1 00:00:03,600 --> 00:00:08,159 Speaker 1: Broadcasting live to New York, Bloomberg Even, to Washington, d C, 2 00:00:08,400 --> 00:00:13,680 Speaker 1: Bloomber to Boston, Bloomberg Well unders to San Francisco Bloomberg 3 00:00:13,760 --> 00:00:18,239 Speaker 1: nine to the country Channel one nine, and around the 4 00:00:18,320 --> 00:00:21,880 Speaker 1: globe the Bloomberg Radio plus Zappen Bloomberg dot Com. This 5 00:00:22,440 --> 00:00:26,599 Speaker 1: is taking Stock Kathleen Hayes along with Pam Fox, broadcasting 6 00:00:26,640 --> 00:00:30,680 Speaker 1: live from Smith and Lensky Restaurant here in Boston. In 7 00:00:30,720 --> 00:00:34,640 Speaker 1: this half hour, two of Boston's finest investment minds are 8 00:00:34,760 --> 00:00:37,320 Speaker 1: joining us. We're kicking off with Mike Allison from Eaton 9 00:00:37,400 --> 00:00:40,479 Speaker 1: Vance Management. We're gonna learn about how to grow some 10 00:00:40,880 --> 00:00:43,440 Speaker 1: income in a world where bond deals are lower negative 11 00:00:43,479 --> 00:00:46,560 Speaker 1: and even dividend funds are looking a little bit harder 12 00:00:46,560 --> 00:00:49,000 Speaker 1: to pick and pick well him. Yes. Indeed, for example, 13 00:00:49,040 --> 00:00:53,200 Speaker 1: today Rio Tinto posting it's the worst of profits since 14 00:00:53,280 --> 00:00:55,360 Speaker 1: the two thousand four and also cut the dividend nearly 15 00:00:55,440 --> 00:00:58,400 Speaker 1: sixty percent. Let's go to Charlie Pellett in the Bloomberg 16 00:00:58,400 --> 00:01:02,000 Speaker 1: newsroom for Bloomberg Business and I thank you, Pim, thank you, Kathleen. 17 00:01:02,080 --> 00:01:06,120 Speaker 1: Rio shares up four tens or one percent. Pim and 18 00:01:06,360 --> 00:01:08,920 Speaker 1: Kathleen will be talking about the one d forty three 19 00:01:08,959 --> 00:01:12,319 Speaker 1: year old mining giant, has cut costs, reined in spending, 20 00:01:12,319 --> 00:01:15,000 Speaker 1: and sold underperforming assets in a bid to whether the 21 00:01:15,040 --> 00:01:19,280 Speaker 1: commodities crisis sparked by China's slowing growth and a glut 22 00:01:19,319 --> 00:01:23,920 Speaker 1: of raw materials. Rio is led by CEO Jean Sebastian Jack, 23 00:01:24,160 --> 00:01:27,360 Speaker 1: and he spoke this morning with Bloomberg Television. Astragi is 24 00:01:27,440 --> 00:01:29,640 Speaker 1: very simple. It's about two elements. One is about the 25 00:01:29,720 --> 00:01:32,600 Speaker 1: quality of the portfolio, what we call t you know, large, 26 00:01:32,640 --> 00:01:35,680 Speaker 1: low cost. We have lots of optional eighties in Samso proof. 27 00:01:35,800 --> 00:01:38,560 Speaker 1: And it's about perference. We are very clear we want 28 00:01:38,560 --> 00:01:42,080 Speaker 1: to give compelling returns. Four shoulders in the shout, medium 29 00:01:42,080 --> 00:01:44,920 Speaker 1: and long term. Crude oil trading higher up four point 30 00:01:45,000 --> 00:01:48,640 Speaker 1: two percent, up a dollar sixty four West Texas Intermediate 31 00:01:48,680 --> 00:01:51,880 Speaker 1: now at forty one fifteen barrel Brent up three point 32 00:01:51,920 --> 00:01:57,000 Speaker 1: four percent. ADP says companies added workers to American payrolls 33 00:01:57,040 --> 00:01:59,760 Speaker 1: at a steady pace from the prior month, showing the 34 00:02:00,040 --> 00:02:02,440 Speaker 1: uper market was holding up in spite of broader growth 35 00:02:02,480 --> 00:02:06,120 Speaker 1: numbers that indicate a slowing in the economy. ADP said 36 00:02:06,120 --> 00:02:10,640 Speaker 1: private payrolls climbed by one hundred seventy nine thousand. Last month, 37 00:02:11,200 --> 00:02:14,440 Speaker 1: we will have the job's report eight thirty am. Wall 38 00:02:14,440 --> 00:02:18,799 Speaker 1: Street Time complete coverage heading into coming out of that 39 00:02:19,000 --> 00:02:23,119 Speaker 1: job's number. SMP up three to sixty a game there 40 00:02:23,120 --> 00:02:25,520 Speaker 1: of two tenths of one percent. To Dow up eighteen, 41 00:02:25,600 --> 00:02:28,160 Speaker 1: a gain of one tenth of one percent, NAS Stack 42 00:02:28,240 --> 00:02:30,800 Speaker 1: up seventeen, a gain of three tenths of one percent, 43 00:02:31,240 --> 00:02:34,360 Speaker 1: Gold down eight dollars anounced the thirteen sixty, a drop 44 00:02:34,440 --> 00:02:37,520 Speaker 1: there of six tenths of one percent. It is three 45 00:02:37,560 --> 00:02:40,040 Speaker 1: thirty two on Wall Street. Now, let's take a look 46 00:02:40,080 --> 00:02:45,320 Speaker 1: at some of the other stories making news. Thank you 47 00:02:45,400 --> 00:02:48,360 Speaker 1: Charlie from the Bloomberg News Room. I'm Jill Schneider. This 48 00:02:48,480 --> 00:02:51,320 Speaker 1: news update is brought to you by Blue Jeans Enterprise 49 00:02:51,440 --> 00:02:55,760 Speaker 1: Video Cloud. See Faces, Emotions, Energy, see two people your 50 00:02:55,800 --> 00:02:59,239 Speaker 1: team's video from any device. Start a free thirty day 51 00:02:59,280 --> 00:03:02,119 Speaker 1: trial at blue Jeans dot com and click the radio Mike. 52 00:03:02,400 --> 00:03:06,480 Speaker 1: Blue Jeans Work Smarter, Connect Better. The Obama administration is 53 00:03:06,520 --> 00:03:09,679 Speaker 1: reacting to the arrest of a veteran police officer in Washington, 54 00:03:09,760 --> 00:03:12,840 Speaker 1: d C. Thirty six year old Nicholas Young of Fairfax 55 00:03:13,080 --> 00:03:16,600 Speaker 1: was arrested at DC police headquarters this morning, he's accused 56 00:03:16,639 --> 00:03:19,360 Speaker 1: of trying to send codes for mobile messaging cards to 57 00:03:19,480 --> 00:03:23,320 Speaker 1: foreign fighters. White House Press Secretary Josh Ernest his officials 58 00:03:23,360 --> 00:03:26,919 Speaker 1: are mindful of the risk posed by homegrown extremists. We 59 00:03:27,080 --> 00:03:28,920 Speaker 1: know that part of the strategy that is used by 60 00:03:28,919 --> 00:03:32,040 Speaker 1: extremist groups around the world, including ISIS, is to use 61 00:03:32,200 --> 00:03:34,480 Speaker 1: social media to try to recruit followers and countries around 62 00:03:34,480 --> 00:03:36,360 Speaker 1: the world. We know that certainly is truer in the 63 00:03:36,440 --> 00:03:38,680 Speaker 1: United States as well. Young had been on the police 64 00:03:38,680 --> 00:03:42,280 Speaker 1: force for twelve years. Florida Senator and former GOP presidential 65 00:03:42,320 --> 00:03:46,040 Speaker 1: candidate Marco Rubio is calling on Congress and President Obama 66 00:03:46,240 --> 00:03:48,720 Speaker 1: to do more to fight ZEKA. I believe it won't 67 00:03:48,760 --> 00:03:51,560 Speaker 1: be long before other jurisdictions, other states, and other communities 68 00:03:51,600 --> 00:03:53,320 Speaker 1: in the state and in this country will face the 69 00:03:53,320 --> 00:03:55,880 Speaker 1: same situation, and so I hope that this is a 70 00:03:55,920 --> 00:03:58,440 Speaker 1: wakeup call to my colleagues, and I reiterate my call 71 00:03:58,520 --> 00:04:02,440 Speaker 1: for Congress to act quickly. Outgoing NYPD Commissioner Bill Brandon 72 00:04:02,520 --> 00:04:06,080 Speaker 1: and his replacement, James O'Neill, joined Mayor Bill de Blasio 73 00:04:06,120 --> 00:04:09,240 Speaker 1: at the annual National Night Out event Tuesday to announce 74 00:04:09,280 --> 00:04:13,000 Speaker 1: the expansion of the Neighborhood Coordination Officers Program. It's designed 75 00:04:13,040 --> 00:04:16,440 Speaker 1: to put cops in specific communities to identify and respond 76 00:04:16,520 --> 00:04:19,240 Speaker 1: to problems and make officers a bigger part of the 77 00:04:19,279 --> 00:04:22,320 Speaker 1: areas they serve. Global news twenty four hours a day, 78 00:04:22,360 --> 00:04:26,040 Speaker 1: powered by more than journalists and analysts in more than 79 00:04:26,080 --> 00:04:29,880 Speaker 1: one twenty countries. I'm Jill Schneider, and this is Bloomberg, Charlie, 80 00:04:30,720 --> 00:04:32,960 Speaker 1: and we thank you and again recapping the now the 81 00:04:33,120 --> 00:04:36,400 Speaker 1: SMP nestack called Advancing twenty six minutes to go ahead 82 00:04:36,400 --> 00:04:39,680 Speaker 1: of the clothes. On a Wednesday, SMP five hundred index 83 00:04:39,760 --> 00:04:42,000 Speaker 1: up three, a gain of two tenths of one percent. 84 00:04:42,440 --> 00:04:52,920 Speaker 1: I'm Charlie Pellett and that's a Bloomberg Business flash stock 85 00:04:53,000 --> 00:04:58,440 Speaker 1: with Kathleen Mays and Pim Fox on Bloomberg Ringox very 86 00:04:58,440 --> 00:05:02,120 Speaker 1: special show today, broadcast live in Boston from Smith and 87 00:05:02,360 --> 00:05:06,359 Speaker 1: Lydsky Restaurant. Mike Alliston joins us now. He's vice president 88 00:05:06,360 --> 00:05:10,279 Speaker 1: Equity portfolio manager Eaton Evans Management. In fact, he is 89 00:05:10,680 --> 00:05:15,160 Speaker 1: the manager on the eating Vans Global Income Dividend Builder Fund. 90 00:05:15,279 --> 00:05:17,600 Speaker 1: He's here to tell us how we can pick some 91 00:05:18,040 --> 00:05:20,839 Speaker 1: good dividend funds, some good dividend paying stocks. At a 92 00:05:20,880 --> 00:05:23,800 Speaker 1: time when they've gotten more expensive relative to the broader market, 93 00:05:24,040 --> 00:05:26,039 Speaker 1: but still looking pretty good when you look at trying 94 00:05:26,040 --> 00:05:29,200 Speaker 1: to build income through any kind of bond these days. Mike, 95 00:05:29,240 --> 00:05:31,120 Speaker 1: welcome back to the show. Thanks thanks for having me. 96 00:05:31,960 --> 00:05:33,960 Speaker 1: So glad you could join us on this beautiful day. 97 00:05:34,120 --> 00:05:37,320 Speaker 1: It's a beautiful, a beautiful day here in Boston. I 98 00:05:37,320 --> 00:05:39,560 Speaker 1: think the last time we were here, you guys were 99 00:05:39,640 --> 00:05:43,200 Speaker 1: up in um Our offices on the roof deck and 100 00:05:43,279 --> 00:05:46,400 Speaker 1: broadcast from from there at International Place. What was a 101 00:05:46,440 --> 00:05:49,160 Speaker 1: beautiful day then too. So you're you're good luck, Mike Allison. 102 00:05:49,279 --> 00:05:53,039 Speaker 1: But so what about how you're you're viewing the markets? 103 00:05:53,080 --> 00:05:56,880 Speaker 1: I mean, is it tougher to be an income builder 104 00:05:56,920 --> 00:06:00,560 Speaker 1: through dividends these days? Well, I think um number one 105 00:06:00,600 --> 00:06:02,400 Speaker 1: in terms of just sort of the market backdrop of 106 00:06:02,480 --> 00:06:07,760 Speaker 1: We've been fairly surprised at how uh steadily the wall 107 00:06:07,800 --> 00:06:10,240 Speaker 1: of worry has been climbed. You know, there's a lot 108 00:06:10,279 --> 00:06:14,960 Speaker 1: to worry about Chinese situation, Brexit, election uncertainty, economic concertainty, 109 00:06:15,279 --> 00:06:18,359 Speaker 1: fed policy, all those sorts of things, and yet the 110 00:06:18,400 --> 00:06:21,680 Speaker 1: market has just continued to, you know, to march upward 111 00:06:21,960 --> 00:06:25,279 Speaker 1: UM in relatively sanguine fashion. You know, the VIX is low, 112 00:06:25,800 --> 00:06:28,400 Speaker 1: a lot of the other indicators are low. So what's 113 00:06:28,480 --> 00:06:30,560 Speaker 1: going on in terms of the behavior of the market 114 00:06:30,800 --> 00:06:32,800 Speaker 1: is it doesn't really match some of the angst that's 115 00:06:32,839 --> 00:06:35,960 Speaker 1: out there, and not only any across the economy, but 116 00:06:36,000 --> 00:06:39,960 Speaker 1: even amongst professional money managers that have lots of cash, uh, 117 00:06:39,960 --> 00:06:42,039 Speaker 1: still to worry about how to put to work, and 118 00:06:42,080 --> 00:06:45,960 Speaker 1: so that is a is a challenge. Um. The you know, 119 00:06:46,000 --> 00:06:48,880 Speaker 1: sort of focusing on on dividends, we we think of 120 00:06:48,920 --> 00:06:54,360 Speaker 1: dividends is and truly the portion of the return, you know, 121 00:06:54,880 --> 00:06:57,599 Speaker 1: And and so to the extent that you're invested in 122 00:06:57,680 --> 00:07:00,920 Speaker 1: quality companies that have strong franchises and strong balance sheets 123 00:07:00,920 --> 00:07:03,880 Speaker 1: and can sustain dividends, um, even if the yield is 124 00:07:03,920 --> 00:07:05,760 Speaker 1: lower than some of the ones where there may be 125 00:07:05,800 --> 00:07:10,120 Speaker 1: dividend risks you mentioned earlier, Kim Um. You know, I 126 00:07:10,120 --> 00:07:13,520 Speaker 1: think being able to grow dividends and sustain them is 127 00:07:13,640 --> 00:07:16,040 Speaker 1: really what makes for a good stock. So it's a 128 00:07:16,040 --> 00:07:18,640 Speaker 1: combination of income as well as capful appreciation with makeup 129 00:07:18,680 --> 00:07:20,760 Speaker 1: total return. All right, Just to put it into some 130 00:07:20,840 --> 00:07:22,960 Speaker 1: context here, taking a look at the dividend yield of 131 00:07:22,960 --> 00:07:26,040 Speaker 1: the S and P five right now, two point one 132 00:07:26,360 --> 00:07:30,440 Speaker 1: per cent the ten year trades at one point five 133 00:07:30,680 --> 00:07:34,960 Speaker 1: three per cent. You factor in inflation, let's just add 134 00:07:34,960 --> 00:07:39,440 Speaker 1: in food and energy just for kicks, let's right, and 135 00:07:39,440 --> 00:07:41,960 Speaker 1: and you know two percent, you're you're basically a negative 136 00:07:42,040 --> 00:07:46,080 Speaker 1: rate of return. Yeah, in in in real terms term, 137 00:07:46,160 --> 00:07:51,080 Speaker 1: that's some would some would argue that, uh, and that's 138 00:07:51,480 --> 00:07:54,680 Speaker 1: that's kind of I think feeds the the perception that 139 00:07:54,840 --> 00:07:58,040 Speaker 1: the particularly in the US stocks are really expensive, but 140 00:07:58,120 --> 00:08:01,000 Speaker 1: yet relative to other asset classes. UM. This is on 141 00:08:01,160 --> 00:08:03,559 Speaker 1: this this this kind of acrodym that we talk about, Tina, 142 00:08:03,680 --> 00:08:07,000 Speaker 1: there is no alternative. Equities are the only place to be. 143 00:08:07,080 --> 00:08:09,240 Speaker 1: And so I think in the search for yield and 144 00:08:09,320 --> 00:08:12,080 Speaker 1: income replacement versus other asset classes, I think that's why 145 00:08:12,080 --> 00:08:15,200 Speaker 1: you've seen several of the highest yielding sectors in the 146 00:08:15,720 --> 00:08:20,080 Speaker 1: um UH in the market become very expensive, you know, 147 00:08:20,160 --> 00:08:24,200 Speaker 1: utilities and consumer staples for example. What what war is 148 00:08:24,240 --> 00:08:26,239 Speaker 1: going with this was that the idea that people should 149 00:08:26,640 --> 00:08:29,920 Speaker 1: not necessarily just look at the dividend yield, because just 150 00:08:29,960 --> 00:08:32,280 Speaker 1: as I was mentioning Rio Tempto earlier, you going to 151 00:08:32,320 --> 00:08:34,079 Speaker 1: look for a big, fat yield and you think, g 152 00:08:34,800 --> 00:08:36,920 Speaker 1: how can they pay this yield? This can this is 153 00:08:36,960 --> 00:08:39,040 Speaker 1: too good to be true. Chances are probably is too 154 00:08:39,080 --> 00:08:40,920 Speaker 1: good to be true. Well, I think that that goes 155 00:08:41,000 --> 00:08:45,720 Speaker 1: to you know mentioned before, cash flow generation, fundamental UH, 156 00:08:46,000 --> 00:08:49,720 Speaker 1: franchise strength, balance sheet strength UM. One of the things 157 00:08:49,720 --> 00:08:52,280 Speaker 1: that that we've done, because we focus a lot on 158 00:08:52,280 --> 00:08:55,880 Speaker 1: on equity income investing diviendated income UH is we took 159 00:08:55,880 --> 00:08:57,840 Speaker 1: a look at the SMP five hundred and ranked the 160 00:08:57,960 --> 00:09:01,960 Speaker 1: SMP five hundred by UH by dividend yield and put 161 00:09:02,000 --> 00:09:04,880 Speaker 1: those into quintiles, and you'd be surprised. You may be 162 00:09:04,920 --> 00:09:07,719 Speaker 1: surprised to know that it's actually the second quintile of 163 00:09:07,760 --> 00:09:10,520 Speaker 1: dividen yield, not the highest yielders, but the second quintile 164 00:09:10,880 --> 00:09:14,120 Speaker 1: that actually outperforms all the other quintiles. And so that's 165 00:09:14,120 --> 00:09:18,520 Speaker 1: sort of a reflection of maybe attractively valued companies with 166 00:09:18,520 --> 00:09:22,920 Speaker 1: with modest but strong UH dividends and strong franchises and 167 00:09:22,960 --> 00:09:26,520 Speaker 1: they actually outperform with lower with lower volatility, so higher 168 00:09:26,559 --> 00:09:29,440 Speaker 1: risk adjusted returns in that strata of the market versus 169 00:09:29,640 --> 00:09:31,720 Speaker 1: going and chasing the highest yields because they may not 170 00:09:31,720 --> 00:09:34,480 Speaker 1: be secure. It sounds very attractive. I want to point 171 00:09:34,480 --> 00:09:39,160 Speaker 1: out something that are Bloomberg Intelligence team that looks at dividends. 172 00:09:39,440 --> 00:09:42,880 Speaker 1: Their global latest global dashboard talks about nineteen nineties stars 173 00:09:42,960 --> 00:09:46,280 Speaker 1: like IBM, S and Cisco leading a certain the infect 174 00:09:46,360 --> 00:09:50,000 Speaker 1: is the first trust NASDAC Technology Dividend Index fund to 175 00:09:50,200 --> 00:09:52,720 Speaker 1: a record high. How do you feel about those kinds 176 00:09:52,720 --> 00:09:54,680 Speaker 1: of companies when it comes to dividends? Are that are that? 177 00:09:54,800 --> 00:09:57,040 Speaker 1: Are they the first core quintile or the highest one 178 00:09:57,080 --> 00:09:58,400 Speaker 1: used to avoid? Are they somewhere in the middle and 179 00:09:58,440 --> 00:10:00,280 Speaker 1: looking a little bit more attractive? I would say I 180 00:10:00,320 --> 00:10:03,600 Speaker 1: would say that some of the more mature technology companies 181 00:10:03,640 --> 00:10:05,520 Speaker 1: are a really good place to be because they do 182 00:10:05,600 --> 00:10:08,640 Speaker 1: have very strong cash flow characteristics and good strong balance 183 00:10:08,720 --> 00:10:12,559 Speaker 1: sheets and relatively strong franchises versus other parts of the 184 00:10:12,600 --> 00:10:16,719 Speaker 1: mortorcixical parts of the economy. And so that is that 185 00:10:16,880 --> 00:10:19,440 Speaker 1: is an area where we have a lot of interest 186 00:10:19,520 --> 00:10:22,280 Speaker 1: in terms of being able to uh to focus on 187 00:10:22,280 --> 00:10:24,560 Speaker 1: on that. Allen, want to thank you very much for 188 00:10:24,600 --> 00:10:27,400 Speaker 1: coming by and spending time with this. Michael Allison. He 189 00:10:27,520 --> 00:10:31,480 Speaker 1: is the vice president and Equity portfolio manager for Eaton 190 00:10:31,600 --> 00:10:35,719 Speaker 1: Events Management, based here in Boston Course home to Bloomberg 191 00:10:35,840 --> 00:10:37,640 Speaker 1: twelve hundred. Thanks for thanks very much for having me. 192 00:10:37,679 --> 00:10:40,240 Speaker 1: Appreciate my pleasure. How We are broadcasting from Smith and 193 00:10:40,240 --> 00:10:45,400 Speaker 1: Woolenski's at Atlantic Wharf at Boston Harbor. This is taking Stock. 194 00:10:45,480 --> 00:10:49,360 Speaker 1: I'm Tim Fox, my co host Kathleen Hayes, and this 195 00:10:50,000 --> 00:11:05,200 Speaker 1: is Bloomberg the mood of the investing public, not from 196 00:11:05,200 --> 00:11:09,040 Speaker 1: economists or analysts perspectives, but from someone in the trenches. 197 00:11:09,480 --> 00:11:12,360 Speaker 1: John Spooner, investment adviser and author, coming up in our 198 00:11:12,400 --> 00:11:14,520 Speaker 1: special Boston show on taking Stock.