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.
Johnson & Johnson has been in the spotlight after revelations that some of its baby products are contaminated, causing the stock price to plummet. Technology company IBM reported results that missed analyst estimates. Bank of America took the third place in the list as it reported strong quarterly results. The list is closed by Boeing, which saw a crisis related to two fatal crashes deepen recently.
Don’t forget to read our previous edition of trends here.
Johnson & Johnson
Johnson & Johnson (JNJ) has taken the first spot in the list this week with 49% increase in viewership. The company’s shares lost around 6% in just one day last week, after the U.S. Food and Drug Administration (FDA) found traces of asbestos in some of the company’s baby powder products that contain talc. Asbestos has been linked to deadly mesothelioma and is known for causing cancer. As a result, Johnson & Johnson recalled 33,000 bottles of the product, triggering worries the company will face additional lawsuits from unhappy customers.
The 130-year-old healthcare conglomerate is already confronting with thousands of lawsuits related to products such as opioids, medical devices, and the antipsychotic Risperdal. Recently, a jury awarded $8 billion to a plaintiff alleging the company downplayed the risks of Risperdal, although Johnson & Johnson itself and experts believe the sum will be lowered substantially. However, the company still faces over 15,000 lawsuits, likely putting pressure on the firm to negotiate a collective settlement.
These issues have had a negative impact on the stock. So far in 2019, Johnson & Johnson stock has fallen more than 6%, versus a 9% gain for the S&P 500.
Some analysts believe the current debacle is likely to have a limited impact on the stock long-term because the asbestos fiasco has already been priced into the stock. At the same time, talc products are just a fraction of the company’s annual expected $82 billion in sales for 2019.
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IBM (IBM) is second in the list with a 42% rise in viewership, as the technology behemoth continued to disappoint with worse-than-expected earnings. Last week, IBM reported the fifth quarterly revenue drop in a row, although it promised improvements next year. Third-quarter net income came in at $1.67 billion, or $1.87 per share, versus $2.69 billion in the comparable period last year. Meanwhile, revenues declined to $18 billion from $18.7 billion.
The company attributed the poor results to its global technology services unit, which CFO Jim Kavanaugh said suffered from headwinds during the quarter. Kavanaugh reassured investors that 2020 will be the year of sustainable revenue growth overall. The bright spot was the company’s cloud services, which saw revenues grow by 11% to $5 billion.
Shares in IBM have dropped around 6% since the results were released, limiting year-to-date gains to 18%. The company’s stock is down 36% since it reached an all-time high in 2013.
IBM is one of the few technology companies that has grown its dividend for the past 19 years. Its dividend now yields nearly 5% on a payout ratio of 50%.
Check out our latest Best Dividend Stocks List here.
Bank of America
Bank of America (BAC) has reported another strong quarter, triggering a rise in the stock price and an advance in viewership of 36%. The lender said net income for the third quarter rose 4% to $7.5 billion. Including a charge related to the end of a partnership with First Data, net income declined to $5.4 billion, or $0.56 per share, which was higher than analysts’ forecast of $0.51.
The main driver for earnings was the bank’s global banking business, which saw revenues increase by 8% to $5.2 billion thanks to higher fees charged to investment banking clients. Consumer banking revenue rose 3% to $9.7 billion, while the trading division saw income decline 2% to $3.88 billion.
Bank of America, under the leadership of CEO Brian Moynihan, has adopted a strategy of keeping costs in check while trying to maintain revenues steady or up. This strategy has attracted Warren Buffett’s Berkshire Hathaway, which has recently asked the Federal Reserve for permission to increase its stake above the 10% level.
Shares in Bank of America have jumped upon the earnings release and are up more than 4% over the past five days. Year-to-date, Bank of America shares have risen nearly 30%. On top of the strong stock performance, Bank of America pays a healthy dividend of 2.31%.
Boeing (BA) has seen its traffic rise by 33% these past two weeks, as the aircraft maker has hit another rough spot. The fallout from a faulty autopilot system that caused two fatal crashes of 737 Max planes has intensified after revelations that two top pilots had expressed concerns about the flight control system, with one calling it “egregious.”
The Federal Aviation Administration (FAA) said Boeing had been aware of the pilots’ warnings and lambasted the company for not revealing the documents earlier. The news triggered a wave of downgrades from analysts.
Shares in Boeing have tumbled more than 8% over the past five days, cutting year-to-date gains to 7.6%. Boeing has a dividend yield of 2.4% and has been increasing it for the past seven years.
The Bottom Line
Johnson & Johnson stock has lost its shine as the company is facing a number of lawsuits related to the discovery of asbestos in its baby powders. Technology giant IBM continued to disappoint investors with another weak earnings report. Bank of America has pleasantly surprised markets with a solid third-quarter earnings report, leading to a jump in the stock price. Finally, Boeing is scrambling to contain the damage from a flight control system that is believed to be the cause of two fatal plane crashes.
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