Podcast Summary
Improve communication skills with the Think Fast, Talk Smart podcast: Learn effective communication strategies from experts and stay informed about business news with the Think Fast, Talk Smart podcast
Effective communication skills are essential in business and life, and the Think Fast, Talk Smart podcast can help you hone these skills. The podcast, which has received nearly 43 million downloads and is the number one career podcast in 95 plus countries, offers valuable insights from experts on various communication topics. For instance, you can learn how to manage speaking anxiety from neuroscientist Andrew Huberman, or how to take risks in your communication from bestselling author Dan Pink. In the business world, strong communication skills are crucial, and the podcast covers a range of topics to help you improve in this area. Regarding the business news, Salesforce CEO Marc Benioff announced that the company plans to reduce its workforce by 10%, which translates to approximately 7,800 jobs. While this news may not have been surprising given Salesforce's acquisition history and the longer sales cycles for enterprise software, it serves as a reminder that even successful companies can face challenges and make difficult decisions. The ripple effects of this decision are yet to be seen, but it highlights the importance of staying informed about business news and trends.
Tech Industry Wave of Layoffs Met with Positive Reaction from Wall Street: Large tech companies are leading a wave of layoffs, with Salesforce, Alphabet, and Amazon among those cutting costs. This trend, driven by lengthy sales cycles and investor pressure, may continue and could present opportunities for investors to find companies still hiring.
The tech industry is experiencing a wave of layoffs, with large companies like Salesforce leading the way. This trend, also seen in tech giants like Alphabet and Amazon, is met with a positive reaction from Wall Street. The lengthy sales cycle in enterprise businesses and the time it takes to unwind a workforce means this trend may continue. Smaller companies are also included in this trend, with 1013 tech companies tracked on layoffs.fyi accounting for 153,100 job losses. This trend sets an expectation among investors for companies to cut costs, potentially under pressure from activist investors. As an investor, looking for companies still doing hiring could be a more promising approach. For instance, HubSpot, a small business CRM company, could be an interesting company to watch.
Dividend-paying companies outperform during economic downturns: Consider maintaining exposure to dividend-paying companies for long-term growth, but they may lag during market rebound
During economic downturns, dividend-paying companies tend to outperform the average stock and hold their value better. This trend was evident in 2022, as dividend ETFs like the Schwab US Dividend ETF and Vanguard High Dividend Yield ETF experienced relatively modest losses compared to the overall market. Looking ahead to 2023, investors should consider maintaining a meaningful exposure to dividend-paying companies, as historical data shows that they have been the best performers over the long term. However, if there is a significant market rebound this year, it's likely that dividend stocks may lag behind other sectors that were heavily impacted in the previous year. Additionally, some companies, like HubSpot, may increase hiring and new initiatives despite economic uncertainty, signaling potential growth opportunities.
Monitor dividend-paying companies, especially those with high payout ratios: Keep a close eye on dividend-paying companies, particularly those in industrials, consumer discretionary, financials, basic materials, and commodities sectors, with high payout ratios above 60% for potential dividend cuts or suspensions in 2023
While technology and high growth stocks may lead the market, 2023 is expected to be a challenging year for the stock market as a whole, with earnings estimates likely to come down. Dividend-paying companies, particularly those in the industrial, consumer discretionary, financial, basic materials, and commodities sectors, should be closely monitored as they are more susceptible to economic slowdowns. A high payout ratio, which is dividends per share as a percentage of earnings per share, above 60% could be a red flag for potential dividend cuts or suspensions. An example of a struggling dividend-paying company is Stanley Black and Decker, which had an earnings miss, slashed earnings estimates, and announced a restructuring due to inventory build-up and business slowdown. Despite these challenges, Stanley Black and Deckers dividend has not been cut yet.
Investing in dividend stocks during economic downturns: REITs and HVAC industry: Consider investing in REITs like Extra Space Storage and sectors like HVAC and refrigeration, such as Lennox International, for potential dividend growth during economic downturns. REITs can have countercyclical aspects, while HVAC companies may take market share from competitors.
Even companies with strong dividend histories may find it difficult to maintain their payouts during economic downturns, despite having low payout ratios. Dividend cuts are often seen as a last resort due to the negative stigma associated with them. However, there are certain sectors and individual companies that could be more attractive to dividend investors during uncertain economic times. Real Estate Investment Trusts (REITs) like Extra Space Storage (EXR) are one such area of interest. Self-storage facilities can have countercyclical aspects, as people may need more temporary storage during economic downturns due to moving or downsizing. Additionally, the aging population trend could lead to increased demand for self-storage as baby boomers downsize and declutter. Extra Space Storage has a great track record and offers a 4% dividend yield. Another sector worth considering is the HVAC and refrigeration industry, represented by Lennox International (LII). Despite a relatively low dividend yield, Lennox has grown its dividend by over 18% annually for the last 10 years. The company has been successful in taking market share from larger competitors, making it an intriguing investment opportunity. However, it's essential to keep in mind that every investment comes with risks, and thorough research is necessary before making any investment decisions.
Anticipating potential Q4 earnings disappointment from industrial company: Speaker considers waiting for industrial company's Q4 earnings report due to potential disappointment, particularly in residential HVAC sector, which could be impacted by a slowing housing market and construction industry. If stock price drops to $200, it could be a profitable investment.
The speaker, Matt Ogersinger, is considering waiting for the industrial company's Q4 earnings report before making a decision on investing, as he anticipates a potential disappointment, particularly with regard to guidance. He mentions that residential HVAC, which is a significant portion of the business, could be impacted by a slowing housing market and construction industry. If the stock price drops closer to $200 per share, Ogersinger believes it could be a profitable investment. However, it's important to remember that people on The Motley Fool program may have formal recommendations for or against the stocks they discuss, so investors should not make buying or selling decisions based solely on what they hear.
