had its third-quarter earnings. The company beat expectations on an earnings-per-share basis, reporting at $3.30 per share versus the estimate of $3.28 per share. Revenues also beat expectations, coming in at $19.2 billion versus the expected amount of $18.6 billion. On the call, CFO Martin Schroeter attributed much of the success to IBM’s Cognitive Solutions segment, where revenue grew 3.9% in the third quarter – a major turnaround from the previous quarter’s decline of 2.5%. Once the market opened the next day, IBM was one of a few companies with stellar earnings calls that led to the Dow Jones Industrial Average surpassing the 23,000 mark for the first time.
During premarket trading, IBM stock surged over 6%, and over the last five days, the stock is up 4.35%. However, on a year-to-date basis, IBM has had a down year, with a negative 7.52%. Over the last trailing five years, IBM is also down 20.61%, which is far below the returns of rival technology companies like HP Inc. (HPQ ), which is up 46.02% on a year-to-date basis. However, one advantage that IBM has over HP is its higher dividend, which is currently paying shareholders $6.00 a year, or 3.91%. Although IBM’s stock price hasn’t performed well in a long time, this recent earnings report shows the stock might be due for a comeback.
For the Best Diversified Computer Systems Dividend Stocks, click here.
Unlike the previous two companies that beat earnings expectations, General Electric Company (GE ) was the third-most trending stock this week because it did not. GE saw an increase of 45% in viewership this week after a huge third-quarter earnings miss. GE posted third-quarter earnings at $0.29 per share, significantly lower than estimates of $0.49 per share. However, revenues did manage to rise 14% to post at $33.47 billion, beating expectations of $32.56 billion. GE’s performance was weighed down by its power business, which saw profits decline 51% to $611 million, from $1.3 billion last year.
After the announcement, the stock started its free fall and declined as much as 8% in premarket trading. Over the last five days, the stock was down 6.44% and trading near its 52-week low of $21.30 per share. This further adds to an already down year for GE, which is now down 31.96% on a year-to-date basis. Even over the last five years, the stock has failed to give investors a positive return and is down 2.41%. Any further stock decline could cause the stock to fall out of the Dow Jones 30 companies, where it has had a firm place for the last 121 years. With the stock price falling, GE’s dividend yield is at one of its highest points at 4.48%, or an annual amount of $0.96 per share.
To view a list of the Dow 30 stocks that pay a dividend, click here.
The fourth-most trending topic this week revolves around Energy Transfer Partners LP Liquid error: internal, up 35% in viewership. The company was in the news this week after a $1 trillion sovereign wealth fund from Norway is reviewing allegations that ETP is in breach of the fund’s guidelines. According to rules set by Norway’s parliament, ETP could be breaking guidelines in its dealings with environmentalists and Native American campaigners in relation to the Dakota Access Pipeline. The fund had as much as $248 million of ETP corporate bonds as of the end of 2016, and if the fund decides to divest the entire portion that could cause a downgrade in ETP’s credit quality.
Like most of the pipeline and other energy-related stocks, ETP has had a challenging year. Over the last week, the stock is down 7.71%, and down 31.77% on a year-to-date basis. The stock has also been on the decline over the trailing five years, down 32.5%. However, like most master limited partnerships (MLPs), ETP issues its revenues in the form of dividends to shareholders. ETP has one of the highest yields in the MLP field, with an annualized payout of $2.20 or a current yield of 13.45%. What is more concerning is that the company has a very high payout ratio of 423.1%. This seems far too high to maintain over the long term and expect the company to cut its dividend in the near future.
Check out our Dividend University section to learn more about dividend investing.
Three of the four trends this week were based on earnings calls, with both Blackstone and IBM beating expectations and causing each of their stocks to rise. On the contrary, GE had a big earnings miss and is in trouble of being removed from the Dow 30 stocks if the stock continues to drop. Finally, ETP might see up to $248 million of its corporate bonds sold out of a Norway Sovereign fund due to a possible violation of the fund’s guidelines.
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