Most of the time, politicians try to help or not hurt the business community because they provide jobs and economic growth. However, President Trump on on hand will offer support to the community, on the other hand takes away. In the case of increasing the size and scope of tariffs on China, there are large companies directly affected as would be expected given China’s growth over the past 30 years. With the growth rates in China it would have been not prudent not to have large investments in China. Now that President Trump is the tariff President, there is consequences on the stock market, how well the companies manage it, will tell a story.
Recently Scott Clayton of TSI Network tried to determine good stocks with sound growth prospects despite the negative impact of tariffs on their company. His criteria:
One point for 5 years of continuous divident payments, 2 points for more than 5
Two points if the company has raised the dividend in the past 5 years
One point for management’s commitment to dividends
One point for operating in non-cyclical industries
One point for limited exposure to foreign currency rates and freedom from political interference
Two Points for long-term record of positive earnings and cash flow sufficient to cover dividend payments.
One point if the company is a leader in its industry
Company Dividend Sustainablity Points Div Yield Mkt Cap 1 Yr Total
Rating % $ Bil Return %
Walmart Higherst 10 2.1 303.4 23.8
Apple Highest 10 1.7 820.1 -5.9
3M Above Average 9 3.5 94.2 -18.9
Caterpillar Above Average 9 3.4 69.5 -22.1
Genuine Parts Above Average 9 3.1 14.2 6.9
Home Depot Above Average 9 2.9 211.2 1.7
Deere & Co Above Average 9 2.2 43.8 -11.2
Nike Above Average 9 1.1 127.6 9.2
Hasbro Above Average 8 2.8 12.3 10.8th
In TSI research found large companies it is important to remember both Walmart and Home Depot rely on China for merchandise. Hasbro and Toys come from China; Nike expects to sell shoes into China but makes them elsewhere in South east Asia; John Deere is affect by agricutlure import restrictions because when the President imposes restrictions on China, China imposes restrictions on the US; Apple makes its products in China and Genuine Parts buys half of its products from China.
Linking to dividend paying stocks, the global supply system which US companies greatly help to implement works until it does not. Relying on Asia has been and generally continues to be a very good thing until local politicians throw a wrench into it. When you are buying stocks, see where they access their supplies to sell at higher margins and what the risks are?
There are more questions than answers, till the next time – to raising questions.