Party at Dow Jones’ and everyone’s invited
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2020 was a big year for the Dow Jones – the benchmark index saw strong runs and dips with Biden’s presidency and the pandemic causing the largest market movement. 2021 appears to be following suit.
The Dow Jones measures the performance of the 30 most-traded stocks on the New York Stock Exchange and Nasdaq. It comprises reputable blue-chip stocks and offers investors some of the best dividends with yields ranging from 1-6%.
Payment vs. dividend
When trading dividend stocks, you will come across the terms payment date and ex-dividend date. These are straightforward but important concepts.
A company will declare when it intends to make a dividend payment in advance and count back to a specific date by which time an investor must be holding a share to qualify to receive it. This is known as the ex-dividend date.
The payment date is the date payment is made and it’s usually some weeks later.
When it comes to investing, sole focus should not be the dividend. To reward shareholders, companies must be performing well during each period – their earnings must rise and they should post a profit. Some companies offer yields in the 6% bracket, and while these can be very tempting for those on the search for an income boost, they must be supported by decent financials.
This week, we look at three high-flying dividend stocks on the Dow Jones.
Cisco Systems (CSCO)
The tech company based in Silicon Valley recently hired a new chief financial officer, Scott Herren, to get its financials in order. It is now one of the best companies in terms of cash on its balance sheet.
The giant was recently upgraded to ‘buy’ by Goldman Sachs on the view corporate spending would increase as the pandemic eased and upgraded from ‘neutral’ to ‘overweight’ by bigwig J.P. Morgan, boosting its price by 10% to $55 a share.
Cisco enjoyed 17% growth year-to-date, offers investors a lofty 4% dividend yield and is due to go ex-dividend 5 April 2021.
Chevron Corporation (CVX)
America’s second-largest oil firm, Chevron, has an expected earnings growth rate of 2,630% for the current year, according to Zacks Consensus Estimates, which is also projecting revenue of $127.97 billion.
During the final quarter of 2020, Warren Buffet’s Berkshire Hathaway began building a position in Chevron and by the end of the year had pocketed more than 48 million shares of the oil giant.
Following a turbulent year for the industry, Chevron implemented cost-cutting measures and significantly lowered its capital spending plan.
Chevron paid $9.7 billion in dividends in 2020, marking the 33rd consecutive year of higher annual dividend payouts per share. In 2021, the oil giant is set to prioritise long-term value investments that are expected to deliver higher returns and lower carbon, including over $300 million for investments to advance a lower-carbon future. Chevron saw 26% growth year-to-date and goes ex-dividend within the next two months.
JPMorgan Chase (JPM)
Shares in JPMorgan Chase, the biggest US bank by market value, hit a record high this month following increased market confidence and consumer spending. The bank also beat its Q4 trading forecasts.
In a bid to rival fintechs, the banking giant rolled out more mobile payment functions and launched its mobile payment service QuickAccept in autumn 2020. As such, the bank was rewarded with a 10% increase in active mobile customers in the fourth quarter of 2020. JPMorgan also said its digital currency had been put to commercial use for the first time after launching a new business around the technology underpinning the coin helping it remain current despite fintech trends.
The banking stalwart is set to deliver a massive $11 billion in dividend payments in 2021 and is focusing efforts on loan and deposit growth as opposed to risky derivative investments in a bid to balance out the recession’s impact.
JPMorgan Chase has achieved 23% growth year-to-date and goes ex-dividend 5 April 2021.