Weekly Digest: Stock Picks from Top Managers, Dividend Funds and Amazon.com

The Russian-Ukrainian conflict and the markets

It has been two weeks since Russia invaded Ukraine, and leaders and businesses around the world have continued to react this week. President Biden has banned imports of Russian oil into the United States. Big companies like Visa and Mastercard, Coke and Pepsi, McDonald’s and Starbucks have suspended operations in Russia.

With Russian stock and bond markets in shambles, index providers like MSCI and FTSE Russell have removed Russian stocks from their global benchmarks. “In my view, the message is as strong as any index maker can send from their perch, effectively: ‘You are on your own now, and your stock market is worth nothing,'” noted the director of global equity research. ETF from Morningstar, Ben Johnson. . Russian-focused exchange-traded funds in the United States have stopped accepting new money, and the many emerging-market equity and bond funds with exposure to Russian stocks have struggled.

For investors, volatility reigned. Morningstar Markets columnist Sandy Ward wrote an excellent article this week outlining lessons for investors in post-invasion markets. You can find all of our coverage for investors related to the Russian-Ukrainian conflict here.

Choice of stocks from the best managers

This week we released the second installment of our quarterly Ultimate Stock-Pickers series, focusing on buys and sells. (We published the article on high-conviction buying two weeks ago.) As a refresher, our list of Ultimate Stock-Pickers includes 26 investment managers that our research teams deem elite; every quarter, we review the portfolios of these leading investors, looking for new investment ideas to explore.

One of the most attractive stocks among these purchases: 3M (MMM). The stock is around 24% undervalued today, although senior analyst Josh Aguilar admits litigation risks will likely continue to mar 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 believe 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 take a look at some of the top-rated dividend-focused equity funds and ETFs. While retirees generally love dividend-paying stocks for their income streams, many non-retired investors love “getting paid to wait” — or the idea of ​​earning quarterly income from stocks while clinging to life. stock price appreciation. And this year, many dividend investors are outperforming the market: the Morningstar Dividend Growth and Morningstar Dividend Yield indices have outperformed the Morningstar US Market index year-to-date.

Part of the outperformance – at least for the dividend yield index – is due to the stunning gains in high-yielding energy stocks this year. In a recent episode of Dividend-Stock Deep Dive, Morningstar’s Director of Energy Research, Dave Meats, spoke about the dividend outlook for the energy sector. And this week, Morningstar DividendInvestor editor David Harrell has written an excellent primer on the variable dividend trend that seems to be sweeping the exploration and production industry in particular.

Stock of the week: Amazon.com

Wednesday, Amazon.com (AMZN) announced plans for a 20-to-1 stock split. The company is no stranger to stock splits, having split its stock a few times in the company’s history. Since stock splits have no fundamental impact on a company’s outlook, Morningstar analysts typically ignore them.

But stock split or no stock split, Morningstar thinks it’s a fundamentally sound company that’s trading at a premium. We give it a broad Morningstar Economic Moat Rating with a stable trend and an exemplary capital allocation rating. “Amazon remains well positioned to thrive from the secular transition to e-commerce and public cloud over the next decade,” said senior analyst Dan Romanoff. The icing on the cake: shares are trading about 32% below our fair value estimate of $4,100.

International Women’s Day

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

In honor of International Women’s Day on March 8, Morningstar researchers examined women and investing from a variety of angles. We looked at the corporate pay gap in the C-suite and how sexual misconduct has become a business risk. We’ve shined the spotlight on remarkable companies led by female CEOs and excellent female portfolio managers. And we discovered why women invest less than men and how they can avoid a pension deficit. Find all this content and more in our special report, How Women are Breaking Stigma in 2022.

–Susan Dziubinski

Editor’s Picks

6 questions to answer about your 401(k) plan today
There’s no need to panic, but checking these things can help you keep your retirement on track.

18 Best Dividend Equity Funds for 2022
These mutual funds and ETFs pursue various dividend strategies and are rated silver or gold by Morningstar analysts.

Minimum distribution confusion required in 2022
Ed Slott shares the changes that have happened.

How did the best bond managers handle the Russian-Ukrainian war?
Funds with large holdings in Russian and Ukrainian bonds face challenges.

5 steps women can take to improve their retirement readiness
The data is sobering on women’s preparedness for retirement, but being proactive can help avoid a shortfall.

When the stock market is blatantly inefficient
The Curious Case of Digital World Acquisition Corporation Warrants.

Big financial questions? Step away from the spreadsheet
Not all decisions are based on numbers. The correct answer might involve a bit of introspection.

How can I earn more on my secured money?
Liquidity and capital loss are things to keep in mind.

20 IRA mistakes to avoid
From contributions to conversions to distributions, don’t fall for these traps.

Index providers react to Russian market turmoil
Index providers and asset managers are abandoning Russia.

The best female portfolio managers to invest with now
The fabulous 27 female managers.

2 bond ETFs for a rising interest rate environment
It may be time to change your fixed income holdings.

3 target date funds for an IRA in 2022
Here’s why target date funds can be great choices for an IRA.

Is investing in emerging markets worth the risk?
With greater and more hazards, these markets underscore the importance of diversification.

Only 8% of Emerging Markets Funds Miss Russia’s Collapse
Some fund processes kept them away from Russian companies.

Why are so many commodity funds underperforming?
Factors that have traditionally been a boost have hurt in 2022.

Starbucks stock price offers a buying opportunity
A hit in Starbucks stock could boost portfolios as the rewards program spurs growth.

Top 10 buys and sells from our ultimate stock pickers
The funds see value in a wide range of sectors.

Airline stocks encounter turbulence
Demand headwinds could be ahead.

Is PayPal’s stock overvalued?
The Morningstar analyst thinks the company could face some headwinds in 2022, but investors may want to tune in to the current stock price.

Indirect Exposure of Automotive Stocks to Uncertain War
Although we expect a negative impact on our fair value estimates, we remain focused on long-term value.

What to expect from the 2022 proxy season
On the shareholders’ agenda this year: the climate, transparency in lobbying, gender and racial pay equity, diversity and Carl Icahn’s fight for animal rights.

Autocracy is a bad investment
Russia and China emphasize the need to take “regime risk” into account.

Andrew Miller: “No index is truly passive”
The investment advisor discusses portfolio construction, “active index decisions” and the challenges of setting retirement withdrawal rates.

Sign of a good fund company: it does not close its funds
The virtues of organizations that stand and wait.

Should you withdraw your mortgage?
Personal finance expert Clark Howard shares his views on the housing market in 2022.

The advantages and disadvantages of variable dividends
Some companies adopt variable dividend policies. Will the trend prevail?

Could group savings work for my family?
You don’t have to amass savings and assets alone.

A flurry of new ETFs have been launched in 2022
The latest offerings range from sensitive to speculative.

Most requested stock quotes

Meta Platforms Inc Class A
Apple
Microsoft
Amazon.com Inc.
NVIDIA Corp.

Most requested fund quotes

Vanguard 500 Index Admiral
Stock Dodge & Cox
Loyalty index 500
Vanguard Dividend Growth Inv
Vanguard Total Stock Mkt Idx Adm

Most requested ETF quotes

Vanguard S&P 500 ETF
SPDR S&P 500 ETF Trust
Invesco QQQ Trust
Schwab US Dividend Equity ETF
Vanguard Total Stock Market ETFs

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