Market Updates.

Overall, the economy has proven resilient and remains strong.

  • Gas prices have been slowly rising mainly due to OPEC (Organization of the Petroleum Exporting Countries) cutting petroleum production by one million barrels per day.
  • Russia and Saudi Arabia also extended their production cuts through the end of the year.
  • We may also experience temporary gas price increases due to Florida hurricanes, but as long as major refineries are not impacted, prices should bounce back.
  • Inflation rose less than expected over the last month by just 0.2% to the current rate of 3.2%.
  • Employment and job openings have dropped resulting in the unemployment rate rising to 3.8%.
  • Because the inflation rate remains higher than the Federal Reserve would like (3.2% compared to 2%), two more interest rate increases are expected. The Stock Market was down at the beginning of the month due to the latest interest rate increase, but the Market is now back up.

Sources

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Securities and Advisory Services offered through Harbour Investments, Inc. Member SIPC & FINRA.

A company’s profits can be reinvested or paid out to the company’s shareholders as “dividends.”

When looking for income-generating investments, some investors turn to dividend-yielding stocks.

When a company makes a profit, that money can be put to two uses:

  1. It can be reinvested in the business.
  2. It can be paid out to the company’s shareholders in the form of a dividend, a taxable disbursement typically made quarterly or monthly.

Dividend Ratios

Investors track dividend-yielding stocks by examining a pair of ratios.1

Dividend per share measures how much cash an investor is scheduled to receive for each share of dividend-yielding stock. It is calculated by adding up the total dividends paid out over a year (not including special dividends) and dividing by the number of shares of stock that are outstanding.

Dividend yield measures how much cash an investor is scheduled to receive for each dollar invested in a dividend-yielding stock. It is calculated by dividing the dividends per share by the share price.

Other Dividend Considerations

Investing in dividend-paying stocks can create a stream of taxable income. But the fact that a company is paying dividends is only one factor to consider when choosing a stock investment.

Dividends can be stopped, increased, or decreased at any time. This is unlike interest from a corporate bond, which is normally a set amount determined and approved by a company’s board of directors. If a company is experiencing financial difficulties, its board may reduce or eliminate its dividend for a period of time. If a company is outperforming expectations, it may boost its dividend or pay shareholders a special one-time payout.

When considering a dividend-yielding stock, focus first on the company’s cash position. Companies with a strong cash position may be able to pay their scheduled dividend without interruption. Many mature, profitable companies are in a position to offer regular dividends to shareholders as a way to attract investors to the stock.

Qualified dividends are taxed at a maximum rate of 20%. Ordinary dividends are taxed at the same rate as federal income taxes, or between 10% and 37%. State income taxes also may apply.2

Be cautious when considering investments that pay a high dividend. While past history cannot predict future performance, companies with established histories of consistent dividend payment may be more likely to continue that performance in the future.

In a period of low interest rates, investors who want income may want to consider all their options. Dividend-yielding stocks can generate taxable income, but like most investments, they should be carefully reviewed before you commit any dollars.

Keep in mind that the return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.

The information in this article is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

1. Investopedia.com, February 6, 2023
2. Investopedia.com, May 26, 2023
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Market Updates

  • Overall, the economy continues to be strong and resilient.
  • A recent Jobs Report from the U.S. Bureau of Labor Statistics showed 339,000 jobs added and that the unemployment rate rose to 3.7%. It is interesting to note that the jobless rate is both the highest it’s been since October 2022 and near the lowest since 1969.
  • The U.S. Debt Ceiling deal was reached, which includes suspending a limit until 2025 and an increase in the debt ceiling.
  • The Stock Market has seen some successes recently, notably in the tech sector. The NASDAQ has now been on the rise for six consecutive weeks.
  • With inflation still higher than desired, the Federal Reserve is expected to raise interest rates again in July.
  • Despite the increase of interest rates ten time over the last year, consumers seem to be optimistic based on spending reports.
  • We still haven’t seen a marked increase in gas prices, though they may go up later this summer. Saudi Arabia announced a plan to cut oil output in July, which could potentially affect prices.

As these updates indicate, the economy is not always predictable. If you’ve been keeping up with “Ask Triangle” on a monthly basis, you’ve likely noticed a few unexpected outcomes from previous predictions. That’s why our team places value on diversified portfolios, which helps us to proactively manage risk and increase stability in a volatile market.

Ask Triangle Question

Q: Are there any updates to you’re hearing about a recession, such as timing and depth?

A: Based on May meeting minutes from the Federal Reserving, a recession is still anticipated sometime in the fall or early winter. Fortunately, it is expected to be a shallow recession. It’s worth noting that the timing of when the recession is expected continues to be pushed further into the future. The uncertainty around timing is likely related to the surprisingly resilient market and consumer optimism, despite inflation and the constant interest rate increase from the Federal Reserve.

In preparation for the possibility of a recession, let us know if you’d like to re-evaluate any or all of the following:

  • Cash-flow needs and distribution methods
  • Emergency savings, and how to build some
  • Other concerns around financial stability in an uncertain economic outlook

Our goal as your financial advisory team is to help you navigate uncertain times like these. Please don’t hesitate to reach out to us for any reason or concern!

Sources

Join us for the next Ask Triangle on Friday, July 7th!

Securities and Advisory Services offered through Harbour Investments, Inc. Member SIPC & FINRA.

Market Updates

  • According to the recent U.S. Bureau of Labor Statistics (BLS) Employment Situation Summery for April, the economy continues to be strong with unemployment low at 3.4% and job growth reaching 253,000. In particular, the leisure and hospitality industry has seen an upward trend in employment as consumers spend more on travel and hotel stays, also a positive sign for the current economy.
  • The Federal Reserve again raised interest rates in April from 5% to 5.25%. In June, rates are likely to rise again in an effort to decrease inflation from the April Consumer Price Index (CPI) report of 5% down to 2%.
  • On May 9, Federal Reserve President John Williams spoke to the New York Economic Club sharing that interest rates may continue to rise and that getting the CPI back to 2% could take as long as two years.
  • While there are still conflicting opinions, there is a general consensus that some level of recession can be expected by fall. Considering continued job growth and economic resilience despite increasing inflation and interest rates, a recession is likely to be smaller in scale.
  • Surprisingly, oil prices are lower than expected despite supply cuts by OPEC+ producers. This is considered to be due in part to lower demand as China reopens their oil production. However, warmer summer weather typically increases travel and demand, which will likely result in higher gas prices.


Sources

Join us for the next Ask Triangle!
Securities and Advisory Services offered through Harbour Investments, Inc. Member SIPC & FINRA.

When the market drops, some investors lose perspective that downtrends and uptrends are part of the investing cycle. When stock prices break lower, it’s a good time to review common terms that are used to describe the market’s downward momentum.

Pullbacks.

A pullback represents the mildest form of a selloff in the markets. You might hear an investor or trader refer to a dip of 5-10% after a peak as a “pullback.”1

Corrections.

The next degree in severity is a “correction.” If a market or markets retreat 10% to 20% after a peak, you’re in correction territory. At this point, you’re likely on guard for the next tier.2

Bear Market.

In a bear market, the decline is 20% or more since the last peak.2

All of this is normal.

“Pullbacks, corrections, and bear markets are a part of the investing cycle.”

When stock prices are trending lower, some investors can second-guess their risk tolerance. But periods of market volatility can be the worst times to consider portfolio decisions.

Pullbacks and corrections are relatively common and represent something that any investor may see from time to time in their financial life, often several times over the course of a decade. Bear markets are much rarer. In fact, between April 1947 and April 2022, there have only been 14 bear markets.3

A retirement strategy formed with a financial professional has market volatility factored in. As you continue your relationship with that professional, they will also be at your side to make any adjustments and help you make any necessary decisions along the way. Their goal is to help you pursue your goals.

1. TheBalanceMoney.com, April 30, 2022
2. Forbes.com, September 23, 2022
3. Investopedia.com, September 23, 2022

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Market Updates

  • While the Federal Reserve expects inflation to begin slowing down, it may still take a while as consumer spending tightens and job growth slows.
  • Credit also continues to tighten, which affects all rate-sensitive sectors, especially housing. Home sales have decreased by more than 30% over the last year.
  • The last Federal Reserve interest rate increase was announced March 22, from 4.75% to 5%, and there’s potential for an additional increase in May.
  • We still anticipate gas prices to increase as the Organization of the Petroleum Exporting Countries (OPEC+) announced production cuts of 1.16 million barrels a day at the beginning of April in response to cuts in Russia production and China reopening. These cuts could lead to gas barrels costing as much as $100, which could raise gas prices into the range of $4-$7 per gallon this summer. The higher gas prices could potentially contribute to an increase in inflation and, ultimately, the Federal Reserve raising interest rates more.

Ask Triangle Questions

Q: What if the Federal Reserve doesn’t raise the interest rate?

A: If the Federal Reserve doesn’t continue increasing interest rates, it would be considered a positive announcement for financial markets. Regardless of what happens, Triangle Financial Services advisors continue to sort through all the noise and the ups and downs of interest rates to ensure we are proactively planning for and keeping an eye on your long-term financial goals and health. We always encourage you to call whenever you have questions or concerns!

Sources

Join us for the next Ask Triangle on Friday May 5th at 11 a.m. (CST)
Securities and Advisory Services offered through Harbour Investments, Inc. Member SIPC & FINRA.

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