Thoughts {08.31.16}

Markets just continue to be really quiet.  They are going to be this way until at least Friday and more likely the beginning of next week after the Labor Day holiday.  We may get some fireworks around Friday's jobs report because Federal Reserve officials seemed to want to hang their hat on that number last week when they discussed what conditions might lead to an interest rate increase in September.  A good number raises the likelihood of a tightening next month.  Most bond market observers still believe a hike is more likely in December if at all this year.  

Today's the last trading day of the month.  Very likely a non-event.  The Street's going to want those monthly statements to look as good as possible.

Leading market sectors for the month are financials up 3%, technology up 2% and energy up 2% according to CNBC.

Go read the Blackrock blog post, "Once Again, It's Too Quiet Out There".

Other than that I "got nuthin".

Back tomorrow.

*Long ETFs related to technology, energy and the financial sectors in client and personal accounts.  Please note these positions may change at anytime without notice on this blog.

In The Things Are Getting Better Department

One of the reasons that stocks flatlined for the better part of two years had to do with the so called "earnings recession" that has really put a damper on S&P 500 company's profits.  The market this year is up close to 7% but the majority of that gain has come from what we in the business refer to as "multiple expansion".  That is prices of stocks have moved higher but corporate earnings have not kept pace.  Now here are my two main reasons why I think this has been happening.  The first is that the economy is doing better than most of the investor class thinks.  The other is I think the markets smell a post-presidential deal that likely trades taxation and immigration reform for increased federal spending.  Both of these would, I think, be positive for stocks longer term.

It has been my argument for years now since the evidence started appearing back in 2009 that the worst of the Great Recession was behind us that things have been getting incrementally better.  I've written over 90 articles that have stressed this point since 2009.  Certainly the improvement we've seen since then has been choppy and the gains have been distributed unevenly, but our economy is in much better shape than it was back in 2009.   Now in keeping with my argument, Paula Dwyer over at Bloomberg.com took a look at some of the most recent economic numbers and here were a few she highlighted:

The economy is near full employment and inflation is close to where the Federal Reserve wants it to be.

We learned on Tuesday that new-home sales in July were the highest in almost nine years. 

Gasoline prices averaging about $2.15 a gallon are 20% lower than a year ago.  The Energy Information Agency says pump prices could go below $2.00 in the 4th Quarter.  That will boost consumer confidence and provide a stimulus to the economy just as voters are headed to the polls.

Unemployment is steady at 4.9 percent. The economy this year is adding 186,000 jobs a month on average.

Wages are also rising finally. Average hourly earnings are up 2.6 percent annually and, in some sectors, are increasing at the fastest rate since the recession.

Ms. Dwyer used these points and a few more to illustrate why she thinks any potential Federal Reserve increase in interest rates won't necessarily hurt Mrs. Clinton's chances to become President.  I'm using these to illustrate how much better things are today for a vast majority of Americans than they were a few years ago.  As long as this continues it should at least provide a floor for stock prices in the inevitable event of future volatility.  A foundation like this can also provide the fuel for the next stage of corporate growth.  Maybe that's coming and maybe the market is smelling that out.  If that is the case then the market may be on better footing than many folks currently think.

Link:  "Why the Fed Can't Doom Clinton's Chances."

*Long ETFs related to the S&P 500 in client and personal accounts although positions can change at any time.

Chart Talk {08.24.16}

The chart above highlights the very narrow range in which the S&P 500 {here shown via its ETF SPY} has settled into over the summer.  Here we have over 30 trading days or close to seven weeks now where the market has traded in less than a 1% range.  It is rare for markets to trade in such a narrow band.  Probability suggests this will resolve itself one way or another in either further upside movement or a break-down in the range.  We may receive some clues when Federal Reserve Chair Janet Yellen gives a widely anticipated speech on Friday at a Federal Reserve Symposium being held in Jackson Hole, Wyoming.  Investors will look to that speech for clues on the future directions in interest rates.  In particular they will be looking to see if there could be an increase as early as September.  Until then Wall Street is in a wait and see mode.  

As for me, and as I mentioned on Tuesday the next post here will be either Monday or Tuesday next week.

Chart is from Tradingview.com.

*Long ETFs related to the S&P 500 in client and personal accounts although positions can change at any time without notice on this blog.

Go Read

Everybody should go read "Sorry You're Just Going to Have to Save More Money" over at the Wall Street Journal's blog, "MoneyBeat".  There are some longer term implications on the record low interest rates we've been seeing that are only now starting to percolate into the financial system.  We'll cover this more extensively in a future post.  

Now for my schedule the rest of the week.  I am having some dental work over the next few days  and honestly I can't tell if I'm going to feel like posting the rest of the week.  I'll take this on a day by day basis through Labor Day.  I will tell you that we'll be back to a more regular schedule after the holiday next Monday.

Maybe another post this week but back here for sure on Tuesday unless events warrant a break-in update.

Happy holiday.  Too bad summer is coming to an end!

How Will the Market Behave in an Election Year?

The 2016 general election is now in full swing. Donald Trump and Hillary Clinton are fighting as November 8th nears and our nation’s future is decided. Emotions are running high, and the results of this election will have far-reaching consequences, from healthcare to immigration. Those who have money invested in the stock market are particularly nervous, as the unparalleled nature of this year’s election leaves them wondering what is in store for the markets.

Historical Election Year Market Trends^[1]

It is impossible to predict the future, but the past can often provide us with some clues as to what the future may hold. Looking back at history, it is fascinating to see how closely related market cycles and presidential terms are. For the 60 years from April 1942 to October 2002, there were 15 stock market cycles, each lasting about four years, the same length as a presidential term.

When we look a little deeper, we see that bear markets historically occur during the first and second years of presidential terms, while bull markets occur during the third and fourth years. Election years are the fourth of the presidential term. In fact, a bear market, defined as a decline in the S&P 500 Index of 20% or more over a period of 1-3 years, never occurred during an election year from 1942-2002.

What Causes The Cycles?

Why is there such a direct correlation between political and economic cycles? The simple answer is fiscal policy. The Federal Reserve has received a lot of attention as of late for their ability to impact the economy through setting interest rates and controlling the money supply. The executive branch of the government also has their own means of influencing the economy, mainly through taxation and spending.

It doesn’t come as any surprise that politicians have discovered a correlation between the health of the economy and voter satisfaction. Consequently, as an election approaches, the sitting president usually does what he can to improve the economy to keep his party in power through the next election. This exercise of fiscal policy to strengthen the economy leading up to an election contributes to election year bull markets.

However, once the election is over, the new president gets down to business and economic appearances are set aside. All of the hype and optimism surrounding a candidate’s promises also fade away as they get into office and the realities of governing set in. This is why the first two years of a presidential term have traditionally seen a more volatile market environment. Then, as the presidential term wanes, fiscal policy picks up, carrying the markets up into the next election. And so the four-year cycle continues, keeping stride with the presidential election cycle.

What To Expect This Year

I’ll be the first to admit that this has not been a run-of-the-mill election. This year’s political race has been anything but ordinary, to say the least. Some people are blowing things so far out of proportion as to predict complete economic collapse depending on which candidate enters the white house. But is it really that big of a deal?

Looking back to 1900, the data shows that, at least where your portfolio is concerned, it doesn’t make much of a difference which party wins the election.^[2] However, when the end of a second term necessitates the election of a completely new president, the markets can be affected and often do not perform as well as in other elections.^[3]

If history is any guide, we should expect moderately positive market returns this year.  So far this year the markets have upheld this pattern.  However, probability suggests the potential for more volatile behavior once the new president takes office and their economic policies are known. Because of the unprecedented and often unpredictable nature of the 2016 race, investors should be prepared for short-term volatility as well.

What You Should Do

Whether it is an election year or not, investment strategies should be focused on your long-term investment goals. These will vary due to the unique risk and return criteria of each client.  No two investors are the same.  Because of the innate volatility of the stock market in general, I believe that short-term investing should be considered strictly as a tactical portion of an investment portfolio and should be only a modest part of a portfolio if used at all. The fact that we are having an unusual election this year should not make a material difference in a sound overall investment strategy built for the long-term. If you keep your eyes on the horizon then this year’s election will likely be no more than just a small bump in the road, if history repeats.

If you’re not sure that your investment strategy is reliable in choppy markets, it is important to get a second opinion from an experienced professional. Also, if the high emotions and sensational media coverage of the 2016 election are getting to you, talking through things with an advisor can help calm your fears and keep you from making irrational investment decisions. If you have any questions or want to discuss, please contact us at 708.488.0115 or by email at lumencapital@hotmail.com.

About Chris

Christopher R. English is a money manager and the founder of Lumen Capital Management, LLC, a Registered Investment Advisory firm. Specializing in investment management and developing customized portfolios that reflect a client’s values and needs, he has nearly three decades of experience working with individuals, families, businesses, and foundations. Based in the greater Chicago area, he serves clients throughout Illinois, as well as Florida, Massachusetts, California, Indiana, and other states. To schedule a complimentary portfolio review, contact Chris today by calling 708.488.0115 or emailing lumencapital@hotmail.com.

---

^[1] https://gbr.pepperdine.edu/2010/08/presidential-elections-and-stock-market-cycles/

^[2] http://www.kiplinger.com/article/investing/T043-C008-S003-how-presidential-elections-affect-the-stock-market.html#ECpfayA6M0iQEehv.99

^[3]

http://www.marketwatch.com/story/2016-predictions-what-presidential-election-years-mean-for-stocks-2015-12-29

Four Reasons You Should Still Invest Abroad

For the most part, international investing has been a disappointing prospect over the past several years.  Here's a recent performance chart of various broad-based international Exchange-Traded Funds (ETFs) going back to the time around the March 2009 market bottom and through the back-end of July. The S&P 500 is in bright red on the immediate left for comparison

Even a quick look will show that while international performance in some instances has been quite positive, all have paled in comparison to the S&P 500.  The good old USA has been the place to be in this period. Some of these markets, like Latin America, haven't justified the risk of investing in them during this time.  

In such an environment, it could be tempting to turn our backs on foreign markets and just eat our home cooking.  Blackrock's Russ Koesterich tells us in a recent article why it might be a mistake to give up on investing abroad.  Here’s part of the case that Russ makes:

Safe, But Not Necessarily Profitable

It’s easy to look at the significant gains the S&P 500 has been making and decide to play it safe and stay loyal to domestic investing. But even though the market could still improve and see even more returns, current levels have historically correlated with lower future returns. Is it worth it to stay safe and sacrifice future earnings just because the international market is currently low?

Emerging Market Comeback

While emerging markets have been lackluster for the past five years, they are starting to show signs of recovery and stability. While these indices have posted double-digit returns so far in 2016, their valuations are still not what has historically been seen as expensive. Emerging markets may be over bought right now owing to these gains but they might be worth a second look when we experience a correction.  Keep in mind that emerging market indices and their ETFs are typically more volatile than their US counterparts.

Bear Market Differences

In a real bear market, U.S. stocks will continue to suffer. Even though a bear market may not affect the U.S. as much as other countries, the point is that stocks aren’t the only place to invest. Other asset classes, such as investment grade bonds or preferred stocks, offer more security than regular stocks and still give decent returns if we return to that type of environment.

All in all, don’t go to extremes. Don’t abandon international markets, but also don’t disregard the U.S. economy. Create a balance in your investments to reap multiple rewards. If you have any questions about the international market or want to know how to build a stable portfolio that will provide returns, please contact us at 708.488.0115 or by email at lumencapital@hotmail.com.

About Chris
Christopher R. English is a money manager and the founder of Lumen Capital Management, LLC, a Registered Investment Advisory firm. Specializing in investment management and developing customized portfolios that reflect a client’s values and needs, he has nearly three decades of experience working with individuals, families, businesses, and foundations. Based in the greater Chicago area, he serves clients throughout Illinois, as well as Florida, Massachusetts, California, Indiana, and other states. To schedule a complimentary portfolio review, contact Chris today by calling 708.488.0115 or emailing lumencapital@hotmail.com.

*Performance chart is from Stockcharts.com

**We are invested in indices related to the S&P 500 and certain international markets for clients and for our own personal accounts via ETFs.  Please note these positions can change at anytime without notice.

Chart Talk {08.18.16}

Chart is from TradingView.com.

You can double-click on the chart if you want to make it larger.  Back Monday.

*Long ETFs related to the S&P 500 in client and personal accounts although positions can change at anytime without notice on this blog.

What Could Go Wrong? Some Black Swans.

Well we're cruising towards the end of summer now. As I mentioned last week most of the investment class is more worried about their tans than their stocks while the markets have mostly traded with a positive bias.  So what could go wrong?  I mean if we sometimes focus on the positives shouldn't we also look at what could wash over the transom that would lead to a more negative bias by investors?   Today I'm not going to focus on economic numbers or issues such as market valuation.  Instead, I'm going to throw out a five scenarios that are mostly overlooked by investors.  These for the most part are what we refer to in the business as "Black Swans".  You can read more about the theory and history of "Black Swans" here.  For my definition I'll go with something simpler and say a black swan is a low probability and unlooked for event that usually catches investors offsides in the risk profiles of their portfolios.  Examples of "Black Swans are 09.11.2001 and the Japanese earthquakes that led to the Fukushima nuclear disaster in 2011.  So here are my five most likely "Black Swan" candidates in no particular order and my amateurish estimated assessment of the probability of each occurring:

Mr. Trump either wins or closes in on Mrs. Clinton in the polls as we get closer to the elections. Now before the hate mail or phone calls start let me say that I'm not making any political judgement here. What I'm saying and what I've been saying for the past few months is that the market's expectation is that Mrs. Clinton will be the next President.  Since her views on many issues are relatively well-known, the markets are already discounting her likely economic policies.  Should this consensus change then it is possible investors would get more nervous and potentially lower their risk levels until events become more certain. At this point, given some of Mr. Trump's more recent statements and actions this outcome seems less likely.  Also the electoral map does not seem to be in Mr. Trump's favor. However a major gaffe by the  Clinton campaign, a health issue for Mrs. Clinton or a poor performance by her in the debates could change this assessment.  Estimated probability of this outcome less than 30%.

A major weather event affecting the United States or another major economic center around the globe.  Earthquakes and hurricanes are events that cannot be gamed.  The can happen tomorrow or a year from now or maybe never.  Still these have happened in the past and will occur again.  Investors usually focus  on the possibility of a hurricane hitting in the southern US or earthquakes in California but tend to forget that some of the more powerful hurricanes have visited New England and one of the strongest earthquakes occurred along the New Madrid fault in 1811-12.  Overseas what would be the impact of a major eruption of Mount Vesuvius?  Estimated probability of occurrence: Less than 15%.

A major terrorist attack that causes a massive economic US or global  disruption.  Think something like a dirty nuclear device unleashed in the middle of London or New York City. Estimated probability of occurrence:  Unknowable.

A world-wide medical emergency.  A medical event that  rapidly spins out of control and forces countries to either close their borders or significantly limit exposure to the outside world. Such an event would not only be psychologically devastating but would also cause a massive disruption in global trade and economic activity.  Think here of Ebola gone bad. Estimated probability of occurrence:  Less than 15%.

A major international crisis.  Here are a few candidates:  Immigration crisis in Europe inflames tensions in the Middle-East.  The Syrian war becomes a more broad-based conflict.  Conflict between Iran and Saudi Arabia.  A Russian military move against the Baltic members of NATO. A North Korean attack on South Korea.  Finally the scenario I think is the most likely, a sudden sharp military engagement between China and a potential host of regional neighbors over issues stemming in the South China Sea.  Estimated probability of occurrence:  Less than 25%.

Of course since these Black Swans can be identified, none of these will probably occurr.  Instead maybe it will be something like this:  The Cubs win the World Series!  OK this last one is for fun but for all of us long suffering fans it would be an earth shattering event, although most likely not something that would impact markets. Then again maybe it would depress the spirits of the folks in Boston and New York to the point we'd have a bear market!  A Cubby bear market.  Probability of occurrence:  Not even going to go there!

Back Thursday.

Summertime and the Markets

Here is the same post as yesterday but annotated and edited to be sent out to clients via email.

As political and international events occur, it is common for markets to react. We can expect changes to the markets in each season and each quarter, so how are our summer markets shaping up in light of what is going on?

Summer Market Overview

The best way to describe the markets over the past several weeks is to say that we've been consolidating at higher prices with a more positive bias. The S&P 500 is up roughly 8% since the "Brexit" scare back at the end of June. The market has so far been lodged in a narrow trading pattern since the middle of July. Most of the time we've barely traded beyond a 1% range. Depending on your perspective, we're either consolidating those gains in preparation for the next move up or topping out before we begin some sort of decline.  

How Are Advisors Reacting?

Most of Wall Street seems to be in the decline camp. Professionals just hate this market. In reality, most of them have not been for it since 2008, but perhaps their ire is more intensive this year as money managers and hedge funds have, for the most part, significantly underperformed their benchmarks. For most of these folks, their playbook, worldview, and the way they learned the investment business isn't working right now. I'd venture to guess that most of them haven't quite figured out yet what to do about it.

What Are the Factors Affecting the Summer Markets?

But the extreme negative sentiment isn’t the only factor propelling the markets lately. What else is going on that is affecting market performance?

Corporate Earnings

You read the research, go on the Internet, and talk to business people, and there is a palpable sense that things are improving slightly. Perhaps not to the point of seeing the economy print something like a 3% GDP number, but there is a feeling that maybe this corporate earnings trough we've been in these past two years might finally be starting to turn a bit.

Maybe this growing sense of optimism will prove to be just another false lead, but for now, it's there. If corporate earnings start to come in better than estimated, then those high multiples we have on the stock market may start to look a bit more promising as well.

Brexit and Global Markets

Our international community has been dealt some tough blows, but improved growth consensus seems to be percolating around the globe and not just here in the USA. Brexit didn't turn out to be the end of the world.

2016 Election

The 2016 presidential election has caused some instability as well. As of a few weeks ago, the market has discounted a Clinton victory. If that turns out to be the case, then stocks have the potential to become more volatile should that consensus start to be doubted.

Cash and Market Sectors

Along with the negative sentiments towards the market are very high levels of cash in both institutional and individual accounts.  

Finally, broad participation by different sectors of the markets has been occurring. This is a significant change, as the majority of stock leadership through most of 2015 was very narrowly focused.

What Does This Mean For You?

Truthfully, you should know that we are in the "dog days" of August. In the east coast money centers of Boston and New York, folks in the investment business are mostly interested in their tans right now. They're probably just hoping we don't have some sort of crisis that forces them to leave the beach for the office.

Because of that, these factors may not matter. The big dogs may come back after Labor Day and hit the sell button, and everything will change. Also, we're likely not completely out of the woods regarding the economy or the election. At least for now, stocks bleed sideways, or they bleed higher. What worried investors six weeks ago is now largely forgotten, a bad memory on an August breeze. It's summertime and the living, as they say, is easy.

If any of these factors are worrying you, or you have questions you would like answered, please contact us at 708.488.0115 or by email at lumencapital@hotmail.com.

About Chris

Christopher R. English is a money manager and the founder of Lumen Capital Management, LLC, a Registered Investment Advisory firm. Specializing in investment management and developing customized portfolios that reflect a client’s values and needs, he has nearly three decades of experience working with individuals, families, businesses, and foundations. Based in the greater Chicago area, he serves clients throughout Illinois, as well as Florida, Massachusetts, California, Indiana, and other states. To schedule a complimentary portfolio review, contact Chris today by calling 708.488.0115 or emailing lumencapital@hotmail.com.

Posting schedule next week will be Tuesday, Thursday and maybe Friday depending on a few client meetings.  We'll be back to a more normal summer schedule after that.  

Summertime

I think the best way to describe the markets over the past several weeks is to say that we've been consolidating at higher prices with a more positive bias.  The S&P 500 is up roughly 8% since the "Brexit" scare back at the end of June.  The market has so far been lodged in a narrow trading pattern since the middle of July.  Most of the time we've barely traded beyond a 1% range.  Depending on your perspective, we're either consolidating those gains in preparation for the next move higher or topping out before we begin some sort of decline.  

Most of Wall Street  seems to be in the decline camp.  Professionals just hate this market.  Really most of them have hated it since 2008, but perhaps their ire is more intensive this year as money managers and hedge funds have for the most part significantly underperformed their benchmarks.  I'm going to write more on this after I'm back in Chicago, but for now I'll say that for most of these folks their playbook, worldview and the way they were taught the investment business, isn't working right now. I'd venture to guess that most of them haven't quite figured out yet what to do about it.  Again more on this at a later date.

What's been propelling the markets lately besides extreme negative sentiment?

You read the research, go to the internet and talk to business people there is a palpable sense that things are a little better.  Perhaps not to the point of seeing the economy print something like a 3% GDP number, but the sense that maybe this corporate earnings trough we've been in these past two years or so maybe finally starting to turn a bit.   Who knows, maybe this budding sense of optimism will turn out to be just another false lead but for now it's there.  If corporate earnings start to come in better than estimates then those high multiples we have on the stock market may start to look a bit better as well.

Better growth consensus also seems to be percolating around the globe and not just here in the USA. Brexit didn't turn out to be the end of the world.

The market has now more than even a few weeks ago discounted a Clinton victory.  Of course if that is the case then stocks have the potential to become more volatile should that consensus start to be doubted.

Along with the negative sentiment are very high levels of cash in both institutional and individual accounts.  

Broad participation by different sectors of the markets.  This is a huge difference as most stock leadership through most of 2015 was very narrowly focused.

Now you should know that we are in the "dog days" of August. I can tell you that in the east coast money centers of Boston and New York,  folks in the investment business are by and large mostly interested in their tans right now.  They're just hoping we don't have some sort of crisis that forces them to leave the beach for the office.  Therefor none of this might matter because the big dogs may come back after Labor Day and hit the sell button.  Also we're likely not completely out of the woods regarding the economy or the election.  But for now stocks bleed sideways or they bleed higher. What worried investors six weeks ago is now largely forgotten, a bad memory on an August breeze.  It's summertime and the living as they say is easy.

Stay tuned.  

Giving International Equities Another Look

For the most part international investing has been a disappointing place to be over the past several years.  Here's a recent performance chart of various broad based international ETFs in our universe going back to the time around the March, 2009 market bottom and through the back end of July.   The S&P 500 is in bright red on the immediate left and it is here for comparison.

Just as a reminder you can double-click on this chart in order to make it larger.

Even a quick look will show that while international performance in some instances has been quite positive, all have paled in comparison to the S&P 500.  The good old US of A has been the place to be during that time.  Some of these markets, like Latin America, haven't justified the risk of investing in them during this time.  

In such an environment it could be tempting to turn our backs on foreign markets and just eat our home cooking.  Blackrock's Russ Koesterich tells you why that might be a mistake.  Go read his most compelling article at the link below.  I'll list the four main reasons but go read the article so you can read the reasoning behind the results.

1.  The US may be safer, but at a cost.

2.  EM is actually outperforming.

3.  International stocks is not just about stocks.

4.  In a real bear market, US stocks are not necessarily the safest place to hide.

Here's the link.  "Now go read Four Reasons You Should Still Invest Abroad."

Performance charts are from Stockcharts.com.    

Back Thursday.

*Long ETFs related to certain of these indices in client & personal accounts.    Please note positions can change at anytime without notice.

Summer Client Letter {Part IV}

Switching gears, you speak about the importance of dividends.  Can you update us on your thoughts?

Sure.  Dividends have long been an extremely important part of an investment’s total return.  Total return is the appreciation or depreciation of an asset plus the income it returns from dividends.  For example, if stock XYZ appreciates 4% this year and also pays a 2% dividend then your total return on XYZ is 6%.  The long-term appreciation of most equities derives something like 40% of their return from dividends.  I think dividend investing may be the hardest thing for clients to analyze because it often doesn’t show up on account statements or portfolio reports in a way for investors to understand its impact on their investments. Your brokerage statements will likely show when you bought an asset and also may give you estimates of the dividend yield if applicable.  But the only way it shows the effects of dividends is by how it impacts the bottom line of an account.  That may be masked by market volatility, client withdrawals and when the payouts occur.   So for example a $100,000 portfolio receiving $3,000 of income has a 3% yield, not taking any price movement into account.  But if at the end of the year the market has declined 10% that client will show a loss for the return period.  Even though the investor has banked the dividends in his account, those market losses in this example will mask their addition.  However, we’d also note that the dividends added to the portfolio would mute that same market decline.  In our example above, in case of a 10% market decline, the portfolio would be down 7%.  Of course the inverse happens when markets advance.

One of the reasons to buy ETFs is for their cash flows in the form of dividends.  We have an ETF strategy based around this.  Not only is there diversification from owning a basket of securities but you also will likely be the recipient of future dividend increases.  As an example, one of the ETFs many of our clients own has a record of raising dividends almost every year due to the nature of the stocks in which it invests.  It’s first recorded quarterly dividend in 2003 was .288 cents per share.  This ETF now pays .675 cents per quarter.  That is a 134% increase in the dividend payout.  Now as a disclosure, the period March 2008-September 2009 saw its payout decline due to economic conditions and this ETF lost nearly 45% in value.   However, the ETF’s worst quarter saw a dividend payout of .395 cents and it has steadily increased its payout since then.  Buying this ETF at an opening price of $50 in 2003 and holding through this June would have paid you a cumulative $26.87 per share in dividends and closed last month with a share price of $84.  That is the power of dividend investing.~  Over time you should also see price and income appreciation as the economy expands for dividend related ETFs.  Think of ETFs with dividends as securities with the potential for price appreciation plus an income bonus. 

Thank you once again for your continued trust and support.   We're going to be in and out a bit over the next few weeks as we take advantage of what we hope will be the traditional summer downtime in the markets.  Posting will be a bit sporadic during this period unless something warrants us breaking in.  Our next post will be Tuesday.

Chris

~We have not named the security discussed in this article so as to not be seen as providing a recommendation of investment.  We are happy to discuss this ETF individually with clients as to its identity and how it fits into our portfolio strategies.  Information taken about the historical dividends related to this ETF and prices comes from sources deemed to be reliable but cannot be guaranteed.  We will happily provide the information on the dividend and price history upon request.