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Adviser Fees on Indexed Assets Can Eat Up Your Nest Egg?

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Indexing sounds like an easy way to track the market’s performance, but if your indexed assets are held in financial advisors’ accounts, it can come with a big cost: significant underperformance. Over 20 years, we estimate in this hypothetical example that the cumulative cost as a result of a 1% annual financial advisor fee on indexed assets can amount to as much as 66% of a saver’s initial investment — just for holding an index fund. Please be careful out there!

Systemic Risk in These Frothy Times

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Let’s talk about index investing, market valuations, and mention how a few ideas in the Best Ideas Newsletter are doing. By Brian Nelson, CFA For most investors during most parts of the economic cycle, index investing (VOO), or holding a broad basket of stocks that approximate the returns of a large market index may make a lot of sense. I have always said this from the very beginning: Individual stock selection is not for everyone. What may not be well-known, however, is that index funds have experienced multi-year periods of both outperformance and underperformance relative to actively-managed funds since the dawning of the very first index fund many decades ago. I’m worried that some investors today may not have this … Read more

Podcast: Markets In Motion

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The Valuentum analyst team covers market moving information that is top of mind from consumer staples valuations, the political election cycle, utility valuations, energy resource pricing, biotech considerations, Brexit uncertainty and beyond. ~8 minutes. Tickerized for several consumer staples entities and ETFs, several companies in the energy sector, emerging market vehicles and more.

A Kleenex? Consumer Staples Trading At Nosebleed Levels

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Image Source: Alan Levine “The forward 12-month P/E ratio is 17.0. This P/E ratio is based on Thursday’s closing price (2170.06) and forward 12-month EPS ($127.93). The P/E ratio of 17.0 is above the prior 5-year average forward 12-month P/E ratio of 14.6, and above the prior 10-year average forward 12-month P/E ratio of 14.3. It is also above the forward 12-month P/E ratio of 16.6 recorded at the start of the third quarter (June 30).” – FactSet Earnings Insight, July 29, 2016 Kleenex anyone? Because we’re at nosebleed valuations in the consumer staples (XLP) sector! At arguably no time in the history of the stock market have investors been willing to pay so much for each unit of earnings … Read more

Nelson’s Warning to the Board Rooms of America

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Image Source: Robert Lyle Bolton “In some ways, a cash dividend is like paying shareholders with their own money, and making a big deal about it!” — Brian Nelson, CFA To the Board Rooms of America: We learn a lot from the culture we live in, the education system we promote, and the games we play. Who hasn’t played Monopoly, the age-old game that Hasbro scooped up from Parker Brothers, first published in 1935? For more than 80 years now, men and women of all ages have been collecting $50 from the “bank” after pulling one of the more-fortuitous Chance cards. Ingrained in society has become the belief that a “dividend” is incremental, that something is “given” to shareholders that … Read more

The Best Ideas for 2014 and Beyond: Part II

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A portion of this article is excerpted from the January 2014 edition of the Dividend Growth Newsletter. Valuentum has two actively-managed portfolios: a Best Ideas portfolio and a Dividend Growth portfolio. Each portfolio has different goals and strategies. The Best Ideas portfolio seeks to find firms that have good value and good momentum characteristics and typically holds them from a Valuentum Buying Index rating of a 9 or 10 to a rating of a 1 or 2. The goal of the portfolio is to generate a positive return each year and to exceed the performance of a broad market benchmark. The Dividend Growth portfolio seeks to find underpriced dividend growth gems that generate phenomenal levels of cash flow and have … Read more

Efficacy of the Dividend Cushion Ratio

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A version of this article was originally published September 2019. The Dividend Cushion ratio is one of the most powerful financial tools an income or dividend growth investor can use in conjunction with qualitative dividend analysis. The ratio is one-of-a-kind in that it is both free-cash-flow based and forward looking. Since its creation in 2012, the Dividend Cushion ratio has forewarned readers of approximately 50 dividend cuts. We estimate its efficacy at ~90%. By Valuentum Analysts  Key Takeaways: The Dividend Cushion ratio is a helpful tool to use to cushion your dividend growth or income portfolio against potential dividend cuts. The ratio also helps to assess the growth potential of a company’s dividend, above and beyond current expectations of payout … Read more

US Congress Is Getting Ready to Pass a Massive ~$2.2 Trillion Fiscal Stimulus Bill

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Image Shown: US equities have started to recover some of their lost ground as the likelihood that the US Congress will pass a massive ~$2.2 trillion fiscal stimulus and emergency spending package, dubbed the CARES Act, has increased significantly over the past week as seen through the bounce in the SPDR S&P 500 ETF Trust (SPY). President Trump has clearly indicated that he intends to sign such a bill into law as soon as possible, with the US House of Representatives expected to take up the legislation this upcoming Friday morning on March 27. By Callum Turcan On March 25, the US Senate worked late into the night to secure a bipartisan compromise on a massive ~$2.2 trillion fiscal stimulus … Read more

Don’t Just Look at the House; Examine the Foundation

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Image Source: Lindsay Holmwood Let’s examine how we derive the forecasts in our stock and dividend reports. This article appeared on our website April 2014. It is updated and refreshed today for the benefit of new members. By Kris Rosemann and Brian Nelson, CFA One of the biggest benefits of being a member of Valuentum’s investment services is that we show you all of the numbers – the numbers tell the real story. An author/analyst may tell the story of a company through his/her eyes, but the author/analyst must still convert his/her thoughts and qualitative considerations into quantitative future forecasts to arrive at a fair value estimate of a stock. These future forecasts ultimately determine an intrinsic value estimate of the … Read more

Valuentum’s ETF Reports

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Image Source: GotCredit Welcome to Valuentum’s ETF coverage. If you’re new to the site, please be sure to access the stock reports and dividend reports as part of your membership. If you are looking for the archives to the Best Ideas Newsletter, they can be found here. The Dividend Growth Newsletter archives can be found here. The Exclusive and High Yield Dividend Newsletter have their own website with archives, the latter coming soon. To learn more about Valuentum’s ETF reports, please see  here . To request a report of an ETF we do not currently cover, please contact us. To access the relevant Valuentum reports for each major ETF category, please click on the respective link, “Click Here to Access Valuentum Report.” The links … Read more