Morningstar Runs the Numbers
We take a numerical look through this week's Morningstar research. Plus, our most popular articles and videos for the week ended Aug. 31.
Inspired by Harper's Index (with a tip of the hat to FiveThirtyEight's Significant Digits blog), Morningstar Runs the Numbers uses a numbers-based approach to highlight recent Morningstar research, along with some outside news stories.
With a requirement to pay out 90% of their net income as a dividend, REITs are highly sought-after investments for income-oriented investors. However, dividend yields are quite variable across the sector, so finding an attractive investment with a high, safe dividend combined with the potential for outperforming the market presents a unique challenge. Equity analyst Kevin Brown highlights five large-cap REITs that provide both a high yield and the potential for positive returns.
Vice president of research John Rekenthaler explores the ABC World News claim that a person who begins investing at age 23 can retire with $1 million by investing $14 daily into a "low-cost S&P 500 fund." His verdict? Despite many caveats, as a general illustration of the results of long-term investing, as well as an indication of the benefits of starting early, the segment is broadly accurate.
Value funds have lagged their growth-focused peers not only in 2018 but over three-and five-year periods as well. Mid-value funds in particular have gained just 2.8% for the year to date through July compared to double-digit gains for small- and large-growth funds. Investing in a mid-value fund in this growth-fueled market is a bit of a contrarian play and could round out a portfolio. Director of equity strategies research Katie Reichart explores four highly rated mid-value funds that are still open to new investors.
Companies that have a history of paying (or increasing) their dividends tend to be the types of businesses that investors like to own: Many are competitively well-positioned, steady cash-generating businesses. To find some investment opportunities among wide-moat companies that are well-positioned to increase their payout, we sorted the 450-plus constituents in the US Dividend Growth Index to find the 10 cheapest stocks relative to our analysts' estimate of their intrinsic value.
Wide-moat Salesforce reported second-quarter earnings on Wednesday that were at the upper end of our expectations; we raised our fair value estimate to $175 per share, said equity analyst Billy Fitzsimmons. He believes Salesforce benefits from strong switching costs and a network effect in terms of its platform offerings. With shares trading at a discount to our fair value estimate, even after an impressive year-to-date run, Fitzsimmons still anticipates additional upside for Salesforce sees this as an attractive point of entry.
Most Popular Articles
Most Popular Videos
Morningstar.com does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.