Another week, another round of mixed messages. Sifting through earnings reports, Covid-19 spread, economic data and the resultant dividend suspensions and cuts is enough to make your head spin. This week nailed me with two additional dividend cuts, both of which will be cut loose in short order. Neither was much of a surprise and one would’ve been gone already save for a hold on one of my accounts which is being transferred to a different broker. (The hold should be lifted next week).
What has been a surprise is the number of companies pulling forward guidance. It kind of reminds me of the days when analysts earned their keep with – well – thoughtful analysis. Looks like we’ll find out which are the better ones that can prove their mettle in times like these.
Even more of a surprise was the interview CNBC did with Grant Sabatier (Millennial Money) where he claims that, “the concept of retiring early (FIRE) has already started to lose steam among younger generations. And the impact of the COVID-19 pandemic on the global economy and markets could be enough to eliminate the movement altogether.” rings a little hollow. I would surmise there will be greater emphasis on reserves and a heightened awareness of security but the dream of early retirement has endured through multiple generations. I may be overly sensitive, but it struck me as , “Hey, I got mine and there’s none left for you.”
Let me assure you, there’s always an opportunity awaiting. You may have to look a little harder or dig a little deeper – but it’s there. It may also be camouflaged and lying in wait. These are times when support and thoughtful reflection serves best. Personal example: I’m now on the cusp of exceeding last year’s dividend cuts – which was a personal record over roughly 38 years. The average dividend raise (including cuts) stands at 6.59% and it will probably go lower which puts my goal of 10% year on year increase in jeopardy. 6.59% betters the inflation rate so I’m ahead there. My current paid run rate on dividends is 19.95% over last year which was previously expected to taper based on some front running I did in the first quarter. At least I’m operating with a head start. Lastly, my portfolio balance has lost less value than the overall market which is little consolation, but at least a positive. Look for what is working.
One of the Diplomats penned a piece published on Seeking Alpha reviewing 3M as a hedge against the pandemic. In fact, one of their ways to boost income via side hustles. Overall a good piece with a likely good conclusion – but for the wrong reasons. The pandemic is a boon to only for their healthcare segment (roughly 20% of sales) their other segments (office, aerospace, automotive) are also in a ditch because of it. Retooling their lines isn’t easy due to some sterile environment requirements. Due to their status as an international conglomerate, I believe they will thrive only on the other side of this. Survivability – either through an essential product line or fortress balance sheet are key.
I would be remiss if I failed to address the (probably) unwanted advertising inflicted by our President on at least two companies.
And I then I see the disinfectant, where it knocks it out in one minute, and is there a way you can do something like that by injection inside, or almost a cleaning. Because you see it gets in the lungs, and it does a tremendous number on the lungs. So it’d be interesting to check that.
While roundly rejected by the manufacturers:
“As a global leader in health and hygiene products, we must be clear that under no circumstance should our disinfectant products be administered into the human body (through injection, ingestion or any other route),” Reckitt Benckiser
“Bleach and other disinfectants are not suitable for consumption or injection under any circumstances. People should always read the label for proper usage instructions.” Clorox
This has to be classified as an item in the “It would be funny if not true” category. But it did spur the creative genius in some corners (not to be confused with stable geniuses). Just remember, due diligence should be performed in investing as well as ‘products’.
Some memes making the social media rounds: