The World’s Top 10 Dividend Payers in 2017

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Dividend payout reached another record in 2017 according to a study by Janus Henderson. The trend is likely to continue and they predict dividend payouts to increase by 8% this year.

The following firms were the top 10 dividend payers in 2017:

Rank Company
1 Royal Dutch Shell
2 China Mobile
3 Exxon Mobil
4 Apple
5 Microsoft
6 AT&T
7 HSBC
8 China Construction Bank
9 Verizon Communications
10 Johnson & Johnson
Total $120.5bn
% of total 9.60%

Two of the top dividend payers in the world are from China. The rest of them are from either the US or developed Europe. After years of struggling oil majors are starting to generate decent profits and are slowly rewarding their shareholder with higher payouts. From an article at U.S. Funds:

Big oil is generating as much profit at 60 dollar oil as it was at 100 dollars

Major Oil Producers Are Rewarding Investors and Have Been Growing Dividends
  • As the above chart demonstrates, oil companies are leaning up. In the final quarter of 2017, profits were back to 2014 levels due to CEOs focusing on squeezing more out of each dollar through slowing projects, renegotiating contracts and shrinking the workforce.
  • Although oil production has been flat for the past few years between the five supermajors, companies are focusing on earning more per barrel rather than boosting production volume.
  • Companies have also been rewarding shareholders by using cash to increase dividends. Major producers Exxon, Shell and Chevron have been boosting their dividends and have 5-year dividend growth of 7 percent, 4.3 percent and 4.2 percent, respectively, as of 12/31/2017.

Among the tech giants, Apple(AAPL) and Microsoft(MSFT) are now sought after for their dividend income by investors. This is a huge shift from the dot com days when most tech firms paid no dividends and were mainly considered for their growth prospects.

Disclosure: No Positions

A Comparison of Sector Allocations of Major Market Indices: Chart

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Among the major MSCI market indices, allocations to various sectors differ widely. For example, Financials account for nearly a quarter of the emerging markets index while they constitute only about 15% in the S&P 500. In Canada, financials have a higher allocation at about 34%.

The tech sector’s allocation in the EAFE and Canada’s benchmark index are very low relative to their allocation in the US and emerging market indices.

Click to enlarge

 

Source: CC&L Financial Group

In The Long Run The Black Monday Was A Blip

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On Monday, October 19, 1987 the Dow Jones Industrial Average fell an astonishing 22.61%. This was one of the largest declines in the US markets. Though “Black Monday” was scary it was a great time to buy stocks. In fact, in the long run the declines of that Monday turned into just a blip according to an article at Schroders.

MSCI USA: 1970-2017 and the blip that was Black Monday

MSCI performance between 1970 and 2017

 

 

From the article:

The market blip that was Black Monday
The chart below reflects the fluctuations in the US stockmarket since 1970. It illustrates how Black Monday registered as barely a blip in the long term and how resilient stocks have been over the last 47 years.

Those who invested after Black Monday would have seen $100 turned into $1,135 without considering the dividend income paid out. That high return was achieved despite remaining invested through the dotcom crash of 2000-03 and the global financial crisis of 2007-09.

Source: Black Monday 30 years on: how it happened and what we can learn, Schroders

The key takeaway is that dramatic declines on a single day may become insignificant when looked at a long-term perspective of many years.

South Africa JSE All Share Index – Major Events in 2017: Chart

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The South African equity market had a tumultuous ride in 2017. Despite the many political and company specific collapse the JSE All Share Index had a decent run with a gain of 21% for the year. With Zuma thrown out of power and replaced by Cyril Ramaphosa as President, South Africans can now look forward to a more economic reforms and growth this year and beyond.

The chart below shows the key events and the movement of the index in 2017:

Click to enlarge

Source: Monthly Insights – Feb 2018, Cannon Asset Managers

An excerpt from the report:

From January 2016 to May 2017, the Johannesburg Stock Exchange’s All Share Index (ALSI) moved largely in a sideways direction. However, fast-forward six months, and the bourse reached successive record highs. Having started 2017 at 51,020 points, the overall index hit a high of 61,211 points in late November, the highest level in its 130 years history, before ending the year at 59,504 points. During this period, the ALSI managed to shrug off a few setbacks including President Jacob Zuma’s intervention to remove finance minister Pravin Gordan early in 2017, as well as the recessionary economic conditions that marred the business landscape. The graph above suggests that this year-end surge was helped along by various events such as the rally in the US market on the back of tax reform proposals and fiscal stimulus in the US. A stronger dollar also benefitted the large dual-listed companies which generate most of their income offshore and dominate the overall index.

Naspers, which owns about 33% in Tencent, the Hong Kong-listed Chinese multinational, also helped lead the ALSI’s gains. The stock’s price doubled in 2017, a rare sight for such a market heavyweight as it momentarily touched a price of R4,000 per share. Naspers makes up around 21% of the index and, as such, any movement has a substantial impact on the bourse. While the index gained 21% in 2017, if Naspers is excluded from this, the gain was only 8%. It took the efforts of both a downgrade by the S&P ratings agency of South Africa’s credit ratings as well as a collapse of Steinhoff after its financial statements scandal to pull the index down. Nonetheless, it ended 2017 dramatically as the market cheered Cyril Ramaphosa’s ANC leadership victory, reverting to the upward trajectory.

From a global investor perspective, emerging markets like South Africa are prone to major political shakeups once in a few years and the impact of political and economic uncertainties must be taken into account when making investment decisions.

Update(6/9/18):

JSE All Share Index-  Major Events in 2016:

Click to enlarge

Source: Cannon

The History of U.S. Debt: Chart

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The national debt has been steadily increasing for many years now. Currently the Total Public Debt Outstanding stands at over $20.0 Trillion. Out of this giant mountain, the Debt Held by the Public is over $15.0 Trillion.

The US national debt has risen significantly since the 1980s. The chart below shows the history of US debt:

Click to enlarge

Source: Oppenheimer Funds

In a video which can be found here, Brian Levitt of Oppenheimer discusses some of the myths of the national debt.

Readers can also click on the below pdf document to review the content.

Download: The Truth About Debt