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Yahoo
26-04-2025
- Business
- Yahoo
The Dow Jones Industrial Average set a startling record that shows just how flawed it truly is
The past few days in the stock market have been so wild—a plunge on Monday, a sharp pivot upward on Tuesday, a rise with lots of oscillations on Wednesday—that a record set by the Dow Jones Industrial Average on last week's final day of trading has been largely overlooked. That's unfortunate, because there's a lot to be learned from that record about how financial markets work. The Dow Jones Industrial Average set a startling record that shows just how flawed it truly is Venus, Saturn planet parade will make a rare smiley face with the crescent moon: Best time to see April 2025 triple conjunction Can these tiny house villages bring new life to small towns? I'm referring to the record loss inflicted on the Dow last Thursday by the three-digit share price drop of UnitedHealth Group (NYSE: UNH), the large healthcare and insurance company. (Thursday was the last day of trading last week because the market was closed for Good Friday.) That price decline—a whopping $130.93 a share, about a 22% drop—cost the DJIA 805 points. That's the biggest daily Dow decline ever caused by a single stock, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. The DJIA dropped 527 points that day, with UnitedHealth responsible for the entire loss. Had UnitedHealth just stayed even, the Dow would have been up close to 300 points. How could a single stock inflict that much damage on the ever-popular Dow, the pioneering market metric that was created in 1896 by financial reporters Charles Dow and Edward Jones? It's because the DJIA is an average based on the share prices of its 30 component stocks. Unlike most stock market indexes, this one is not based on its components' market values. So a dollar change in the share price of any Dow component—be it UnitedHealth or Apple, which has about 15 times as many shares outstanding as UnitedHealth does—has the same impact on the Dow as a change in any other component. The Dow Divisor, the market metric used to calculate the value of the DJIA, means that every dollar change in any one Dow component these days moves the DJIA about 6.15 points. Even with its huge drop last week, UnitedHealth is still the second-highest-priced stock in the Dow, behind only Goldman Sachs. So the DJIA is still vulnerable to another sickening day for UnitedHealth shareholders. Or, for optimists, a sharp UnitedHealth rise could set off a sharp Dow rise. The Dow is based on share prices because when Dow and Jones created it back in the day and it had only 12 stocks, the only metric available for them to use was share price. Companies' market values—which are used to calculate modern metrics like the Standard & Poor's 500 Index, the Nasdaq Composite, and the FT Wilshire 5000 Index—weren't available 129 years ago. The day before UnitedHealth's sickening plunge last week, the company's weight in the Dow was 9.1%, but its weight in the S&P was only 1.2%, according to Silverblatt. By the end of the day Thursday, its weight had fallen to 7.3% of the Dow and 0.9% of the S&P. If you do the math, you'll see that if you had $10,000 in a Dow index fund when the market opened last Thursday, UnitedHealthcare's plunging price would have cost you about $207. By contrast, if you had $10,000 in an S&P 500 index fund, your UnitedHealth loss was about $27. That's an example of why about $9 trillion was indexed to the S&P in 2023 (the most recent date for which data is available), according to S&P Dow Jones Indices, but only about $76 billion was indexed to the Dow. Please keep all of this in mind when people mistakenly refer to the DJIA as'the market.' Sure, the Dow is a long-standing, venerable metric. But despite the massive exposure that Dow changes get each day, it is not the whole stock market. For that matter, neither is the S&P 500, which was launched in 1957 and is used by many investors and institutions as a performance benchmark. But as we can see from UnitedHealth's disproportionate market impact on the DJIA relative to its S&P impact, the S&P measures a lot more of the market than the Dow does. Which makes it a far more useful and accurate metric. And that, as they say, is the bottom line. This post originally appeared at to get the Fast Company newsletter:
Yahoo
21-04-2025
- Business
- Yahoo
UnitedHealth Group Incorporated (UNH): One of the Best American Dividend Stocks to Buy According to Analysts
We recently published a list of the 13 Best American Dividend Stocks to Buy According to Analysts. In this article, we are going to take a look at where UnitedHealth Group Incorporated (NYSE:UNH) stands against other best American dividend stocks. Dividend-paying stocks have long benefited investors by delivering consistent and solid returns. During periods of economic uncertainty, they've generally performed more reliably than many other types of investments. Because of these qualities, more investors are turning to dividend stocks to take advantage of their compounding potential. This growing optimism has also encouraged several companies to join the dividend club, which was evident in the way tech firms eagerly began issuing dividends in 2024. According to a report by S&P Dow Jones Indices, dividends paid by the S&P companies reached a new high of $167.6 billion in the fourth quarter of 2024, marking a 6.7% increase from the previous quarter's $157.0 billion—which itself had set a record. This also represented an 8.7% rise compared to the $154.1 billion paid out in Q4 2023. For the full year, total dividend payments hit an all-time high of $629.6 billion in 2024, up 7.0% from the $588.2 billion distributed in 2023. The report further mentioned that the indicated dividends for the top 20 companies in the S&P index amounted to over $141 billion. Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, made the following comment about dividends: 'Under an increased tax, some of the expenditures may shift from buybacks to dividends. However, any shift was not seen as being on a dollar-for-dollar basis as dividends remain a long-term pure cash-flow item which must be incorporated into corporate budgets.' Dividends have played a key role in driving overall returns from equity investments over the long haul. This was emphasized in a study by London-based Guinness Global Investors, which examined the broader market's performance dating back to 1940. According to their analysis, dividends and reinvested payouts made up about 94% of the index's total return during that time. To put it in perspective, a $100 investment made at the end of 1940 would have grown to roughly $525,000 by the end of 2019 if dividends were reinvested, compared to just $30,000 if the dividends had simply been taken as cash. The report also pointed out that dividends become a more significant part of total returns the longer an investment is held. Since 1940, for the broader market, dividends have made up about 27% of total returns over a typical one-year holding period. Stretching that to three years, their contribution rises to 36%. Over five years, it climbs to 40%, and over ten years, it reaches 47%. For investors who hold their positions for twenty years, dividends end up accounting for around 57% of the total returns. Due to this performance, analysts also recommend investing in dividend stocks. A senior healthcare professional giving advice to a patient in a clinic. Our Methodology: We created this list by scanning Insider Monkey's Q4 2024 database for US companies that have strong dividend policies and are traded on American stock exchanges. From that group, we further refined our selection criteria by identifying stocks with a projected upside potential of over 5% based on analyst price targets, as of April 20. The stocks are ranked according to their upside potential. At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (). Upside Potential as of April 20: 40.2% An American health insurance company, UnitedHealth Group Incorporated (NYSE:UNH) offers a wide range of related services and products to its consumers. The company and other major health insurers got a boost on April 8 after the Centers for Medicare and Medicaid Services (CMS) announced that Medicare Advantage plans will receive a larger-than-expected payment increase in 2026. Adding to the positive outlook, the Senate confirmation of Dr. Mehmet Oz—a former television personality and heart surgeon—was also seen as favorable news for the company. Dr. Oz has been a strong proponent of Medicare Advantage plans, which could support further industry momentum. In its Q1 2025 results, UnitedHealth Group Incorporated (NYSE:UNH) reported revenues of $109.5 billion, reflecting a 9.8% increase from the prior year. The company expanded its reach by serving 780,000 more customers this year, while its Optum Health division reaffirmed plans to deliver care to 650,000 additional patients through value-based care in 2025. Leadership emphasized ongoing efforts to navigate current challenges and position the business to meet its long-term earnings growth target of 13% to 16%. UnitedHealth Group Incorporated (NYSE:UNH) also posted strong cash flow, generating $5.5 billion in operating cash during the quarter. It returned about $5 billion to shareholders through dividends and share buybacks and has maintained a consistent dividend payout history since 2010. Its quarterly dividend comes in at $2.10 per share and has a dividend yield of 1.85%, as of April 20. Overall, UNH ranks 2nd on our list of the best American dividend stocks according to analysts. While we acknowledge the potential of UNH as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than UNH but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the . READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at . Sign in to access your portfolio
Yahoo
21-04-2025
- Business
- Yahoo
McKesson Corporation (MCK): One of the Dividend Stocks with Sustainable Payout Ratios
We recently published a list of the . In this article, we are going to take a look at where McKesson Corporation (NYSE:MCK) stands against other best dividend stocks with sustainable payout ratios. Dividend-paying stocks have remained popular among investors due to their strong historical performance. This sustained interest has led many companies to maintain their dividend payouts, raise them, or introduce new dividend policies altogether. According to data from S&P Dow Jones Indices, US domestic common stocks saw a net dividend increase of $15.3 billion in the first quarter of 2025, which is an improvement over the $11.7 billion increase seen in the previous quarter. Over the 12 months ending in March 2025, dividend hikes amounted to $68.2 billion, just above the $68.1 billion reported the year before. Meanwhile, dividend cuts dropped significantly, totaling $15.6 billion, compared to $25.2 billion in the prior 12-month period. The same report noted that overall dividend payments climbed by roughly 6% to 7%, though this was slightly below the pre-2025 expectation of 8%. In comparison, dividend payouts rose by 6.4% in 2024 and 5.1% in 2023. Additional data from S&P Dow Jones Indices showed that 758 companies raised or initiated dividend payments in Q1 2025, which is a slight decline from 796 in the same period last year, reflecting a 4.8% year-over-year drop. Despite this, the total value of these increases amounted to $19.5 billion for the quarter. Over the 12-month period ending in March 2025, a total of 2,412 companies raised their dividend payments, marking a slight uptick from the 2,411 companies that did so in the same period the previous year. The total value of these dividend increases reached $68.2 billion, just edging past the $68.1 billion recorded during the prior 12-month stretch. Howard Silverblatt, a Senior Index Analyst at S&P Dow Jones Indices, expressed continued optimism about the overall outlook for dividends. However, he also acknowledged some uncertainty ahead, given the current market conditions. He made the following comment about the situation. 'Dividend growth typically is strongest in Q1, as most companies finish their fiscal year and prepare for their shareholder meeting. For Q1 2025, growth, while noticeably slower, did continue and was in line with expectations given the current economic uncertainties. This uncertainty however did not appear to stop increases, though it did limit them, as forward commitment levels appeared shy.' Despite some caution, analysts remain positive on dividend stocks, pointing out that US companies are well-positioned to sustain their payouts thanks to strong cash reserves. Nuveen, a financial planning firm based in Illinois, noted that an increasing number of companies are likely to roll out dividend policies, supported by the current cash-rich environment, which could drive stronger-than-expected dividend growth in 2025. The report mentioned that as of September 30, 2024, corporate cash holdings stood at $1.8 trillion, which was close to their highest levels in the past 20 years. With equity valuations running above historical norms, Nuveen believes that companies may lean more toward boosting dividend payments as a way to return value to shareholders, rather than relying on stock buybacks, which may be less attractive in a higher-valuation landscape. Analysts generally consider a payout ratio in the range of 30% to 50% to be optimal because it indicates that a company is returning a healthy portion of its earnings to shareholders while still retaining enough profits to reinvest in its business and support future growth. A successful pharmacist in front of shelves of drugs in a community-based oncology pharmacy. For this article, we screened for companies that consistently distribute dividends to their shareholders. From this initial selection, we narrowed down the list to include only those companies with a 5-year average payout ratio below 50%, indicating a robust cash position. Subsequently, we identified the top 10 companies meeting these criteria and arranged them in ascending order of the number of hedge funds that held stakes in each of them, as per Insider Monkey's database of Q4 2024. At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (). 5-Year Average Payout Ratio: 15.34% McKesson Corporation (NYSE:MCK) is a Texas-based healthcare company that focuses on pharmaceutical distribution, medical supplies, health information technology, and healthcare management solutions. In recent years, the company has sharpened its focus on the U.S. and Canadian markets, scaling back its presence in parts of Europe to better concentrate its resources. Its operational strength is underpinned by an expansive distribution network and solid ties with suppliers and customers, enabling efficient service delivery across its core business areas. During fiscal Q3 2025, McKesson Corporation (NYSE:MCK) reported revenue of $95.3 billion—an 18% increase compared to the same quarter last year. Adjusted operating profit also climbed 16% to $1.5 billion. However, revenue fell slightly short of analyst projections of $96.08 billion, partly due to weaker performance in the U.S. pharmaceutical segment. With a forward P/E ratio of 18.80, the company is considered one of the more attractive value plays in the market. Following its strong quarterly performance, McKesson Corporation (NYSE:MCK) raised its full-year adjusted EPS guidance to a range of $32.55 to $32.95, reflecting a projected annual growth of 19% to 20%. The company also reaffirmed its focus on rewarding shareholders, distributing $3.1 billion in the first nine months of 2024, including $254 million in dividend payments. Its quarterly dividend comes in at $0.71 per share for a dividend yield of 0.41%, as of April 17. It is one of the best dividend stocks on our list as the company has been rewarding shareholders with growing dividends for the past eight years. Overall, MCK ranks 1st on our list of the best dividend stocks with sustainable payout ratios. While we acknowledge the potential of MCK as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than MCK but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the . READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at .
Yahoo
21-04-2025
- Business
- Yahoo
Is Exxon Mobil Corporation (XOM) the Best American Dividend Stock to Buy According to Analysts?
We recently published a list of the 13 Best American Dividend Stocks to Buy According to Analysts. In this article, we are going to take a look at where Exxon Mobil Corporation (NYSE:XOM) stands against other best American dividend stocks. Dividend-paying stocks have long benefited investors by delivering consistent and solid returns. During periods of economic uncertainty, they've generally performed more reliably than many other types of investments. Because of these qualities, more investors are turning to dividend stocks to take advantage of their compounding potential. This growing optimism has also encouraged several companies to join the dividend club, which was evident in the way tech firms eagerly began issuing dividends in 2024. According to a report by S&P Dow Jones Indices, dividends paid by the S&P companies reached a new high of $167.6 billion in the fourth quarter of 2024, marking a 6.7% increase from the previous quarter's $157.0 billion—which itself had set a record. This also represented an 8.7% rise compared to the $154.1 billion paid out in Q4 2023. For the full year, total dividend payments hit an all-time high of $629.6 billion in 2024, up 7.0% from the $588.2 billion distributed in 2023. The report further mentioned that the indicated dividends for the top 20 companies in the S&P index amounted to over $141 billion. Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, made the following comment about dividends: 'Under an increased tax, some of the expenditures may shift from buybacks to dividends. However, any shift was not seen as being on a dollar-for-dollar basis as dividends remain a long-term pure cash-flow item which must be incorporated into corporate budgets.' Dividends have played a key role in driving overall returns from equity investments over the long haul. This was emphasized in a study by London-based Guinness Global Investors, which examined the broader market's performance dating back to 1940. According to their analysis, dividends and reinvested payouts made up about 94% of the index's total return during that time. To put it in perspective, a $100 investment made at the end of 1940 would have grown to roughly $525,000 by the end of 2019 if dividends were reinvested, compared to just $30,000 if the dividends had simply been taken as cash. The report also pointed out that dividends become a more significant part of total returns the longer an investment is held. Since 1940, for the broader market, dividends have made up about 27% of total returns over a typical one-year holding period. Stretching that to three years, their contribution rises to 36%. Over five years, it climbs to 40%, and over ten years, it reaches 47%. For investors who hold their positions for twenty years, dividends end up accounting for around 57% of the total returns. Due to this performance, analysts also recommend investing in dividend stocks. Aerial view of a major oil rig in the middle of the sea, pumping crude oil. Our Methodology: We created this list by scanning Insider Monkey's Q4 2024 database for US companies that have strong dividend policies and are traded on American stock exchanges. From that group, we further refined our selection criteria by identifying stocks with a projected upside potential of over 5% based on analyst price targets, as of April 20. The stocks are ranked according to their upside potential. At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (). Upside Potential as of April 20: 20.4% Exxon Mobil Corporation (NYSE:XOM) is an American multinational oil and gas company. The company is leveraging artificial intelligence to boost efficiency and enhance overall performance across its operations. Exxon Mobil Corporation (NYSE:XOM) has been utilizing machine learning to prevent equipment failures, optimize production, and automate various tasks. AI holds significant potential in the energy sector, where breakdowns can cause costly delays, and some facilities operate without on-site personnel. The technology helps streamline processes and partially automates drilling operations. Ultimately, the company is working toward autonomous drilling, a system capable of identifying optimal conditions and carrying out drilling with minimal human intervention. Backed by strong cash flow, Exxon Mobil Corporation (NYSE:XOM) remains a dependable dividend stock. In 2024, it generated $55 billion in operating cash flow—its third-best year over the past decade. For the fourth quarter alone, operating cash flow hit $12.2 billion, with free cash flow reaching $8 billion. The company returned $36 billion to shareholders during the year, including $16.7 billion through dividends. Exxon Mobil Corporation (NYSE:XOM), one of the best dividend stocks, currently offers a quarterly dividend of $0.99 per share and has a dividend yield of 3.70%, as of April 20. The company has a strong history of paying dividends to shareholders, spanning 143 years. In addition, it has raised its payouts for 42 consecutive years. Overall, XOM ranks 8th on our list of the best American dividend stocks according to analysts. While we acknowledge the potential of XOM as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than XOM but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the . READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at . Sign in to access your portfolio
Yahoo
21-04-2025
- Business
- Yahoo
Is Thermo Fisher Scientific Inc. (TMO) the Best American Dividend Stock to Buy According to Analysts?
We recently published a list of the 13 Best American Dividend Stocks to Buy According to Analysts. In this article, we are going to take a look at where Thermo Fisher Scientific Inc. (NYSE:TMO) stands against other best American dividend stocks. Dividend-paying stocks have long benefited investors by delivering consistent and solid returns. During periods of economic uncertainty, they've generally performed more reliably than many other types of investments. Because of these qualities, more investors are turning to dividend stocks to take advantage of their compounding potential. This growing optimism has also encouraged several companies to join the dividend club, which was evident in the way tech firms eagerly began issuing dividends in 2024. According to a report by S&P Dow Jones Indices, dividends paid by the S&P companies reached a new high of $167.6 billion in the fourth quarter of 2024, marking a 6.7% increase from the previous quarter's $157.0 billion—which itself had set a record. This also represented an 8.7% rise compared to the $154.1 billion paid out in Q4 2023. For the full year, total dividend payments hit an all-time high of $629.6 billion in 2024, up 7.0% from the $588.2 billion distributed in 2023. The report further mentioned that the indicated dividends for the top 20 companies in the S&P index amounted to over $141 billion. Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, made the following comment about dividends: 'Under an increased tax, some of the expenditures may shift from buybacks to dividends. However, any shift was not seen as being on a dollar-for-dollar basis as dividends remain a long-term pure cash-flow item which must be incorporated into corporate budgets.' Dividends have played a key role in driving overall returns from equity investments over the long haul. This was emphasized in a study by London-based Guinness Global Investors, which examined the broader market's performance dating back to 1940. According to their analysis, dividends and reinvested payouts made up about 94% of the index's total return during that time. To put it in perspective, a $100 investment made at the end of 1940 would have grown to roughly $525,000 by the end of 2019 if dividends were reinvested, compared to just $30,000 if the dividends had simply been taken as cash. The report also pointed out that dividends become a more significant part of total returns the longer an investment is held. Since 1940, for the broader market, dividends have made up about 27% of total returns over a typical one-year holding period. Stretching that to three years, their contribution rises to 36%. Over five years, it climbs to 40%, and over ten years, it reaches 47%. For investors who hold their positions for twenty years, dividends end up accounting for around 57% of the total returns. Due to this performance, analysts also recommend investing in dividend stocks. A workstation in a research lab stocked with laboratory products and services. Our Methodology: We created this list by scanning Insider Monkey's Q4 2024 database for US companies that have strong dividend policies and are traded on American stock exchanges. From that group, we further refined our selection criteria by identifying stocks with a projected upside potential of over 5% based on analyst price targets, as of April 20. The stocks are ranked according to their upside potential. At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (). Upside Potential as of April 20: 46.18% Thermo Fisher Scientific Inc. (NYSE:TMO), a major US-based biotech and life sciences company, outperformed expectations in the fourth quarter, posting earnings of $6.10 per share on $11.40 billion in revenue—both exceeding Wall Street's forecasts of $5.94 and $11.28 billion, respectively. Although the biotech sector continues to experience muted spending, anticipated interest rate cuts could ease financing conditions and serve as a tailwind. Looking ahead to 2025, Thermo Fisher Scientific Inc. (NYSE:TMO) expects adjusted earnings to fall between $23.10 and $23.50 per share, in line with analysts' projections. As a key player in the healthcare and pharmaceutical industries, Thermo Fisher allows investors to gain exposure to long-term growth in the sector without facing risks tied to expiring patents or dependency on breakthrough drugs. Its business model is built for stability, with more than 80% of its revenue derived from recurring sources. Thermo Fisher Scientific Inc. (NYSE:TMO) also demonstrated strong cash generation in the latest quarter, bringing in $3.3 billion in operating cash flow and $2.8 billion in free cash flow. Throughout 2024, it returned $4.6 billion to shareholders through dividends and buybacks. The company currently pays a quarterly dividend of $0.43 per share, which was raised by 10% in February, marking its eighth consecutive year of dividend increases. The stock has a dividend yield of 0.40%, as of April 20. Overall, TMO ranks 1st on our list of the best American dividend stocks according to analysts. While we acknowledge the potential of TMO as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than TMO but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the . READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at .
