Do companies that issue dividends make good investments?
Neil Hennessy and Matt McCall discuss the government's uncertainty over dividend credits
- Duration 9:37
- Date Apr 16, 2012
Neil Hennessy and Matt McCall discuss the government's uncertainty over dividend credits
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-- so we haven't.
To really Smart people here today dynasty portfolio manager chief investment officer of Hennessy funds when he thought about -- -- -- and a second because some fire.
Not a call Mondays with -- president -- -- financial group violent act Matthew McCall.
-- -- -- I've not kidding the fund your fund has done ridiculously well and hang on it is up.
26% over the last three years you outpaced S&P 500 returns.
How would you say to everyone out there who owns all these mutual funds who they've managers can't seem to -- the markets to save their lives.
Why Tennessee -- that.
I am -- with a story for a long time that we've liked consumer Staples consumer discretionary we like dividend paying stocks we like companies that have the chance of not only initiating the dividends -- directing TV.
That earned four dollars funny -- initiated dividend.
War and to raise dividends -- to be Campbell Soup -- could be Nordstrom's that we're just starting to get up into the middle.
Arena now things we've always been down.
For the last three years and in consumer disgraced discretionary but the lower end like -- Family Dollar store but here -- these companies are all are -- 354 dollars a share their pain there their dividends are covered three to one I mean they got plenty of room expanded dividends.
And I think that's the -- -- -- unless Washington doesn't.
You know extend the dividend credit.
Which -- you and I talked about it and then that is part of the biggest uncertainty in this market rate pick -- basically it's the government it's Europe.
I think the government here -- now quite frankly right yeah -- -- two major black clouds they keep the market from breaking out to all time highs in my mind that we.
-- a four year high just we can -- -- some -- and made.
Considering the black -- -- over we're doing pretty darn good.
I reveal what -- -- to dividends to you know we have a few ETF -- -- -- -- very you know -- dividend yields.
And they've done very well especially in the market that realistically you should be happy that 8% parent gets a cup is paying for 5%.
I -- that's a bonus right on top right there.
My only concern with the dividend paying stocks going forward.
Is -- fact that.
If this risk on trade continues we do break out you see money rotate out of the consumer -- into some of the more aggressive technology consumer discretionary.
When you thought that going north that is.
Consumers -- easy money -- about failing dollar they go into -- -- -- -- in the Saxon world.
-- -- -- -- Anecdotally I was -- this weekend in at least dance so -- says anything about their it recovery.
I find that very difficult that you know you do hear of people especially outside of our tristate area -- I really do think some times we live in a bubble.
Outside our tristate area people are still struggling and yeah -- -- -- and martians in our area and you have to -- I want to twenty minutes.
You know most generous visit when he talks about Trace the unemployment at eight point 2% right the real numbers fifteen to sixteen million Americans that are all job I'm when he put everybody and that's somewhat more than eight point 2%.
It would just fall off the vols.
But you have to take it in perspective for this show we're talking about investing you're not investing in.
Politics in Washington -- -- and -- in US economy you're investing companies.
That are doing well and have a good chance of doing extremely well once the economy takes up.
The problem with that is is people still focus on housing.
The financial and and autos which yes wants -- money.
But every other company in America from 20089101112.
We're making a ton of money.
In the financial.
In his she's gotten a lot more healthier than a year ago -- -- a lot more healthier.
Are -- the housing issue is still some -- -- to be dealt with.
Because of latest mad you probably know better than me but.
I heard there's like 45 to fifty billion dollars it's going into worry economy.
Because people weren't paying their mortgages yes him once if banks start before close.
That can be a big problem.
The weight but.
Before we -- numbers are talking about this and what you're saying and then neon is people need to separated out in their heads.
It is hard to do that we need to separate out what you're saying basically you're even -- -- -- the financials about the auto stocks.
Look at the stock market X that stuff.
Don't quit don't equate it to what you seen on the street.
You're buying companies you're investing but people know -- and it in the front of their of their mind.
Is march of 2009 and they don't wanna go back there and you hear people come on -- markets up 400 a 100% since 2009 is trying to sell on this -- The time user or different from a company standpoint meaning amount of cash Jamaican flashier than -- two trillion dollars in profits pretax all time high.
And this is -- a -- economy can you imagine we start to grow at two and a half or 3% of.
The problem is Lotta people look at this in such a short term timeframe now not looking long term because what can happen is.
They're -- bought 2008 with a company to have -- and things are looking great we get swept up and you hit that bottom 2009 -- sold out or eat a kind of gave up on the market.
So now they're thinking well.
I did the right thing I've bought fundamentally sound companies making a lot of money he's right that then as stocks still -- 50% and -- -- so we wanted to be in a market.
But you know as you know what the -- I'm sure you have to look longer term and and what the market does pull back and look at valuations right now obviously evaluation so attractive to me you're not gold stocks now when you -- your own stock and I think that's proper pretty individual -- to copper.
That I actually way I totally agree with you because it's it's all about the moment now.
You buys stock he wanted to go up for you get -- Email somebody wants to require right now our our message -- -- -- at least that's the idea Daniel.
That's not how you make money it's time in the market it's not time and market.
But not like to Samir picks you know -- resource is independent oil and gas company no matter but this is still going to be something we need to get into the Bakken shale to a greatest areas you know the -- there is a natural gas side and oil in the United States.
And it trades that was -- the pig gracious -- to PE vs growth of point six and it's extremely attractive very undervalued.
And and if you really believe that natural gas is gonna ever pick up cannot go to zero I mean -- natural gas prices are two dollars -- whoever -- right now I can't think this will do well.
And you look at the charts -- lot all three stocks have brought.
We're breaking up multi year highs and pulling back.
People at the bottom stock's up they don't quite a violent -- stock's down and they didn't let it pull back at a deal sake you know by -- back 10%.
Like a threat you know look at apple last at least it's.
Yeah fire into the stock today if now the pure apple.
Why this pullback but it's so much easier feel so much better -- -- at 620 vs by the -- is coming out there's thinking pats can keep falling and then there's the whole notion of trying to catch all of that it is back to 64 -- I'm gonna hit.
-- you mentioned sunnier picture earlier Campbell's soup Family Dollar Stores in mean those are both sort of -- -- -- -- -- of the well money's tight story aren't that right.
Yeah right in so.
If if people still aren't confident in -- in the shoppers.
The way people shop over the last three years really change it went from the Nordstrom's down to the lower rents and you -- dollar tree he had nothing Stanley dollar he had ten dollars to Ross Stores.
And that's why sort of like Nordstrom's now simply because you can see maybe a shift in back a little bit.
But there's still -- of people that are gonna shop on the lower and they want more for less.
Within any black.
Right but I mean that I didn't argument a year ago I made against them the same Nordstrom's was why would you go by hundred dollar shorter and orphans for your six year old -- -- remember -- -- -- about that it's gonna go into wouldn't roster twenty dollars are gonna outgrow it anyway.
But at some point time when people start to feel a little bit more confident about themselves their job their money.
They're gonna go back -- it -- and Nordstrom.
Mental two people right to go spend I mean there's TJ Maxx across the street my apartment that was attacked all the time -- -- people always commuter that hire people to think what deals.
But we also feel good got -- endorsement of sex and spitting at and getting that I don't let us 500 gaining for a while it was it was a must have been to shop there.
You did not want to be seen on the streets with a Sachs -- or any of those high end bags.
Well yeah but if you look back forty years ago there is no way that New York was gonna have a Wal-Mart.
Great and how many hands fight -- get a Wal-Mart yes you're -- how times change.
Before I let you guys go -- -- always bringing overseas contrast and -- an attempt to say I'm extensive I think there -- CD DCD hits a -- Brazil food products clothing home appliances for like a small -- Wal-Mart but based in Brazil.
Peg ratio one point one which -- -- fairly valued.
And in Brazil using this -- -- the middle class as it grows as the middle class grows they're gonna move up in the spending more money -- food more money on home appliances you name it clothing.
This is that a company would do really well it's kind of us more committed by their radar the biggest part of Brazil's conservative here in the states it is one that you may overlook it budgeting and -- -- Always get a Green -- -- overseas -- also to Aetna was on your list DirecTV was on meals both those stocks pay an awesome dividend may -- check out -- -- -- focus thirty funds.
I'm time in three years between 6% you can meet you couldn't even buying that.
Well yes yeah.
Yeah finding good.
Hello whole story.
And that -- -- him at Matthew -- our president and financial group and of course near Hennessey the flu manager chief investment officer Hennessy funds and again the fund is the focus thirty.
Like that you focus on thirty stocks.
Although I think it's too much.