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.
As 2022 draws to a close, Broadcom has taken the first position in the list, as it faces antitrust scrutiny over its takeover of VMWare. J.P. Morgan Chase is second in the list, as the storied bank faces questions about leadership transition. Third in the list is Exxon Mobil, which has seen a turn of fortunes with the oil prices rising this year. The list is closed by mortgage real estate investment firm Annaly Capital, which had a tough ride lately.
Don’t forget to read our previous edition of trends here.
Broadcom’s Acquisition of VMWare Probed by EU regulators
Large semiconductor company Broadcom(AVGO) has taken the first position in the list with an advance in viewership of 40%. The semiconductor maker was in the news for obvious reasons, as its expansion into software faces growing opposition. The European Union regulators opened an investigation into the company’s deal to acquire VMWare for $61 billion, arguing this could lead to a worse experience for consumers.
Broadcom and VMWare have no product overlap given that the acquirer makes semiconductors and the target focuses on cloud computing and virtualization technology. However, VMWare controls 79% of the market and this has raised worries Broadcom will be able to leverage its pricing position.
Broadcom has been a serial acquirer in recent years, in a bid to expand into software. After its takeover of rival Qualcomm was struck down by former President Donald Trump, the company acquired CA Technologies and Symantec’s enterprise security unit. The move has apparently paid off. Broadcom shares outperformed the iShares Semiconductor ETF by about 20%, amid a tough environment for technology stocks.
Broadcom also has a relatively strong dividend, yielding about 3.3% versus 1.4% for technology average.
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J.P. Morgan Chase Completes Fintech Deal
Banking juggernaut J.P. Morgan Chase (JPM) has taken the second position in the list, seeing its viewership surge 17%. J.P. Morgan Chase has trended thanks to a multitude of news. The company recently closed the acquisition of a large stake in Viva Wallet, a European cloud-based fintech firm, as it continued its quick expansion into new technologies. This is part of CEO Jamie Dimon’s strategy of investing in digital technologies, which has at times prompted backlash from investors over rising costs.
Yet, the company performed very well during CEO Jamie Dimon’s 17-year tenure, comfortably beating peers and easily navigating the financial crisis in 2008. But as Dimon reaches retirement age, questions loom over who will replace him, and so far it is less than clear if there is a successor in place.
J.P. Morgan Chase shares are down 17% over the past year, as net income declined in recent quarters due to higher costs with the digitalization drive. However, trading at 11x earnings and a dividend yield of 3%, J.P. Morgan Chase might be a good long-term bet, especially if the company’s investments in technology bear fruit.
Exxon Mobil Has Stellar Year
Exxon Mobil (XOM) is third in the list with an advance in traffic of 14%. Exxon Mobil has had a stellar year, with its stock continuing last year’s gains, up around 71%. The company was helped by rising oil prices and their stabilization at relatively high levels. Clearly, the company’s bets on oil exploration – at a time when many were skeptical – has paid off handsomely. The company’s net income tripled in the quarter ended September 30, while revenues grew by 50%.
Exxon shares still trade relatively cheap at around 8x earnings, indicating that the market is doubtful it will be able to maintain this level of profits going forward. Climate-change initiatives and oil price outlook will weigh on the stock over the long term.
Exxon increased its dividend in the most recent quarter by 3 cents to 91 cents, which now yields 3%.
Rising Mortgage Rates Makes Investors Cautious About Annaly Capital
Annaly Capital (NLY) is last in the list with an increase in viewership of 6%. Annaly, a mortgage real estate investment firm, has been hit by rising interest rates on mortgages, which could lead to a rising amount of defaults. However, as the stock continued to decline, its dividend yield surged to a current 15.6%, which has been attractive to investors.
If Annaly is able to withstand a potential economic storm or recession, its stock will recover, potentially making this an attractive long-term investment, especially since the company beat the S&P 500 Index on a total return basis since its initial public offering 25 years ago.
The Bottom Line
Broadcom has work to do to convince European regulators that its blockbuster acquisition of VMWare will not hurt competition in the region. J.P. Morgan Chase is betting strongly on digitalization even as it faces growing questions over who will replace star CEO Jamie Dimon. Exxon Mobil has had a stellar year thanks to rising oil prices. Finally, Annaly Capital’s performance has sagged due to rising interest rates on mortgages.
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