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No stock split in sight | Unilever revives buybacks |
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Hi Reader, here's what you need to know for April 30th in 3:07 minutes.

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Today's big stories

  1. Online retail and cloud computing giant Amazon announced strong first-quarter results
  2. There are two simple strategies you can use to find stocks that pay the best dividends on the market – Read Now
  3. Unilever reported better-than-expected quarterly earnings of its own

Spoiled For Choice

Spoiled For Choice

What’s Going On Here?

Amazon reported better-than-expected results late on Thursday, and investors – who initially pushed its stock up 5% – couldn’t decide how to celebrate first.

What Does This Mean?

Amazon’s ecommerce business – perfectly placed to benefit from the global rise in stay-at-home shopping – grew its sales by a higher-than-expected 40% in North America and 60% internationally. The working-from-home trend, meanwhile, boosted the company’s cloud computing business, which reported expectation-busting sales that were 32% higher than the same time last year. Put both segments together, and Amazon delivered a quarterly profit that shook off pandemic-driven elevated costs and came in 65% better than expected – as well as a sales growth forecast for this quarter that blew past predictions.

Why Should I Care?

The bigger picture: Amazon’s a pulse check on big tech.
Amazon’s broad reach tells you a lot about how other companies are getting on too. The company’s better-than-expected performance in ecommerce, for example, bodes well for retail rivals Walmart and Target. The continued momentum of its cloud computing segment, meanwhile, suggests the industry’s still growing quickly – especially alongside Microsoft and Google’s own rapid growth in the area. And as far as its advertising business goes, last quarter’s 70%-plus revenue growth gives weight to recent reports that online ads are surging in a big way.

For markets: There’ll soon be more Amazon to go around.
Some investors were also expecting Amazon to announce a “stock split” on Thursday. In other words, every share an investor owns – currently worth around $3,500 each – would be replaced by multiple cheaper shares (say, 10 shares worth $350 each). Companies like Tesla and Apple took that route last year, making it easier for new investors – retail and institutional alike – to buy their shares and give their stocks a boost. Amazon didn’t end up announcing a split on Thursday, but it may happen before too long with a new CEO taking the helm later this year.

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2. Analyst Take

How To Find The Best Dividends

What’s Going On Here?

Now that companies are in post-pandemic recovery mode and markets are so expensive, investors’ attention is turning back to dividends.

No surprises there: dividends – the cash payouts firms often make their shareholders – offer lower but more certain returns than the capital appreciation of buying low, selling high.

But finding the highest-paying stocks starts with two key factors: knowing where to look, and knowing which key characteristics to look out for.

You could, for instance, buy stocks with a long track record of increasing their payouts. Or you could buy dividend-paying stocks that screen as particularly attractive right now.

That’s our Insight for today: how to track down the biggest payouts, and which stocks currently fit the bill.

Read or listen to the Insight here

Thick Skin

Thick Skin

What’s Going On Here?

Unilever’s not going to let a little wrinkle like the pandemic spoil its quarter: the consumer staples company reported better-than-expected earnings on Thursday, and its stock price rose 3%.

What Does This Mean?

In a world where there’s not much more to do than eat your bodyweight in snacks or moisturize your orifices, it makes sense that food and skincare brands have been two of the biggest lockdown winners. Those segments helped Unilever grow its sales by a better-than-expected 6% compared to the year before, and gave the firm the confidence to predict as much as 5% growth for the rest of 2021. That might come as a surprise considering two of its key markets – India and Brazil – are fighting dramatic surges in coronavirus infections. But it might have something to do with its recent push into two particularly fast-growing areas: plant-based foods and cosmetics.

Why Should I Care?

For markets: Buybacks are back, baby.
Unilever also took the opportunity to announce that it’s buying back its own shares for the first time since 2018 – almost $4 billion worth. That makes it one of the first consumer companies since the outbreak to restart buybacks, which reduce the number of shares available on the market and boost the prices of those left over (tweet this). And it’s not the only way Unilever's planning to spend its cash this year: the firm hinted that it’s not averse to a new acquisition if the right opportunity lands in its lap.

The bigger picture: Keep that consumer spending coming.
Unilever’s strong results come just a week after Nestlé’s own better-than-expected earnings, and right alongside McDonald’s expectation-beating update, which saw the fast food chain’s revenue beat even pre-pandemic levels. And what do they all have in common? They all seem to be reaping the rewards of a post-lockdown consumer spending boom – one that shows no signs of letting up.

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🤔 Q&A · RE: Waste Not, Want Not

“I know that passive investment funds outperform actively managed funds in the long run. But are there specific active managers who deliver consistent outperformance worth the higher fees?”

– Douglas in Florida, USA

“There are, Douglas, but they’re not easy to find. For a start, active managers with a long track record are a rarity: less than 20% of managers look after the same fund for more than ten years. Rarer still are those who’ve outperformed their benchmarks in that time: just 39% of managers fit the bill there. That’s even taking into account so-called ‘survivorship bias’, which boosts the figure by excluding shuttered funds from the count. Your best bet is to use databases like Morningstar’s to find them. And even then, since past performance doesn’t guarantee future results, your rockstar fund manager might hit a bum note just as you invest with them.”

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🤔 Who is Max Rofagha really?

They say Max Rofagha, founder and CEO of Finimize, is about to bring the theory of gravity to its knees. They say he was raised on a steady diet of acorns, Skittles, and mistrust. They say he once released a single called “Invest In My Heart” under the stage name “MRof”. Is any of this true? Ask him any of those questions – and more useful ones – at Friday’s Live Q&A With Finimize CEO Max Rofagha.

👋 Live Q&A With CEO Max Rofagha: 1.30pm UK time, April 30th
📈 The Shift From Growth To Value Stocks: 6pm UK time, May 4th
⚽️ Investing In Professional Sports: 6pm UK time, May 5th
🤒 The Financial Health Check: 4pm UK time, May 6th
🎉 Crowdfunding Club: 1pm NYC time, May 10th
☄️ The Future Of Commodities: 6pm UK time, May 12th
🤖 NFTs: A Modern-Day Masterpiece?: 5pm UK time, May 13th
💪 Building A Circular Economy: 5pm UK time, May 25th
🇨🇳 The Surge In China’s Tech Scene: 5pm UK time, June 1st

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