Dividend Breakout Despite Declines
In last Thursday’s Chart of the Day, we highlighted how important dividends are for long-term investment performance. While dividends do help to boost investment returns over the long term, in the short term there is often an ebb and flow of dividend-focused ETFs under and outperforming in terms of price moves. For example, up until June, the S&P 500’s highest yielders measured by the SPDR S&P 500 High Dividend Yield ETF (SPYD) had mostly been trading in the green whereas the S&P 500 (SPY) was deep in the red.
With equities broadly taking a turn lower over the past week, SPYD has held up relatively well when compared to the S&P 500 (SPY). Even though SPYD has not avoided declines (as we also showed in our decile analysis, the highest dividend payers have only slightly better performance than non-dividend payers), the relative strength line of SPYD versus SPY has broken out of the past couple of months’ downtrend. That being said, it has not been a sharp move higher like what was observed in the first half of the year, particularly in the second quarter. In other words, the highest yielders are back to outperforming the broader market but not to the same extent as earlier in the year. Click here to learn more about Bespoke’s premium stock market research service.
Two Month Rally Rotation
Using the Russell 3,000 as a benchmark, US equities peaked exactly a week ago and have traded lower in all but one session since. In all, the Russell 3000 has fallen 4.33% in that time on weak breadth, albeit certain stocks have been hit far harder than others. Breaking the index down into deciles ranked by a variety of factors, performance has generally been the reverse of what we highlighted earlier this month in regards to the rally off of the June 16th low.
Over the past week, stocks with higher multiples and smaller market caps have fallen the most. Those are also the ones that had become the most elevated above their moving averages after outperforming during the two-month rally from mid-June to mid-August. Conversely, those stocks with more attractive valuations have tended to perform better, although, here too there have been low single-digit percentage declines across deciles. One other interesting point worth noting is how the highest dividend payers have been hit just as hard as other deciles for that category which is a big difference when compared to the spring when the highest dividend payers were the only pocket of positive performance. Click here to learn more about Bespoke’s premium stock market research service.
Bespoke Stock Scores — 8/23/22
This content is for members onlyThe Closer – Selloff Accelerates, Commodity Dollar, Crude Backdrop, Auctions, CoT – 8/22/22
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin by looking at the stocks that have been most heavily punished over the past couple of days (page 1) followed by a look into the dollar and its relation to commodities (page 2) and commodities themselves after that (page 3). We then preview this week’s Treasury auctions (Page 4) before updating on the latest speculator positioning numbers (pages 5-7).
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