The Dividend Cafe - Thursday - August 27, 2026

Episode Date: August 27, 2026

Brian Szytel recaps Thursday, August 27 markets, highlighting a major AI chip company’s better-than-expected earnings and sharply higher 2028 guidance that lifted its stock 10% and pushed all three major indices higher, led by the Nasdaq, while bonds were flat with the 10-year at 4.67% and WTI oil up about 2% near $83. Economic updates included better-than-expected initial jobless claims (203k vs. 208k) and a wider July goods trade deficit of $118 billion, which he frames within the dollar-based reserve system. He also discusses US-Canada tariff tensions, arguing trade wars are zero-sum and ultimately hurt consumers and the economy. Addressing low S&P 500 dividend yield concerns, he says the decline is largely price-driven and maintains confidence in dividend growth investing focused on efficient capital use, including dividends and buybacks. 00:00 Welcome and Setup 00:24 AI Earnings Lift Markets 01:08 Rates Oil and Data 02:00 Trade Deficit Explained 03:02 Tariffs and Trade Wars 03:44 Dividend Yield Concerns 04:06 Why Dividends Still Win 05:40 Wrap Up and Disclosures Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividend Cafe weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Welcome back to Dividend Cafe. This is Brian Saitel, your host this evening here on Thursday, August the 27th. And we've got an update overall in markets. The biggest news I'd say on the day was the largest AI chip company reporting better than expected earnings. This is the largest market cap company in the world, by the way. and also raise guidance for 2028 by 70%. And so that stock is up 10%. It's moving the entire market up a little bit, particularly the NASDAQ, and you've got more of an AI sort of semiconductor chip trade.

There's also a few other names that have reported better than expected earnings in addition. And so a bit of a risk on day overall in markets. I'm recording this just a couple minutes here before the close, but you've got all three indices up on the day, Dow up north of 100. S&P positive by about half of a percent and NASDAQ up over a percent on the day. So bond markets, flat, you've got 10-year at 467, and then oil. I quote this every day now just because of the Iran deal, but is up a little bit about 2% on WTI, but we're still only at about $83 a barrel.

So there's your sort of around the horn quickly, I suppose, in markets, generally positive, generally positive on the earnings front. and there were a few pieces of information out in the economic calendar, but I wouldn't call any of those things necessarily earth-shattering, but you had initial jobless claims that were better than expected. We got a 203 versus a 208,000 print, so we'll take it. Employment continues to be very positive, and unemployment, the rate continues to trend a little lower,

and part of the reason the Fed is looking at inflation being stickier and knowing they could get away, I guess, with a rate hike because the employment picture is so robust, along with economic numbers. But you also had the trade deficit, and this is counter to what tariffs were sent to do, but this is a goods trade deficit widened more. What does that mean? It means we bought more widgets overseas than we sold, and the number was negative $118 billion.

For the month of July, we were expecting it to be only about $100 billion or so. When you think about how wealthy the United States is and the fact that we have a benefit for buying a widget overseas at a lower price to be able to reinvest that saved capital into other investments and other things that we can consume. It's not all bad out there, as my point on the trade deficit, so keep that in mind. Also, keep in mind that by doing that, what we're essentially doing is sending $118 billion U.S. dollars overseas and basically protecting the reserve status of the dollar in doing that, since those dollars have to basically be invested in a treasury to stay in the dollar form or

converted. Nonetheless, it's a dollar-based system, and that's one of the main reasons as to it. It's that trade deficit ongoing. So there you have it. Speaking of trade that I did want to touch on a little bit, and this was David's comment, but it's just around trade wars in general. We're looking at the U.S. and Canada now. There's a tit for tat back and forth with different tariffs that are going in place, and if the question is who's going to win that war, U.S. is a larger economy, that's sure. But at the end, it's a zero-sum game. So tariffs that we import get affected as much as tariffs that we export. And the end winner is nobody and the end loser is both. So I suppose the end loser would be the consumer, you and I, and ultimately the

economy. So free trade is what we believe in the Bonson Group and the impediments to those things like tariffs are a negative overall. So the question that I wanted to share with you and David had this in there today was a good one. I thought it was about the dividend yield on the SEP being at historic lows and many companies that don't even pay dividends, are we concerned that the strategy of dividend growth investing could be jeopardized because it simply goes away or is less popular and all those things. So I would say a couple of things. First off, no, we're not worried about it. Second, you just remember, the yield on the S&P is lower because the price of it has gone up so dramatic in the last four years that the dividend growth has been sub what the price performance is,

and hence the denominator growing means that the yield is going down. And that's just a byproduct of performance and where returns have come from more than anything else. Companies that don't pay dividends that have a poor track record of putting that capital they didn't pay to work in growing their business are not rewarded and those shares will sell off. Companies that do pay dividends because they've got big cash flows to generate and have a good track record of growing those cash flows, but would otherwise let that money sit idle within their corporate balance sheet and pay the dividend are rewarded because that's a better use of capital deployment. So you get my draft. We're not too worried about the environment and what is rewarded and not rewarded, ultimately what is rewarded is capital being

used efficiently, and that's where investors make money. And so some companies pay dividends, some don't. We actually believe that the yields being lower and more companies doing things like share buybacks not only doesn't hurt the thesis, but it would actually support it since the playing field would look all that shinier on dividend growing companies that have it all. They have KKKKiniti too. They have growing profits. They have money that is being used to deploy and growing their business. They have money being used to buy back shares of their business. And then there's money left over that gets paid out in the form of a dividend and the business keeps growing and the dividends keep rising. That's sort of the scenario that we like to look for. And of course,

that we find in our dividend growth equity portfolio. But that's what I've got for you today. I know it was a little short and sweet for a podcast recording. But I wanted to get this out to you here on the market here on Thursday. I'll be back with you next week. David will have long-form dividend cafe in your inbox tomorrow, and if I don't speak to you, have a lovely evening. Reach out with questions. Take care. Thanks for listening to the Dividend Cafe.

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