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Week In Review

Dividend Power Week In Review – What I Miss The Most?

Week 8 of Lockdown – What I Miss The Most?

What I Miss the Most and Ronald Read a Secret Dividend Millionaire. The lockdown is easing here. I was thinking about “What I miss the most?” I think sports on TV is a big one. March Madness did not occur this year since it was canceled. I missed making my bracket and tracking it. I also miss going to my youngest kids’ soccer games and cheering the team on. It’s a major effort from the perspective of time commitment. But my youngest loves it and the social aspect is nice. I also miss eating at a nice restaurant every now and then. I have been grilling more, but it is not the same. I also miss the gym. It is tough to vary my workout routine with limited equipment at home.

There are many more cars on the road and some businesses are reopening now. The nearby Starbucks (SBUX) that I like reopened with limited hours, but I have not yet visited it for my coffee fix. Hallmark reopened this past week too. Mother’s Day is tomorrow as a reminder. The Hallmark store was pretty much like before except for hand sanitizer at the entryway, everyone was wearing mask, and there was a large plastic shield at the cash register. Times change. Toilet paper, coffee, eggs, and dairy are pretty easy to find now. One still can’t get hand sanitizer easily though. Flour is still hard to find unless one wants non-wheat flour. I guess there are a lot of people baking at home.

Coronavirus Dividend Cuts and Suspension List in 2020

I updated my coronavirus dividend cuts and suspensions list this past Wednesday. The number of companies on the list has risen to 219. We are now over 7% of companies that pay dividend having cut or suspended them. The list is still growing, and we will be over 230 at the next update. Some of these cuts and suspensions will be long-term, but some will be short-term. The difficulty is that the economic recovery is largely beyond the control of companies. Yes, most businesses will likely reopen over the next few months. At least to a limited extent, but consumers will likely still be wary of infection. Despite the rhetoric about significant improvement, there are still about 1,500 to 2,000 people dying from COVID-19 in the U.S. each day. This likely weighs on consumers’ minds and keeps them home.

The big dividend cut this past week was from a blue-chip stock, The Disney Company (DIS). Disney has paid an uninterrupted dividend for approximately 40 years. I will have an article about the company posted soon on this blog. 

I Do Not Miss Stock Market Volatility

The CBOE VIX is down below 30 this past Friday and is trending down. I think that we will get to the long-term average of 19 eventually. I’m not sure of the timing. The Fed has cut rates and pumped in so much liquidity that it’s keeping the stock market buoyed in my opinion. The saying of ‘Don’t fight the Fed’ is seemingly true in this case. The saying is credited to the late Marty Zweig in his book “Winning on Wall Street” published in 1970. It suggests that investors shouldn’t trade or invest against the Fed’s actions.

Source: Google

I have also been tracking the Fear & Greed Index. It has been between about 40 to 50 for the past couple of weeks in Fear. There has not been much change in this Index from last week. This index is comprised of safe haven demand, put-to-call option ratio, market volatility, stock price breadth, stock price strength, junk bond demand, and market momentum.

Source: CNN Business

Unemployment Hits A Record Since World War II

The U.S. unemployment rate hit 14.7%. This is the highest reading since the end of World War II. This is not surprising since there were a record 20.5 million jobs lost in April alone. You can see the charts from the Bureau of Labor Statistics news release this past Friday below. 

Source: Bureau of Labor Statistics

The real unemployment rate, which includes those not looking for jobs and the underemployed is approximately 22.8%. So, almost one-quarter of U.S. workers are unemployed or underemployed at the moment. This percentage is not the record though. The reading was 24.9% at the peak of the Great Depression. To put the number in context, the peak real unemployment rate was roughly 10% during the Great Recession and financial crisis in 2009. The post-World War II record was 10.8%. The greatest number of jobs lost was in the ‘leisure and hospitality’ category at 7.7 million with 5.5 million in food services and drinking places alone. Strangely, the average hourly earnings jumped 5%. This is probably an artifact indicating that most of the job losses were in lower paying jobs compared to higher paying jobs.

Many laid off workers are confident that they will be rehired back in their old jobs. I personally think that we are in for a long road back to ‘normal’ for unemployment. It is unrealistic to assume that the U.S. economy will immediately go back to anything like it was two to three months ago. Most companies will bring back furloughed workers incrementally rather than all at once depending on demand and restrictions in each state. There will also be enhanced worker safety, ‘social distancing’, and infection control protocols. All of this will keep the recovery on the slow track for a while. Further, some businesses will downsize. One can see that in recent announcements from department store chains like Nordstrom’s (JWN) that has permanently closed 16 stores. Overall, many people will miss the normality of pre-pandemic times.

Secret Dividend Millionaires – Ronald Read

I thought I would start a series on Secret Dividend Millionaires since this blog is about dividend growth investing. Today, I want to highlight the story of Ronald Read, who was a Vermont gas station attendant, mechanic, and janitor. He died at age 92 in 2014 with an $8 million fortune. He bequeathed part of that fortune to an area library and hospital. 

Ronald Read had invested in dividend paying stocks and held a diversified portfolio of at least 95 stocks. Ronald Read was not an active trader and followed a buy-and-hold strategy. He also lived very frugally allowing him to save. Lastly, he lived to 92 so time and the power of compounding was on his side. So, he eventually became a Dividend Millionaire.

You can read Ronald Read’s full story at some of the links above. His story is also on Wikipedia. I think that the key points to learn from his success in becoming a Dividend Millionaire is that living frugally, saving, and investing in dividend stocks over the long haul can work.

You can also read about the other Secret Dividend Millionaires.

Here are my recommendations:

Lastly, if you are interested in a resource for beginner to intermediate investors. Please take a look at my Review of The Simply Investing Report from another dividend growth investor, Kanwal. Note that I am an affiliate of the Simply Investing.

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