High inflation is already upon us. As BBC News reported, the U.S. saw consumer prices jump 4.2% in the past 12 months. Price surges for certain goods can be even more ridiculous. Second-hand car prices rose 10% in April versus March.
A part of that had to do with the shortage (and consequential price rise) in basic materials like steel. The situation is similar for other raw materials like copper and lumber.
The Federal Reserve aims for a long-term inflation rate of 2%, as does the Bank of Canada. The Federal Reserve explains very well here how a stable rate of 2% helps with keeping maximum employment and consumer price stability. It further clarifies that an extended period of low inflation is likely to lead to a period of higher inflation (triggered by monetary policy), which is what we’re seeing now in both countries.
At the very minimum, Americans and Canadians need to ensure their savings are earning at least 2% a year from interest income. Of course, we can do better than that with dividend stocks.
The stock market is trading near its all-time high. Morningstar revealed that of the 682 U.S. stocks that its equity analysts cover, “only 5(!) have 5 stars, while 83 receive a single star.”
For those who are not familiar with Morningstar’s star system, 5 stars represent super undervalued while 1 star represents super overvalued.
The Volatility Index, the “Fear Gauge” or “Fear Index” is a 30-day forward-looking measure of the volatility of the market. The lower the VIX is at, the less fear or more complacent the market is and vice versa. The Volatility Index also suggests there’s little fear in the stock market right now.
Although Morningstar covers less than 20% of the stocks on the U.S. market, its coverage includes many prominent names across different industries.
Should investors stop buying stocks in a high market? As the stock market has ascended to new heights, it has become more difficult to find value, but they do exist if you look for it.
A Canadian Dividend Aristocrat typically refers to a TSX stock that has increased its dividend for at least five years. Ever wonder what a Canadian Dividend Aristocrat must be like before it actually becomes one?
Let’s rewind a bit. The stock must pay its first dividend and after that, be able to continue increasing its dividend year after year. Therefore, it should generate stable (ideally growing) earnings.
I believe I have a stock here that is a Canadian Dividend Aristocrat in the making. However, I’m probably way ahead in this thinking because it’ll likely take years before it will pay its first dividend.
Why do I hold shares of this stock now if it pays no dividend? …because if I’m right, this stock is going to give me a whole lot of capital gains before it initiates a dividend.
Right now, this small-cap stock has better places to allocate its capital. It was no April Fool’s joke when it announced another acquisition on Thursday, which drove the stock price 13% higher.