An armchair analyst might suppose that Obamacare and health insurers’ efforts to cut costs are the culprits here, and that would appear to be mostly correct. With or without the Affordable Care Act, we’re experiencing a giant shift toward crappy health insurance, with people stuck with giant deductibles ($2,500 a year and more). So, they’re forced to pay out of pocket and are choosing fewer medical services. That’s going to continue, unless a single-payer system arrives one day.
Saying, “sure, let’s do it” to some blood tests is easy when you’ve got a tiny deductible or co-pay, but less so when you’re the payer. Many of the newly insured under Obamacare will be covered by these high-deductible policies, which are really OK for catastrophic diseases and other major expenses but a lot like being self-insured otherwise.
The 54 companies currently anointed S&P 500 Dividend Aristocrats would seem to represent the crème de la crème of dividend-paying stocks. But the high hurdle to entrance -- 25 years of annual dividend increases -- doesn’t necessarily give investors a leg up on either dividend yield or dividend growth.BCR), Franklin Resources (BEN) and Sigma-Aldrich (SIAL) yield less than 1%.
Steel producer Nucor (NUE) delivers a nice 2.83% yield, but shareholders haven’t seen dividend growth keep pace with inflation; over the past year it had the weakest dividend growth rate among the Aristocrats. Fellow Aristocrats Consolidated Edison (ED), AT&T (T) and Cincinnati Financial (CINF) have also delivered dividend hikes below the abnormally low 1.7% rate of inflation over the trailing 12 months:
Luxury goods makers Michael Kors Holdings (KORS) and Coach (COH) are in a fierce battle for customers, and the rivalry fuels an ongoing debate about which stock is the better investment. But for investors trying to build diversified portfolios, choosing between these two companies is like trying to decide between a pair of glittery pumps from Michael Kors and a Coach calfskin handbag. You’ll probably want some version of both items for the party.
In the investment portfolio, Michael Kors is the high flying momentum stock whose potential for big gains comes with considerable risks. It was even riskier back in December 2011, when the small company came to market with about $1.3 billion in annual revenues and just under $150 million in profit. Investors who saw potential back then have been very well rewarded, more than tripling their investment since its first day of trading.
Looking ahead, the sex business isn’t expected to be as profitable as it once was for Pfizer (PFE), Eli Lilly (LLY) and Bayer AG (BAYRY), manufacturers of Viagra, Cialis and Levitra, respectively, the three top-selling oral drugs taken by men worldwide for erectile dysfunction (ED). Owing to generic intrusion, the global market for branded erectile dysfunction (ED) drugs is forecasted to decline at a compounded annual rate of 4.5% from 2013 to 2019.
As reflected in the following Y-Chart tracking 1-year price returns, investors appear to believe that the impact of cheaper ED knockoffs will have the least impact on German drug maker Bayer’s forward growth prospects:
Capitalizing on first-mover advantage (FDA approval, 1998), Pfizer’s Viagra (sildenafil) still held a market-leading 47% share of the ED drug market in 2012, with worldwide sales totaling $2.05 billion.
In a setback to Pfizer (PFE), the U.S. Supreme Court has left intact a $142 million award to Kaiser Foundation Health plan for marketing the Neurontin epilepsy drug for unapproved uses (see earlier Pharma news). The court also allowed two other lawsuits – one brought by Aetna (AET), the large insurer, and a class action that was filed on behalf of union health plans and other insurers – to proceed.
The decision opens Pfizer to potentially still more payouts, especially if additional lawsuits are filed by other insurers or health plans that make similar claims. The lawsuits charged that Pfizer engaged in racketeering and induced physicians to prescribe the drug for unapproved uses.
The litigation was prompted after the drug maker agreed to a $430 million settlement in 2004 with the US Department of Justice to resolve civil and criminal charges for off-label promotion. The illegal promotion stretched from 1995 to 2001, one year after Pfizer acquired Warner-Lambert, which first marketed the treatment, which became a blockbuster seller.
Yesterday, YCharts looked at companies doing big stock buybacks even though their stock looks pricey, part of our ongoing examination of stock buybacks and dividends during this period of cash-laden corporations.
Our goal is to help you identify companies with large and steady cash flow (and perhaps lots of cash on hand) and the tendency to share that cash with stockholders.
While both buybacks and dividends are discretionary spending that a corporation can taper or cut off at any time, repurchases are like casual dating compared to the commitment of ponying up a dividend that comes with the expectation it will continue (and grow).
About 80% of S&P 500 companies now pay a dividend, yet ranking that index by buyback yield, four of the top 10 are mere casual daters, with no dividend: Yahoo (YHOO), VeriSign (VRSN), General Motors (GM) and Directv (DTV).
Amidst write downs, commodity price drops and lower revenues, gold, silver and copper were the hardest hit metals this year and will continue to struggle in 2014, reveals the latest report published Monday by PwC.
In its Gold, silver and copper report 2014, the research firm says that while gold prices have been the “big mining story” of the year, the metal wasn’t the worst performing. The title, they say, goes to silver prices, plummeting 40% in 2013.
Gold prices, which surpassed $1,900 per ounce in 2011, fell to around $1,200 this summer and they are currently hovering not far above that. Mining stocks are suffered. Barrick Gold (ABX), Anglogold Ashanti (AU), Goldcorp (GG) and Kinross Gold (KGC) all fell more steeply than actual metals prices.
After applying greater scrutiny of pay-to-delay deals between brand-name and generic drugmakers, the European Commission finds that fewer such troubling patent settlements took place last year. At the same time, though, the agency has fined Johnson & Johnson (JNJ) nearly $15 million and Novartis (NVS) about $7.5 million for allegedly conspiring to delay the generic introduction of a prescription pain patch in the Netherlands.
European antitrust regulators over the last few years have been cracking down on certain deals, in which a brand-name drug maker offers a payment to a generic rival that then agrees to delay the launch of a copycat medicine. Concern over patent settlements has picked up steam as European governments grapple with rising healthcare costs, including prescription drugs.
The troublesome deals, however, accounted for 12 of 183, or 7 percent of all patent settlements concluded in 2012, compared with 45 of 207, or 22 percent of all settlements between 2000 and the first half of 2008, according to the European Commission. The agency also noted there was a slight increase in patent settlements overall in 2012 compared with 2011 – 125, up from 120.
Corporate after-tax profits have nearly tripled since the end of 2008, yet with little boardroom enthusiasm for investing in growth a lot of that money is parked in the vault.
Non-financial corporations now hold a record $1.8 trillion in liquid assets, up 30% since 2008. With all that idle cash sitting around earning bupkes, it’s no surprise that we’re in the midst of a corporate renaissance in returning cash to shareholders either via dividends or stock buybacks.
And it’s share repurchases that are getting plenty of love lately. The PowerShares Buyback Achievers ETF (PKW) has managed to outperform the none-too-shabby return of the S&P 500 as represented by the SPDR S&P 500 ETF (SPY) and the SPDR S&P 500 Dividend ETF (SDY):
It’s not every day you see a former Reagan Administration official – Martin Feldstein, chairman of the Council of Economic Advisors during the Gipper’s first term – call for a $1 trillion public works program to stimulate the economy, but there it was on the New York Times oped page today.
Feldstein wants the Federal Reserve to get out of the stimulus business – its quantitative easing, which produces negative real interest rates, encourages extreme risk taking he explains – and suggests Congress and the Obama Administration step in and do some more effective stimulating:
“To get the economy back on track, President Obama should propose, and Congress should enact, a five-year fiscal package that would move the growth of gross domestic product to above 3 percent a year and focus on direct government spending on infrastructure.”
“The total price tag over five years would have to exceed $1 trillion to achieve the needed rise in the economic growth rate. The lack of “shovel-ready” projects is not an excuse for not pursuing this strategy or for diverting the funds into income transfers and other low-impact spending of the kind that made the 2009 stimulus so ineffective. It would be better to spend a year or two preparing for the right kind of spending.”
Timeless thoughts for serious business minds
- pharma stocks
- tech stocks
- stocks that look cheap
- stocks that look pricey
- money managers
- retail stocks
- growth stocks
- earnings season
- dividend growth
- energy stocks
- bank stocks
- value investing
- short sellers
- warren buffett
- entertainment stocks
- federal reserve
- executive compensation
- fast food stocks
- dividend yield
- overall market
- broader market
- stock screener
- stock buybacks
- cyclical stocks
- industrial stocks
- CEO & Publisher Shawn Carpenter
- Editor Jeff Bailey
- Contributing Editors Dee Gill, Carla Fried, Emily Lambert, Bill Barnhart, Kathy Kristof, Stephane Fitch, Larry Barrett, Bill Bulkeley, Mark Henricks, Suzanne McGee, Ed Silverman, David J. Phillips, Katherine Reynolds Lewis, Theo Francis, Condrad de Aenlle, Amy Merrick