Dividends

Dividends in the Current Environment

The COVID-19 pandemic and its effect on the market has brought dividends to the top of many investor’s minds. Will dividend paying companies be able to sustain their payouts in the face of an economic slowdown? Should they bow to political and societal pressure to cut or suspend their dividends? With bond yields at historic lows, dividends take on even more importance for those investors in need of income. How will these pressures affect the outlook for dividends? Epoch has a long history of expertise investing in dividend paying companies in our Shareholder Yield strategies and has recently produced a plethora of insights on the topic, collected below.
       
Paper – December 16, 2020   Post Webinar Q&A – May 8, 2020  
The Enduring Allure and Sustainability of Dividends   The Death of Dividends: Greatly Exaggerated  
   
The recent economic downturn caused by the COVID-19 pandemic provides another example of the resiliency of dividends. As in the past, they held up better than earnings, with the most severe pressure in specific sectors.   Questions from the audience answered by our experts after the recent webinar on dividends.  
       
Insights – May 1, 2020   Quarterly Investment Update – May 1, 2020  
Factors: Not Driving, Just Along for the Ride   The Outlook for Dividends in a World of Yield Starvation  
   
It is important to pay attention to how real economic events drove recent performance, rather than fall back on a set of abstract factor returns.   Executive Chairman and Co-CIO, Bill Priest explores the outlook for dividends and why they are even more essential today.  
       
Webinar – April 30, 2020   Webinar Presentation Deck – April 30, 2020  
The Death of Dividends: Greatly Exaggerated The Death of Dividends: Greatly Exaggerated  
 
Epoch’s thought leaders address pressing questions about the state of dividends in the current environment.   Presentation slides from the recent webinar on dividends.  
       
Edited Transcript – April 30, 2020   Bloomberg Radio Interview – April 27, 2020  
The Death of Dividends: Greatly Exaggerated   Not All Companies Should Cut Dividends   
   
A summarized transcript of the recent webinar on dividends.   Shareholder Yield PM John Tobin argues for a more nuanced approach to whether companies should cut their dividends in the current environment.  
       
Podcast – April 16, 2020   Spotlight – April 15, 2020  
Not All Dividend Cuts are the Same What is Quality Yield?
   
Shareholder Yield PM John Tobin discusses how COVID-19 related economic, political, and social pressures have led some to either cut or suspend their dividends.   Shareholder Yield PM Kera Van Valen on why quality yield is important in the current environment.  
       
Letter – April 6, 2020  
Not All Dividend Cuts are the Same
In the COVID era, not all dividend cuts are created equal.
 

Our Perspectives

During the past two years, CBDC has progressed from a bold speculative concept to a seeming inevitability and will soon be a core feature of our financial ecosystem. The rollout of CBDCs will further accelerate the digitization of the economy, which is the key defining feature of markets over the past decade. This paper explores the implications for monetary policy, the FinTech and payments sectors, and the potential disintermediation of significant swaths of the commercial banking system.
March 24, 2021

Money 3.0: Central Bank Digital Currencies (CBDC)

During the past two years, CBDC has progressed from a bold speculative concept to a seeming inevitability and will soon be a core feature of our financial ecosystem. The rollout of CBDCs will further accelerate the digitization of the economy, which is the key defining feature of markets over the past decade. This paper explores the implications for monetary policy, the FinTech and payments sectors, and the potential disintermediation of significant swaths of the commercial banking system.

The Cambrian explosion of exciting breakthroughs in AI, autonomous driving, 5G, and cloud computing will drive double-digit growth in semiconductor revenues for the foreseeable future. Superstar firms have come to dominate all subsectors of the increasingly concentrated semiconductor industry, which implies pricing power and explains the sector’s attractive operating margins and return on capital. Valuations are reasonable, and we have a constructive view on the semiconductor sector and believe it possesses considerable upside.
February 11, 2021

Moore’s Law & the Race for the Rest of the Chessboard

The Cambrian explosion of exciting breakthroughs in AI, autonomous driving, 5G, and cloud computing will drive double-digit growth in semiconductor revenues for the foreseeable future. Superstar firms have come to dominate all subsectors of the increasingly concentrated semiconductor industry, which implies pricing power and explains the sector’s attractive operating margins and return on capital. Valuations are reasonable, and we have a constructive view on the semiconductor sector and believe it possesses considerable upside.

Both sides of the political spectrum have been increasing their calls for regulatory action on the Big Tech companies. Here we explain why tech will continue to be the most dynamic sector of the economy, and why we expect greater breadth in tech market leadership and the emergence of entirely new sub-sectors.
January 22, 2021

Will Biden Take On the Tech Barons?

Both sides of the political spectrum have been increasing their calls for regulatory action on the Big Tech companies. Here we explain why tech will continue to be the most dynamic sector of the economy, and why we expect greater breadth in tech market leadership and the emergence of entirely new sub-sectors.

More than just our proprietary stock selection model, the Epoch Core Model (ECM) is a rules-based expression of Epoch’s free cash flow investment philosophy. Learn more about the components that make up the ECM and how it’s being used to enhance the firm’s investment processes across strategies, to surface ideas for further research, to prioritize our research queue, and to inform our portfolio construction process.
December 1, 2020

The Epoch Core Model: Our Proprietary Stock Model

More than just our proprietary stock selection model, the Epoch Core Model (ECM) is a rules-based expression of Epoch’s free cash flow investment philosophy. Learn more about the components that make up the ECM and how it’s being used to enhance the firm’s investment processes across strategies, to surface ideas for further research, to prioritize our research queue, and to inform our portfolio construction process.

The final two months of the U.S. presidential campaign promises a torrent of incendiary rhetoric and plenty of surprises for both voters and investors. Market volatility typically rises ahead of elections and if the race remains close we may see elevated uncertainty well beyond November 3. In our latest Insight piece, we look at the implications for taxes, regulation, health care, global trade, green infrastructure and anti trust issues among others, all dependent on the outcomes of the presidential and congressional contests.
September 10, 2020

Election Campaign Enters Overdrive: Choppy Markets Ahead

The final two months of the U.S. presidential campaign promises a torrent of incendiary rhetoric and plenty of surprises for both voters and investors. Market volatility typically rises ahead of elections and if the race remains close we may see elevated uncertainty well beyond November 3. In our latest Insight piece, we look at the implications for taxes, regulation, health care, global trade, green infrastructure and anti trust issues among others, all dependent on the outcomes of the presidential and congressional contests.

In understanding the performance of any investment strategy, it is important to pay attention to how real economic events drove that performance, rather than fall back on a set of abstract  factor returns as if they were somehow responsible.
May 1, 2020

Factors: Not Driving, Just Along for the Ride

In understanding the performance of any investment strategy, it is important to pay attention to how real economic events drove that performance, rather than fall back on a set of abstract  factor returns as if they were somehow responsible.

The last six months have been profoundly transformational, with the COVID shock acting as an accelerant for the digitization of the economy. This radical transition is especially advantageous for asset-light business models. All companies will be acutely affected, although the biggest winners are platforms, with their economies of scale and low marginal costs.
August 19, 2020

The Pandemic Accelerant: Digital Age Business Strategies

The last six months have been profoundly transformational, with the COVID shock acting as an accelerant for the digitization of the economy. This radical transition is especially advantageous for asset-light business models. All companies will be acutely affected, although the biggest winners are platforms, with their economies of scale and low marginal costs.

Does a stock’s price and its P/E ratio tell you how much a company is worth? Conventional wisdom says yes, but we think otherwise. In this paper we explore:

  • The theory behind the discounted cash flow (DCF) valuation model and the underappreciated role that ROIC plays in the model
  • The P/E ratio and find that it does not tell us what most people think it does, nor does its offshoot, the P/E to growth (PEG) ratio
  • How we can use what we have learned about the DCF model to deconstruct P/E ratios in the real world to better understand what they do tell us
June 17, 2019

The P/E Ratio: A User’s Manual

Does a stock’s price and its P/E ratio tell you how much a company is worth? Conventional wisdom says yes, but we think otherwise. In this paper we explore:

  • The theory behind the discounted cash flow (DCF) valuation model and the underappreciated role that ROIC plays in the model
  • The P/E ratio and find that it does not tell us what most people think it does, nor does its offshoot, the P/E to growth (PEG) ratio
  • How we can use what we have learned about the DCF model to deconstruct P/E ratios in the real world to better understand what they do tell us