Wall Street Blindsided (Again!) Plus, 5 Must Knows For Monday

This post Wall Street Blindsided (Again!) Plus, 5 Must Knows For Monday appeared first on Daily Reckoning.

He did it! …And Wall Street still doesn’t believe it.

I’m talking of course about the corporate tax cuts that the Trump Administration pushed through Congress, and the positive effect that this new tax bill has already had on American companies and American investors.

Sometimes I don’t know whether to laugh or cry when I see how Wall Street and the mainstream media is covering the situation.

Because to hear them talk, you’d think something terrible is happening.

When in actuality, tens of billions of dollars are flowing directly into the pockets of hard working American investors.

In fact, the latest data shows that the “Cash for Patriots” program we’ve been talking about here at The Daily Edge is adding another $78 billion to the normal payments Americans will receive… And we’re just getting started!

A $41.3 Billion Raise for Americans

Want to hear my favorite quote from my weekend research?

“We knew there would be an impact from tax cuts… [but] there have been some big upside surprises in the past seven weeks.”¹

That’s from Thomas Matheson, head of dividend research for IHS Markit.

This guy — the guy who is supposed to be one of Wall Street’s top experts on dividends and the companies who pay them — essentially didn’t realize that Trump’s tax cuts would be that big of a deal investors.

Meanwhile, we’ve been here pounding the table for investors to buy American dividend stocks, especially the ones that will benefit from Trump’s tax cuts.

It seemed like a no-brainer to us…

Companies are getting to keep more of the cash that they earn. Companies with big international profits are able to bring that cash back home, while paying a much lower tax rate. And flush with cash, these companies are going to pay much higher dividends to investors.

Today, that’s exactly what is happening! And it’s catching the Wall Street “experts” off guard.

• AbbVie (ABBV) is paying investors a quarterly dividend of $0.96 per share — up 35% from what investors received last year.

• Aflac (AFL) gave investors a 21% gain over last year which now equates to $0.52 quarterly.

• Allstate (ALL) just upped its dividend by 24% — that’s twice the 12% raise Allstate gave investors last year.

• Associated Bancorp (ASB) increased its payout by 25% over the last year…

The list goes on and on. I’m only showing you the “A’s” right here!

Between the companies in the large cap S&P 500, the mid cap S&P 400 and the small cap S&P 600, there’s a full $41.3 billion in extra dividends being paid to investors. That’s above and beyond the dividends that were already on the docket before the new tax legislation was passed.

Hopefully you’ve already loaded up on the American stocks that will benefit most from lower taxes and higher dividend payments. If so, you’re already sitting on some nice profits and your dividend checks should have already started flowing.

If not, there’s still time.

But you’ll want to act right away before these stocks head any higher. Because as more and more companies announce bigger payments to investors, I expect U.S. dividend stocks to continue trading higher. And you’d certainly rather profit from the higher prices than pay a premium when you get around to investing in these names.

As you can tell, I’m excited about this opportunity and I hope you are too!

Now, let’s switch gears and take a look at the 5 things you need to know as we start a new week…

5 Must Knows For February 26th, 2018

Treasuries Pause — 3% is now the magic yield on the 10-year Treasury that has investors worrying. Remember, it was the rising rate expectations on February 2nd that kicked off the two weeks of volatility in the first place. Now the yield on the 10-year sits at 2.85%, just off its high of 2.95% on February 21st as investors await Jerome Powell’s semi-annual testimony in front of the House Financial Services Committee on Tuesday. This testimony is Powell’s first major appearance as Fed Chairman and should provide more insights to how he views rising inflation and its impact on rate hikes.

President Xi’s Rule Continues — On Sunday, February 25th, China’s Communist Party announced they are seeking to end the constitutional provision that bars the president from serving more than two consecutive terms. The move solidifies Xi’s intent to rule the country beyond his next term which ends in 2023. According to David Cohen, a Beijing-based managing editor at consulting firm China Policy, “this move signals that those whose opinion Xi has to care about are either happy about the direction Xi is taking things, or have been effectively sidelined.”

Buffett’s Letter Released — On Saturday, February 24th, Warren Buffett released his highly anticipated annual letter to Berkshire Hathaway shareholders. Here are some of the highlights: Berkshire reported a $29 billion gain from Trump’s tax plan, Buffett stated that he’s in the market to make one “huge” acquisition with his $116 billion cash pile, high asset prices is the reason Berkshire didn’t make a deal in 2017 and Berkshire’s top holdings are Wells Fargo, Apple, Bank of America and Coca-Cola.

This Week In Economics — The upcoming week is a busy one for the U.S. Commerce Department. On Wednesday, they are scheduled to release their second estimate for 4th quarter GDP after the first (released in January) showed the economy finally picking up speed. And on Thursday, they will release personal income data for January. This will show further insights into increased wages which could lead to higher inflation and tighter monetary policies.

Bitcoin Dips (Again) — After moving back above $12,000 last week, Bitcoin is now hovering around $10,000 after Coinbase announced it’s releasing customer information from 13,000 users to the IRS. Originally, the IRS requested transaction data in July for tax purposes from all Coinbase users (which then amounted to 500,000), but has now settled for only the “highest transacting” users which Coinbase reports is around 13,000 people. Remember, we here at The Daily Edge recommend you only invest money that you can afford to lose in these volatile markets.

That’s all from me today. As always, I’ll keep you updated on any shifts in the events talked about above. Have a great week!

Here’s to growing and protecting your wealth!

Zach Scheidt
Editor, The Daily Edge
Twitter ❘ Facebook ❘ Email

¹Tax Cuts and Confidence Drive Surge of Payouts, Barron’s

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