Dividends and US cyclical sectors could shine in 2021

For the past 6 months, if you moved your money or your portfolio was weighed towards stay at home stocks, it did better than the averages, will those stocks remain high flyers or will another sector be the leading sector? We now have hope as more and more people are vaccinated, the economy can recover for people to move around more. Will the downtown office buildings be filled, the highways go back to stop and go traffic? we do not know. Although if you have been driving during the COVID shutdowns, driving is easier. On Wall Street, there is money to made in every sector, so analysts are now suggesting many cyclical stocks will be a leading percentage gainers.

In an article by Caroline Valetkevitch of Reuters she interviewed people such as Tim Ghriskey, chief investment strategist at Inverness Counsel in New York, who said, You are going to see earnings recover, the economy recover and that is on the back of cyclicals and restocking. The market will transition from all growth to more of a balance between tech and cyclicals.

Energy is down for the year 36%, financials are down 8%, information tech up 40%.

Jonathan Golub, chief US equity strategist at Credit Suisse Securities, is overweight financials in 2021, but neutral on cycicals in general.

Goldman Sachs is overweight industrials and materials and neutral on consumer discretionary, financials and energy.

Linking to dividend paying stocks, when you buy a profitable stocks as long as it stays profitable, there is very little reason to move into different sectors, because you are buying the stock for the dividend and not to worry about the price. Over a period of time, profitable stocks trade at higher multiplies and your total return makes you wealthier. If you go into the retail store or mall, they have to change every season to entice you to buy. Wall Street operates on the same theory, they make more money if you buy and sell often, you make more money if you buy profitable companies which pay you dividends and then at some point you can use the dividends to buy growth stocks, in that fashion you have the best of both worlds, but the portfolio is concentrated on dividend stocks. As you review your portfolio in January and if it did what you had expected and it continue, you might not have to do much and that is a good thing.

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

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