Weekly Wrap: Stock Picks of Top Managers, Dividend Funds, and Amazon.com

Weekly Wrap: Stock Picks of Top Managers, Dividend Funds, and Amazon.com

Russia/Ukraine Conflict and the Markets

It’s been two weeks since Russia invaded Ukraine, and leaders and companies around the globe continued to respond this week. President Biden banned Russian oil imports to the United States . Major companies like Visa and Mastercard , Coke and Pepsi , and McDonald’s and Starbucks suspended their operations in Russia.

With the Russian stock and bond markets in shambles, index providers like MSCI and FTSE Russell dropped Russian stocks from their global benchmarks. “As I see it, the message is as strong as an index manufacturer can send from its perch, effectively: ‘You’re on your own now, and your stock market is worthless,’” noted Morningstar’s director of global ETF research Ben Johnson . Russia-focused exchange-traded funds in the U.S. have stopped accepting new money, and the many emerging-markets stock and bond funds with exposure to Russian stocks have struggled.

For investors, volatility has reigned . Morningstar’s markets columnist Sandy Ward filed an excellent piece this week outlining lessons for investors from post-invasion markets . You can find all of our coverage for investors related to the Russia/Ukraine conflict here . Stock Picks of Top Managers

This week, we published the second installment in our quarterly Ultimate Stock-Pickers series, focusing on buys and sells . (We published the installment about high-conviction purchases two weeks ago.) As a refresher, our roster of Ultimate Stock-Pickers includes 26 investment managers that our research teams deem elite; each quarter, we delve into the portfolios of these top-tier investors, looking for new investing ideas to pursue further.

One of the more attractively priced stocks among those purchases: 3M ( MMM ). The stock is about 24% undervalued today, though senior analyst Josh Aguilar admits that litigation risks will likely continue to muck up the company’s story for the foreseeable future. That being said, 3M may be a compelling idea for dividend-seekers , with its 4% forward dividend yield. “We think the dividend is safe, given 3M’s prioritization among its capital allocation priorities and a strong balance sheet,” adds Aguilar. Superb Dividend Funds

Speaking of dividend seekers: In my Our Picks column this week, I examine some of the highest-rated dividend-stock focused funds and ETFs . Although retirees typically adore dividend stocks for their income streams, many investors in the nonretired set enjoy “getting paid to wait”–or the idea of collecting quarterly income from stocks while holding on for stock price appreciation. And this year, many dividend investors are outpacing the market: Both the Morningstar Dividend Growth and the Morningstar Dividend Yield indexes are outperforming the Morningstar US Market Index for the year to date.

Part of the outperformance–at least for the Dividend Yield Index–owes to the stunning gains of rich-yielding energy stocks this year. In a recent episode of Dividend-Stock Deep Dive , Morningstar’s director of research for energy, Dave Meats , talked about the dividend prospects for the energy sector. And this week, Morningstar DividendInvestor editor David Harrell wrote a great primer on the variable dividend trend that seems to be sweeping the exploration and production industry specifically. Stock of the Week: Amazon.com

On Wednesday, Amazon.com ( AMZN ) announced plans for a 20-for-1 stock split . The firm is no stranger to stock splits, having split its stock a couple of times in the company’s history. Given that stock splits do not have any fundamental impact on a company’s prospects, Morningstar’s analysts generally shrug them off.

But stock split or no stock split, Morningstar thinks that this is a fundamentally strong company trading at a great price. We assign it a Morningstar Economic Moat Rating of wide with a stable moat trend and an exemplary capital allocation rating . “Amazon remains well positioned to prosper from the secular shift toward e-commerce and the public cloud over the next decade,” says senior analyst Dan Romanoff . The icing on the cake: Shares are trading about 32% below our $4,100 fair value estimate. International Women’s Day

“Soon, women will play a bigger role in the world’s wealth,” notes Morningstar’s editorial director of sustainability Leslie Norton . “They’ll take control of more baby boomer assets, and, increasingly, they take the role of family breadwinners.”

In honor of International Women’s Day on March 8, Morningstar’s researchers examined women and investing from a variety of angles. We took a look at the corporate pay gap in the C-suite and how sexual misconduct became a business risk . We shone a spotlight on standout companies led by female CEOs and terrific female portfolio managers . And we uncovered why […]

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