6B
MONEYLINE
Beth Belton @bethbelton USA TODAY
BUSINESS SURVEILLANCE POKÉMON ROARS BACK uIn a nutshell: Ready to bid farewell to your productivity and smartphone’s battery life? Late Wednesday night, Pokémon Go launched for iOS and Android mobile devices, our Brett Molina warns. The classic video game features characters called Pokémon players will catch, power up and train to do battle with other Pokémon. uThe upshot: The reason Go is awesome is because it adds augmented reality to the mix, which means you can find Pokémon anywhere in your environment. After customizing your trainer character, you see a map with arenas and Pokémon lurking nearby. uThe lowdown: When you spot one, your smartphone camera pops up, where you spot the Pokémon and “catch” them by flicking a Poké Ball toward it.
NEWS MONEY SPORTS THESE LIFE COMPANIES AUTOS PAY OUT MORE TRAVEL
THAN THEY EARN Matt Krantz
D
Pokémon Go adds augmented reality to the mix. Wuh-oh.
IN THE HOT SEAT LYFT UNVEILS PREMIER Lyft is going upscale. The ridehailing service on Thursday said it has started Premier, a high-end car service in the San Francisco Bay Area, Los Angeles and New York. Sedans and SUVs, such as BMW 5 Series, Audi A6, Lexus ES and/or Cadillac Escalade are available. Uber, Lyft’s larger rival, has a comparable service called Select. Lyft added Premier after more than 60% of its passengers in a survey requested a more luxurious option for corporate meetings and special nights out.
USA SNAPSHOTS©
Wake up and smell the coffee Most small-business owners typically take
3 weeks or less to realize they’ve hired the wrong person.
noisrev siht rof ylnO SOURCE Monster survey of 639 U.S. small-business owners JAE YANG AND PAUL TRAP, USA TODAY
HIGH PAYOUT RATIOS S&P 500 companies with the highest payout ratios: Company Payout ratio Kinder Morgan 2,574.1% Spectra Energy 627.0% Chevron 617.4% Equinix 528.8% Helmerich & Payne 291.7% Iron Mountain 282.2% Digital Realty Trust 241.6% Seagate Technology 225.4% Ventas 222.7% Harris 220.4% Kraft-Heinz 214.4% Realty Income 202.6% Zimmer Biomet 201.7% PPL 195.5% ONEOK 191.5% Schlumberger 158.7% Bristol-Myers Squibb 158.5% Caterpillar 157.9% Johnson Controls 155.7% Weyerhaeuser 154.7%
Dividends are like investors’ catnip, so S&P 500 players dig deep to please @mattkrantz USA TODAY
RICHARD VOGEL, AP
L awrence J ournal -W orld - USA TODAY SUNDAY, JULY 10, 2016
ividends are all the rage with investors. Some companies are so eager to hand them out, they’re paying dividends bigger than their profit. Forty-two companies in the Standard & Poor’s 500 — including computer storage company Seagate Technology, earth-moving equipment maker Caterpillar and energy pipeline company Kinder Morgan — are digging deep to keep investors happy with their dividends, according to a USA TODAY analysis of data from S&P Global Capital Markets. These companies have paid dividends the past 12 months that exceed their reported net income. With the stock market stuck in neutral, dividends have been one of the only sources of dependable returns — so investors are paying up for them. The iShares Core High Dividend exchange-traded fund, a basket of high-yielding stocks, is up 12.5% this year, leaving the S&P 500 in the dust with its 2.7% gain. Utilities have turned into the hottest sector — gaining 22.3% this year — mostly due to outsize dividends. So far this year, dividends paid by S&P 500 companies accounted for a third of total returns. Last year, the market’s 2.1% dividend yield was the only return investors got since stocks fell 0.7%. S&P 500 companies that pay a dividend on average have paid out two-thirds of their net income over the past 12 months, according to S&P Global data. If you add in cash companies spent buying back their stock, another way to return cash to investors, companies are paying out 128% of what they earned, which is the highest amount on record, excluding the financial crisis of 2008, according to a research report from Barclays’ Jonathan Glionna.
Payouts are soaring as rising dividends “and declining net income have all contributed to the increase in the total payout ratio,” Glionna said in his report. Seagate, for instance, paid 225% of its net income to investors in the form of dividends the past 12 months. The massive dividend is now generating a more than 10% yield for investors, which is roughly five times the market’s yield. Seagate has tripledowned on its dividend, diverting cash that previously would have been paid to stock buybacks or to erase debt, says Joseph Wittine, analyst at Longbow Research. It’s a similar situation at Caterpillar. The company paid out $157 in dividends for every $100 reported in net income. Caterpillar’s net income is taking a hit due to weak demand, but the company is “committed to its dividend,” says Lawrence Demaria, analyst at William Blair. There are some special cases to consider. Some companies paying out high percentages of profit as dividends must do so because they are real-estate investment trusts. Companies like REITs also have large non-cash expenses, making the payout ratio distorted, says Matthew Heinz, analyst at Stifel. Equinix, a data center company, is structured as a REIT and must pay out at least about half of its income, says James Breen, analyst at William Blair. The past 12 months the company paid out 528% of net income as a dividend. That’s somewhat exaggerated because the company’s net income took a hit from restructuring costs last year. Merger costs also took a bite out of net income at Kraft Heinz, which explains why its dividend payout ratio of 214% looks so high, says Erin Lash, analyst at Morningstar. Going forward, the company has plenty of cash to pay the dividend, says Christopher Growe, analyst at Stifel. Some companies have made adjustments to dividends to make
NOTE RATIO IS PERCENTAGE OF NET INCOME PAID AS DIVIDENDS OVER THE TRAILING 12 MONTHS SOURCE S&P GLOBAL MARKET INTELLIGENCE; USA TODAY
them more affordable going forward. Kinder Morgan, which paid dividends the past 12 months that were 2,000% greater than net income, cut its dividend by 75% in 2015’s fourth quarter. Excluding many non-cash charges, the company’s adjusted payout rate is now closer to 75%, says spokesman Richard Wheatley. Investors, take note: High payout ratios tend to be harbingers for poor returns because they mark peaks in the business cycle, Glionna says, which is bad news for stocks. “ A high total payout ratio implies low future returns for the S&P 500,” he says.
Audible pushes short-form content with Channels Competes with horde of podcasts — just don’t call them that Edward C. Baig @edbaig USA TODAY
Audible has launched a standalone, on-demand shortform digital audio service called Channels, plunging the Amazonowned company smack into the listening mode dominated by podcasts. Almost all of the 1.6 billion hours of spoken content that Audible members around the world listened to last year centered around lengthy material. Audible has more than 300,000 audiobooks in its library, after all, and is the largest seller of such narrated books. Following its months-long beta period, Channels offers a free, unlimited, add-on feature for current Audible subscribers, who pay (under the most typical Audible plan) $14.95 per month and which entitles them to a dozen NEW YORK
audiobooks in a year. Folks who have no interest in the longer-form Audible content can pay $4.95 a month to use Channels standalone. With Channels, Audible will find itself competing against podcasters, though the company is loath to characterize its own new service as a collection of podcasts. All of Channels’ programs — typically running from five minutes to an hour in length — will be adfree, and include a broad lineup of original shows, stand-up comedy, meditations, lectures, performances of short stories, as well as selected material read aloud from such media properties as The New York Times, Wall Street Journal, The Onion and, yes, USA TODAY. “We have no aspirations to becoming a breaking news service,” says Eric Nuzum, who joined Audible from NPR about a year ago, as its senior vice president of original content development. But Nuzum says the audio offerings will be relevant throughout the following day or days. There will not be any user-generated content, as is found on an
USA TODAY
Ad-free, from comedy to news
audio service such as SoundCloud. Channels subscribers will be able find stuff to listen to by topic (sports, science fiction, food and so on).
I found some of the Channels originals series I was able to check out in advance of the launch — think almost Netflix for the spoken word — quirky and interesting. Among the content I sampled was an original Channels show called Breasts Unbound, a series in which science journalist Florence Williams delves into a variety of topics related to human breasts: why breasts evolved in the first place, how jet fuel ended up in breast milk and how breast cancer in men can help female breast cancer patients. In another original series called Mortal City, former crime reporter Kathleen Horan seeks out eccentrics and lost souls. In the episode I listened to, she interviewed Rocky Robinson, who tells some tales of his 40 years as an emergency medical responder. Robinson, who is African-American, believed he was once a white man who hated black people. He says his punishment was that he was reincarnated as a black man. I also listened to Presidents Are People Too!, with this fascinating tidbit from an episode devoted to
oft-maligned President Warren G. Harding: Former Nixon White House counsel John Dean of Watergate fame is apparently a Harding redeemer. Other original series include The Butterfly Effect, hosted by author Jon Ronson, and Authorized, in which authors share their “most intimate firsts” as in first drafts, first rejections, first loves. Audible has brought out other features lately to help spread the (spoken) word. In March, it introduced Clips, a feature that allows people to save 45-second excerpts from an Audible audiobook that they can share by text, email or on social media. And in May, it unveiled a “Send this Book” feature that let listeners instantly share an audiobook they are listening to with anyone they’d like. If it is the first time the recipient is accepting a book in this manner, he or she can keep it for free, even non-members. Without revealing specifics, Nuzum says Audible has ambitions to make Channels more accessible in the coming weeks. “Watch this space,” he says.