Sep 5, 2024
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we start with a look into S&P 500 performance following new lows in yields (page 1) followed by a review of the latest productivity data (page 2). We then dive into claims seasonality and service PMIs (page 3) followed by a rundown of the latest housing data (page 4 and 5). We finish with our weekly recap of petroleum inventories (page 6).
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Sep 5, 2024
In yesterday’s Chart of the Day, we discussed how rotational this month’s declines have been. Additionally, there is one other factor at play. In the chart below, we’ve performed a decile analysis of the Russell 1,000 to see how stocks have done this month based on their dividend yields. The stocks in the deciles to the left of the chart have the lowest or no dividend yields, while the deciles on the right have the highest dividend yields. The bar for each decile shows the average month-to-date percentage change of the stocks in each decile. Generally speaking, it has been the highest dividend payers that have held up the best so far this month, while the no or low-yielders have fallen the most.
Dividends don’t impact total return much over short time frames, but they make a massive difference over the long term. There are plenty of ways to seek dividends including a number of dividend focused ETFs. However, not all dividend ETFs are created equally. Below we show three popular ones: the iShares Select Dividend ETF (DVY), the SPDR S&P Dividend ETF (SDY), and the ProShares S&P 500 Dividend Aristocrats ETF (NOBL). While they may appear similar to one another at face value, each ETF is constructed with different methodology.
For starters, DVY holdings include 100 US stocks that must have at least five years of dividend payments. Of these three ETFs, that is the shortest dividend time requirement. For inclusion into SDY, the methodology requires holdings to have consistently increased dividends for at least 20 years, and the NOBL ETF has the most stringent rules with a required 25 year history of raising dividend yields with many holdings having far longer histories. As shown below, for performance over the past decade, those longer payout histories have (pun intended) paid dividends. NOBL has posted the best total return over the past decade with a gain of 172% (10.54% annualized). That compares to a 156% return for SDY and a 145% return for DVY. For comparison to a broader basket of stocks, that annualized return for NOBL even outpaces the broader S&P 500 Value ETF (IVE), but note that it’s still a couple of percentage points worse than the annualized total return of the S&P 500 ETF (SPY).
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Sep 5, 2024
Alongside equities, it’s been a rough week for crude oil. On catalysts of assumed weaker demand and supply news out of the Middle East, front month WTI futures are already down 5.56% month to date with the steepest declines occurring on Tuesday. As shown below, crude has been falling throughout the past year and these most recent declines have brought the price of black gold to the low end of its range. Whereas last fall it was in the mid-$90 range, this week it moved into the $60 range (today prices are rebounding back above $70). The only other times in the past year that WTI was below $70 was briefly back in December. As we noted in Monday’s Closer, although front month futures are hitting the low end of the past year’s range, those prices are actually at a premium compared to out-month futures as crude markets are currently in backwardation.
Expanding the timeframe out, below we show the price of crude over the past five years. Again, the most recent prior instance of WTI having a $60 handle was last December, and there have been a handful of other brief periods of price being as low. Since Q2 2021 as crude prices recovered from the pandemic, the high $60 range roughly has marked a notable level of support .
That decline in crude oil has resulted in lower gas prices. Seasonally, it is typical for prices at the pump to roll over during the summer months with declines accelerating in the fall. This year, however, prices have been falling since mid-spring. According to AAA, the national average for a gallon of gasoline yesterday was at $3.31, which is the lowest price since late February. That is the lowest price of gas on 9/4 since 2021 ($3.19).
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Sep 4, 2024
Log-in here if you’re a member with access to the Closer.
Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin with a look at the drop in rates and the latest update of the Beige Book (page 1). We then dive into today’s JOLTS report (page 2) and the latest job openings data from Indeed (pages 3 and 4). We also review the latest trade data (page 5) before closing out with a look into AI mentions in conference calls (page 6).
See today’s full post-market Closer and everything else Bespoke publishes by starting a 14-day trial to Bespoke Institutional today!
