In an article by Saqib Iqbal Ahmed of Reuters, S&P Global research showed dividend payments to investors in the S&P 500 rose to a new record in 2020.

Dividend payments rose 0.7% to $58.28 a share from the previous record set in 2019.

Howard Silverblatt, senior index analyst for S&P and Dow Jones indices, noted a record dividend payment in the 1st quarter of 2020 and a stronger than expected payment in the 4th quarter led to record payouts to investors.

For 2021, Mr. Silverblatt currently sees dividend payments setting its 10th consecutive record year up 4.2%. Tesla is now included in the S&P 500 but does not pay a dividend, if you take Tesla out the index, payout would be 5.9%.

Interest rates remain low and boosting dividends helps bring more investors to buying stocks.

Linking to dividend paying stocks, companies look to alternatives to determine what level of dividends they will pay. In financing there are always choices – issue debt, equity or a combination of both. At the moment and for the next year or as long as COVID rages, interest rates will be low and investing in dividend paying stocks is a very good choice.

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

The auto market is a bell weather for the economy and there will be many analysts projecting the future. Some people have a more vested interested because as head of a company they need to invest billions of money to tool and retool auto plants.

In an article by Tom Krisher of the Associated Press, the President of VW of America since 2018 Scott Keogh was interviewed.

The first question with VW is there was a scandal of emissions and 30% of people said they would never buy VW again, now the number is down to 13%.

13% sounds high, but you have to remember every brand has a 8 to 9% avoidance. The goal is not 0% but to be around 7%.

The market in the US will probably be down 14 -15% in 2020 to , with 14.5 million vehicles sold and VW having a 10% share. In 2021, the expectation is 15.4 million.

The trend for both shoppers and dealers to being digital is going to stay because it is more transparent and clear.

The electric market is 2% but every single survey 30 -40% of consumers says electric will be my next car.

Linking to dividend paying stocks, auto companies are in a very interesting area, they see the internal combustion engine is changing and electric vehicles are going to be a growth area but there is time lag between the 2 segments. Will we always have internal combustion engines? how many have to be produced for economies of scale? what is the price point which tips the market? All very important issues which someone has to make a decision on. We know the government under President Biden will encourage more electric, but when will consumers make the decision? On one hand you want your manufacturing company to be nimble and quick, but there are capital investments to be made, do you agree with your companies’ investment strategies?

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

One of the most successful companies to come out of China is Alibaba Group run by Jack Ma. Since 1999 only 20 years ago, Mr. Ma has amassed a $59 billion fortune. If you think about Amazon, you can make comparisons to Alibaba. In the last few years, Mr. Ma moved into the financial services with a company called Ant Group.

In an article by Raymond Zhong of the New York Times News Service, Ant is a financial services and technology firm which has grown to help out its 730 million monthly users to take out small loans, invest their savings and buy insurance from their smartphones. With 730 million monthly users, Ant Group was going to do an IPO (initial public offering) and many firms would buy the shares.

Alibaba is headquarter in China and in China the Central Power has the final blessings. The Central Power wanted Ant Group to be regulated similar to a bank as opposed to a tech company. As a tech company the rules are much less than if they were regulated similar to a bank. At first, likely because of its size, Ant told the Central Power they should be regulated similar to a tech company. The regulators disagreed, but in China regulators are backed by the President of China. Regulators win.

The regulators have ordered Ant to “return to its payments origins,” and to strictly rectify illegal credit and wealth management financial activities. This means Ant to spin off those business lines, which have been increasingly important to its revenue.

Mr. Pan also the regulators had ordered Ant to reorganize itself to ensure that it met capital requirements. Keeping more money on its books to back its lending activities could crimp Ant’s bottom line.

Regulators have played give and take with Ant for years. When the company created a money market fund within Alipay that paid higher rates than bank deposits, the government forced the fund to shed risk and lower returns. After Ant began managing huge amounts of money in Alipay virtual wallets, the central bank made it park those funds made it park those funds in special accounts where they would earn minimal interest.

Ant said it would put together a plan for complying with the new requirement.

Linking to dividend paying stocks, all companies want to move into areas where they can make the most money, sometimes the government will step in and place restrictions on the company. The company’s best avenue is to work with the government because it has more levers to pull. Regulation or the threat of full regulation is why companies work with government. Companies love free enterprise but working with government is important to stay in business.

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

After 20 months grounding Boeing 737 Max made its first flights in the US flying from Miami to New York. The flight which started the long process by Boeing was an American Airlines Flight 718 and the new year celebrations came early to Boeing.

In an article by Niraj Chokshi of the New York Times News Service, the Max is the workhorse of the global airline fleet, used for domestic flights and some shorter international flights. The benefits include being significantly more fuel efficient (the airlines save money on fuel), has a single aisle plane which passengers like because of the direct, non-stop flights.

Ryanair, the low-cost European airline has agreed to buy 75 planes and Alaska Airlines bought 24 planes.

As more and more people are vaccinated, American Airlines expect to operate 91 Max flights a day. In the meantime all American airline pilots will have gone through a retraining process. The capacity of the Max 737 is 172 passengers with 16 in business class.

United Airlines expects to begin flying Max on Feb 11 out of Dallas and Houston. Southwest Airlines which has an all Boeing fleet, expects to fly the Max in the second quarter. Delta does not use the plane.

Internationally, Gol, a Brazilian company became the first company to fly the Max and Aeromexico has begun using the plane. Equally importantly to Boeing as President elect Biden becomes President and the policy towards China changes, expect China to buy planes from Boeing.

Linking to dividend paying stocks, every company has a workhorse product or service which they have to accumulate revenue. It is something investors look at, expect to have recurring revenues and when it happens all is good. Every company has faced problems, but only deep pocketed ones such as Boeing which operates in a very controlled environment can bounce back. Normally, if the big revenue base is gone, it is time to find alternatives very quickly.

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

During COVID, one of the big winners on the stock exchanges has been the tech sector. For a wide variety of reasons, the tech sector influence in the economy has increased and equally important profits soared. In the US exchanges owning directly or indirectly the FANG stocks has increased your portfolio. However with the greater influence, all governments have started to ask are the tech sector too important? too unregulated? can we control it? The solution in the US is different than the solution in China.

In an article by Joe McDonald of the Associated Press offers insight into how China is trying to controlled its tech sector. China has the world’s biggest population of internet users at 940 million, according to government data. An unusually large share of the public use e-commerce and other online services, giving internet companies outsized influence in retailing, entertainment and other industries. If you think back a number of years, the US had a phone line in almost every home, then a cable and then the internet. China and other countries went straight to the internet and smartphones.

In China the biggest internet companies are Alibaba, JD.com and Tencent, with Alibaba as number one company. Alibaba’s revenue rose 30% in the 3 months ending in September to $23.4 billion. In November, Alibaba has the single’s day festival from Nov 1 to 11 and spending rose to $75.1 billion.

In China, the ruling party can clip any wings it wishes or wants to. The ruling party says anti-monopoly enforcement in tech industries will be a priority. What does that mean, according to Francis Lun, chief executive of Geo Securities in Hong Kong, the era of free growth and ultrahigh growth is over. The government will decide what you can do.

Alibaba was set up in 1999 and operates in retail, business to business, consumer to consumer and has expanded into financial services, film production and other fields. Its founder Jack Ma has a fortune estimated at $59 billion. Alibaba owns Ant financial services and it competes against state owned banks for business, squeezing their profits. The state owned banks feel theaten and have the government supporting them.

Linking to dividend paying stocks, when the established players make money competition is a wonderful thing in theory. When the established players lose money or do not make as much, competition is not a good thing. When you invest and the companies are making profits, the process is less important until they make less. Process matters all the time, particularly for governments. If the companies you invest have good governance, then they will be able to whether the cycles in the market.

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

In every portfolio there will be stocks that have done well and stocks that have not, as the economy is never even. If you own oil stocks which for years was a very good thing to own, your portfolio was down. However there are some stocks which have been consistent over the past year in making profits and paying dividends.

Michael Pe of product manager for CPMS at Morningstar Research examined the S&P 500 index to find the consistent profitable companies.

His criteria was:

a consistent dividend growth – annual dividend growth every year for the past 5 years

a low dividend-to-earnings payout ratio – dividend payout ratio of less than 70%

a high Morningstar quantitative health score (the company he works for) – at least 70 out of 100

dividend yield of at least 1%

Company Mkt Cap Div Grth Payout Quant Health Div 1 Yr Ttl Recent

$ Bil Rate % Ratio% Score % Yld Rtn % Price

Citigroup 122.960 53.2 34.0 76 3.5 -21.9 59.06

Citizens Fin 14.610 42.8 54.2 71 4.6 -11.3 34.21

Charles Schwab 93.552 34.1 30.3 82 1.4 9.3 51.98

Regions Financial 14.656 28.3 42.6 73 4.1 -8.2 15.26

KeyCorp 15.057 24.6 55.0 72 4.8 -20.1 15.42

A.O. Smith 7.535 21.5 44.0 77 1.9 19.6 55.64

Hormel Foods 25.883 11.8 56.0 80 2.0 9.3 47.94

Jack Henry & Assoc 12.335 11.7 45.4 74 1.1 11.8 161.63

Accenture PLC 176.027 10.1 42.8 73 1.3 29.4 266.25

Microsoft 1662.648 9.5 33.0 72 1.0 41.7 218.59

The other companies in the list were: Cicso Systems, Clorox, Church & Dwight, Merck, Tiffany, Expeditors International of Washington, Johnson & Johnson, AmerisourceBergen, C.H. Robinson and Proctor & Gamble

Linking to dividend paying stocks, if you bought the above companies for the dividend, you would still own them. Not all of them went up, the financials tended to have a down year but in 2021 they are expected to be positive as they stayed profitable but concerns were they would have greater write off of loans. In 2021 we all have hope that sectors such as tourism and hospitality can open up which is a good thing. You might own some names such as the ones above and you can ask your investment advisor for research such as the Morningside Research. Buying profitable stocks that can pay dividends is a good strategy.

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

Stocks have done well over the past number of years and there are reasons why they could continue their run. The most important reason is interest rates which Central Bankers around the world have kept low, which means the alternative to bonds is stocks. Another reason is simple simple and demand.

In an article by Sujata Rao of Reuters, investors are competing against companies doing buy backs and central banks trying to ensure the economy keeps running through the pandemic.

Dealogic shows a number of high profile IPOs has raised over $1 trillion in new equity. On the over side of the coin was mergers and private equity deals which took shares off the markets.

The issue with the bond market is the biggest buyer is the Central Bank. At the end of 2020, Central Banks own half the sovereign bonds in Britain, the Euro and Japan.

JPMorgan analyst Nikolaos Panigirtzoglou estimates the net equity demand/supply match next year around $1.1 trillion. He is expecting demand for shares to increase by $600 billion, while supply drops by $500 billion as buybacks and private equity led leveraged buyouts recover.

Buybacks of stock was held lower by federal regulations, which restricted the banks from buying back their stock, however in 2021, the Federal Reserve is allowing US banks to buy back stock and a number have been announced for 2021.

A change for new IPOs is people who use the platform of Robinhood and others have increased their participation from 10% in 2019 to an estimated 40% in 2020 according to estimates from Citadel Securities.

Linking to dividend paying stocks, all things being equal when there is a supply and demand issue, good stocks should continue to do well in 2021. This means if you own a good profitable company you should be able to hold it and the value will likely climb. The alternative of buying bonds at rates about dividend paying companies is low, which means 2021 is looking to be a good year.

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

It is hard not to like Amazon for what it does, it is also hard not to use Amazon or see how the company has been growing and continues to grow over the years. Amazon is now the biggest office user in Seattle, is scheduled to increased its presence in the Washington, DC area and with its large distribution centers is a major employer in many cities. This is good for many people, however if you work in the distribution center you may or may not like working there. In the work of time motion activities, Amazon has it down to a a science.

In an article by Jeffery Dastin and Krystal Hu of Reuters, in 2021, there will be some votes at Amazon facilities to unionize or not. In the past, Amazon has been anti-union, not as bad as Wal-mart, but in that area. (Wal-mart and Amazon are America’s two largest private employers). People have tried to unionize at Amazon, but since 2014 and that result was a no, Amazon has no union.

One would thought the first union would come from a state that is more heavily unionized than others, but the first vote is coming from a fulfillment center in Bessemer, Alabama. At the moment, the average pay at the facility is $15.30 a hour plus health and retirement benefits (the minimum wage in Alabama is $7.25, which means the concern is something more than money). Other efforts to organize a union are in Wauwatosa, Wisconsin and Portland, Oregon.

Linking to dividend paying stocks, many dividend paying stocks have a union, most utilities have a unionized electrical workers. Unions do not mean the company will not make money, but it does mean a change management attitudes towards the lowest worker in the company. Whether a company organizes or not, it does not mean wages would go up because in Amazon’s case they pay greater than minimum wage and President elect Biden is going to working on a $15 minimum wage. Management can easily work with unions and still make profits which translates to dividends.

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

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.