Amazon grocery expansion supports share gains, says JPMorgan
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Yahoo
an hour ago
- Yahoo
High Yield and Low Stress: 2 Dividend ETFs That Are Built for Passive Income
Key Points Statistical evidence supports the idea that these two ETFs can simultaneously grow capital and generate income. Maximum monthly drawdowns are less than the benchmark's performance, and so is the risk as defined by standard deviation. These ETFs do relatively best when benchmark indexes are highly volatile but still make money in bull markets. 10 stocks we like better than JPMorgan Equity Premium Income ETF › The JPMorgan Equity Premium Income ETF (NYSEMKT: JEPI) and JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ: JEPQ) have garnered significant investor attention, in part due to their trailing-12-month dividend yields of 8.2% and 11.2%, respectively. Moreover, they offer monthly income, making them a favorite among passive income investors. As such, it would be interesting to share some modeling of their performance to see if they do offer investors a way to a relatively low-volatility strategy that practically guarantees a monthly income. (Keep in mind dividends can always be cut.) Introducing two JPMorgan ETFs The first thing to understand about these two exchange-traded funds is that they are not tailored to invest in dividend stocks. Instead, they both follow the same strategy of investing up to 80% of net assets in equities (stocks), with the only difference being that the Equity Premium ETF focuses on S&P 500 stocks while the Nasdaq Equity Premium ETF focuses on stocks in the Nasdaq-100. As noted above, the stocks are not explicitly selected for their dividend yield, an essential point because high-yield equity-focused ETFs often involve concentrating holdings in sectors with high yields. The remaining net assets, up to 20%, are invested in equity-linked notes (ELNs) that follow a strategy of selling call options on the indexes that the two ETFs benchmark -- S&P 500 and Nasdaq-100, respectively. A call option is the right to buy shares of the index at a specified price (the strike price) and is bought by bullish investors. The seller of the call options (in this case the ETF) receives a premium from the buyer. However, if the index increases significantly, the option is exercised, and the ELN typically incurs a loss. Conversely, when the index experiences a small gain, stays flat, or loses value, the option isn't exercised. The idea is that an anticipated net profit in premiums collected from the ELNs, combined with some dividend income from stock holdings, will generate sufficient income for distributions to be paid to shareholders under any condition, particularly in the event of a substantial increase in the index. And note that the upside is limited (gains less than the market), but the downside is also restricted. This table lays out how the portions of the ETFs will perform based on how the underlying index performs in a month. Monthly Index Performance Strong Gain Moderate Gain Moderate Loss Strong Loss Equities (At least 80% of the ETF assets) Strong Gain Gain Loss Strong Loss ELNs (Up to 20% of the ETF's assets) Loss Profit Profit Profit Overall Gain, but less than the market Gain, but less than the market Slight profit/slight loss Loss, but less than the market Author's analysis. What the ETFs need to do to demonstrate they work Before I throw charts at you, it's worth noting that the proof of the strategy working includes: The ETF should have a lower volatility than the index (measured here by the standard deviation of monthly returns). The ETFs should have relatively low maximum monthly drawdowns because passive investors usually do not want to lose a significant amount in any one month. The strategy should demonstrate a high coefficient of determination, or R^2, indicating that the independent variable (in this case, the benchmark index) is primarily responsible for determining the outcome. Performance consistent with the outcomes outlined in the table above. That said, here are the charts comparing the monthly index performance to the ETF's performance. Both sets of data include reinvestment of dividends. First, here's the JPMorgan Equity Premium Income ETF. And now the JPMorgan Nasdaq Equity Premium Income ETF. A few conclusions can be drawn from the data, along with some additional calculations. The monthly standard deviation of the S&P 500 over the period is 4.7%, compared to 3.1% for JEPI, indicating lower volatility returns. The monthly standard deviation of the Nasdaq-100 over the period is 5.7%, compared to 4.2% for JEPQ, indicating lower volatility returns. Both ETFs exhibit high R^2 values, indicating a consistency of outcome from the strategy. The three most significant monthly drawdowns for JEPI are -6.4%, -4.2%, and -4.1%. The three most significant monthly drawdowns for JEPQ are -8.7%, -6.8%, and -6.6%. In general, the strategy is effective, generating a collection of positive returns when the indices report moderate gains and losses. The downside is limited compared to the index when the market declines significantly, and the upside is limited when the indexes perform well. What it means to passive investors Both indices have performed very well over the periods, with an average monthly gain of 1.5% on the S&P 500 and 1.8% on the Nasdaq; therefore, the ETFs have understandably underperformed. However, there's no guarantee that these conditions will continue, and these ETFs have demonstrated lower volatility returns while maintaining substantial dividends for those seeking monthly income. As such, they are excellent options for those seeking to generate passive income across a range of market conditions. Should you invest $1,000 in JPMorgan Equity Premium Income ETF right now? Before you buy stock in JPMorgan Equity Premium Income ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and JPMorgan Equity Premium Income ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $663,630!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,115,695!* Now, it's worth noting Stock Advisor's total average return is 1,071% — a market-crushing outperformance compared to 185% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 13, 2025 JPMorgan Chase is an advertising partner of Motley Fool Money. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy. High Yield and Low Stress: 2 Dividend ETFs That Are Built for Passive Income was originally published by The Motley Fool
Business Insider
an hour ago
- Business Insider
How Micron (MU) Shifted from Cyclical Player to Industry Leader
Wall Street appears to be taking greater notice of Micron's (MU) transformation from a company historically tied to the volatility of the commodity cycle into a technology leader benefiting from consistent, AI-driven demand. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Earlier this week, Micron raised its fiscal fourth-quarter 2025 guidance, increasing revenue expectations by approximately $500 million at the midpoint and non-GAAP EPS by $0.30 from its prior forecast. This revision follows its fiscal third-quarter 2025 results, in which the company reported record revenue with broad-based growth across end markets. These developments reinforce the view that Micron is evolving from a reactive, cycle-dependent operator into a proactive participant in a multi-year structural growth trend. This shift supports a reassessment of the company as a technology leader rather than solely a cyclical commodity supplier. While geopolitical risks and competitive pressures remain significant, the current trajectory underpins a Bullish outlook on MU stock. MU Rides the Memory Boom-and-Bust Cycle For much of its history, Micron has been tethered to the volatile cycles of the commodity memory market—particularly DRAM—a segment characterized by largely interchangeable products competing primarily on price. Scale was its main competitive advantage, but downturns in the PC and smartphone markets often drove steep declines in financial performance. Consequently, since its 1995 inception, Micron's share price has mirrored these pronounced boom-and-bust cycles Micron's HBM3E Powers the AI Era The rapid growth of generative AI has fueled unprecedented demand for a new class of memory: High-Bandwidth Memory (HBM). This specialized, high-performance technology is stacked alongside GPUs, serving as an ultra-fast data pipeline critical to AI workloads. Micron entered this market in 2023 with the launch of its HBM3E solution, which delivers over 1.2 TB/s of bandwidth while consuming 30% less power than competing products—an attractive proposition for hyperscale operators running energy-intensive AI data centers. Shortly thereafter, Nvidia validated Micron's capabilities by selecting its HBM3E for integration into the H200 Tensor Core GPUs, widely regarded as the backbone of AI infrastructure. Financial Momentum In its fiscal third-quarter 2025 earnings report, Micron posted record revenue, fueled by a nearly 50% sequential increase in HBM sales. The company also disclosed that its entire HBM production in 2025 has already been sold. In its latest guidance update, management cited 'improved pricing, particularly in DRAM, and strong execution' as the primary drivers behind the upward revision. Micron Poised to Capture Greater Share The HBM market remains an oligopoly controlled by three major players: SK Hynix, Samsung, and Micron. As of 2024, SK Hynix held over 50% market share, followed by Samsung at approximately 42%, with Micron in third place. However, Micron has been gaining momentum and has publicly targeted a low-to-mid-20% share by the end of 2025. Recent industry reports indicate that Samsung is encountering difficulties validating its HBM3E product, creating an opening for Micron to capture additional share. Samsung's challenges were reflected in its latest earnings, where its Device Solutions division generated roughly $0.3 billion in profit on $20.2 billion in revenue. In contrast, the recovery in the memory sector is concentrated among companies—such as Micron and SK Hynix—that are executing effectively in AI-focused memory products. With the HBM market expected to see strong growth, driven by unprecedented capital spending on AI infrastructure from technology leaders like Meta (META) and Alphabet (GOOGL), and given Micron's strong operational execution, the company appears well positioned to secure a durable and significant share of this high-value segment—fundamentally shifting the investment case for MU. Key Risks That Could Challenge Micron's Growth Trajectory Key risks to Micron's outlook include exposure to geopolitical tensions, such as potential new tariffs on semiconductors and related products, which could significantly disrupt supply chains. Competitive pressures may also intensify if Samsung resolves its HBM3E production challenges, potentially leading to price erosion and margin compression across the industry. Additionally, any slowdown in AI-related demand—whether driven by macroeconomic headwinds or a temporary investment pause—would likely have an immediate adverse impact on HBM sales. Is MU a Buy, Sell, or Hold? On Wall Street, MU carries a Strong Buy consensus rating based on 24 Buy, four Hold, and zero Sell ratings in the past three months. MU's average stock price target of $153.19 implies an upside potential of ~22% over the next twelve months. MU Emerges as a Tech Powerhouse Micron is evolving into a high-margin technology leader. Its differentiated, power-efficient HBM products are enabling market share gains and supporting premium pricing, translating into higher revenue and stronger profitability. More broadly, Micron's trajectory highlights the widening gap between AI 'haves' and 'have-nots.' The contrasting performance of Micron and SK Hynix versus Samsung underscores that the recovery in the memory sector is far from uniform. Sustained execution and innovation will be critical to Micron's long-term success, alongside favorable external conditions such as continued AI infrastructure investment and geopolitical stability. Given these dynamics, a market re-rating appears increasingly plausible. At a Price-to-Earnings ratio of 22.3—approximately a 20% discount to the Information Technology sector average—Micron may still be weighed down by lingering perceptions of its historical commodity-cycle exposure. If the company maintains its current momentum into 2026, it could close that valuation gap and achieve Wall Street's more optimistic price targets.
Business Insider
an hour ago
- Business Insider
Why Netflix's (NFLX) 85% Rally Isn't Done Yet
Over the past year, Netflix (NFLX) shares have appreciated 82%, prompting the question of whether further upside remains. The company's performance has been supported by a robust content pipeline, rapid expansion of its advertising business, and strategic deployment of generative AI capabilities. In addition, Netflix is generating substantial free cash flow, benefiting from economies of scale and the early success of its high-margin advertising tier. Given the stock's current valuation, the key consideration for investors is whether the growth trajectory justifies continued investment. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Momentum That Just Won't Quit Netflix delivered a strong second quarter, reporting revenue of $11.08 billion, up 16% year-over-year and slightly ahead of Wall Street's $11.07 billion consensus. Growth was driven by continued member acquisition, higher subscription pricing, and rapid expansion of the advertising business. While the company no longer discloses exact subscriber counts, management noted that membership growth accelerated late in the quarter, particularly in international markets, supported by anticipated releases such as the Squid Game and Stranger Things season finales. The advertising segment remains a key growth driver, with revenue on pace to double in 2025. This momentum is supported by the full deployment of Netflix's proprietary ad tech platform, which streamlines media buying for brands. The introduction of a redesigned user interface—now implemented on 50% of TV devices—has improved content discovery and engagement, increasing both viewing time and advertiser appeal. Content continues to be a strategic differentiator. Netflix is investing heavily in globally resonant titles, including Alice in Borderland and the upcoming Happy Gilmore 2. Its partnership with France's TF1 is expected to strengthen local content production, particularly in the European market. The company's gaming initiative is also gaining traction, with early success from cult-classic titles such as Grand Theft Auto enhancing platform stickiness. Overall, Netflix continues to demonstrate the ability to drive growth and innovation, even at a more mature stage of its business lifecycle. Turning into a Cash Flow Powerhouse Turning to profitability—particularly free cash flow—Netflix generated $2.3 billion in Q2, representing a 91% year-over-year increase. Management also raised its full-year FCF guidance to $8.0–$8.5 billion. This level of cash generation reflects the benefits of significant economies of scale. With more than 300 million paid memberships globally, the cost to serve each subscriber declines as the base expands, enabling a greater share of revenue to translate into earnings. While content amortization is projected to exceed $16 billion in 2025, robust subscriber growth helps distribute these costs more efficiently. The advertising segment is further enhancing cash flow, as incremental ad revenue carries minimal associated costs once the global ad tech platform is in place. Each additional advertising dollar contributes disproportionately to profitability. Operational efficiency gains from generative AI—such as accelerating and reducing the cost of visual effects—are also supporting margin expansion. These factors allowed Q2 operating margins to reach 34.1%, an improvement of nearly seven percentage points compared with the prior year, while still enabling sustained investment in premium content. Is the Price Tag Worth It? Now, at 45x this year's expected EPS, Netflix's isn't a bargain, as the company is trading at a steep premium compared to the broader market. But then again, Netflix's dominance makes it hard to call it overpriced. Over the years, they've faced heavyweights like Apple (AAPL), Disney (DIS), and Amazon (AMZN), who've dumped billions into streaming to chip away at Netflix's lead. Yet, Netflix keeps growing like a weed, with revenue up double-digits quarter after quarter and EPS expected to climb at least 20% per year for the foreseeable future. And while Disney and Amazon have gained ground, Netflix's global reach, brand loyalty, and content machine keep it ahead. Their 'local for local' strategy, which revolves around producing hits in markets like Japan, Korea, and now France via TF1, gives them an edge no one can match. What is the 12-Month Forecast for NFLX stock? There are 38 analysts offering price targets on NFLX stock via TipRanks, with a fairly bullish consensus. Today, the stock carries a Moderate Buy consensus rating based on 26 Buy, 11 Hold, and one Sell rating over the past three months. NFLX's average stock price target of $1,394.23 suggests ~13% upside over the next twelve months. NFLX Transitions from Disruptor to Dominant Leader Netflix has transitioned from industry disruptor to dominant market leader, while continuing to uncover new growth avenues. Its advertising tier is scaling rapidly, globally resonant content is attracting new audiences, and free cash flow is reaching levels previously thought unattainable. While the stock trades at a premium, businesses combining this degree of growth and profitability seldom come at a discount. For investors seeking a company with a proven ability to adapt, innovate, and maintain a competitive edge, Netflix remains a compelling proposition.
