Dividends and is Wall Street pro-Biden now?

On the surface, President Trump is more biased towards Wall Street, however Joe Biden is from Delaware. On of the attributes of the state of Delaware is low corporate taxes for companies nominally headquarter in Delaware. Many New York companies are technically headquartered in Delaware for the low taxes. Do you believe someone who has represented the state for years is going to be bad for Wall Street. What he will tend to do is reign in some of the excesses and bring a fairness to corporations and what they do and do not do, but expect good relationships with Wall Street.

If the polls are correct and they were closer than expected, but the Democrats remembered electoral college math and President-elect Joe Biden will take over President in January 2021 and investors will vote with their check books as opposed to voting to take advantage of democracy.

In an article by Matt Phillips of the New York Times News Service, if the Democrats win there will be more regulation and taxes. Some of the regulation is needed because the Trump administration has move the pendulum too far and took away too many regulations. Taxes on corporations will go up to 28% from 21% and more taxes for those earning above $400,000. It must be remember that when taxes were cut, many Wall Street companies bought back more stock and gave larger dividends as opposed to reinvesting in the business. The tax cuts were seen as a one time bonus.

Analysts at JPMorgan Chase & Co examined what companies on the surface should be winners and who will be losers given the biases of Biden. The winners tend to be health care, renewable energy, infrastructure and better trade relations with China (Jim Cramer on Mad Money agrees with the China). Potential losers could be companies with large numbers of minimum wage workers (although the federal government does not employ many people Biden believes the minimum wage should be $15.00 a hour), defence contractors (the defence budget will likely be cut), energy companies (due to climate change and higher demands of fuel efficiencies).

The higher the win, the cleaner the outcome and Wall Street likes certainities.

Linking to dividend paying stocks, companies love to say they want independence from the government then when competition happens they want a level playing field which means playing by the same rules and ensuring the bigger company keeps making money. As long as your investment in the companies can still make money that is your first concern. Under the Trump administration it was much easier to do many corporate activities or the bias was towards the company. Under the Biden administration there will tend to be more emphasis on is the corporate activity helpful to the consumer and employee? There will be a shift but good companies with strong values which consistently make money will continue to make profits.

There are more questions than answers, till the next time – to raising questions.

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