Did you know that Alphabet and Meta only started paying dividends this year?

Even high-growth tech companies are shifting strategies to reward shareholders, showing that dividends aren’t limited to "boring" sectors.

Here’s what we’ll cover:

• Don’t Count Tech Out: First, we’ll look at the performance of tech stocks despite recent drops 🖥️

• U.S. Dividends Grew 9% In The Second Quarter—Meta And Alphabet Gave A Boost: Next, the U.S. dividend landscape is changing rapidly 🚀

• U.S. Recession Odds Remain Low—Don’t Worry About A Bear Market, Goldman Sachs Says: Finally, Goldman Sachs gives their explanation for why a bear market is unlikely 🤔

Stay informed, and make sure to leverage these insights for smarter investments. Let’s go!

Don’t Count Tech Out 🖥️

September is notoriously a rough month for the stock market.

Right on cue, the S&P 500 dropped by 4.3% in the first week of September.

Technology stocks, the sector that has led the rally since October of 2022, also led last week’s decline.

This has led investors to worry that the tech rally is over.

That’s an unlikely and excessively bearish outlook 🐻

Tech has outperformed the broader market by 500 basis points per year over the last 20 years, and by a stunning 800 basis points per year over the last 10 years.

Perhaps that kind of outperformance won’t continue, but technology will always be the future and will always drive productivity.

To think otherwise is to deny data 📊

U.S. Dividends Grew 9% In The Second Quarter—Meta And Alphabet Gave A Boost 🚀

Dividends are no longer just for utilities, real estate companies, and other more “boring” value oriented sectors of the market.

Alphabet (Google) and Meta (Facebook) started paying dividends for the first time earlier this year, and that helped lead to a big boost in the overall amount of dividends from U.S. companies 📈

Dividend payments issued by American companies rose 8.6% in the second quarter to $161.5 billion, according to findings from the Janus Henderson Global Dividend Index.

Alphabet and Meta accounted for nearly $4 billion of that figure.

Microsoft was the biggest US dividend payer.

With Meta and Alphabet now paying dividends, that means five of the so-called Magnificent Seven are doing so 💰

The only holdouts are Amazon and Tesla.

Payouts from big tech firms are still relatively tiny, though.

Nvidia for example, has a dividend that yields a paltry 0.04%.

Microsoft, Apple, Meta, and Alphabet all yield less than 1%.

Still, investors have been flocking to dividend-paying stocks lately due in part to expectations the Federal Reserve will begin cutting interest rates at its September 18 meeting.

Long-term Treasury bond yields have tumbled from near 4.5% to about 3.7% since early July, which makes income-producing stocks more attractive.

To that end, the S&P Dividend ETF is up nearly 6.5% in the past three months compared to a 1% increase in the S&P 500.

Dividend stocks are also seen as providing safety during recessions, which is another reason for their outperformance due to growing recession worries 🛡️

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U.S. Recession Odds Remain Low—Don’t Worry About A Bear Market, Goldman Sachs Says 🤔

Stocks are down in September, but not out, according to Goldman Sachs.

According to their analysis, while stocks are likely to post further losses over the rest of the year, the risk of a bear market—typically defined as a drawdown of at least 20%—remains low.

It pointed to limited recession risk, strong private sector spending and looming interest rate cuts as factors that should support equities.

So why do they believe the stock market will close the year lower from here? 😮

It's not clear, but perhaps high valuations is the culprit.

Investors are however concerned about recession.

If those fears ease, it's hard to imagine that the S&P 500 doesn’t close the year well above current levels.

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