Flush with cash on their balance sheets, many U.S. companies have increasingly been rewarding shareholders in the form of dividends over the past year. That’s good news to the many investors who have sought out dividend-paying stocks for potential relief in today’s yield-scarce environment. Alan Muschott, portfolio manager for Franklin Equity Income Fund, is a vocal fan of not just dividends, but growing dividends. In a recent interview he shared his views on the dividend comeback, including technophile-favorite Apple’s announcement that it plans to declare a dividend for the first time in more than two decades. Read on to see what he had to say. Read more…
Never underestimate the power of perception to influence people’s fiscal behavior. Perception is such a significant influence, in fact, that economic tea-leaf readers have developed a myriad of surveys and indicators to monitor individuals’ perceptions of the investing environment because perceptions can—and do—move markets. When sentiment is negative, investors tend to shift out of assets they perceive as “risky” and into assets they perceive as “safe.” Ed Perks, portfolio manager of Franklin Balanced Fund and Franklin Income Fund, is well aware of the role perception plays in the markets and even took note of it in a previous post to these pages: see “Perception vs. Reality.” Here he picks up the thread with his strategy for determining a strategic mix between equities and fixed income when market perceptions change, and what he sees as the fundamental reality today. His thoughts, in brief:
- We’ve seen a gradual decline in market volatility levels in the first quarter and, at the same time, an increase in risk-tolerance among investors.
- Despite market turbulence, corporate profits have remained strong.
- We think rewarding shareholders, achieving dividend growth, and engaging in share buy-backs should be a big part of the corporate story in 2012.
- Dividend-paying common stocks offer an interesting opportunity amid the reality of today’s yield-scarce environment. Read more…
Last year at about this time, the municipal bond market was in the midst of a selloff of historic proportions. Franklin Templeton’s Municipal Bond Department Co-Director, Rafael Costas, was quite vocal during that period in the face of what his team viewed as an unnecessary panic. What a difference a year makes! The panic has subsided, and now, John Wiley, portfolio manager for Franklin High Yield Tax-Free Income Fund, offers his voice to the conversation. According to Wiley, now’s an exciting time for investors to consider this asset class, which he feels is on firmer footing today. In brief:
- We believe the fear and dire predictions about municipal bonds last year were largely unfounded and misguided.
- We think the municipal bond market is now trading on strong fundamentals.
- Fiscal constraints remain in the marketplace; we need to be disciplined and responsible in our investing.
- In our opinion, it’s nonsensical to compare the U.S. municipal marketplace to sovereign-debt countries.
- We are staying more defensive; we think it’s the most prudent course of action. Read more…
Gasoline, deodorant, dishwashing, liquid, eye glasses, crayons….What does this list of seemingly random items have in common? They are all made from refined crude oil.1 So even if you don’t feel pain at the gas pump, you probably rely on more products made with or from crude oil than you’d think. And of course even non-oil based products are generally shipped via fuel-consuming transport vehicles, so you’re bound to feel the pinch in the form of fuel surcharges or price hikes sooner or later.
But Beyond Bulls & Bears has never taken a fatalistic view. If volatility can present buying opportunities, surely there’s a possible silver lining to headline-making oil price heights. And so we turn to Fred Fromm, portfolio manager for Franklin Natural Resources Fund and part of the team that manages Franklin Gold and Precious Metals Fund, aka the guy with the inside scoop on all things oil, gold, and even those other less-talked-about commodities.
Fromm in brief:
- U.S. demand for gasoline is actually down, but demand outside the U.S. is strong.
- Geopolitical issues, namely in Iran and Syria, are being factored into oil pricing, but major disruptions may not occur.
- If China’s growth rate could continue indefinitely, its too-strong growth would likely strain commodity supply.
- Supply-demand balance looks tight enough to support gold, but demand can fall quickly and should be closely watched.
- Fromm opts for geographic diversification to avoid the risk of having too many investments in a country with a high degree of political risk. Read more…