Thanksgiving Week 2020
Since this is Thanksgiving Week 2020, I am not providing commentary for the Week In Review. You can read the dividend news, market summary, and economic news below. I will resume providing commentary after Thanksgiving 2020, next week.
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Dividend Increases and Reinstatements – Thanksgiving Week 2020
Fastenal Company (FAST) will pay a special dividend of $0.40 per share.
Kimco Realty (KIM) hiked the dividend 60% to $0.16 per share from $0.10 per share. The REIT reinstated the dividend after suspending it due to the pandemic.
Brown-Forman Corporation (BF-B) raised the dividend 3.0% to $0.1795 per share from $0.1743 per share. This is the 37th consecutive increase and 76th year in a row of paying a dividend. Brown-Forman is a Dividend Aristocrat and Dividend Champion.
Muncy Bank Financial (MYBF) increased the dividend 2.9% to $0.36 per share from $0.35 per share. This is the 20thstraight annual increase. Muncy Bank has paid a dividend since 1935. Muncy Bank is a Dividend Contender.
Matthews International (MATW) increased the dividend 2.4% to $0.215 per share from $0.21 per share. This is the 27th annual increase in a row. Matthews is a Dividend Aristocrat.
MSC Industrial Direct (MSM) declared a special dividend of $3.50 per share. MSC Industrial is a Dividend Contender.
Costco Wholesale (COST) declared a special dividend of $10 per share. Costco is a Dividend Contender.
Coronavirus Dividend Cuts and Suspensions List
I updated my coronavirus dividend cuts and suspensions list this past Wednesday. The number of companies on the list has risen to 466. We are well over 10% of companies that pay dividends having cut or suspended them since the start of the COVID-19 pandemic. The number of companies on the list continues to rise each week.
Two new companies were added to the list in the past week. These were Newtek Business (NEWT) and Israel Chemicals (ICL).
I included eight companies that I had previously missed. The eight companies that I previously missed were National Bancshares (NKSH), bebe stores (BEBE), Aristan Partners Asset Management (APAM), Genco Shipping & Trading (GNK), Solar Senior Capital (SUNS), Falcon Minerals (FLMN), Entravision (EVC), and Salient Midstream & MLP Fund (SMM).
Market Indices – Thanksgiving Week 2020
Dow Jones Industrial Averages (DJIA): 29,263 (-0.74%)
NASDAQ: 11,855 (+0.22%)
S&P 500: 3,558 (-0.76%)
The S&P 500 is trading at a price-to-earnings ratio of 35.9X and the Schiller P/E Ratio is at about 32.4X. These two metrics down to weakness in the market this past week. Note that the long-term means of these two ratios are 15.8X and 16.7X, respectively. I continue to believe that the market is overvalued at this point. I personally view anything over 30X as overvalued.
S&P 500 PE Ratio
Shiller PE Ratio
Stock Market Volatility – CBOE VIX
The CBOE VIX measuring volatility was flat with last week at 23.70 at end of this past week. This VIX had spiked to ~38 three weeks ago and has since then trended down. The VIX still remains elevated relative to the long-term average. The long-term average is approximately 19 to 20.
Fear & Greed Index
I also track the Fear & Greed Index. There are seven indicators in the index. They are Put and Call Options, Junk Bond Demand, Market Momentum, Market Volatility, Stock Price Strength, Stock Price Breadth, and Safe Haven Demand.
The Fear & Greed Index is signaling Greed in the market at a value of 62, which is the second straight week of Greed. This is up from the recent low of 29 three weeks ago, which was the lowest since the market route during the depths of coronavirus pandemic.
Both Stock Price Breadth and Put and Call Options are now signaling Extreme Greed. Market breadth is improving as 12.86% more volume in advancing issues compared to declining issues, which is near the higher end of this range in the past two years. Put option volume is 61.19% below Call option volume, which is near the lowest level in the past two years.
Market Momentum is indicating Greed. The upward trend in the market the past two weeks has placed the S&P 500 at 7.17% above its 125-day moving average.
Junk Bond Demand, Market Volatility, and Stock Price Strength is signaling Neutral. Investors are only accepting 2.15% additional yield over investment grade corporates. The CBOE VIX is at 23.70 which is a neutral reading. Stock Price Strength is the in middle of the range for the number of stocks hitting highs exceeding the number of stocks hitting lows.
Safe Haven Demand is indicating Fear. Stock have outperformed bonds by 1.93% during the last 20 trading days. This is on the weaker end of the range in the past two years.
The number of weekly new unemployment claims were up with last week at 742,000. This is up 31,000 from last week’s revised numbers. We are now below 800,000 claims consistently. But for some perspective, one-year ago weekly unemployment claims were only about 223,000. Currently we are 3X – 4X the normal level. The seasonally adjusted insured unemployment rate was 4.3%.
The ten states with the highest unemployment rates were California (8.3), Hawaii (8.3), New Mexico (8.0), Nevada (7.6), Georgia (6.5), Pennsylvania (6.4), Alaska (6.2), Massachusetts (6.2), District of Columbia (6.0), and Illinois (5.7).
The U.S. Census Bureau reported the sixth straight month of positive retail sales with overall retail sales up to a seasonally adjusted 0.3% in October. This below a revised 1.6% gain for September. It is the smallest increase since May. Sales rose for autos, home and garden stores, electronics and appliance stores, and online retailers. Online shopping was strong increasing by 3.1% in October. Sales declined at furniture stores, restaurants, health and personal care, clothing, sporting goods, and general merchandise stores.
The Commerce Department reported that new home construction rose rose 4.9% to an annualized rate of 1.53 million in October, after rising 6.3% in September. September was revised up to 1.459 million from 1.415 million units. Housing starts were up 14.2% on year-over-year basis. Permits for future building were flat at a rate of 1.545 million units.
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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.