Today is Tuesday, August 24, 2021
Dividends Make A Comeback
Over $1.39 trillion in dividends is expected to be paid out in 2021, showing that dividend payouts have returned to pre-pandemic levels, according to research from asset manager Janus Henderson on Monday.
Data: Janus Henderson found that dividend payments, which are profits distributed to shareholders, grew 26% from last year in the second quarter to over $471 billion.
History: When the pandemic struck in 2020, some companies halted dividend payments to investors as a way to hoard cash to combat economic uncertainty. Now, with the economy booming, companies are rewarding investors by reinstating or increasing dividends.
Bigger Picture: The return of dividends to pre-pandemic levels is a good sign for the economy and it is helpful for income investors.
Final Thoughts: The average dividend yield varies by sector, with financial services companies averaging around 4% and industrial companies averaging less than 2%.
Notable Earnings Today: Best Buy (BBY), Medtronic (MDT), Intuit (INTU), Nordstrom (JWN), Toll Brothers (TOL), Advance Auto Parts (AAP).
Notable IPOs Today: Chardan NexTech Acquisition 2 Corp. Class A Common Stock (Nasdaq: CNTQ), HEXO Corp. Common Shares (Nasdaq: HEXO), Ipsidy Inc. Common Stock (Nasdaq: AUID), ReNew Energy Global plc Class A Ordinary Shares (Nasdaq: RNW).
Notable Equity Crowdfunding Campaigns Ending Today: Streamlytics (StartEngine), CycleBoard (StartEngine).
Notable Economic Events Today: New Home Sales (10:00 a.m.), API Weekly Crude Oil Stock (2:30 p.m.).
NVIDIA Stock Rides Chip Rally To New Heights
Shares of NVIDIA Corporation (Nasdaq: NVDA) surged over 5% Monday to an all-time high of $219.58 per share.
Recent History: NVIDIA posted strong earnings last week, with revenue up 68% year-over-year.
Sector Outlook: Monday was a good day for most of the semiconductor stocks because Chinese regulators finally approved of a long-standing transaction in the industry. Also, the shortage of semiconductors has benefited many chip stocks.
Hold Up: NVIDIA’s acquisition of ARM, which was announced last year, is facing some regulatory hiccups and is currently delayed. This could be an issue for the stock in the future.
Final Thoughts: NVIDIA has a price-to-earnings ratio of 72.
The Risks Of Investing In A SPAC
Many investors have set their sights on special-purpose acquisition companies, or SPACs, which is when a publicly-traded shell company acquires a private company and then takes it public.
But there are many hidden risks with SPACs that investors need to understand before jumping in.
No Revenue, No Problem: Some of the companies that went public via SPAC in the past year are pre-revenue, with some notable examples in the electric vehicle space. These companies are only trading on the potential to make money in the future.
Popularity Bias: Because a few SPAC stocks have seen massive increases in their prices, some investors see this and assume that this might happen to every SPAC on the market. They need to realize that this increase is the exception and not the rule.
Bubble: Some SPACs have attracted the backing of celebrities and other famous people. This is has resulted in a speculative price surge, which some have compared to a bubble.
Final Thoughts: The SEC has noticed the rise of SPACs and there could be new regulations in the future to protect investors. Until then, it is important to know the risks that SPACs might carry.
Trends to Watch
Coming to a Stop: Chinese Uber rival Didi scraps UK launch amid privacy fears (The Telegraph)
A New Record: CryptoPunk NFTs Break Sales Record as Visa Sparks Buying Frenzy (CoinDesk)
Here We Go Again: Richard Branson's satellite-launching company Virgin Orbit to go public (CNN)
Going Strong: Equity Crowdfunding Platforms are Booming (Securities.io)
New Rules: SEC gives Chinese companies new requirements for U.S. IPO disclosures (Reuters)
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