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Forbes
2 days ago
- Business
- Forbes
These Dirt Cheap Dividends Pay 4x-9x The Market
The market-at-large is expensive by historical metrics. So let's look past the pricey, low-yielding ETFs in favor of cheap dividends. That's right, good ol' value investing bargains. With high yields too! We're talking about divvies of 5%, 8% and even 11% that we'll discuss in a moment. The spring market dip sure was brief, wasn't it? The S&P 500 sank into near-bear territory in roughly a month, then snapped back just as quick. In doing so, Mr. and Ms. Market took valuations to high levels. The S&P 500's forward price-to-earnings (P/E) ratio of 22.1 remains in rarefied air, last reached during the COVID rebound, and before that, the dot-com bubble. Which is fine. We'll leave the 22 P/Es to the vanilla investors while we focus on bargains with respect to two 'cash is king' metrics: Cheap Dividends #1: AES Corp. Let's start with Virginia-based electric utility AES Corp. (AES, 5.5% yield), which we recently discussed as a low-beta name. This means AES, being a safe, stodgy utility, is more insulated from market pullbacks than run-of-the-mill dividends. AES also has upside potential. Its renewable energy-selling business gives it growth potential that many utility stocks don't have. It's also cheap. AES trades at a cheap 5 times cash-flow estimates, as well as a 0.6 PEG that implies it's also cheap compared to its growth estimates. (Remember: A PEG under 1.0 signals that a stock is inexpensive.) The stock yields more than 5%, to boot, which is better than the already generous utility sector. Cheap Dividends #2: Edison International Edison International (EIX, 5.9%) is another utility company—this one more typical of the sector. It's the parent of regulated utility Southern California Edison (SCE), which serves more than 15 million customers and generates much of its electricity from renewable sources including solar, wind, and hydro. It does, however, have a second business—Trio (formerly Edison Energy), a global energy advisory firm that serves large commercial, industrial and institutional organizations. Unlike other utilities, however, EIX is a bit more 'exciting.' It spent years in court fighting litigation over wildfire damage and ended up having to pay multiple billion-dollar-plus settlements. And the legal drama has returned in 2025. Shares have lost more than a quarter of their value, with most of that coming in January amid Los Angeles County wildfires, including the massive Eaton Fire, which prompted multiple suits against SCE over allegations that the company had 'violated public safety and utility codes and was negligent in its handling of power safety shut-offs.' SCE is also being investigated in connection with the Hurst Fire. If, for a minute, we closed our eyes and ignored all that, there's a lot to like about Edison. It's expected to generate decent top-line growth and a significant snap-back in profits over the next couple years. The big drop in shares has launched EIX's yield to nearly 6%. It trades at just 3 times cash-flow estimates. And its PEG, which at fractionally under 1 suggests the stock is only mildly underpriced, is substantially down from the nearly 3 it traded at when I evaluated the stock a couple years ago. But we can't ignore the fire liabilities—they're why EIX's valuations are so low. That makes Edison a much bigger high-risk, high-reward gamble than the average utility. Cheap Dividends #3: Amcor Amcor (AMCR, 5.2% yield) is technically a cyclical stock, but it acts defensively. That's because, as a packaging specialist, it's in the business of—well, other business's business. It makes everything from high-barrier paperboard trays for beef and meats to glass dressing bottles to overwrap for home and personal care. And its applications go far beyond the grocery store: Amcor's products are used in garden and outdoor products, agriculture, pet care, healthcare, even building and construction. So Amcor is simultaneously a play on the broader economy and all the businesses it supports, but it also fills a vital need across a diversified set of companies. AMCR stands out for a few reasons: Cheap Dividends #4: Kodiak Gas Services Kodiak Gas Services (KGS, 5.2% yield) is an energy services firm that provides natural gas compression services, mostly in the Permian Basin of Texas and New Mexico. Its compression units are critical to upstream and midstream natural gas firms, so it's able to secure multiyear, fixed-revenue contracts. There's nothing novel about the business model, though. Like other energy services firms, if natural gas/liquefied natural gas (LNG) is in demand, Kodiak will be in demand, so the fact that global LNG demand is expected to grow over the next few years bodes well for KGS. That's in large part because Kodiak is extremely well-positioned to capture that growth. In late 2023, KGS announced it would acquire CSI Compressco LP to create the industry's largest compression fleet. Kodiak's fleet is young, too (read: less maintenance and replacement costs). There's not much stock history to examine, however. Kodiak is a relatively new issue that went public just a few months before the CSI announcement. But the company has started a dividend and raised it twice since then, including a nearly 10% improvement announced in April 2025. Meanwhile, its yield has wafted up to over 5% amid energy's weakness this year—and left shares relatively cheap. KGS trades at roughly 6 times cash flow estimates and a low PEG of 0.13. Cheap Dividends #5: Atlas Energy Solutions Atlas Energy Solutions (AESI, 8.4% yield) is another Permian Basin energy equipment and services firm, this one providing transportation and logistics, storage solutions, and contract labor services to oil and natural gas E&P firms, as well as other oilfield services companies. Its most important offering is mesh frac sand used in hydraulic fracturing (fracking). I had been keeping tabs on it because of its unorthodox streak of dividend hikes, but that streak stopped earlier this year. It's not ideal. Nor is the fact that AESI shares have been hammered to the tune of 45% this year. Again, energy services haven't had a great 2025, but Atlas has been downright miserable amid slower-than-expected U.S. completion activity and droopy frac-sand prices. If there's any silver lining to that, it's that AESI shares now trade at just 5.7 times estimates for cash flows, as well as an attractive PEG of 0.75. The dividend at least appears to be safe, too. While things look bad from an adjusted earnings perspective ($1.00 in dividends annually vs. forecasts for just 25 cents this year), Atlas has more than enough FCF to cover the payout. Example: Last quarter, it generated $48.9 million in adjusted FCF while paying out $30.9 million. Those cash flows are substantial because AESI is a low-cost operator—crucial for survival in this industry. But like any energy services provider, Atlas needs commodity prices to cooperate. Cheap Dividends #6: UPS It's unusual for a blue-chip stock like United Parcel Service (UPS, 7.5%) to yield north of 7%, but it's also rare for a blue-chip stock like UPS to have its shares hemorrhage so much without a recession or broader bear market. Lower-margin e-commerce volumes, higher costs because of its unionized workforce, and a weak freight environment hampered the company in 2024. Then in early 2025, it spooked investors with a weak 2025 forecast and announced that—in hopes of shifting away from those lower-margin volumes—it would drastically reduce its business with Amazon (AMZN), which accounted for roughly 10%-12% of annual UPS revenues. The April tariff announcement also hit shares hard. The result? UPS shares have lost nearly half of their value in just two years. The upshot? UPS trades at roughly 8 times cash-flow estimates and has never offered a better yield in its 26 years of trading. Is UPS a dividend trap? Perhaps. The company pulled its full-year revenue and profit forecasts in April, and didn't bring them back in its late July report. Meanwhile, Wall Street is expecting a roughly 15% drop in adjusted earnings, to $6.61 per share. That specific number matters: UPS has a target dividend payout ratio of approximately 50% of prior-year adjusted EPS. It currently pays $6.56 across four quarterly dividends. (That's 99%!) CEO Carol Tomé continued to signal commitment to the dividend in the earnings call—'UPS is rock-solid strong and so is our dividend. The UPS dividend is backed by solid free cash flow and a strong investment-grade balance sheet,' she said—but if the delivery giant continues to struggle, simple numbers might force management's hand. Cheap Dividends #7: Western Union Western Union (WU, 11.3% yield), somehow, is still in business. Payment apps like PayPal, Venmo and Zelle have been taking business from the 'OG' of money transfer. WU boasts a big yield but for the wrong reason—its divvie looks big because shares are (deservedly) way down! WU, to its credit, has launched an initiative called 'Evolve 2025' in which it's rolling out new products, improvements and an operational efficiency program. It's also expanding its digital wallet offerings in Mexico and Singapore. And its latest move, announced just a couple days ago, is the $500 million acquisition of Miami-based International Money Express (IMXI), aka Intermex, which serves some 6 million customers who send money from the United States, Canada, Spain, Italy, the United Kingdom, and Germany to more than 60 countries. But c'mon man—this dog is dead. The business trades for 4x cash flow and a sub-5 forward P/E, but who cares? Not me. Brett Owens is Chief Investment Strategist for Contrarian Outlook. For more great income ideas, get your free copy his latest special report: How to Live off Huge Monthly Dividends (up to 8.7%) — Practically Forever. Disclosure: none
Yahoo
7 days ago
- Business
- Yahoo
Will tariffs cause a Great Depression style crash?
Will tariffs cause a Great Depression style crash? originally appeared on TheStreet. U.S. stocks have been fairly battered by recent events, particularly in response to evolving tariff news. On April 2, President Donald Trump announced potentially draconian tariffs on the U.S.'s major trading partners on "Liberation Day." Mr. Market did not like it. 💵💰💰💵 Major indices lost over 12% in the next six days, until President Trump backtracked and said tariffs would only apply for 90 days, pending negotiations, etc. The S&P 500 index then recovered an amazing 28% from the low, creating the so-called TACO trade (Trump Always Chickens Out, meaning he offers harsh trade terms and pulls back, leading to stocks falling and bouncing). While tariffs are on pace to settle lower than feared in April, they'll still pose a surprisingly significant drag on the US economy, leading to worries over another Great Depression-style stock market reckoning. What is a tariff anyway? For starters, what is a tariff? A tariff is an import duty, or a tax, on imported goods to a country, the U.S. in this case. So, to be clear, a tariff is a tax paid by the importer, which then has to pass the tax (or part of it) on to somebody else or absorb it. That "somebody else" ultimately is the consumer. And there's the rub.U.S. personal consumption (private spending) accounts for more than two-thirds of the nation's GDP, which measures its total economic output. With higher tariffs come increases in costs of goods and services (inflation), leaving the consumer holding the bag, so to speak. Lower disposable income translates to reduced consumer spending overall, which is a poor omen for the economic situation generally, and a problem for corporate profits and potentially, stock prices. Tariff rates are much higher than last year As of August 7, the president's various tariff deals have gone into effect, with a base rate of 10% or more, depending on the deals reached with the Trump administration. This compares to negligible zero and 2.5% tariff rates for most countries that preceded President Trump's tariffs. That's a big jump, no matter how you slice the major U.S. trading partners, tariffs range from 10% for the UK to 50% for India. But most major U.S. trading partners (e.g., Japan & the European Union) settled on a 15% tariff rate, and made concessions for foreign direct investments (FDIs) into the U.S. Still other nations, such as China, Canada, and Mexico (the three largest U.S. trading partners), are in a negotiation period, with tariffs currently set at around 30% for all of them. Negotiations with China are set to conclude in November, so plenty of drama has yet to play out on that stage. Meanwhile, about 95% of Canadian and Mexican imports are exempt from the 30% tariffs due to the MCA (Mexican-Canadian-American trade agreement) negotiated by Trump in his first term. In the end, it may all be much ado about nothing if U.S. courts strike down the Trump administration's legal rationale for imposing the tariffs. Smoot-Hawley tariffs coincided with Great Depression The last time tariff rates were this high was nearly a hundred years ago, when the dreaded Smoot-Hawley Tariff Act was implemented in 1930 to protect farmers and other key U.S. industries during the height of the Great Depression. Tariffs of around 20% were applied to most goods, leading to retaliatory tariffs by other nations. This sparked a global trade war, which saw trade fall by 65% between 1929 and 1934. Did the Smoot-Hawley tariffs cause the stock market crash of October 1929? Not directly, but the passage of the legislation by the U.S. House in May of 1929, approximately five months before the crash, caused the market to begin to wobble. More on tariffs: Billionaire fund manager explans why tariffs may not be a big deal after all EU and US automakers both lose big in latest tariff deal Tariffs will cost the liquor industry over $2 billion in sales All this set the stage for an era of protectionism, which augured poorly for an already nervous and overextended stock market. Excess leverage — that is, borrowing to speculate on stocks- was rampant. All of this unfolded against the backdrop of a global depression, and voila: Black Tuesday of October 1929. President Herbert Hoover signed the Smoot-Hawley tariffs into law in June 1930. Stocks limped along for years and hit new lows in 1932, before bottoming around FDR's inauguration in March 1933. The Smoot-Hawley tariffs were largely reversed in June 1934 in favor of bilateral trade agreements, and stocks continued to recover. Are we heading toward another market crash? The outlook for stocks is far from clear. On the one hand, President Trump's tariff regime has yet to show up materially in the data. Hence, stocks have not experienced a pronounced negative reaction since August 7, when President Trump's tariff pause officially ended, and tariffs took effect. However, stocks remain extremely jittery on tariff-related news, not unlike the stock market run-up to the 1929 the other hand, we have a market that is marking new all-time highs. In recent weeks, over two-thirds of companies have reported second-quarter earnings, and 82% of them beat EPS expectations, allowing the market to grind back from recent jobs-related losses. With most of the positive earnings data in the rearview mirror, however, one wonders what might fuel further upside in stocks. Overall, the macro picture is biased to the downside, what with the tariffs' effect still to be felt in real time, a weak jobs number for July, and an uptick in jobless claims recently raising fresh concerns about the U.S. economic trajectory. Is a crash like 1929's imminent? Hardly likely, given the absence of excess leverage or borrowing to speculate on stocks. Still, the market is overvalued by most measures of healthy price-to-earnings ratios (P/E) at 29.4; more normal market P/E ratios are on the order of 15 to 20. A look at the () (SPDR S&P 500 ETF Trust) chart shows a solid rebound from August 1's disappointing NFP (non-farm payrolls) report (red oval). But price is still below the pre-NFP high, potentially setting up a double-top formation. (A double top formation is created when price makes two attempts to surpass a particular price level and fails, resulting in a subsequent price decline.) An alternative view is highlighted by the faster Tenkan Line (blue) still holding above the slower Kijun line (red). A move above the recent highs would suggest the uptrend is resuming, with price well above the cloud indicating that an overall uptrend remains in place. Active investors will want to pay close attention to the coming days' price action to see if a new pre-NFP high can be made, or if it's only a bear flag correction higher, with more downside in store and a potential major double-top reversal pattern forming tariffs cause a Great Depression style crash? first appeared on TheStreet on Aug 12, 2025 This story was originally reported by TheStreet on Aug 12, 2025, where it first appeared. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
09-08-2025
- Business
- Yahoo
Surprising AI chip stock is up 90% in 30 days (and still climbing)
Surprising AI chip stock is up 90% in 30 days (and still climbing) originally appeared on TheStreet. In a space typically dominated by household names, AI chip player Astera Labs has effectively broken through the noise. After another earnings stunner, Astera stock just turned heads on Wall Street again, surprising even the bulls. Moreover, with Astera riding the wave of next-gen data center buildouts, its latest quarterly showing was a clear signal of its rapidly growing influence in AI infrastructure. 💵💰💰💵 Mr. Market's reaction was instant and powerful, pushing the stock into one of the year's most explosive tech stock rallies. Given the ferociousness of the move and Astera's growing strategic importance, it seems there's plenty of runway left in this under-the-radar AI stock. AI infrastructure buildout hits overdrive The AI infrastructure space is growing at a breakneck pace as stakeholders rush to lock in the power, connectivity, and capacity needed to scale generative AI workloads. Big Tech is leading the charge. In 2025 alone, Amazon, Google, Meta, and Microsoft are shelling out a whopping $350 billion on data centers, high-speed networks, and specialized spending spree is effectively reshaping tech ecosystems and regional economies. Private capital is also chasing the same opportunity. For instance, Brookfield is zeroing in on key investments like liquid cooling, GPUs, and chip fabrication. Apollo is making an even bigger splash, scooping Stream Data Centers to position for years of AI-driven demand. However, the real choke point now is Electricity. Silver Lake committed a massive $400 million just to secure gigawatts of power before buying land, underscoring the critical importance of grid access. Additionally, governments are stepping up, too. The U.S.'s 'Stargate Project,' with roughly $500 billion in planned investment, is matched by similar efforts from the EU in creating localized infrastructure. However, this scale-up isn't without stress. Data center power needs could double global electricity demand by 2030, weighing down utilities and new facility activations. Still, the upside is massive, with the boom adding 0.7 percentage points to U.S. GDP growth. Moreover, McKinsey estimates global data center investment could reach an eye-popping $6.7 trillion by 2030, suggesting that today's frenzy may just be the warm-up. Astera Labs emerges as AI's hidden backbone Astera Labs has done a tremendous job standing out in the crowded semiconductor niche. It's efficiently carved out a critical niche in high-speed, intelligent connectivity, the invisible plumbing that keeps AI and cloud infrastructure running smoothly. Also, it boasts a powerful hardware and software stack that's built for like PCIe 6.0 smart retimers, gearboxes, and the Scorpio smart fabric switches are all designed to move vast amounts of data between CPUs, GPUs, memory, and storage with minimal latency. On the software end, its COSMOS platform aids in monitoring and optimizing complex systems at scale. As generative AI workloads explode, data centers need ultra-efficient and reliable interconnects to sidestep performance hiccups. At the same time, Astera's PCIe 6.0 and CXL solutions meet this demand head-on, showing off powerful signal integrity for unbundled, rack-scale architectures. On top of that, Astera's powerful partnerships add to its advantage. Its gear is layered into NVIDIA's Blackwell-based MGX AI platforms, while working seamlessly with AMD's tech and other memory and storage providers. Speed matters, too. With its robust Cloud-Scale Interop Lab, Astera constantly tests for cross-vendor compatibility, minimizing deployment risk and speeding up hyperscaler rollout. Hence, with its competitive advantages, Astera is rapidly becoming the connective tissue of next-gen AI systems, powering the shape-shifting AI infrastructure boom. Astera Labs smashes Q2 expectations Astera Labs once again stunned Wall Street with another smashing quarterly performance, handily beating estimates across both lines. Shares rocketed over 28.7% on Aug. 6 following the earnings release, as the market reacted sharply to the beat-and-raise quarter. Investors didn't hesitate to reward the the past month, the stock's rally has grown from strength to strength, with it now up close to 90%, and 77% in the past six months. Its Q2 2025 report included non-GAAP EPS of $0.44, comfortably ahead of the $0.32–$0.33 expected range. Similarly, revenues hit $191.9 million, topping the $172 million forecast with year-over-year growth at 150%. The upbeat trend looks set to continue. For Q3, Astera expects sales to fall between $203 million and $210 million, well above consensus estimates, underscoring management's confidence in the long-term growth runway of its AI-focused connectivity solutions. Wall Street resets Astera Labs stock price targets Evercore ISI lifted its Astera Labs stock price target from $104 to $215, on the back of the explosive demand for the Scorpio P Series fabric switches and the upcoming X Series. More News: Veteran analyst spots unexpected star in Apple's earnings report Bank of America drops shocking price target on hot weight-loss stock post-earnings JPMorgan drops 3-word verdict on Amazon stock post-earnings JPMorgan bumped its target to $180, highlighting Astera's growing product pipeline and superb position in PCIe retimers. On top of that, Jefferies' projects' earnings could exceed $3 per share by 2026, a figure that's likely to push the stock to new heights. Surprising AI chip stock is up 90% in 30 days (and still climbing) first appeared on TheStreet on Aug 9, 2025 This story was originally reported by TheStreet on Aug 9, 2025, where it first appeared. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
09-07-2025
- Business
- Yahoo
AES Stock Soars on Buyout Chatter
AES (NYSE:AES) leap 14% after that takeover buzz hit Bloomberg. Now, talking about the utility weighing a sale and top private equity names lining up to take a closer look. It's been a rough couple of years for AESshares are down nearly half and off 13% this year before the news. At about $8 billion in market cap and $36 billion enterprise value, that $30 billion debt load looks heavy, even with $2 billion in the bank. Warning! GuruFocus has detected 9 Warning Signs with AES. What really grabbed buyers is all those renewable assets. AES runs 18.4 GW of wind, solar, hydro and storage. They added 3.5 GW last year and have 12.3 GW waiting in the wings, with 5.1 GW already under construction. From a 220 MW solar farm in Pennsylvania to a 238 MW wind park in Arizona, the pipeline's stacking up. If AES can unlock even a slice of that value, shareholders could see a big win. Keep an eye on the board's update later this month to see if they opt for a full sale or carve out pieces to crank up the value. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
28-06-2025
- Business
- Yahoo
Surprising jobs data shows economy in flux
Surprising jobs data shows economy in flux originally appeared on TheStreet. It's been one "strong job market report" after another. Investors continue dancing to that beat, as we stare down a record high for the S&P 500. 💵💰💰💵 Mr. Market is brushing off any wobble in weekly unemployment claims as mostly seasonal noise. Peel back the curtain, however, and the continuing claims paint a more mixed story about a fragile economic state. The latest jobless claims update drives that point home and could shake the economy. Over the past few months, weekly jobless claims in the U.S. have fallen in a pattern that gives off mixed signals. In early April, initial claims nudged up to 223,000 in the week ending April 5. This represents a modest rise of 4,000, but economists expected the number to remain flat. Businesses were already feeling the heat due to the threat of new tariffs, and March hiring numbers were underwhelming. Just 228,000 jobs were added, with unemployment ticking up to 4.2%.A few weeks later, in late April, things got shakier. Claims rose by 18,000 to 241,000, the highest they'd been in a couple of months. Sure, spring breaks played a part, but beneath the surface, you had corporate America feeling the squeeze from tariffs. May brought its mix of highs and lows as well. Things picked up strongly, with claims dropping by 13,000 to 228,000. By mid-month, filings hovered around 229,000, but by May 24, claims shot up to 240,000, the biggest weekly spike in over a year. It wasn't just about the seasonal hires this time, though. More on Markets: Housing market update spells more trouble Why Thursday's market bell might echo in history Wall Street veteran analyst who predicted stock market rally resets forecast Layoffs were starting to impact areas like transportation and hospitality, once considered safe from recession talk. And June's data felt more like walking a tightrope. The month kicked off with claims climbing to 248,000, and up until last week, the four-week average crept up to 245,500, the highest it's been in nearly two years. That was all before today's update, adding a new twist to the story. For the week ending June 21, initial jobless claims dropped to 236,000, 10,000 lower than the week before and below the 244,000 forecast. That comes with a catch, though, as last week's numbers were quietly revised to 246,000 — a soft win, at best. Meanwhile, continuing claims surged by 37,000 to 1.974 million, the highest since late clearly indicates that more folks are stuck on benefits significantly longer than expected, clipping away at their disposable incomes. Unadjusted state filings dropped 4% to 227,080, again mostly in line with last year once you factor out seasonal noise. Moreover, with the insured unemployment rate at 1.2%, things continue to look bleak for those already out of work. Nevertheless, it seems the markets are shrugging off those darker themes. S&P 500 futures briefly popped to 6,171 earlier today, topping the prior intraday record of 6,166. Hence, Mr. Market's still buying the corporate resilience story, even as the jobless rolls tell a more cautionary jobs data shows economy in flux first appeared on TheStreet on Jun 26, 2025 This story was originally reported by TheStreet on Jun 26, 2025, where it first appeared. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
