Stock Market This Week

Stock Market This Week – 02/17/24

Stock Market This Week

Stock Market This Week – 02/17/24

Future retirees building passive income streams continue to do well. On average, dividend growth will match earnings growth rates over time. Exceptions occur, especially when a company initiates a dividend. However, growth rates typically slow once the payout ratio reaches about 40% to 50%. In general, higher payout ratios lead to lower growth.

Currently, the Dividend Kings, stocks with 50+ years of increases, have a 5-year earnings growth rate of 6.0%, while the dividends have risen at an average of 6.18% over the same period. On the other hand, the Dividend Contenders, equities with 10 – 24 years of increases, have grown earnings at about 7.5% annually while earnings have climbed at 8.8% in the past five years. Notably, the median payout ratio for the Dividend Kings is ~49%, while for the Dividend Contenders it is ~39%.

The yearly payout doubles relatively quickly when the dividend grows at a 6% rate. Even a stock with a modest dividend growth rate like Coca-Cola (KO), a Dividend King, will create substantial passive income if held long enough. Checking the dividend charts in Stock Rover*, The firm paid $1.22 per share in 2014, which increased to $1.84 by 2023. But go back to 2010, and the payout was $0.88 per share, meaning the annual dividend multiplied by more than two in 13 years. 

However, if the dividends were reinvested, the income stream would increase more rapidly because the reinvested cash purchases more shares that pay dividends. This action is the power of compounding. Consequently, the aim is to build a diversified portfolio of dividend growth stocks and hold them until retirement.

Research more dividend growth stocks in Stock Rover and build a passive income stream from a diversified portfolio. Stock Rover has 25% off the first year for a President’s Day Sale. Click here to try Stock Rover for free* (14-day free trial).

Stock Market Overview

Data from Stock Rover* showed a mixed week for the stock market. The Russell 2000 was the only index gaining for the week. The Dow Jones Industrial Average (DJIA), the S&P 500 Index, and the Nasdaq Composite declined because of weakness in the Technology sector.

However, seven of the 11 sectors gained this week. The Energy, Basic Materials, and Utilities sectors were top performers. However, the Consumer Cyclical, Communication Services, and Technology sectors were the worst performers.

Oil prices gained more than 3% to ~$79. The VIX climbed roughly 10% to 14.26, which is still well below its long-term average. Gold ended the week at ~$2,025.50 per ounce.


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Stock Rover is an award winning investment research platform.

  • The site has 8,500+ stocks, 4,000 ETFs, and 40,000 mutual funds.
  • Access to 650+ metrics, financial data, market news, stock and fund ratings, fair value, margin of safety, etc.
  • Includes brokerage integration, portfolio tracking, rebalancing, watchlists, alerts, future income forecasts, etc.

Click here to try Stock Rover for free (14-day free trial).


Stock Market Returns This Week
Source: Stock Rover*

The markets continue to move upward due to the economy’s strength. The Nasdaq leads the way, followed by the S&P 500, the DJIA, and the Russell 2000. After starting the year weakly, the Russell 2000 has recovered and is in positive territory. Eight of the 11 sectors have positive returns. The top performers in 2024 have been Communication Services, Healthcare, and Technology, while the Basic Materials, Utilities, and Real Estate sectors are trailing.

YTD Stock Market Returns
Source: Stock Rover*

The dividend growth investing strategy started the year down. Larger market capitalization stocks are performing better than smaller ones. The table below shows their performance by category. However, dividends and passive income streams continue to grow.

CategoryYTD Return (%)
Dividend Kings-0.6%
Dividend Aristocrats+0.2%
Dividend Champions-1.3%
Dividend Contenders-1.0%
Dividend Challengers-0.7%
Source: Stock Rover*

Affiliate

Stock Rover is an award winning investment research platform.

  • The site has 8,500+ stocks, 4,000 ETFs, and 40,000 mutual funds. 
  • Access to 650+ metrics, financial data, market news, stock and fund ratings, fair value, margin of safety, etc. 
  • Includes brokerage integration, portfolio tracking, rebalancing, watchlists, alerts, future income forecasts, etc.
  • Plus export to spreadsheets, dividend calendar, 10+ years of data history, etc.
  • Best Buy and Hold Screener by Investopedia
  • Editor’s Choice by American Association of Individual Investors (AAII).

Click here to try Stock Rover for free (14-day free trial).


Stock Market Valuation This Week

The S&P 500 Index trades at a price-to-earnings ratio of 27.17X, and the Schiller P/E Ratio is about 33.69X. These multiples are based on trailing twelve months (TTM) earnings.

The long-term means of these two ratios are approximately 16X and 17X, respectively. 

Despite the recent correction, bear market, and rebound, the market is still overvalued. Based on historical data, earnings multiples of more than 30X are overvalued.

Resources

Curated Weekend Reading From Around The Web

Portfolio Management and Investing

Retirement

Financial Independence


Here are my recommendations:

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  • Simply Investing Report & Analysis Platform or the Course can teach you how to invest in stocks. Try it free for 14 days. 
  • Sure Dividend Newsletter is an excellent resource for DIY dividend growth investors and retirees. Try it free for 7 days.
  • Stock Rover is the leading investment research platform with all the fundamental metrics, screens, and analysis tools you need. Try it free for 14 days.
  • Portfolio Insight is the newest and most complete portfolio management tool with built-in stock screeners. Try it free for 14 days.


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*This post contains affiliate links meaning that I earn a commission for any purchases that you make at the Affiliates website through these links. This will not incur additional costs for you. Please read my disclosure for more information.

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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.

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