And another record: in 2024, companies worldwide paid out dividends worth a total of 1.75 trillion dollars, which is 5.2% more than in the previous year.

The major US tech stocks, which previously paid out nothing at all for many years, played the leading role. Alone $META (-4,66%) Meta (Facebook ), Amazon $AMZN (-3,07%) and the Chinese online retailer Alibaba $BABA (-5,84%) were responsible for a fifth of the increase. And $MSFT (-2,35%) Microsoft once again paid the highest dividend worldwide at 22.90 billion dollars. In second place is $XOM (-2,06%) Exxon Mobil with 15.60 billion dollars and only just behind it $HSBA (-1,45%) HSBC with 15.40 billion dollars (see table).

Overall, the top group is heavily dominated by American and Chinese companies. Just under half of the increase comes from the financial sector.

Dividends are particularly important for investors who value current income. The key indicator here is the dividend yield, i.e. the payout in relation to the share price. A high percentage can be based on earnings strength and a shareholder-friendly corporate policy. However, very high dividend yields in particular are sometimes the result of falling share prices and therefore indicate a lack of confidence in the earnings power and therefore also in the medium and longer-term ability to continue to pay high dividends. Therefore, this figure alone can never be a good reason to buy.

Source (excerpt) & chart: Handelsblatt

Last week, Saturday's episode of "All About Stocks" [1] featured an excerpt from the study "Do Stocks Outperform Treasury Bills?" [2], which sounded quite interesting and the contents of which I subsequently read again in more detail.

The essence of the study is that only a small proportion of companies are responsible for the majority of returns.

It therefore serves as a reminder that it is probably the best choice for the "average investor" to invest in a well-diversified ETF.

Here is a brief presentation of the results.

Hendrik Bessembinder from the W.P. Carey School of Business at Arizona State University has investigated which stocks really drive the market in the long term.

According to the study, since 1926 only 4% of all stocks have generated the total net profit of the US stock market [2].

The other 96% of stocks in total have only generated as much return as safe one-month US government bonds or even less [2]. The average monthly return here was 0.37% (which is roughly equivalent to an annual return of 4.53% when compound interest is taken into account).

Almost more interesting is the following:

The top 50 companies were responsible for 39.29% of the total value creation of the US stock market and.

... the top 90 stocks (only 0.36% of all companies) even generated more than 50% of the total market profit [2].

The 4% mentioned still represent just under 1,092 of over 25,000 companies. It doesn't seem so unrealistic to find them.

The only problem is:

The best stocks are usually only recognized in retrospect

• Apple, Mircosoft and Amazon were still small, unknown companies 30 years ago.
• Many investors would have bet on "safe" large companies back then, but some of them (e.g. Kodak or Nokia) are no longer among the top performers today.
• We will only know today's 4% winners in the future.

Even professionals often fail

• Active fund managers try to do just that: find the best stocks and avoid the bad ones.
• But most fund managers do not beat the market over the long term.

Timing is often extremely difficult

• Many of the best stocks looked like losers in the meantime.
• For example, the Amazon share fell $AMZN (-3,07%) after the dotcom crash by almost - 90 %, even after mid-2021 Amazon lost almost - 50 %, would you have held it?

More than half of all stocks have even generated negative returns over their entire lifetime [2].

That means: The average stock return we all know is not generated by the "broad" market, but only by these 4% of stocks.

Further results of the study:

Value creation on the stock market is extremely unevenly distributed.

• ExxonMobil $XOM (-2,06%) alone generated the most shareholder value creation with 1 trillion dollars and was responsible for 2.88% of the total market development from 1926 to 2016 [2].
• Apple $AAPL (-5,01%) ($745.7 billion), Microsoft $MSFT (-2,35%) ($629.8 billion), General Electric $GE (-3,72%) ($608.1 billion) and IBM $IBM (-1,74%) ($520.2 billion) are among the top 5 companies that together account for over 10% of total stock market value creation [2].

The question now for us as investors is:

Do I really think I can buy these 4% winning stocks early can find them early?

... and at the same time can I at least stay away from the biggest losers from the remaining 96%?

... or do I prefer to stick with John Bogle the founder of Vanguard, who gave the following famous quote:

🧠 "Don't try to find the needle in the haystack. Just buy the whole haystack."

The haystack is in that sense an ETF:

• ETFs are a self-optimizing system in which well-performing sectors and companies are overweighted and weak companies gradually lose importance.
• You don't have to find the 4% yourself, the ETF does it for you.

Conclusion

Yes, it is theoretically possible to find the 4% yourself, to time it correctly and to hold it, as well as to stay away from the biggest losers of the 96% in the long term.

The question is: do you want to bet your portfolio on it, or would you rather make sure you automatically profit from the 4%.

💡For most investors, a simple ETF investment as a "core" is therefore probably the best choice.

Thank you for reading 🤝

__________

P.S. The study was published in 2017 and last revised in 2018.

With regard to a more recent analysis, which refers specifically to the last few years, the study does not contain separate results for shorter periods. However, it does mention that this effect has been even more pronounced in recent decades, particularly since the 1980s. To get a detailed current analysis, one would have to search more recent research.

__________

Source:

[1] https://open.spotify.com/episode/7ik1W0e9zq7TBYacPW0eVl?si=Sw2Mu0XSSH2SQFp5cHtpLQ

[2]

published 01/2017, revised 06/2018
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2900447&utm_source=chatgpt.com

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In the following post, I would like to discuss the new US tariffs and their potential economic consequences. The background and the potential impact on inflation and companies, as well as the winners and losers on the stock market, will be discussed.

Again, of course, the stocks mentioned do not constitute investment advice, but merely serve as examples of possible beneficiaries or losers of tightening trade restrictions. Historical developments are no guarantee of future returns.

__________

In this post:

• Influence on inflation
• New tariffs in force
• Reaction of the countries
• Consequences for the global economy
• Winners & losers
• Investment opportunities

__________

The topic of "tariffs" is currently not only very present in the media, but the term "tariffs" has also been discussed with a strong increase in the past earnings calls of companies in the S&P 500, as the following chart shows [1].

The chart shows that the discussion about tariffs has intensified in recent months and is having an ever greater impact on the outlook in companies' annual reports.

The data is presented as a three-month average and broken down into various sectors, including e.g. industry, healthcare, consumer goods, information technology, etc.

I am curious to see how the stock markets will behave in the coming week. In addition to the current reporting season, the topic of "tariffs" will certainly dominate.

After the tough tariffs announced after Trump took office were not immediately enforced and there was a "slight" sigh of relief, there could now be a new reaction on the markets, as there was on Friday evening. slightly was already slightly noticeable on Friday evening when the markets turned towards the evening.

A looming trade conflict could not only affect individual companies, but also further fuel inflation in the US:

💰 Influence on inflation

On January 31, Deutsche Bank published a forecast on the potential impact of tariffs on the inflation rate [2]:

The chart compares the current forecast with the forecast before the "Trump" era and takes into account various scenarios for the passing on of tariffs (pass-through) by Canada and Mexico.

Two scenarios are considered: one with a 50% pass-through of tariffs (additional increase shown in dark green) and one with a 75% pass-through (light green). It is clear that the inflation rate could rise sharply again this year and fall again by 2027.

🛃 New tariffs in force & further measures planned

As of today, February 1, 2025, the US government and Donald Trump have imposed new import tariffs on Mexico, Canada and China:

• 25% on imports from Mexico and Canada
• 10% on imports from China

According to the White House spokesperson, these measures are, among other things, a response to the failure of these countries to stop the influx of fentanyl and illegal immigrants into the USA. [3]

But this is just the beginning:

From mid-February, the USA will also impose tariffs on strategic goods [4], including:

• computer chips
• pharmaceuticals
• Steel, aluminum and copper
• Oil and gas imports (but only from February 18 with reduced 10% tariffs so as not to burden US petrol prices immediately).

🚨 Trump relies on escalation - Canada announces retaliation

Yesterday, Canadian government representatives, including Foreign Minister Mélanie Joly, tried to prevent the tariffs in Washington, but to no avail.

Trump made it clear before his departure to Mar-a-Lago [5]:

"We have a 200 billion dollar trade deficit with Canada. Why should we subsidize Canada?"

The EU could also soon be targeted, as Trump hinted:

"Absolutely! The European Union has treated us so terribly!"

🔄 Canada's reaction:

Prime Minister Justin Trudeau announced that Canada will not back down and will respond with "swift and robust countermeasures".

The government is planning a three-stage retaliation strategy [5]:

• 1️⃣ Targeted punitive tariffs on US products coming from Republican states (e.g. orange juice, whiskey, ketchup, peanut butter and motorcycles).

• 2️⃣ Tariffs on steel products and machine parts from the USA.

• 3️⃣ Escalation: Stop exports of oil, gas and electricity to the USA

However, this last step in particular would be a double-edged sword, as Canada is heavily dependent on energy cooperation with the USA.

Economic experts in the US are already warning of the consequences of a trade war [5]:

• The new tariffs could increase the cost of living of an average US household by 800 dollars per year.
• The oil and gas tariffs could increase the price of petrol in the USA by up to 20 cents per liter.

But Trump remains firm:

"Maybe there will be short-term disruption, but in the long run the tariffs will make us very rich and very strong."

🌎 Possible consequences for the global economy

(a) Rising prices in the USA

• Technology & electronicsHigher chip prices are hitting companies such as Apple $AAPL (-5,01%) , Dell $DELL and HP $HPQ (-1,9%) as many of their components come from China.

• Healthcare costs: Pharmaceutical companies such as CVS Health $CVS (-0,06%) and Walgreens Boots Alliance $WBA (+0%) are facing higher purchasing costs.

• Construction & InfrastructureHigher steel prices are weighing on companies such as Lennar $LEN (+0,44%) D.R. Horton $DHI (-1,38%) and Caterpillar $CAT (-1,88%) .

(b) Retaliation & new trade wars?

• China could impose tariffs on US products, which could affect e.g. Archer Daniels Midland $ADM (-1,24%) Boeing $BA (-2,36%) and Qualcomm $QCOM (-2,21%) would be affected.

• The EU could make US imports more expensive, which would affect Tesla $TSLA (+0,75%) , Ford $F (+0%) and General Motors $GM (-2,33%) could be harmed.

(c) Effects on the stock market

• Volatility is increasing as there is uncertainty about the consequences for various industries.

• Particularly affected: Technology and automotive stocks with global supply chains.

🏆 Winners & losers - which companies will benefit, which will suffer?

Possible beneficiaries of the tariffs

US manufacturers of steel, aluminum & copper

• Nucor $NUE (+0%) , U.S. Steel $X (+0%) and Freeport-McMoRan $FCX (-2,28%) could benefit as foreign competition becomes more expensive as a result of the tariffs.

Domestic pharmaceutical and biotech companies

• Pfizer $PFE (-0,99%) Moderna $MRNA (+0%) and Eli Lilly $LLY (+0%) could gain market share.

Energy companies with US production

• ExxonMobil $XOM (-2,06%) , Chevron$CVX (-2,3%) and Expand Energy $CHK (+0,34%) could benefit from rising prices for US oil and gas.

Chip manufacturers with US production

• Intel $INTC (-3,21%) and Texas Instruments$TXN (-2,29%) have US factories and could gain market share.

😥 Companies that could suffer from the tariffs

Chip manufacturers with global supply chains

• Apple $AAPL (-5,01%) NVIDIA $NVDA (-3,43%) , AMD $AMD (-2,91%) are dependent on Asian imports and could see higher production costs.

Car manufacturers with global suppliers

• Tesla $TSLA (+0,75%) , Ford $F (+0%) , General Motors $GM (-2,33%) are under pressure because components from Mexico and Canada could become more expensive.

Companies with strong export business

• Boeing $BA (-2,36%) and Caterpillar $CAT (-1,88%) suffer from possible retaliatory tariffs.

US retailers with a high import share

• Walmart $WMT (-2,86%) , Target $TGT (-3,75%) and Nike $NKE (-6,6%) could have to pass on rising prices to customers.

🧠 Possible investment strategies

Favor defensive sectors:

• Utilities (e.g. NextEra Energy $NEE (-1,67%) Duke Energy $DUK (+0%) ) and healthcare companies (e.g. UnitedHealth $UNH (-0,17%) , Johnson & Johnson $JNJ (+0,37%) ) remain more stable.

Exploit long-term opportunities in "reshoring":

• Intel $INTC (-3,21%) , Eli Lilly $LLY (+0%) , Nucor $NUE (+0%) could benefit in the long term.

Conclusion: Will the trade conflict escalate further?

With the new tariffs, Trump is taking a confrontational stance and Canada, Mexico and China are preparing for retaliatory measures. If further tariffs on European goods follow, the situation could worsen.

❓Which stocks do you think could be most affected? Which beneficiaries do you see?

Thanks for reading! 🤝

__________

Sources:

[1] https://finance.yahoo.com/news/yahoo-finance-chartbook-44-charts-that-tell-the-story-of-markets-and-the-economy-to-start-2025-105856766.html

[2] https://finance.yahoo.com/news/2-charts-show-why-markets-are-skittish-about-trumps-tariff-policy-144318249.html

[3] https://www.faz.net/aktuell/politik/usa-unter-trump/trumps-verhaengt-zoelle-gegen-kanada-mexiko-und-china-110269990.html?

[4]

https://www.finanznachrichten.de/nachrichten-2025-01/64440108-trump-usa-werden-ab-mitte-februar-zoelle-auf-computerchips-stahl-sowie-oel-und-gasimporte-erheben-015.htm

[5] https://www.tagesschau.de/ausland/amerika/usa-trump-strafzoelle-100.html

$XOM (-2,06%)

The No. 1 US oil producer reported a total profit of 33.46 billion dollars for the full year 2024, down from 38.57 billion dollars in the previous year.

After completing the acquisition of Pioneer Natural Resources in May, the company became the largest oil producer in the Permian Basin in 2024, the largest oil field in the US.

Profit for the fourth quarter amounted to 7.39 billion dollars.

Earnings per share amounted to 1.67 dollars, exceeding analysts' estimates of 1.56 dollars.

Exxon's low production costs in the Permian Basin and its lucrative and prolific projects in Guyana have supported the company's profits despite lower oil prices (link) and a drop in profits from fuel production.

The company had said earlier this month that the sharp fall in oil refining margins (link) would mean a drop in profits of USD 300 million to USD 700 million compared to the third quarter.

The start-up of new oil refineries by other companies in Asia and Africa led to higher global fuel supply, even though demand for gasoline and diesel fell short of expectations.

The refining business remains under pressure as the additional supply comes to market, Exxon Chief Financial Officer Kathryn Mikells said in an interview.

"That's what we're really watching as we look ahead to 2025," she said.

The company had previously stated that impairment charges would cost around 600 million dollars in the fourth quarter. The costs stem from the sale of non-strategic assets, including a joint venture in Nigeria , Mikells said.

The largest U.S. oil producer still expects a decision by September in its arbitration case against Chevron's takeover of oil producer Hess, she said. If Chevron goes through with the takeover, the company would gain a foothold in oil projects in Guyana.

While the deal has been approved by U.S. regulators, Exxon and CNOOC, Hess' partners in the Guyana oil joint venture, claim they have a contractual right of first refusal to buy Hess' stake.

Returns to shareholders through buybacks and dividends totaled 36 billion dollars in 2024, compared to 32 billion dollars in the previous year. Distributions to shareholders, a cornerstone of Big Oil's strategy to woo investors, were covered by Exxon's free cash flow of $36.2 billion.