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  • 11 high-yield dividend stocks that are Wall Street’s favorites for 2023

    11 high-yield dividend stocks that are Wall Street’s favorites for 2023

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    Investors love dividend stocks but there are different ways to look at them, including various “quality” approaches. Today we are focusing on high yields.

    A high dividend yield can be a warning that investors have lost confidence in a company’s ability to maintain its dividend payout. But there are always exceptions, some of which can be brought about by market events — some investors remain skeptical of energy stocks, for example, after so much pain before this year’s outstanding performance for the sector.

    Below is a screen of stocks that have high dividend yields and are favored by analysts. The screen has no financial quality filters.

    For investors who are interested in dividend stocks but wish to focus on quality and total returns, this recent look at the S&P Dividend Aristocrats (companies that have raised dividends consistently for many years) might be of interest. For those looking for income but also worried about dividend cuts, here is a list of stocks with dividend yields of at least 5% whose payouts are expected to be well-covered by free cash flow in 2023.

    If you are looking for higher yields with moderate risk, you should at also learn about funds that use covered-call option strategies to enhance income.

    Removing the filters for a high-yield dividend-stock screen

    For a broad screen of stocks with high dividend yields that are favored by analysts, we began with the S&P Composite 1500 Index
    SP1500,
    +1.42%    ,
    which is made up of the S&P 500
    SPX,
    +1.42%    ,
    the S&P 400 Mid Cap Index
    MID,
    +1.48%    ,
    and the S&P 600 Small Cap Index
    SML,
    +1.49%    .

    The S&P indexes exclude energy partnerships, so we added the 15 stocks held by the Alerian MLP ETF
    AMLP,
    +1.81%
    to the list. Energy partnerships tend to have high distribution yields, in part because they pass most earnings through to investors. But they also can make tax preparation more complicated. They can also be volatile as oil
    CL00,
    +2.96%
    CL00 and natural-gas
    NG00,
    +1.58%
    prices swing.

    The S&P indexes also exclude business development companies, or BDCs, so we expanded our initial screen to include the 24 stocks held by the VanEck BDC income ETF
    BIZD,
    +0.76%    .
    BDCs are specialized leveraged lenders that make loans with high interest rates, mainly to middle-market companies. They often take equity stakes in the companies they lend to, for a venture-capital-type of investment style. The BDC space features several stocks with very high dividend yields, but is also known for volatility.

    You have been warned — this particular stock screen focuses only on high yields and favorable ratings among analysts working for brokerage firms. There is no look back at dividend cuts and no cash-flow analysis as featured in other dividend-stock articles. If you see anything of interest resulting from the screen, you need to do your own research to consider whether or not a long-term commitment to one or more of these companies is worth the risk as you seek high income.

    The screen

    Starting with the S&P Composite 1500 and the components of AMLP and BIZD, there are 68 stocks with dividend yields of at least 8%, according to data provided by FactSet.

    Among the 68 companies, 55 made the first screen, because they are covered by at least five analysts polled by FactSet.

    Among the 55 companies, 11 have “buy” or equivalent ratings among at least 70% of analysts.

    Here they are, ranked by upside potential implied by analysts’ consensus price targets:

    Company

    		 Ticker

    		 Dividend yield

    		 Share “buy” ratings

    		 Dec. 20 price

    		 Consensus price target

    		 Implied 12-month upside potential
    Energy Transfer LP

    		 ET,
    +2.35%         		9.08%

    		 95%

    		 $11.68

    		 $16.24

    		 39%
    Enterprise Products Partners LP

    		 EPD,
    +0.88%         		8.12%

    		 79%

    		 $23.39

    		 $31.69

    		 35%
    Barings BDC Inc.

    		 BBDC,
         		11.67%

    		 86%

    		 $8.14

    		 $10.75

    		 32%
    Redwood Trust Inc.

    		 RWT,
    +2.70%         		13.45%

    		 80%

    		 $6.84

    		 $8.92

    		 30%
    Crestwood Equity Partners LP

    		 CEQP,
    +0.78%         		9.75%

    		 100%

    		 $26.86

    		 $35.00

    		 30%
    KKR Real Estate Finance Trust Inc.

    		 KREF,
    +1.38%         		11.90%

    		 71%

    		 $14.45

    		 $18.50

    		 28%
    Owl Rock Capital Corp.

    		 ORCC,
    +0.38%         		11.21%

    		 91%

    		 $11.78

    		 $14.73

    		 25%
    Sixth Street Specialty Lending Inc.

    		 TSLX,
    +1.89%         		10.48%

    		 82%

    		 $17.18

    		 $20.90

    		 22%
    Oaktree Specialty Lending Corp.

    		 OCSL,
    -0.37%         		9.97%

    		 100%

    		 $6.77

    		 $7.75

    		 14%
    Ares Capital Corp.

    		 ARCC,
    +1.22%         		10.45%

    		 93%

    		 $18.38

    		 $20.87

    		 14%
    BlackRock TCP Capital Corp.

    		 TCPC,
    +1.76%         		10.25%

    		 71.43%

    		 $12.49

    		 $14.00

    		 12%
    Source: FactSet

    One way to begin your own research into any company listed here is to click on the ticker for more information.

    You should also read Tomi Kilgore’s detailed guide to the wealth of information available free on the MarketWatch quote page.

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  • Builder sentiment fell every single month in 2022. Builders say there’s a silver lining.

    Builder sentiment fell every single month in 2022. Builders say there’s a silver lining.

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    The numbers:  The National Association of Home Builders’ monthly confidence index fell two points to 31 in December, the trade group said on Monday.

    It’s the 12th month in a row that the index has fallen.

    Outside of the pandemic, the December reading of 31 is the lowest level since mid-2012.

    A year ago, the NAHB index stood at 84. The index’s 12-month drop is a new record. 

    But it’s not the biggest drop, the NAHB said. The drop in builder confidence between the end of 2004 and the start of 2009 was sharper; the index fell from 71 to 8 in that span.

    Key details: The three gauges that underpin the overall confidence index were mixed:

    • The gauge that marks current sales conditions fell by 3 points. 

    • The component that assesses sales expectations for the next six months rose by 4 points.

    • And the gauge that measures traffic of prospective buyers was unchanged from last month.

    All four NAHB regions posted a drop in builder confidence, led by the South and the Northeast. 

    Big picture: While builders continue to struggle to find buyers with the current rate environment, they’re also seeing a light at the end of the tunnel.

    Buyers are slowly coming back to the table as mortgage rates are no longer above 7%, and home price growth is moderating.

    And with 62% of builders offering incentives like mortgage rate buy-downs, paying points for buyers, and even price reductions, that luring some buyers, per the NAHB.

    About 35% of builders were dropping home prices in December, the NAHB said, with the average price reduction being 8%.

    What the NAHB said: “The silver lining in this HMI report is that it is the smallest drop in the index in the past six months, indicating that we are possibly nearing the bottom of the cycle for builder sentiment,” Robert Dietz, chief economist at the NAHB, said in a statement.

    “Mortgage rates are down from above 7% in recent weeks to about 6.3% today, and for the first time since April, builders registered an increase in future sales expectations,” he added.

    But the NAHB is expecting “weaker housing conditions” to persist in 2023, and only forecasts a full recovery in 2024, Dietz said. There is still a gap of 1.5 million housing units, they estimated nationwide.

    Nonetheless, the path to recovery is hard, the builders stressed.

    “In this high inflation, high mortgage rate environment, builders are struggling to keep housing affordable for home buyers,” Jerry Konter, chairman of the NAHB and a home builder and developer from Savannah, Ga., said in a statement.

    “With construction costs up more than 30% since inflation began to take off at the beginning of the year, there is little room for builders to cut prices,” Konter added.

    What are they saying? “We think home sales will find a floor by the end of the first quarter, helped by the near-75 [basis point] decline in mortgage rates since late October,” Kieran Clancy, senior U.S. economist at Pantheon Macroeconomics, wrote in a note.

    “But a meaningful recovery is still a long way off, and home prices have much further to fall,” he added.

    Market reaction: The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.597%
    rose to 3.57% on Monday morning.

    While the SPDR S&P Homebuilders ETF
    XHB,
    -1.67%
    traded slightly lower during the morning session, as well as big home builder stocks like D.R. Horton Inc
    DHI,
    -1.44%    ,
    Toll Brothers
    TOL,
    -0.87%    ,
    and Lennar
    LEN,
    -2.28%    .

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  • Vanguard sees a recession in 2023 — and one ‘silver lining’ for investors

    Vanguard sees a recession in 2023 — and one ‘silver lining’ for investors

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    The last 12 months was a year of fast-rising inflation, fast-rising interest rates and fast-rising questions about a future recession.

    Prices went up while stock markets and savings account balances went down, leaving consumers and investors dizzy and their wallets hurting.

    There may be more financial pain, that’s pretty sure — but it might not be as bad as feared, according to Vanguard’s look ahead to 2023.

    The likely recession will not send jobless rates charging sharply higher, sticker shock will fade for the price of goods, and the rise in rent and mortgages will also ease, Vanguard said.

    “On Tuesday, inflation data for November showed prices are continuing to cool. Analysts say that makes a 50-basis point increase, rather than a 75-basis-point increase, more likely.”

    The good news: This opens up chances for stocks to rebound, the asset-manager added.

    The outlook, released this week, comes as Americans are trying to guess what 2023 holds for their finances while they manage their holiday shopping budgets, and 2022 investments.

    On Tuesday, inflation data for November showed prices are continuing to cool. From October to November, the cost of living nudged up 0.1%, lower than the 0.3% forecast, the Consumer Price Index showed. Year over year, the inflation rate receded to 7.1% from 7.7% in October, according to the CPI data.

    On Wednesday, the Federal Reserve will announce its latest decision on interest rate increases. A 50-basis point increase is widely expected after four jumbo-sized 75-basis point hikes from the central bank.

    Here’s one roadmap for what’s next, as far as Vanguard’s researchers and experts can see.

    Hot inflation will cool

    Inflation rates during 2022 climbed to four-decade highs. There have been signs of easing, such as smaller-than-expected price increases in October.

    “As we step into 2023, early signs of a recovery in goods supply and softening demand could help balance supply and demand for consumption goods and bring prices lower,” the authors noted ahead of Tuesday’s CPI numbers.

    But the cost and demand of services are going to prevent a quick fall, they noted. Signs of slowing price increases are already emerging in rents and mortgages, but they will take longer to ease than prices of consumer goods, the authors said.

    That echoes the view from Treasury Secretary Janet Yellen, who said Sunday there will be “much lower inflation,” absent any unanticipated shocks to the economy.

    But while hot inflation will cool, it will still be warm to the touch. The Fed says 2% inflation is its target goal; Vanguard sees 3% inflation by the end of 2023.

    A recession is very much on the cards

    As “generationally high inflation” slowed economies across the world, the Fed and other central banks have countered with interest-rate increases to tame price increases. That “will ultimately succeed, but at a cost of a global recession in 2023,” according to Vanguard’s report. Vanguard sees a 90% chance of a recession in the United States by the end of next year.

    Vanguard is hardly alone in the recession call, so the question is how bad could the big picture look?

    In Vanguard’s view, it’s not so bad. “Households, businesses, and financial institutions are in a much better position to handle the eventual downturn, such that drawing parallels with the 1970s, 1980s, 2008, or 2020 seems misplaced,” the authors wrote.

    Job losses may be clustered

    For now, the jobless rate in a tight labor market is 3.7%, which is just a little above the lowest levels in five decades. That stands against the headline-grabbing list of companies where layoffs are mounting, notably in the tech sector.

    When a recession, in all likelihood, lands next year, “unemployment may peak around 5%, a historically low rate for a recession,” the Vanguard outlook said. As interest rates climb, the job losses “should be most concentrated in the technology and real estate sectors, which were among the strongest beneficiaries of the zero-rate environment.”

    The unemployment rate going from 3.7% to the 5% vicinity is “a sizable move,” Roger Aliaga-Díaz, Americas chief economist for Vanguard, said in a Monday press conference on the report. “But it is less dramatic of a rise than compared to past recessions perhaps.”

    Spotting the opportunities

    When interest rates go up, bond prices go down. So it’s been difficult for bonds with lower returns and “near-term pain” for investors this year, the Vanguard outlook said.

    “However the bright side of higher rates is higher interest payments. These have led our return expectations for U.S. and international bonds to increase by more than twofold,” the report said.

    Vanguard said U.S. bond return projections could be 4.1% – 5.1% annually over the next year versus its 1.4% – 2.4% return estimate last year. For U.S. stocks, the forecast could be 4.7% – 6.7% annually, while returns in emerging market equities could be between 7% and 9%.

    On Tuesday morning, stock markets are soaring higher on the cooler than expected inflation data, igniting hopes of an end of year Santa Claus rally.

    “‘There’s one silver lining of our outlook for a modest global recession. And it’s the clear silver lining of higher expected returns for investors.’”


    — Joseph Davis, Vanguard’s chief global economist

    Still, the Dow Jones Industrial Average
    DJIA,
    +0.30%
    is down nearly 5% year to date. The S&P 500
    SPX,
    +0.73%
    is off 14% in that time and for the Nasdaq Composite
    COMP,
    +0.38%
    is down more than 26%.

    When the market hits bottom is impossible to know, the outlook said — but it noted “valuations and yields are clearly more attractive than they were a year ago.”

    “There’s one silver lining of our outlook for a modest global recession. And it’s the clear silver lining of higher expected returns for investors,” said Joseph Davis, Vanguard’s chief global economist.

    “We’re long concerned that the low rate environment was both unsustainable and ultimately a tax and a headwind for savers and long term investors,” Davis said.

    But even with all the turbulence this year, “we certainly are starting to see the dividends to higher real interest rates around the world in the higher projected returns that we anticipate for investors over the coming decade.”

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  • Best stock picks for 2023: Here are Wall Street analysts’ most heavily favored choices

    Best stock picks for 2023: Here are Wall Street analysts’ most heavily favored choices

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    Following a sharp and sustained rise in interest rates, U.S. stocks have taken a broad beating this year.

    But 2023 may bring very different circumstances.

    Below are lists of analysts’ favorite stocks among the benchmark S&P 500
    SPX,
    the S&P 400 Mid Cap Index
    MID
    and the S&P Small Cap 600 Index
    SML
    that are expected to rise the most over the next year. Those lists are followed by a summary of opinions of all 30 stocks in the Dow Jones Industrial Average
    DJIA.

    Stocks rallied on Dec. 13 when the November CPI report showed a much slower inflation pace than economists had expected. Investors were also anticipating the Federal Open Market Committee’s next monetary policy announcement on Dec. 14. The consensus among economists polled by FactSet is for the Federal Reserve to raise the federal funds rate by 0.50% to a target range of 4.50% to 4.75%.

    Read: 5 things to watch when the Fed makes its interest-rate decision

    A 0.50% increase would be a slowdown from the four previous increases of 0.75%. The rate began 2022 in a range of zero to 0.25%, where it had sat since March 2020.

    A pivot for the Fed Reserve and the possibility that the federal funds rate will reach its “terminal” rate (the highest for this cycle) in the near term could set the stage for a broad rally for stocks in 2023.

    Wall Street’s large-cap favorites

    Among the S&P 500, 92 stocks are rated “buy” or the equivalent by at least 75% of analysts working for brokerage firms. That number itself is interesting — at the end of 2021, 93 of the S&P 500 had this distinction. Meanwhile, the S&P 500 has declined 16% in 2022, with all sectors down except for energy, which has risen 53%, and the utilities sector, which his risen 1% (both excluding dividends).

    Here are the 20 stocks in the S&P 500 with at least 75% “buy” or equivalent ratings that analysts expect to rise the most over the next year, based on consensus price targets:

    Company

    		 Ticker

    		 Industry

    		 Closing price – Dec. 12

    		 Consensus price target

    		 Implied 12-month upside potential

    		 Share “buy” ratings

    		 Price change – 2022 through Dec. 12
    EQT Corp.

    		 EQT Oil and Gas Production

    		 $36.91

    		 $59.70

    		 62%

    		 78%

    		 69%
    Catalent Inc.

    		 CTLT Pharmaceuticals

    		 $45.50

    		 $72.42

    		 59%

    		 75%

    		 -64%
    Amazon.com Inc.

    		 AMZN Internet Retail

    		 $90.55

    		 $136.02

    		 50%

    		 91%

    		 -46%
    Global Payments Inc.

    		 GPN Misc. Commercial Services

    		 $99.64

    		 $147.43

    		 48%

    		 75%

    		 -26%
    Signature Bank

    		 SBNY Regional Banks

    		 $122.73

    		 $180.44

    		 47%

    		 78%

    		 -62%
    Salesforce Inc.

    		 CRM Software

    		 $133.11

    		 $195.59

    		 47%

    		 80%

    		 -48%
    Bio-Rad Laboratories Inc. Class A

    		 BIO Medical Specialties

    		 $418.28

    		 $591.00

    		 41%

    		 100%

    		 -45%
    Zoetis Inc. Class A

    		 ZTS Pharmaceuticals

    		 $152.86

    		 $212.80

    		 39%

    		 87%

    		 -37%
    Delta Air Lines Inc.

    		 DAL Airlines

    		 $34.77

    		 $48.31

    		 39%

    		 90%

    		 -11%
    Diamondback Energy Inc.

    		 FANG Oil and Gas Production

    		 $134.21

    		 $182.33

    		 36%

    		 84%

    		 24%
    Caesars Entertainment Inc

    		 CZR Casinos/ Gaming

    		 $50.27

    		 $67.79

    		 35%

    		 81%

    		 -46%
    Alphabet Inc. Class A

    		 GOOGL Internet Software/ Services

    		 $93.31

    		 $125.70

    		 35%

    		 92%

    		 -36%
    Halliburton Co.

    		 HAL Oilfield Services/ Equipment

    		 $34.30

    		 $45.95

    		 34%

    		 86%

    		 50%
    Alaska Air Group Inc.

    		 ALK Airlines

    		 $45.75

    		 $61.08

    		 34%

    		 93%

    		 -12%
    Targa Resources Corp.

    		 TRGP Gas Distributors

    		 $70.42

    		 $93.95

    		 33%

    		 95%

    		 35%
    Charles River Laboratories International Inc.

    		 CRL Misc. Commercial Services

    		 $201.94

    		 $269.25

    		 33%

    		 88%

    		 -46%
    ServiceNow Inc.

    		 NOW Information Technology Services

    		 $401.64

    		 $529.83

    		 32%

    		 92%

    		 -38%
    Take-Two Interactive Software Inc.

    		 TTWO Software

    		 $102.61

    		 $135.04

    		 32%

    		 79%

    		 -42%
    EOG Resources Inc.

    		 EOG Oil and Gas Production

    		 $124.06

    		 $158.24

    		 28%

    		 82%

    		 40%
    Southwest Airlines Co.

    		 LUV Airlines

    		 $38.94

    		 $49.56

    		 27%

    		 76%

    		 -9%
    Source: FactSet

    Most of the companies on the S&P 500 list expected to soar in 2023 have seen large declines in 2022. But the company at the top of the list, EQT Corp.
    EQT,
    is an exception. The stock has risen 69% in 2022 and is expected to add another 62% over the next 12 months. Analysts expect the company’s earnings per share to double during 2023 (in part from its expected acquisition of THQ), after nearly a four-fold EPS increase in 2022.

    Shares of Amazon.com Inc.
    AMZN
    are expected to soar 50% over the next year, following a decline of 46% so far in 2022. If the shares were to rise 50% from here to the price target of $136.02, they would still be 18% below their closing price of 166.72 at the end of 2021.

    Read: Here’s why Amazon is Citi’s top internet stock idea

    You can see the earnings estimates and more for any stock in this article by clicking on its ticker.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    Mid-cap stocks expected to rise the most

    The lists of favored stocks are limited to those covered by at least five analysts polled by FactSet.

    Among components of the S&P 400 Mid Cap Index, there are 84 stocks with at least 75% “buy” ratings. Here at the 20 expected to rise the most over the next year:

    Company

    		 Ticker

    		 Industry

    		 Closing price – Dec. 12

    		 Consensus price target

    		 Implied 12-month upside potential

    		 Share “buy” ratings

    		 Price change – 2022 through Dec. 12
    Arrowhead Pharmaceuticals Inc.

    		 ARWR Biotechnology

    		 $31.85

    		 $69.69

    		 119%

    		 83%

    		 -52%
    Lantheus Holdings Inc.

    		 LNTH Medical Specialties

    		 $54.92

    		 $102.00

    		 86%

    		 100%

    		 90%
    Progyny Inc.

    		 PGNY Misc. Commercial Services

    		 $31.21

    		 $55.57

    		 78%

    		 100%

    		 -38%
    Coherent Corp.

    		 COHR Electronic Equipment/ Instruments

    		 $35.41

    		 $60.56

    		 71%

    		 84%

    		 -48%
    Exelixis Inc.

    		 EXEL Biotechnology

    		 $16.08

    		 $26.07

    		 62%

    		 81%

    		 -12%
    Darling Ingredients Inc.

    		 DAR Food: Specialty/ Candy

    		 $61.17

    		 $97.36

    		 59%

    		 93%

    		 -12%
    Perrigo Co. PLC

    		 PRGO Pharmaceuticals

    		 $31.83

    		 $49.25

    		 55%

    		 100%

    		 -18%
    Mattel Inc.

    		 MAT Recreational Products

    		 $17.39

    		 $26.58

    		 53%

    		 87%

    		 -19%
    ACI Worldwide Inc.

    		 ACIW Software

    		 $20.75

    		 $31.40

    		 51%

    		 83%

    		 -40%
    Topgolf Callaway Brands Corp.

    		 MODG Recreational Products

    		 $21.99

    		 $32.91

    		 50%

    		 83%

    		 -20%
    Dycom Industries Inc.

    		 DY Engineering and Construction

    		 $86.03

    		 $128.13

    		 49%

    		 100%

    		 -8%
    Travel + Leisure Co.

    		 TNL Hotels/ Resorts/ Cruiselines

    		 $37.98

    		 $56.00

    		 47%

    		 75%

    		 -31%
    Frontier Communications Parent Inc.

    		 FYBR Telecommunications

    		 $25.21

    		 $36.18

    		 44%

    		 82%

    		 -15%
    Manhattan Associates Inc.

    		 MANH Software

    		 $120.06

    		 $171.80

    		 43%

    		 88%

    		 -23%
    MP Materials Corp Class A

    		 MP Other Metals/ Minerals

    		 $31.39

    		 $44.79

    		 43%

    		 92%

    		 -31%
    Lumentum Holdings Inc.

    		 LITE Electrical Products

    		 $54.45

    		 $76.44

    		 40%

    		 76%

    		 -49%
    Tenet Healthcare Corp.

    		 THC Hospital/ Nursing Management

    		 $44.22

    		 $62.00

    		 40%

    		 80%

    		 -46%
    Repligen Corp.

    		 RGEN Pharmaceuticals

    		 $166.88

    		 $233.10

    		 40%

    		 82%

    		 -37%
    STAAR Surgical Co.

    		 STAA Medical Specialties

    		 $59.57

    		 $82.67

    		 39%

    		 82%

    		 -35%
    Carlisle Cos. Inc.

    		 CSL Building Products

    		 $251.99

    		 $348.33

    		 38%

    		 75%

    		 2%
    Source: FactSet
    Wall Street’s favorite small-cap names

    Among companies in the S&P Small Cap 600 Index, 91 are rated “buy” or the equivalent by at least 75% of analysts. Here are the 20 with the highest 12-month upside potential indicated by consensus price targets:

    Company

    		 Ticker

    		 Industry

    		 Closing price – Dec. 12

    		 Consensus price target

    		 Implied 12-month upside potential

    		 Share “buy” ratings

    		 Price change – 2022 through Dec. 12
    UniQure NV

    		 QURE Biotechnology

    		 $22.99

    		 $51.29

    		 123%

    		 95%

    		 11%
    Cara Therapeutics Inc.

    		 CARA Biotechnology

    		 $11.34

    		 $23.63

    		 108%

    		 88%

    		 -7%
    Vir Biotechnology Inc.

    		 VIR Biotechnology

    		 $25.50

    		 $53.00

    		 108%

    		 75%

    		 -39%
    Dynavax Technologies Corp.

    		 DVAX Biotechnology

    		 $11.22

    		 $23.20

    		 107%

    		 100%

    		 -20%
    Thryv Holdings Inc.

    		 THRY Advertising/ Marketing Services

    		 $18.40

    		 $36.75

    		 100%

    		 100%

    		 -55%
    Artivion Inc.

    		 AORT Medical Specialties

    		 $12.93

    		 $23.13

    		 79%

    		 83%

    		 -36%
    Cytokinetics Inc.

    		 CYTK Pharmaceuticals

    		 $38.33

    		 $67.43

    		 76%

    		 100%

    		 -16%
    Harsco Corp.

    		 HSC Environmental Services

    		 $7.17

    		 $12.30

    		 72%

    		 80%

    		 -57%
    Ligand Pharmaceuticals Inc.

    		 LGND Pharmaceuticals

    		 $64.80

    		 $110.83

    		 71%

    		 100%

    		 -35%
    Corcept Therapeutics Inc.

    		 CORT Pharmaceuticals

    		 $20.84

    		 $34.20

    		 64%

    		 80%

    		 5%
    Payoneer Global Inc.

    		 PAYO Misc. Commercial Services

    		 $5.70

    		 $9.33

    		 64%

    		 100%

    		 -22%
    Xencor Inc.

    		 XNCR Biotechnology

    		 $28.69

    		 $46.71

    		 63%

    		 93%

    		 -28%
    Pacira Biosciences Inc.

    		 PCRX Pharmaceuticals

    		 $45.50

    		 $72.90

    		 60%

    		 80%

    		 -24%
    BioLife Solutions Inc.

    		 BLFS Chemicals

    		 $19.72

    		 $31.38

    		 59%

    		 89%

    		 -47%
    Customers Bancorp Inc.

    		 CUBI Regional Banks

    		 $30.00

    		 $47.63

    		 59%

    		 75%

    		 -54%
    ModivCare Inc.

    		 MODV Other Transportation

    		 $92.22

    		 $145.83

    		 58%

    		 100%

    		 -38%
    Stride Inc.

    		 LRN Consumer Services

    		 $32.56

    		 $51.25

    		 57%

    		 100%

    		 -2%
    Ranger Oil Corp. Class A

    		 ROCC Oil and Gas Production

    		 $36.98

    		 $58.00

    		 57%

    		 100%

    		 37%
    Outfront Media Inc.

    		 OUT Real Estate Investment Trusts

    		 $17.59

    		 $27.00

    		 53%

    		 83%

    		 -34%
    Walker & Dunlop Inc.

    		 WD Finance/ Rental/ Leasing

    		 $82.22

    		 $125.20

    		 52%

    		 100%

    		 -46%
    Source: FactSet
    The Dow

    Here are all 30 components of the Dow Jones Industrial Average ranked by how much analysts expect their prices to rise over the next year:

    Company

    		 Ticker

    		 Industry

    		 Closing price – Dec. 12

    		 Consensus price target

    		 Implied 12-month upside potential

    		 Share “buy” ratings

    		 Price change – 2022 through Dec. 12
    Salesforce Inc.

    		 CRM Software

    		 $133.11

    		 $195.59

    		 47%

    		 80%

    		 -48%
    Walt Disney Co.

    		 DIS Movies/ Entertainment

    		 $94.66

    		 $119.60

    		 26%

    		 82%

    		 -39%
    Apple Inc.

    		 AAPL Telecommunications Equipment

    		 $144.49

    		 $173.70

    		 20%

    		 74%

    		 -19%
    Verizon Communications Inc.

    		 VZ Telecommunications

    		 $37.95

    		 $44.60

    		 18%

    		 21%

    		 -27%
    Visa Inc. Class A

    		 V Misc.s Commercial Services

    		 $214.59

    		 $249.33

    		 16%

    		 86%

    		 -1%
    Microsoft Corp.

    		 MSFT Software

    		 $252.51

    		 $293.06

    		 16%

    		 91%

    		 -25%
    Chevron Corp.

    		 CVX Integrated Oil

    		 $169.75

    		 $191.20

    		 13%

    		 54%

    		 45%
    Cisco Systems Inc.

    		 CSCO Information Technology Services

    		 $49.30

    		 $53.76

    		 9%

    		 44%

    		 -22%
    UnitedHealth Group Inc.

    		 UNH Managed Health Care

    		 $545.86

    		 $593.30

    		 9%

    		 85%

    		 9%
    Goldman Sachs Group Inc.

    		 GS Investment Banks/ Brokers

    		 $363.18

    		 $392.63

    		 8%

    		 59%

    		 -5%
    Walmart Inc.

    		 WMT Specialty Stores

    		 $148.02

    		 $159.86

    		 8%

    		 72%

    		 2%
    JPMorgan Chase & Co.

    		 JPM Banks

    		 $134.21

    		 $143.84

    		 7%

    		 59%

    		 -15%
    Home Depot Inc.

    		 HD Home Improvement Chains

    		 $327.98

    		 $346.61

    		 6%

    		 61%

    		 -21%
    American Express Co.

    		 AXP Finance/ Rental/ Leasing

    		 $157.31

    		 $164.57

    		 5%

    		 43%

    		 -4%
    McDonald’s Corp.

    		 MCD Restaurants

    		 $276.62

    		 $288.67

    		 4%

    		 72%

    		 3%
    Johnson & Johnson

    		 JNJ Pharmaceuticals

    		 $177.84

    		 $185.35

    		 4%

    		 36%

    		 4%
    Coca-Cola Co.

    		 KO Beverages: Non-Alcoholic

    		 $63.97

    		 $66.62

    		 4%

    		 73%

    		 8%
    Boeing Co.

    		 BA Aerospace and Defense

    		 $186.27

    		 $192.69

    		 3%

    		 77%

    		 -7%
    Intel Corp.

    		 INTC Semiconductors

    		 $28.69

    		 $29.54

    		 3%

    		 13%

    		 -44%
    Walgreens Boots Alliance Inc.

    		 WBA Drugstore Chains

    		 $41.06

    		 $42.24

    		 3%

    		 17%

    		 -21%
    Merck & Co. Inc.

    		 MRK Pharmaceuticals

    		 $108.97

    		 $110.62

    		 2%

    		 65%

    		 42%
    Caterpillar Inc.

    		 CAT Trucks/ Construction/ Farm Machinery

    		 $233.06

    		 $236.23

    		 1%

    		 41%

    		 13%
    Honeywell International Inc.

    		 HON Aerospace and Defense

    		 $214.50

    		 $217.35

    		 1%

    		 54%

    		 3%
    Nike Inc. Class B

    		 NKE Apparel/ Footwear

    		 $112.07

    		 $112.58

    		 0%

    		 64%

    		 -33%
    3M Co.

    		 MMM Industrial Conglomerates

    		 $126.85

    		 $127.30

    		 0%

    		 5%

    		 -29%
    Procter & Gamble Co.

    		 PG Household/ Personal Care

    		 $152.47

    		 $150.22

    		 -1%

    		 59%

    		 -7%
    Travelers Companies Inc.

    		 TRV Multi-Line Insurance

    		 $187.11

    		 $184.24

    		 -2%

    		 18%

    		 20%
    Amgen Inc.

    		 AMGN Biotechnology

    		 $276.78

    		 $264.79

    		 -4%

    		 24%

    		 23%
    Dow Inc.

    		 DOW Chemicals

    		 $51.11

    		 $48.73

    		 -5%

    		 15%

    		 -10%
    International Business Machines Corp.

    		 IBM Information Technology Services

    		 $149.21

    		 $140.29

    		 -6%

    		 33%

    		 12%
    Source: FactSet

    Don’t miss: 10 Dividend Aristocrat stocks expected by analysts to rise up to 54% in 2023

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  • Kingsbarn Capital & Development Breaks Ground on Ole Miss Student Housing Complex

    Kingsbarn Capital & Development Breaks Ground on Ole Miss Student Housing Complex

    [ad_1]

    Press Release
    –

    Dec 8, 2022


    LAS VEGAS, December 8, 2022 (Newswire.com)
    –
    Kingsbarn Capital & Development (“Company” or “Kingsbarn”) has broken ground on The Cottages at Hooper Hill (the “Property”), a student housing project in Oxford, Mississippi (“Ole Miss”). Kingsbarn has hired A.S. Fornea Construction, a well-respected and experienced local Oxford contractor, to construct the project.

    The project, which is an expansion of the existing Cottages at Hooper Hill, will be the addition of 51 beds to the Property by constructing nine buildings consisting of three- and four-bedroom units. Delta Gamma and Kappa Delta, two sorority organizations at the University of Mississippi, have executed leases for the expansion phase at Hooper Hill. The occupancy rate at Hooper Hill is 100% for the 2023-24 school year. It is a significant accomplishment to be fully leased so far in advance of the next school year and is a testament to the significant demand for student housing at Ole Miss.

    “Kingsbarn is thrilled to increase its student housing investment at Ole Miss with the expansion of the Hooper Hill project. The University had the largest ever freshman class in the fall of 2022, which continues a positive growth trend over the past several years,” stated Tony Hama, Managing Director of Commercial Development at Kingsbarn. “Student housing vacancy rates are extremely low in Oxford and we expect our properties to continue to perform exceptionally well over the long term.”

    Hooper Hill is the third Ole Miss student housing community Kingsbarn has acquired this year. The flagship university in the state of Mississippi, Ole Miss competes in the NCAA Division I Southeastern Conference (SEC). The school’s enrollment for 2021-2022 saw an increase of 18% over 2020, and enrollment for 2022-2023 saw an increase of 5.1%. By expanding Hooper Hill, Kingsbarn intends to help provide a luxurious solution to the growing student population’s need for housing.

    About Kingsbarn Realty Capital 
    Kingsbarn Realty Capital is a real estate-centric investment house that provides institutional and accredited investors access to an array of alternative investments. Kingsbarn offers investments in private equity, Exchange Traded Funds, traditional investment funds, private placements, and Delaware Statutory Trusts (DSTs). Kingsbarn’s management team has wide-ranging experience developing, managing, operating, and sponsoring a diversified portfolio of stabilized, income-driven properties as well as ground-up construction, value-added offerings, opportunity zone investments, and entitlement projects. Kingsbarn has over $1.5 billion of assets under management throughout the United States.

    Source: Kingsbarn Capital and Development

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  • This fund beats the S&P 500 by using just 75 of its components. Here’s how it works.

    This fund beats the S&P 500 by using just 75 of its components. Here’s how it works.

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    What worked well during the years-long bull market through 2021 — a focus on growth, regardless of price — has ground to a halt this year. The rebirth of the value style of investing — and modest valuations overall — has taken hold.

    The approach taken by the Invesco S&P 500 GARP ETF has paid off through both bull and bear markets.

    Let’s begin with a 10-year chart comparing total returns with dividends reinvested for the Invesco S&P 500 GARP ETF
    SPGP,
    +0.67%
    and the SPDR S&P 500 ETF Trust
    SPY,
    +0.78%    ,
    which tracks the benchmark S&P 500:


    FactSet

    So far this year, SPGP is down 12%, while SPY is down 16%. But the long-term chart shows significant and consistent outperformance for SPGP, even during the bull market.

    The S&P 500 GARP Index

    GARP stands for “growth at a reasonable price.” SPGP tracks the S&P 500 GARP Index, which is reconstituted and rebalanced twice a year, on the third Fridays of June and December. The next change occurs Dec. 16.

    S&P Dow Jones Indices assigns a growth score to each component of the S&P 500 by averaging the three-year compound annual growth rate (CAGR) for earnings and sales per share.

    The top 150 components of the S&P 500 by growth score are eligible for inclusion in the GARP index. Those 150 are ranked by “quality/value composite score,” which is the average of these three ratios:

    • Financial leverage — total debt to book value.

    • Return on equity — trailing 12 months’ earnings per share divided by book value per share.

    • Earnings-to-price — 12 months’ earnings per share divided by the share price.

    The top 75 of the 150 by QV rankings are then included in the GARP index and weighted by the growth score, with portfolio weightings ranging from 0.5% to 5%.

    There is a weighting limitation of 40% to any one of the 11 S&P sectors.

    Addressing concentration risk

    The benchmark S&P 500 Index
    SPX,
    +0.75%
    is weighted by market capitalization, which means it is more heavily concentrated than you might expect — success is rewarded, with rising stocks more heavily weighted over time.

    That can backfire during a bear market, with Amazon.com Inc.
    AMZN,
    +2.14%
    down 47% and Tesla Inc.
    TSLA,
    -0.34%
    down 51% this year, to name two prominent examples.

    Looking at the SPDR S&P 500 ETF Trust
    SPY,
    +0.78%    ,
    which is the first and largest exchange traded fund and tracks the benchmark index by holding all of its components, six companies (Apple Inc.
    AAPL,
    +1.21%    ,
    Microsoft Corp.
    MSFT,
    +1.24%    ,
    Amazon, both common share classes of Alphabet Inc.
    GOOGL,
    -1.30%
     
    GOOG,
    -1.26%
    and Berkshire Hathaway Inc.
    BRK.B,
    +0.06%
    ) make up 19.2% of the portfolio.

    That percentage has come down this year, but a lot of risk remains concentrated in a handful of companies. (Apple alone makes up 6.4% of the SPY portfolio. Tesla is now the ninth-largest holding, making up 1.4% of the portfolio.)

    One way to address high concentration in an index fund is to use an equal-weighted approach, which Mark Hulbert recently discussed.

    For the Invesco S&P 500 GARP ETF, the underlying index’s selection methodology has resulted in much less portfolio concentration than we see in SPY, with the top five holdings making up 10.9% of the portfolio.

    Here are the 10 largest holdings of SPGP:

    Company

    		 Ticker

    		 Share of portfolio
    Regeneron Pharmaceuticals, Inc.

    		 REGN,
    +0.15%         		2.49%
    Cigna Corporation

    		 CI,
    +0.39%         		2.26%
    Everest Re Group, Ltd.

    		 RE,
    +0.24%         		2.21%
    Vertex Pharmaceuticals Incorporated

    		 VRTX,
    +1.18%         		1.98%
    D.R. Horton, Inc.

    		 DHI,
    -0.39%         		1.97%
    Expeditors International of Washington, Inc.

    		 EXPD,
    +0.23%         		1.96%
    Incyte Corporation

    		 INCY,
    +0.10%         		1.92%
    Goldman Sachs Group, Inc.

    		 GS,
    -0.51%         		1.83%
    Ebay Inc.

    		 EBAY,
    +1.67%         		1.81%
    Pfizer Inc.

    		 PFE,
    +3.07%         		1.73%
    Source: FactSet

    Click on the tickers for more information about any company, ETF or index in this article.

    You should also read Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.

    Don’t miss: 10 Dividend Aristocrat stocks expected by analysts to rise up to 54% in 2023

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  • Trump Organization found guilty in executive tax-fraud scheme

    Trump Organization found guilty in executive tax-fraud scheme

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    NEW YORK — Donald Trump’s company was convicted of tax fraud on Tuesday in a case brought by the Manhattan District Attorney, a significant repudiation of financial practices at the former president’s business.

    A jury found two corporate entities at the Trump Organization guilty on all 17 counts, including conspiracy charges and falsifying business records.

    The verdict came on the second day of deliberations following a trial in which the Trump Organization was accused of being complicit in a scheme by top executives to avoid paying personal income taxes on job perks such as rent-free apartments and luxury cars.

    The conviction is a validation for New York prosecutors, who have spent three years investigating the former president and his businesses, though the penalties aren’t expected to be severe enough to jeopardize the future of Trump’s company.

    As punishment, the Trump Organization could be fined up to $1.6 million — a relatively small amount for a company of its size, though the conviction might make some of its future deals more complicated.

    Trump, who recently announced he was running for president again, has said the case against his company was part of a politically motivated “witch hunt” waged against him by vindictive Democrats.

    Trump himself was not on trial but prosecutors alleged he “knew exactly what was going on” with the scheme, though he and the company’s lawyers have denied that.

    The case against the company was built largely around testimony from the Trump Organization’s former finance chief, Allen Weisselberg, who previously pleaded guilty to charges that he manipulated the company’s books and his own compensation package to illegally reduce his taxes.

    Weisselberg testified in exchange for a promised five-month jail sentence.

    To convict the Trump Organization, prosecutors had to convince jurors that Weisselberg or his subordinate, Senior Vice President and Controller Jeffrey McConney, were “high managerial” agents acting on the company’s behalf and that the company also benefited from his scheme.

    Trump Organization lawyers repeated the mantra “Weisselberg did it for Weisselberg” throughout the monthlong trial. They contended the executive had gone rogue and betrayed the company’s trust. No one in the Trump family or the company was to blame, they argued.

    Though he testified as a prosecution witness, Weisselberg also attempted to take responsibility on the witness stand, saying nobody in the Trump family knew what he was doing.

    “It was my own personal greed that led to this,” an emotional Weisselberg testified.

    Weisselberg, who pleaded guilty to dodging taxes on $1.7 million in fringe benefits, testified that he and McConney conspired to hide that extra compensation from his income by deducting their cost from his pre-tax salary and issuing falsified W-2 forms.

    During his closing argument, prosecutor Joshua Steinglass attempted to refute the claim that Trump knew nothing about the scheme. He showed jurors a lease Trump signed for Weisselberg’s company-paid apartment and a memo Trump initialed authorizing a pay cut for another executive who got perks.

    “Mr. Trump is explicitly sanctioning tax fraud,” Steinglass argued.

    The verdict doesn’t end Trump’s battle with Manhattan District Attorney Alvin Bragg, a Democrat who took office in January.

    Bragg has said that a related investigation of Trump that began under his predecessor, District Attorney Cyrus Vance Jr., is “active and ongoing.”

    In that wide-ranging probe, investigators have examined whether Trump misled banks and others about the value of his real estate holdings, golf courses and other assets — allegations at the heart of New York Attorney General Letitia James’ pending lawsuit against the former president and his company.

    The district attorney’s office has also investigated whether any state laws were broken when Trump’s allies made payments to two women who claimed to have had sexual affairs with the Republican years ago.

    Near the end of his tenure last year, Vance directed deputies to present evidence to a grand jury for a possible indictment of Trump. After taking office, though, Bragg let that grand jury disband so he could give the case a fresh look.

    On Monday, he confirmed that a new lead prosecutor had been brought on to handle that investigation, signaling again that it was still active.

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  • S&P 500, Nasdaq post worst day in month after strong data fuels worry about Fed rate hikes

    S&P 500, Nasdaq post worst day in month after strong data fuels worry about Fed rate hikes

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    The S&P 500 and Nasdaq Composite indexes recorded their worst day in almost a month on Monday, after a hotter-than-expected U.S. services-sector reading fueled concerns that the Federal Reserve may need to be even more aggressive in its inflation battle.

    How stocks traded
    • The Dow Jones Industrial Average
      DJIA,
      -0.26%
      finished down 482.78 points, or 1.4%, at 33,947.10.

    • The S&P 500
      SPX,
      -1.79%
      ended 72.86 points lower, or 1.8%, at 3,998.84.

    • The Nasdaq Composite
      COMP,
      -11.01%
      closed down 221.56 points, or 1.9%, at 11,239.94.

    • Those were the largest declines for the S&P 500 and Nasdaq Composite since Nov. 9, according to Dow Jones Market Data.

    Stocks finished mixed on Friday, although they clinched gains last week, following a robust November jobs report, which stoked fears that inflation might not be so easily defeated.

    What drove markets

    Strong wage growth numbers released Friday were followed up on Monday by a robust reading for the U.S. services sector — both of which helped to stoke fears that the Fed’s interest-rate hikes, along with the central bank’s modest balance-sheet unwind, haven’t had much of an impact on the tight labor market.

    The ISM barometer of U.S. business conditions in the service sector came in stronger than expected, rising to 56.5% in November, a healthy showing that signals the U.S. economy is still expanding at a steady pace.

    “If nothing else, the ISM services report is being interpreted as very strong, and thus the economy is overheating and that means more Fed tightening,” said Will Compernolle, a senior economist at FHN Financial in New York. “Consumer resilience has proven to be more intense than I would have expected. In the two most interest-rate sensitive sectors — housing and autos — tightening has channeled into markets in meaningful ways.”

    But there has been so much pent-up demand, that higher interest rates haven’t been cooling overall spending as much as the Fed would like because companies are still having to fill a backlog of orders, he said via phone.

    In other economic data, the final November S&P Global U.S. services PMI edged up to 46.2 from 46.1, but remained in contractionary territory.

    November jobs data released on Friday showed average hourly wages grew over the past year by more than 5% as of November, beating economists’ expectations and stoking concerns that robust wage growth would continue to fuel inflation, market strategists said.

    Worries about a more-aggressive Fed also helped to drive Treasury yields higher, adding to the pressure on stocks. The yield on the 10-year note rose 9.6 basis points to 3.6% on Monday. Treasury yields move inversely to prices, and yields had fallen sharply over the past month, driven by shifting expectations about the pace of Fed rate hikes.

    Monday’s ISM services figure “surprised to the upside, suggesting that the economy is still running above its long-run sustainable path and that the Fed is going to have to slow the economy more than expected in 2023,” Bill Adams, the Dallas-based chief economist for Comerica Inc. CMA, said via phone.

    In other markets news, signs that China’s government is easing its COVID restrictions helped Hong Kong’s Hang Seng Index
    HSI,
    +4.51%
    finish with a 4.5% gain.

    See also: Chinese ADRs and casino operators rally on signs of easing COVID

    Meanwhile, oil futures ended lower on Monday, a day after Sunday’s decision by OPEC and its allies to keep production quotas unchanged.

    Falling equity prices helped drive the CBOE Volatility Index
    VIX,
    +8.87%    ,
    also known as the VIX, back above 20 on Monday. The volatility gauge had fallen sharply in recent weeks as stocks rallied, potentially signaling complacency that could ultimately hurt stocks, said Jonathan Krinsky, chief market technician at BTIG, in a note to clients.

    Companies in focus

    ––Jamie Chisholm contributed reporting to this article.

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  • Inflation and credit-card debt are on the rise, despite a strong job market. Tell us how the economy is affecting you.

    Inflation and credit-card debt are on the rise, despite a strong job market. Tell us how the economy is affecting you.

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    We want to hear from readers who have stories to share about the effects of increasing costs and a changing economy. If you’d like to share your experience, write to readerstories@marketwatch.com. Please include your name and the best way to reach you. A reporter may be in touch.

    For many people living in the U.S., these are tough — and confusing — times.

    On Friday, the Labor Department reported 263,000 new jobs in November, while the unemployment rate held steady at 3.7%. Layoffs remain low, despite mass job cuts in the tech sector. Average hourly wages have also risen 5.1% in the past year, but still lag behind inflation for many workers. And there were 10.3 million job openings in October — slightly down from the previous month’s 10.7 million. 

    Some people might see the latest economic data as both challenging and confusing.

    After all, the cost of living rose 7.7% on the year in October. The once red-hot housing market is finally cooling, thanks to mortgage rates that have more than doubled over the last year amid the Federal Reserve’s attempts to rein in inflation, and rents, while moderating, have surged from pre-pandemic levels. Borrowing money to cover increased precarity is becoming more expensive too, with the average credit-card APR at 19.2% as of Nov. 30, according to Bankrate.

    “‘It’s just mind-boggling, the disconnect that we’ve seen.’”

    Given all the conflicting signals, economists say it can be difficult for consumers to know exactly how to feel about the economy right now. “It’s not new, this disparity between the actual facts on the ground about what’s going on in the economy and the sentiment,” said Heidi Shierholz, president of the Economic Policy Institute, a left-leaning think tank. 

    “I remember this summer it was just unambiguously the strongest jobs recovery we’ve had in decades,” she added. “There’s just absolutely zero chance that we were in a recession — not only were we not in a recession, we were in just an extraordinarily fast recovery — and the polling, a huge share of people actually thought we were in a recession. It’s just mind-boggling, the disconnect that we’ve seen.”

    Still, the fact that inflation is eating into people’s savings — and that essential goods like food, energy and housing have spiked in cost — is bound to make many people unhappy. 

    Struggling to pay for rent and food

    “Going into the pandemic, more than seven out of every 10 extremely low-income renters were already spending more than half of their income on rent. And then the pandemic hits; we saw a lot of low-wage workers lose their jobs and see an income decline,” said Andrew Aurand, vice president for research at the National Low Income Housing Coalition. “Then in 2021, we see this huge spike in prices. For a variety of reasons, they’ve struggled for a long time, and since the pandemic, it’s gotten even worse.”

    Moderate-income Americans are struggling too. Maybe you can’t afford your favorite family meals, as the price of grocery store and supermarket purchases has jumped by 12.4% from last year. Or maybe you’re putting off a trip to see family this holiday season thanks to the higher cost of airfare, or you’re worried about losing your job as some business leaders warn of a recession. Perhaps you’re forced to rely on credit cards and personal loans, as credit-card debt is up 15% from a year ago.

    MarketWatch has chronicled many of these changes, detailing renters’ frustrations, families’ tough choices at the grocery store, and the reality faced by would-be home buyers sidelined by higher rates and dwindling affordability. 

    But we would like your help telling an ongoing story about the American economy, centering the experiences of everyday people. Our readers know better than anyone about how today’s economic conditions have impacted their daily lives.

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  • Salesforce co-CEO Bret Taylor leaving, stock falls after lower-than-expected forecast

    Salesforce co-CEO Bret Taylor leaving, stock falls after lower-than-expected forecast

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    Salesforce Inc. performed better than expected in the third quarter, but executives issued a fourth-quarter forecast that fell short of expectations on Wednesday and revealed that co-Chief Executive Bret Taylor is leaving the company.

    Salesforce
    CRM,
    +5.65%
    shares fell about 7% after hours, after rising about 5.5% in the regular session to close at $159.97, their fifth gain in the past six sessions. 

    The cloud-software company said in a news release that founder, co-CEO and Chairman Marc Benioff will resume the sole CEO role on Jan. 31. Taylor is the second executive to be elevated to co-CEO with Benioff, only to leave with Benioff still in charge. Keith Block stepped down in February 2020 after just 18 months in the position, and Taylor lasted exactly a year in the co-CEO position after being promoted Nov. 30 of last year.

    “I am grateful for six fantastic years at Salesforce,” Taylor, who was also vice chairman, said in a statement. “Marc was my mentor well before I joined Salesforce and the opportunity to partner with him to lead the most important software company in the world is career-defining. After a lot of reflection, I’ve decided to return to my entrepreneurial roots.”

    See more: Opinion: Salesforce better get used to Marc Benioff in charge, because he keeps chasing off his chosen successors

    On the company’s earnings call, Benioff said “we’re still in a little bit of shock and extremely sad” about Taylor’s exit, but did not answer an analyst’s question about whether he would fill the co-CEO position.

    At least one analyst said he didn’t see the departure coming: “Given that Mr. Taylor was assumed to be the ‘heir apparent’ at CRM, this does bring up a lot of questions in terms of the management team and frankly offsets some of the positive narrative around margins heading into [calendar year 2023],” wrote Kirk Materne, analyst for Evercore ISI, in a note Wednesday.

    Salesforce reported that third-quarter net income fell to $210 million, or 21 cents a share, compared with $468 million, or 47 cents a share, in the year-ago period. Adjusted for stock-based compensation and other costs, earnings were $1.40 a share. Revenue rose to $7.84 billion from $6.86 billion in the year-ago quarter.

    Analysts, who have been expressing concerns about a slowdown in business-software spending, had forecast adjusted earnings of $1.22 a share on revenue of $7.83 billion, according to FactSet.

    “We remain positive on the long-term outlook for Salesforce as front-office applications leader,” Michael Turits, analyst for KeyBanc Capital Markets, wrote ahead of the company’s earnings report. “That said, we remain cautious regarding the near-term outlook given ongoing recession concerns, slowing cloud spend, and weaker conversations we had with a few Salesforce channels this quarter.”

    Those concerns sprung up in the company’s forecast, as Salesforce executives’ guidance fell $900 million short of expectations. They expect fourth-quarter earnings of 23 cents to 25 cents a share on revenue in the range of $7.932 billion to $8.032 billion, and adjusted earnings of $1.35 to $1.37 a share. Analysts had forecast adjusted earnings of $1.44 a share on revenue of $8.94 billion.

    Chief Financial Officer Amy Weaver said on the earnings call that along with the “unpredictable” macroeconomic environment and some slowing in customer spending, the strong dollar had an impact on the company’s showing. “Foreign exchange continued to be a headwind for our results,” she said.

    Still, Weaver said the company remains committed to a goal of operating margins of 25% or above; in the third quarter it was at 22.7%, which she said was a record high. Among the things the company is doing, she said, is taking a measured approach to hiring. Earlier this month, the company confirmed hundreds of layoffs, though it did not address them during the call.

    See: Tech layoffs approach Great Recession levels

    In response to an analyst’s question about employees working from home and the company’s real-estate footprint, Benioff said the San Francisco-based company will have more employees in the office while maintaining the flexibility of remote work. “We’re never going back to how it was, we all know that,” he said. Meanwhile, Weaver said the company is “looking at every aspect of our real estate .”

    Shares of Salesforce have declined about 37% this year. The Dow Jones Industrial Average
    DJIA,
    +2.18%    ,
    whose 30 components include Salesforce, has fallen about 5% year to date, while the S&P 500 index
    SPX,
    +3.09%
    is down almost 15% this year.

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  • U.S. pending home sales drop for fifth straight month in October

    U.S. pending home sales drop for fifth straight month in October

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    The numbers: U.S. pending home sales fell 4.6% in October, the fifth straight monthly decline, the National Association of Realtors said Wednesday. 

    Economists polled by the Wall Street Journal expected pending home sales to fall 5.5%. 

    The index captures transactions where a contract has been signed, but the home sale has not yet closed.

    Key details: On a year-on-year basis, pending home sales were down a sharp 37%.

    Sales fell in three of the four regions, with the Midwest registering an increase.

    Big picture: Sales have stalled as mortgage rates have jumped, making houses less affordable. Pending home sales are a leading indicator for the sector. Some economists think that buyers might return to the market as mortgage rates have plateaued.

    Market reaction: Stocks
    DJIA,
    -0.63%

    SPX,
    -0.35%
    opened slightly higher on Wednesday. The yield on the 10-year Treasury note jumped to 3.78%.

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  • 20 dividend stocks with high yields that have become more attractive right now

    20 dividend stocks with high yields that have become more attractive right now

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    Income-seeking investors are looking at an opportunity to scoop up shares of real estate investment trusts. Stocks in that asset class have become more attractive as prices have fallen and cash flow is improving.

    Below is a broad screen of REITs that have high dividend yields and are also expected to generate enough excess cash in 2023 to enable increases in dividend payouts.

    REIT prices may turn a corner in 2023

    REITs distribute most of their income to shareholders to maintain their tax-advantaged status. But the group is cyclical, with pressure on share prices when interest rates rise, as they have this year at an unprecedented scale. A slowing growth rate for the group may have also placed a drag on the stocks.

    And now, with talk that the Federal Reserve may begin to temper its cycle of interest-rate increases, we may be nearing the time when REIT prices rise in anticipation of an eventual decline in interest rates. The market always looks ahead, which means long-term investors who have been waiting on the sidelines to buy higher-yielding income-oriented investments may have to make a move soon.

    During an interview on Nov 28, James Bullard, president of the Federal Reserve Bank of St. Louis and a member of the Federal Open Market Committee, discussed the central bank’s cycle of interest-rate increases meant to reduce inflation.

    When asked about the potential timing of the Fed’s “terminal rate” (the peak federal funds rate for this cycle), Bullard said: “Generally speaking, I have advocated that sooner is better, that you do want to get to the right level of the policy rate for the current data and the current situation.”

    Fed’s Bullard says in MarketWatch interview that markets are underpricing the chance of still-higher rates

    In August we published this guide to investing in REITs for income. Since the data for that article was pulled on Aug. 24, the S&P 500
    SPX,
    -0.29%
    has declined 4% (despite a 10% rally from its 2022 closing low on Oct. 12), but the benchmark index’s real estate sector has declined 13%.

    REITs can be placed broadly into two categories. Mortgage REITs lend money to commercial or residential borrowers and/or invest in mortgage-backed securities, while equity REITs own property and lease it out.

    The pressure on share prices can be greater for mortgage REITs, because the mortgage-lending business slows as interest rates rise. In this article we are focusing on equity REITs.

    Industry numbers

    The National Association of Real Estate Investment Trusts (Nareit) reported that third-quarter funds from operations (FFO) for U.S.-listed equity REITs were up 14% from a year earlier. To put that number in context, the year-over-year growth rate of quarterly FFO has been slowing — it was 35% a year ago. And the third-quarter FFO increase compares to a 23% increase in earnings per share for the S&P 500 from a year earlier, according to FactSet.

    The NAREIT report breaks out numbers for 12 categories of equity REITs, and there is great variance in the growth numbers, as you can see here.

    FFO is a non-GAAP measure that is commonly used to gauge REITs’ capacity for paying dividends. It adds amortization and depreciation (noncash items) back to earnings, while excluding gains on the sale of property. Adjusted funds from operations (AFFO) goes further, netting out expected capital expenditures to maintain the quality of property investments.

    The slowing FFO growth numbers point to the importance of looking at REITs individually, to see if expected cash flow is sufficient to cover dividend payments.

    Screen of high-yielding equity REITs

    For 2022 through Nov. 28, the S&P 500 has declined 17%, while the real estate sector has fallen 27%, excluding dividends.

    Over the very long term, through interest-rate cycles and the liquidity-driven bull market that ended this year, equity REITs have fared well, with an average annual return of 9.3% for 20 years, compared to an average return of 9.6% for the S&P 500, both with dividends reinvested, according to FactSet.

    This performance might surprise some investors, when considering the REITs’ income focus and the S&P 500’s heavy weighting for rapidly growing technology companies.

    For a broad screen of equity REITs, we began with the Russell 3000 Index
    RUA,
    -0.04%    ,
    which represents 98% of U.S. companies by market capitalization.

    We then narrowed the list to 119 equity REITs that are followed by at least five analysts covered by FactSet for which AFFO estimates are available.

    If we divide the expected 2023 AFFO by the current share price, we have an estimated AFFO yield, which can be compared with the current dividend yield to see if there is expected “headroom” for dividend increases.

    For example, if we look at Vornado Realty Trust
    VNO,
    +1.03%    ,
    the current dividend yield is 8.56%. Based on the consensus 2023 AFFO estimate among analysts polled by FactSet, the expected AFFO yield is only 7.25%. This doesn’t mean that Vornado will cut its dividend and it doesn’t even mean the company won’t raise its payout next year. But it might make it less likely to do so.

    Among the 119 equity REITs, 104 have expected 2023 AFFO headroom of at least 1.00%.

    Here are the 20 equity REITs from our screen with the highest current dividend yields that have at least 1% expected AFFO headroom:

    Company

    		 Ticker

    		 Dividend yield

    		 Estimated 2023 AFFO yield

    		 Estimated “headroom”

    		 Market cap. ($mil)

    		 Main concentration
    Brandywine Realty Trust

    		 BDN,
    +2.12%         		11.52%

    		 12.82%

    		 1.30%

    		 $1,132

    		 Offices
    Sabra Health Care REIT Inc.

    		 SBRA,
    +2.41%         		9.70%

    		 12.04%

    		 2.34%

    		 $2,857

    		 Health care
    Medical Properties Trust Inc.

    		 MPW,
    +2.53%         		9.18%

    		 11.46%

    		 2.29%

    		 $7,559

    		 Health care
    SL Green Realty Corp.

    		 SLG,
    +2.25%         		9.16%

    		 10.43%

    		 1.28%

    		 $2,619

    		 Offices
    Hudson Pacific Properties Inc.

    		 HPP,
    +1.41%         		9.12%

    		 12.69%

    		 3.57%

    		 $1,546

    		 Offices
    Omega Healthcare Investors Inc.

    		 OHI,
    +1.23%         		9.05%

    		 10.13%

    		 1.08%

    		 $6,936

    		 Health care
    Global Medical REIT Inc.

    		 GMRE,
    +2.55%         		8.75%

    		 10.59%

    		 1.84%

    		 $629

    		 Health care
    Uniti Group Inc.

    		 UNIT,
    +0.55%         		8.30%

    		 25.00%

    		 16.70%

    		 $1,715

    		 Communications infrastructure
    EPR Properties

    		 EPR,
    +0.86%         		8.19%

    		 12.24%

    		 4.05%

    		 $3,023

    		 Leisure properties
    CTO Realty Growth Inc.

    		 CTO,
    +2.22%         		7.51%

    		 9.34%

    		 1.83%

    		 $381

    		 Retail
    Highwoods Properties Inc.

    		 HIW,
    +0.99%         		6.95%

    		 8.82%

    		 1.86%

    		 $3,025

    		 Offices
    National Health Investors Inc.

    		 NHI,
    +2.59%         		6.75%

    		 8.32%

    		 1.57%

    		 $2,313

    		 Senior housing
    Douglas Emmett Inc.

    		 DEI,
    +0.87%         		6.74%

    		 10.30%

    		 3.55%

    		 $2,920

    		 Offices
    Outfront Media Inc.

    		 OUT,
    +0.89%         		6.68%

    		 11.74%

    		 5.06%

    		 $2,950

    		 Billboards
    Spirit Realty Capital Inc.

    		 SRC,
    +1.15%         		6.62%

    		 9.07%

    		 2.45%

    		 $5,595

    		 Retail
    Broadstone Net Lease Inc.

    		 BNL,
    -0.30%         		6.61%

    		 8.70%

    		 2.08%

    		 $2,879

    		 Industial
    Armada Hoffler Properties Inc.

    		 AHH,
    +0.00%         		6.38%

    		 7.78%

    		 1.41%

    		 $807

    		 Offices
    Innovative Industrial Properties Inc.

    		 IIPR,
    +1.42%         		6.24%

    		 7.53%

    		 1.29%

    		 $3,226

    		 Health care
    Simon Property Group Inc.

    		 SPG,
    +1.03%         		6.22%

    		 9.55%

    		 3.33%

    		 $37,847

    		 Retail
    LTC Properties Inc.

    		 LTC,
    +1.42%         		5.99%

    		 7.60%

    		 1.60%

    		 $1,541

    		 Senior housing
    Source: FactSet

    Click on the tickers for more about each company. You should read Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.

    The list includes each REIT’s main property investment type. However, many REITs are highly diversified. The simplified categories on the table may not cover all of their investment properties.

    Knowing what a REIT invests in is part of the research you should do on your own before buying any individual stock. For arbitrary examples, some investors may wish to steer clear of exposure to certain areas of retail or hotels, or they may favor health-care properties.

    Largest REITs

    Several of the REITs that passed the screen have relatively small market capitalizations. You might be curious to see how the most widely held REITs fared in the screen. So here’s another list of the 20 largest U.S. REITs among the 119 that passed the first cut, sorted by market cap as of Nov. 28:

    Company

    		 Ticker

    		 Dividend yield

    		 Estimated 2023 AFFO yield

    		 Estimated “headroom”

    		 Market cap. ($mil)

    		 Main concentration
    Prologis Inc.

    		 PLD,
    +1.63%         		2.84%

    		 4.36%

    		 1.52%

    		 $102,886

    		 Warehouses and logistics
    American Tower Corp.

    		 AMT,
    +0.75%         		2.66%

    		 4.82%

    		 2.16%

    		 $99,593

    		 Communications infrastructure
    Equinix Inc.

    		 EQIX,
    +0.80%         		1.87%

    		 4.79%

    		 2.91%

    		 $61,317

    		 Data centers
    Crown Castle Inc.

    		 CCI,
    +0.93%         		4.55%

    		 5.42%

    		 0.86%

    		 $59,553

    		 Wireless Infrastructure
    Public Storage

    		 PSA,
    +0.19%         		2.77%

    		 5.35%

    		 2.57%

    		 $50,680

    		 Self-storage
    Realty Income Corp.

    		 O,
    +0.72%         		4.82%

    		 6.46%

    		 1.64%

    		 $38,720

    		 Retail
    Simon Property Group Inc.

    		 SPG,
    +1.03%         		6.22%

    		 9.55%

    		 3.33%

    		 $37,847

    		 Retail
    VICI Properties Inc.

    		 VICI,
    +0.81%         		4.69%

    		 6.21%

    		 1.52%

    		 $32,013

    		 Leisure properties
    SBA Communications Corp. Class A

    		 SBAC,
    +0.27%         		0.97%

    		 4.33%

    		 3.36%

    		 $31,662

    		 Communications infrastructure
    Welltower Inc.

    		 WELL,
    +3.06%         		3.66%

    		 4.76%

    		 1.10%

    		 $31,489

    		 Health care
    Digital Realty Trust Inc.

    		 DLR,
    +0.63%         		4.54%

    		 6.18%

    		 1.64%

    		 $30,903

    		 Data centers
    Alexandria Real Estate Equities Inc.

    		 ARE,
    +1.49%         		3.17%

    		 4.87%

    		 1.70%

    		 $24,451

    		 Offices
    AvalonBay Communities Inc.

    		 AVB,
    +0.98%         		3.78%

    		 5.69%

    		 1.90%

    		 $23,513

    		 Multifamily residential
    Equity Residential

    		 EQR,
    +1.46%         		4.02%

    		 5.36%

    		 1.34%

    		 $23,503

    		 Multifamily residential
    Extra Space Storage Inc.

    		 EXR,
    +0.31%         		3.93%

    		 5.83%

    		 1.90%

    		 $20,430

    		 Self-storage
    Invitation Homes Inc.

    		 INVH,
    +2.15%         		2.84%

    		 5.12%

    		 2.28%

    		 $18,948

    		 Single-family residental
    Mid-America Apartment Communities Inc.

    		 MAA,
    +1.83%         		3.16%

    		 5.18%

    		 2.02%

    		 $18,260

    		 Multifamily residential
    Ventas Inc.

    		 VTR,
    +2.22%         		4.07%

    		 5.95%

    		 1.88%

    		 $17,660

    		 Senior housing
    Sun Communities Inc.

    		 SUI,
    +2.12%         		2.51%

    		 4.81%

    		 2.30%

    		 $17,346

    		 Multifamily residential
    Source: FactSet

    Simon Property Group Inc.
    SPG,
    +1.03%
    is the only REIT to make both lists.

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  • U.S. existing home sales retreat for a record ninth straight month in October

    U.S. existing home sales retreat for a record ninth straight month in October

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    The numbers: Existing-home sales fell 5.9% to a seasonally adjusted annual rate of 4.43 million in October, the National Association of Realtors said Friday. Compared with October 2021, home sales were down 28.4%.

    Economists polled by the Wall Street Journal had expected an decrease to 4.37 million units. 

    The level of sales is the lowest since December 2011 excluding the 2020 pandemic.

    This is also the ninth straight monthly decline in sales, the longest streak on record.

    Key details: The median price for an existing home was $379,100 up 6.6% from October 2021.

    But price gains are decelerating. Prices were up over 20% on a year-on-year basis earlier this year.

    Housing inventory fell 0.8% to 1.22 million units in October. Unsold inventory sits at a 3.3-month supply at the current sales pace, up from 3.1 months in September and 2.4 months a year ago.

    A 6-month supply of homes is generally viewed as indicative of a balanced market.

    Sales declined in all regions of the country.

    Big picture: Home sales have dropped as mortgage rates have risen sharply and affordability has dropped.

    Softer inflation data in October have led to a drop in mortgage rates, which could lead for a floor on sales.

    At the same time, Federal Reserve officials may pencil in a “peak” interest rate above 5% at the policy meeting next month.

    Economists see home prices have further to fall in this market.

    What the NAR is saying: Home sales have been very low and the softness could continue for a few months. But sales could pick up early next year if the mortgage rate has peaked, said Lawrence Yun, chief economist at the NAR.

    Market reaction: Stocks
    DJIA,
    +0.59%

    SPX,
    +0.48%
    opened lower on Friday. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.827%
    rose to 3.79%.

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  • Housing starts fall again as high mortgage rates scare off U.S. home buyers

    Housing starts fall again as high mortgage rates scare off U.S. home buyers

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    The numbers: Construction on new houses fell 4.2% in October as high mortgage rates put off buyers and forced builders to scale back, a situation that’s likely to continue through 2023.

    U.S. housing starts slowed to an annual pace of 1.43 million last month from 1.49 million in September. That figure reflects how many homes would be built in 2022 if construction took place at same rate over the entire year as it did in October.

    Economists polled by MarketWatch had expected housing starts to register a rate of 1.41 million after adjusting for the typical seasonal swings in demand.

    New construction hit a record 1.8 million in April before tapering off.

    The number of permits, meanwhile, slipped 2.4% to a rate of 1.53 million, down sharply from a record 1.9 million last December.

    Permits foreshadow how many houses are likely to be built in the months ahead, assuming a stable real estate market. But a major increase in mortgage rates this year has depressed demand and forced builders to scale back plans.

    Key details: Single-family home construction fell 6.1% to an annual rate of 855,000 in October. Projects with five units or more registered a 556,000 rate, little changed from the prior month.

    Housing starts are down 9% from a year ago, when mortgage rates briefly dipped below 3%.

    Permits have fallen 10% from a year earlier.

    Big picture: The highest mortgage rates in several decades have stifled new construction and are likely to do so through the next year or longer. The rate on a 30-year fixed mortgage recently topped 7%, more than double the rate a year ago.

    While the U.S. has an acute need for more housing, fewer people can now afford to buy a home. Home prices are starting to come off record highs, but not by much.

    Looking ahead: “Higher mortgage rates continue to exact a heavy toll on new construction,” said Richard Moody, chief economist of Regions Financial.

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    -0.18%
    and S&P 500
    SPX,
    -1.01%
    fell in Thursday trades.

    Also read: The median income needed to buy a typical home is over $88,000 — $40,000 more than before the pandemic

    Related: Home prices will fall in 2023, but affordability will be at its worst since 1985, research firm says

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  • 20 dividend stocks that may be safest if the Federal Reserve causes a recession

    20 dividend stocks that may be safest if the Federal Reserve causes a recession

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    Investors cheered when a report last week showed the economy expanded in the third quarter after back-to-back contractions.

    But it’s too early to get excited, because the Federal Reserve hasn’t given any sign yet that it is about to stop raising interest rates at the fastest pace in decades.

    Below is a list of dividend stocks that have had low price volatility over the past 12 months, culled from three large exchange traded funds that screen for high yields and quality in different ways.

    In a year when the S&P 500
    SPX,
    -0.40%
    is down 18%, the three ETFs have widely outperformed, with the best of the group falling only 1%.

    Read: GDP looked great for the U.S. economy, but it really wasn’t

    That said, last week was a very good one for U.S. stocks, with the S&P 500 returning 4% and the Dow Jones Industrial Average
    DJIA,
    -0.32%
    having its best October ever.

    This week, investors’ eyes turn back to the Federal Reserve. Following a two-day policy meeting, the Federal Open Market Committee is expected to make its fourth consecutive increase of 0.75% to the federal funds rate on Wednesday.

    The inverted yield curve, with yields on two-year U.S. Treasury notes
    TMUBMUSD02Y,
    4.540%
    exceeding yields on 10-year notes
    TMUBMUSD10Y,
    4.064%    ,
    indicates investors in the bond market expect a recession. Meanwhile, this has been a difficult earnings season for many companies and analysts have reacted by lowering their earnings estimates.

    The weighted rolling consensus 12-month earning estimate for the S&P 500, based on estimates of analysts polled by FactSet, has declined 2% over the past month to $230.60. In a healthy economy, investors expect this number to rise every quarter, at least slightly.

    Low-volatility stocks are working in 2022

    Take a look at this chart, showing year-to-date total returns for the three ETFs against the S&P 500 through October:


    FactSet

    The three dividend-stock ETFs take different approaches:

    • The $40.6 billion Schwab U.S. Dividend Equity ETF
      SCHD,
      +0.15%
      tracks the Dow Jones U.S. Dividend 100 Indexed quarterly. This approach incorporates 10-year screens for cash flow, debt, return on equity and dividend growth for quality and safety. It excludes real estate investment trusts (REITs). The ETF’s 30-day SEC yield was 3.79% as of Sept. 30.

    • The iShares Select Dividend ETF
      DVY,
      +0.45%
      has $21.7 billion in assets. It tracks the Dow Jones U.S. Select Dividend Index, which is weighted by dividend yield and “skews toward smaller firms paying consistent dividends,” according to FactSet. It holds about 100 stocks, includes REITs and looks back five years for dividend growth and payout ratios. The ETF’s 30-day yield was 4.07% as of Sept. 30.

    • The SPDR Portfolio S&P 500 High Dividend ETF
      SPYD,
      +0.60%
      has $7.8 billion in assets and holds 80 stocks, taking an equal-weighted approach to investing in the top-yielding stocks among the S&P 500. It’s 30-day yield was 4.07% as of Sept. 30.

    All three ETFs have fared well this year relative to the S&P 500. The funds’ beta — a measure of price volatility against that of the S&P 500 (in this case) — have ranged this year from 0.75 to 0.76, according to FactSet. A beta of 1 would indicate volatility matching that of the index, while a beta above 1 would indicate higher volatility.

    Now look at this five-year total return chart showing the three ETFs against the S&P 500 over the past five years:


    FactSet

    The Schwab U.S. Dividend Equity ETF ranks highest for five-year total return with dividends reinvested — it is the only one of the three to beat the index for this period.

    Screening for the least volatile dividend stocks

    Together, the three ETFs hold 194 stocks. Here are the 20 with the lowest 12-month beta. The list is sorted by beta, ascending, and dividend yields range from 2.45% to 8.13%:

    Company

    		 Ticker

    		 12-month beta

    		 Dividend yield

    		 2022 total return
    Newmont Corp.

    		 NEM,
    -0.78%         		0.17

    		 5.20%

    		 -30%
    Verizon Communications Inc.

    		 VZ,
    -0.07%         		0.22

    		 6.98%

    		 -24%
    General Mills Inc.

    		 GIS,
    -1.47%         		0.27

    		 2.65%

    		 25%
    Kellogg Co.

    		 K,
    -0.93%         		0.27

    		 3.07%

    		 22%
    Merck & Co. Inc.

    		 MRK,
    -1.73%         		0.29

    		 2.73%

    		 35%
    Kraft Heinz Co.

    		 KHC,
    -0.56%         		0.35

    		 4.16%

    		 11%
    City Holding Co.

    		 CHCO,
    -1.45%         		0.38

    		 2.58%

    		 27%
    CVB Financial Corp.

    		 CVBF,
    -1.24%         		0.38

    		 2.79%

    		 37%
    First Horizon Corp.

    		 FHN,
    -0.18%         		0.39

    		 2.45%

    		 53%
    Avista Corp.

    		 AVA,
    -7.82%         		0.41

    		 4.29%

    		 0%
    NorthWestern Corp.

    		 NWE,
    -0.21%         		0.42

    		 4.77%

    		 -4%
    Altria Group Inc

    		 MO,
    -0.18%         		0.43

    		 8.13%

    		 4%
    Northwest Bancshares Inc.

    		 NWBI,
    +0.10%         		0.45

    		 5.31%

    		 11%
    AT&T Inc.

    		 T,
    +0.63%         		0.47

    		 6.09%

    		 5%
    Flowers Foods Inc.

    		 FLO,
    -0.44%         		0.48

    		 3.07%

    		 7%
    Mercury General Corp.

    		 MCY,
    +0.07%         		0.48

    		 4.38%

    		 -43%
    Conagra Brands Inc.

    		 CAG,
    -0.82%         		0.48

    		 3.60%

    		 10%
    Amgen Inc.

    		 AMGN,
    +0.41%         		0.49

    		 2.87%

    		 23%
    Safety Insurance Group Inc.

    		 SAFT,
    -1.70%         		0.49

    		 4.14%

    		 5%
    Tyson Foods Inc. Class A

    		 TSN,
    -0.40%         		0.50

    		 2.69%

    		 -20%
    Source: FactSet

    Any list of stocks will have its dogs, but 16 of these 20 have outperformed the S&P 500 so far in 2022, and 14 have had positive total returns.

    You can click on the tickers for more about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information available free on the MarketWatch quote page.

    Don’t miss: Municipal bond yields are attractive now — here’s how to figure out if they are right for you

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  • ‘He’s not willing to live in my house because it has fewer amenities’: My boyfriend wants me to move in and pay half his monthly costs. Is that fair?

    ‘He’s not willing to live in my house because it has fewer amenities’: My boyfriend wants me to move in and pay half his monthly costs. Is that fair?

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    Dear Quentin,

    My boyfriend owns a house with a 30-year mortgage balance of $150,000 on a 4% interest rate. He has $275,000 in cash and retirement accounts. He is retired.

    My house is paid off. I have $50,000 in cash and retirement accounts. I would like to retire within one to two years.

    We wish to cohabitate but have not been able to agree on a fair “rent” to pay. He is not willing to live in my house because it has fewer amenities. 

    “‘He believes I should pay half of his monthly cost at his nicer, more expensive house. He could pay off his mortgage and save $600 a month, but he likes to have cash. ‘”

    He believes I should pay half of his monthly cost at his nicer, more expensive house. He could pay off his mortgage and save $600 a month, but he likes to have cash. 

    I have forgone that luxury and paid off my mortgage. I am now working on building my savings. I don’t feel it is fair for me to pay half of the mortgage interest expense. 

    I don’t know what repair and maintenance costs should be expected from me, if I have no equity in his house. There are many points of view, none of which feels fair.

    These are the options he set forth:

    · I live in his house and thus get to rent mine out. Pay him half of what I net from that rental.

    · Pay half of the actual costs of living expenses and upkeep on his house while I live there.

    · Pay him what I pay to live in my current home for taxes, insurance, and utilities: $800/month.

    What say you, Moneyist?

    House Owner & Girlfriend 

    Dear House Owner,

    I’m sure your house is just as nice. And just because he believes you should pay half his costs, does not make it so. If you are paying no mortgage on your own home, I don’t believe you should pay one red cent more to live in his home. 

    That is to say, you should not come out of this arrangement paying more, just because (a) he would like you to live in his home and (b) he would like you to help him pay off his mortgage, or his tax and maintenance.

    You both made different choices: Yours was to have a home that’s free-and-clear of a mortgage, so you can spend this time building up your savings for retirement and/or a rainy day. 

    You have worked hard to pay off your mortgage, and you have $50,000 in savings, less than 20% of your boyfriend’s savings. He has $150,000 left on his mortgage, and that’s his choice.

    “If his aim is to find help to pay off half of his mortgage, he can find a tenant to do that for him. ”

    You are not the answer to his long-term financial plans, you are his partner in life. If his aim is to find help to pay off half of his mortgage, he can find a tenant to do that for him. What do you expect of you? Forget what he expects.

    By the way he is approaching this arrangement, it seems like he wants the equivalent of a detergent and a fabric softener — a girlfriend and a tenant in one handy bottle to keep his financial plans smooth and clean.

    Bottom line: You should not compromise any plans to build your nest egg. The lady’s not for turning. Only acquiesce to his plan if — with the help of an actual tenant in your home — it helps you too. 

    In other words, the desired outcome for you is more important than the suggestions he has put forward. He could save $600 a month! That’s his business. Not yours. What do you want to have in your pocket every month?

    Figure out what you want, and then work your way backwards based on that goal. For instance, if you can pay him $800 a month, charge $1,600 rent for your home, and put $800 towards your savings, do that.

    You’ve come a long way. Don’t let these negotiations scupper that.

    Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

    The Moneyist regrets he cannot reply to questions individually.

    By emailing your questions, you agree to having them published anonymously on MarketWatch. By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

    Also read:

    I built a property portfolio with 23 units while we were dating. How much should I give to my fiancé in our prenup?

    ‘We will not outlive our money’: How can we give $10,000 to our nieces and nephews without offending the rest of the family?

    ‘S‘I hate to be cheap’: Is it still acceptable to arrive at a friend’s house for dinner with just one bottle of wine?

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  • Mortgage industry group predicts recession next year, expects mortgage rates to come back down from 7%

    Mortgage industry group predicts recession next year, expects mortgage rates to come back down from 7%

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    NASHVILLE, Tenn. — A mortgage industry group is expecting a recession to hit the U.S. economy.

    “We’re forecasting a recession for next year,” Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association, said Sunday during the industry group’s annual conference in Nashville, Tenn. 

    “The upside of that potentially for the industry is, that’s the thing that’s likely going to bring rates down a little bit,” he added.

    Also see: Mortgage bankers forecast rates to drop to 5.4% in 2023. Here’s what that means for home prices.

    In a statement, Fratantoni said the MBA’s forecast calls for a recession in the first half of 2023, and predicts the unemployment rate will rise from 3.5% to 5.5% by the end of next year.

    “We’re beginning to see some significant signs of softening in the labor market,” Frantantoni said. 

    He expects companies to no longer be scrambling to fill job openings, and that hiring will eventually cool off.

    On average in 2023, expect the economy to lose 25,000 jobs per month, he said, and end the year with employment at 5.5%. 

    That’s in stark contrast to the latest unemployment rate in September, which was 3.5%, according to the Bureau of Labor Statistics.

    “So a very, very different job market to today,” Frantantoni said. “I do expect the next couple of months are gonna be a pretty abrupt transition.”

    With a recession on the horizon, expect mortgage rates to come down to close to 5.4% at the end of next year, he said, versus the 7%-plus rates that the market is seeing today. 

    “We are holding to our view that this is a spike right now, driven by financial-market dislocation, heightened level of volatility in the market and this global slowdown we’re about to experience, the likelihood of recession in the U.S. will begin to pull this number,” Fratantoni said.

    Mike Fratantoni, senior vice president and chief economist for the MBA, speaks in Nashville on Sunday.


    AARTHI SWAMINATHAN

    Given the massive rise in rates this year, with the 30-year fixed rate averaging 6.94% last week as compared to 3.85% a year ago, many potential home buyers have decided to wait as their projected monthly mortgage payments have become unaffordable.

    Home sales have plunged, and are dragging down home prices. Sellers are also making more concessions in their attempts to woo buyers.

    As a result of the slowdown, the MBA is expecting total mortgage origination volume to fall to $2.05 trillion in 2023 from the $2.26 trillion expected in 2022. 

    They’re also expecting purchase originations to drop 3%, and refinances by 24%.

    Fratantoni also expects delinquencies to rise from 40-year lows.

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  • Home builders sentiment index falls for record tenth month in a row in October. Home builders say the ‘situation is unhealthy and unsustainable.’

    Home builders sentiment index falls for record tenth month in a row in October. Home builders say the ‘situation is unhealthy and unsustainable.’

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    The numbers:  The National Association of Home Builders’ (NAHB) monthly confidence fell 8 points to 38 in October, the trade group said on Tuesday.

    It’s the tenth month in a row that the index has fallen.

    Outside of the pandemic, the October reading of 38 is the lowest level since August 2012.

    A year ago, the index stood at 80.

    The index’s ten-month drop is a new record. The index last fell for 8 months straight in 2006 and 2007.

    Key details: All three gauges that underpin the overall builder-confidence index fell.

    • The gauge that marks current sales conditions fell by 9 points. 

    • The component that assesses sales expectations for the next six months fell by 11 points.

    • And the gauge that measures traffic of prospective buyers fell by 6 points.

    All four NAHB regions posted a drop in builder confidence, led by the south and the west. 

    It’s also likely that this year will be the first time since 2011 that single-family starts see a decline, the NAHB added.

    Big picture: Builders continue to struggle to find buyers with the current rate environment.

    Now they’re saying they’re worried about that depressed demand impacting supply moving forward.

    Specifically, they’re concerned about housing affordability worsening, with potentially fewer new homes being built in the future.

    Mortgage rates have doubled from last year, now exceeding 7%, which has considerably cooled buyer demand. 

    Home price growth is moderating, but prices have not come down substantially — yet. 

    The median sales price for a new home was $436,800 in August, according to the U.S. Census Bureau.

    What the NAHB said: Builders are expecting single-family starts to fall for the first time in 11 years — and expect additional declines through 2023, said NAHB Chief Economist Robert Dietz, due to the Federal Reserve’s projected rate hikes to control inflation.

    “While some analysts have suggested that the housing market is now more ‘balanced,’ the truth is that the homeownership rate will decline in the quarters ahead as higher interest rates, and ongoing elevated construction costs continue to price out a large number of prospective buyers,” he added.

    “This situation is unhealthy and unsustainable,” Jerry Konter, a home builder and developer from Savannah, Ga. and the NAHB’s chairman, said in a statement.
    “Policymakers must address this worsening housing affordability crisis,” he added.

    What are they saying? “The housing sector – sentiment, building activity and sales – is collapsing under the weight of a rapid increase in interest rates and elevated prices, which are crimping affordability and demand,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a note.

    So expect building activity to be depressed, she added.

    Market reaction: The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.989%
    fell to 3.98% on Tuesday morning.

    While the SPDR S&P Homebuilders ETF
    XHB,
    +2.15%
    traded slightly higher during the morning session, and the big home-builder stocks, from D.R. Horton Inc.
    DHI,
    +2.90%
    to Toll Brothers
    TOL,
    +1.87%
    to Lennar
    LEN,
    +2.97%    ,
    edged higher.

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  • Why It’s Time to Buy This Uranium Miner’s Stock

    Why It’s Time to Buy This Uranium Miner’s Stock

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    Heading into this past week, uranium miner


    Cameco


    was that rare stock in the market: It had posted a double-digit gain in 2022. One deal made those gains disappear—and created a buying opportunity.

    At first glance, there didn’t seem to be all that much that was controversial about the joint venture Cameco (ticker: CCJ) announced this past Tuesday. Along with


    Brookfield Renewable Partners


    (BEP), Cameco agreed to buy Westinghouse Electric, a servicer to nuclear power plants, for $7.88 billion, including debt. Cameco will own 49% of the joint venture once the deal is completed.

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  • Some good news: One key driver of inflation is finally showing signs of easing

    Some good news: One key driver of inflation is finally showing signs of easing

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    Rent growth is beginning to cool. But it’s descending from a heck of a peak.

    Rental prices climbed 7.2% between September 2021 to September of this year, the largest annual increase since 1982, according to consumer price data released Thursday. Overall, shelter costs were also among the most significant drivers in rising consumer prices, along with the cost of food and medical care, the Labor Department said.

    Still, it’s not all bad news for tenants. A new report from Realtor.com out Thursday found that nationwide, median rental prices in 50 large metros grew at their slowest annual pace in 16 months in September — at 7.8%. That marked the second consecutive month of single-digit year-over-year growth for 0-2 bedroom properties, and it meant that median asking rents fell by $12 in a month, Realtor.com said. 

    Housing inflation in the Consumer Price Index lags trends in the rental market, though, meaning the slowdown in rent growth might not register in the data for a while. 

    While median rental prices are still nearly 23% higher than they were two years ago, they’re no longer climbing at breakneck speeds with no end in sight. These days, economists say, that counts as a silver lining. 

    “After more than a year of double-digit yearly rent gains and nearly as many months of record-high rents, it’s especially important to see consistency before we confirm a major shift like the recent rental market cool-down,” Realtor.com Chief Economist Danielle Hale said in a statement. “But September data provides that evidence, as national rents continued to pull back from their latest all-time high registered just two months ago.”

    “This return of more seasonal norms indicates that rental markets are charting a path back toward a more typical balance between supply and demand, compared to the previous year,” Hale added. “We expect rent growth to keep slowing in the months ahead, partly driven by the impact of inflation on renters’ budgets.” 

    Affordability, however, is worsening, Realtor.com said. Blame the fact that consumer prices are rising faster than wages. 

    (Realtor.com is operated by News Corp
    NWSA,
    +1.64%
    subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.)

    A Redfin
    RDFN,
    -3.55%
    report out Thursday, meanwhile, said rents grew 9% year-over-year in September — the slowest pace since August 2021. Rents were still way up year-over-year in cities like Oklahoma City (24.1%), Pittsburgh (20%), and Indianapolis (17.9%.) 

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