Established in 1957, the S&P 500, also known as the Standard and Poor’s 500 Index, is a capitalization-weighted index of 500 large-cap common stocks. Capitalization-weighted means that the companies with largest stock market capitalization have the greatest impact on the value of the index. The S&P 500 is the second most widely followed stock market index in America after the Dow Jones Industrial Average.
You don’t often hear a lot about United Technologies Corporation (UTX) these days; it’s an old economy name that doesn’t seem to garner much attention from the media.
Nevertheless, the company that makes elevators, helicopters, airplane engines, and HVAC (heating, ventilation, and air conditioning) and fire/security systems continues to perform excellently. It’s a component of the Dow Jones Industrial Average, and the stock’s had an exceptional year. (See “The One Market Sector That’s Consistently Outperforming the Rest.”)
Approximately $17.0 billion of the company’s total sales in 2012 came from its “UTC Climate, Controls and Security” business. Next was “Pratt & Whitney” aircraft engines at $14.0 billion. “Otis” elevators and escalators brought in $12.0 billion in sales last year, followed by “UTC Aerospace Systems” at $8.3 billion and “Sikorsky” helicopters at $6.8 billion.
As a conglomerate with a strong constituent in aerospace, United Technologies has an excellent track record of increasing its dividends to stockholders.
In 2012, the company increased its common share dividend by a total of 11.5%, representing its 76th consecutive year of paying dividends. According to the company, from fiscal year-end 2002 to year-end 2012, United Technologies delivered a 225% total return to shareholders, which is more than double the total return of the DOW or S&P 500.
In 2008, the company paid out $1.35 in total dividends per share. By the end of last year, that figure was $2.03 per share.
Of the company’s total sales, 40% are in the U.S. market, followed by 26% in Europe and 20% in the Asia Pacific region.
Since the recession, United Technologies’ sales, earnings, and earnings per share … Read More
It’s hard to believe we are nearing the end of another year. It seems as though the move into 2013 was just yesterday. I was bullish at the start of the year, but I was not expecting the kind of stock market advances we have seen with the NASDAQ and Russell 2000 up more than 30% and the S&P 500 nearing that level with multiple record-highs.
Recently, I wrote about the need to ride the current market higher, as the signs point to more upside moves ahead. (Read “Why Stocks Likely to Head Higher into the New Year.”) But at the same time, I remain nervous about the vulnerability of the stock market.
The soft results from what was pumped up as a killer Black Friday failed to materialize, as sales on the Thanksgiving weekend fell 2.7% year-over-year, according to the National Retail Federation (NRF). The NRF did estimate sales during the next few weeks prior to Christmas could rise 3.9%, but while it may pan out, it will only do so because of heavy discounting to clear inventory.
What continues to linger on my mind is the fact that we have yet to see a correction of 10% or more during this four-year bull market, which began in March 2009. This makes me nervous.
Robert Shiller, who was one of three Americans who just won the 2013 Nobel prize for economics, believes there is a bubble in the U.S. stock market, especially given the run-up in stocks in spite of what has been a fragile economic recovery. (Source: Clinch, M., “Nobel Prize winner warns of … Read More
In the first 11 months of this year, key stock indices like the S&P 500 have gone up 26%. But as this happened, we saw optimism towards stocks increase and fundamentals became weak—two major negatives for stocks going into 2014.
According to the Investment Company Institute (ICI), U.S. long-term stock mutual funds have been witnessing massive inflows. Between the week ended October 23, 2013 and the week ended November 20, 2013, U.S. long-term stock mutual funds saw inflows of $23.95 billion. (Source: Investment Company Institute, November 27, 2013.)
It seems investors are confident key stock indices will continue to go higher. Risk is not a concern anymore. One of the ways this can be seen is via the Chicago Board Options Exchange (CBOE) Market Volatility Index—better known as the “VIX.” This index gauges the amount of fear in the key stock indices. You will see in the chart below how the VIX is breaking down to new lows.
Chart courtesy of www.StockCharts.com
The VIX is saying investors are far from worried about a decline in key stock indices. But the optimism doesn’t end here; I’ve read several analysts say key stock indices will soar higher. One of the most recent examples is Adam Parker from Morgan Stanley (NYSE/MS). He believes that the S&P 500 (currently at 1,800) will reach 2,014 by the end of next year. (Source: Wall Street Journal, December 2, 2013.)
On the fundamental side, the most critical factor for a rally in key stock indices—corporate revenue and earnings growth—just isn’t there. Consider this: as of November 29, almost all of the companies in the S&P 500 … Read More
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