The Dividend Cafe - Wednesday - April 22, 2026

Episode Date: April 22, 2026

Brian Szytel from Dividend Cafe recaps a broad market rally with the Dow up 340 points, S&P up 1%, and Nasdaq up 1.6%, led by prior momentum/AI, semiconductors, and crypto, following a ceasefire extension announcement from the Trump administration. He notes oil also rose, suggesting energy markets aren’t pricing a near-term reopening of the Strait of Hormuz, while investors shift back toward strong fundamentals: ~18% expected year-over-year EPS growth, record-high margins near 19%+, and a lower S&P multiple (~20.5 vs. ~22–23 earlier), implying upside if multiples revert. With no economic data released, he addresses a question on early-20th-century dividend yields, arguing the Great Depression’s profit collapse—not taxes—drove dividend cuts, and that strong free-cash-flow companies can sustain dividend growth through macro shocks. 00:00 Market Rally Recap 00:50 Ceasefire and Oil Signals 01:26 Earnings Growth and Tech Margins 02:30 Valuations and Upside Risk 04:13 No Economic Data Today 04:24 Dividend Yields History Lesson 05:00 Depression Era Dividend Cuts 05:41 Postwar Shift and Nifty Fifty 06:45 Wrap Up and Qs 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 to Dividend Cafe. This is Brian Sightel, your host this evening here from our West Palm Beach, Florida office. Here in a bright sunny day, both outside of my office and in the markets, we had a rally across the board. When I say across the board, pretty much across the board. Stocks, bonds, oil, the precious metals. dollar. Pretty much everything was up on the day. Dow ended up closing, 340 points higher, S&P was up a percent. Nasdaq was up about a 1.6 percent. So this was the opposite of the rotation

that I wrote about yesterday where you had a big outsized performance in sort of the momentum names from last year. I think of all the AI names, the semiconductors, the chips, that mostly technology companies, a lot of the crypto stuff was up today. So all the shiny objects from yesteryear were up a lot today and let the good times roll. So that's what you had in markets, and the reason was because of the ceasefire announcement or the extension of it, moreover, last night from the Trump administration. So there actually wasn't a timeline put on it. And also because the oil market was up on the day, so you had a big rally in stocks,

but oil was also up. So it tells me a couple things. One, I don't think the oil markets are pricing in a near-term resolution and the reopening of the Strait of Hormuz anytime soon. And then second, the market really is looking to move on from just being engrossed in geopolitics alone and start to focus on the actual fundamentals because they're actually quite good. And the things that I'll point out I've mentioned before, but we're now at a new number of EPS growth estimated for year over year, which is about 18%. So that's super robust.

Historically, the long-term average is closer to seven. So big EPS growth expectation this year. Earnings are just now coming out. The one thing I'll also mention is if you've got CAPX that is starting to decline. You have a inside of technology companies from just a saturation of what has already been spent on AI and the buildout of it from hyperscalers. If that delta starts to slow and you still have rising top line revenue, then of course margins in those companies should start to pick back up. And I think you will start seeing that. I think you will start to see it this quarter, frankly. And I think that's part of the reason as to the tech rebound here today. But all that to say, you also have margins that are record highs, call it 19 plus percent, and you've got had a market

now get discounted a little bit. Originally, at least in the first quarter, it was around the volatility with Iran, and market sold off, call it 8%. That has now been recovered, but you still have a multiple that has moved lower by a couple turns. You had a 22, almost 23 multiple heading into the year, and we're now back to about 20.5. Historically, it's not like that's cheap on the historical level. You could say maybe it's been 1718. Given the quality of earnings, given margins, given the growth of earnings, you could argue for it being at least a neighborhood of more reasonably priced. It's on the lower end of the range that we've seen for the last two to three years. There already is a discount baked into the market because of the Iran skirmish and the closure of the Hormuz Strait and the chokehold on energy market.

So that's already baked in, but we're still back to highs, meaning they'd be higher otherwise. If you continue to get animal spirits that kind of stir around better than expected earnings and all the positive things I mentioned, and you just get multiples to go back to say 22x from where they are now at 25. I'm sorry, 20.5. If that happens, you're talking about a very sizable move higher on the S&P 500, just to get back to the multiples we had in January. So I'm not saying that as a prediction. I'm saying that is it's a right-tail risk, meaning a good one. And you just don't want to miss that.

And so when we talk about staying invested, focusing on the fundamentals and also something that is a ballast of asset allocation, it's these types of risks are real to the upside and you want to participate in them when they do happen. All that to say, there's still value in the market. There's still reasonable valuations if you're selective. And of course, on the dividend side, there's lots of things to be excited about. But on the economic side, there just wasn't any data out. So I'm not going to spend time on it for today. We'll have some more as the week goes on. But the Q&A in there, I thought, was a thoughtful one.

I like the way it was presented. It was about the fact that in the first 50 years of the 20th century, you had dividend yields that were actually higher than the bond market paid, the Treasury market. And he talks about the fact that there was a couple of wars in depression, but really it was taxes that went from 15% to more than 50% on the corporate side. And then because of that, you had dividend cuts. And he was curious about the potential risk today. So I'll say this. First off, you're right. History speaks for itself. You had dividend yields that were higher and they got slashed. But they didn't get slash because of corporate taxation. That wasn't even the main reason. It was because of the annihilation of the profits within corporations themselves because of the Great Depression. That was a great depression. That was a demand destruction on that front. They aren't able to pay dividends because earnings are down because of the depression, less so on the taxation side. That was a part of it too. But that was more on broader scale. And you also had basically an 80% decline in stock prices during that period of time. And a 25-year period it took for stocks to regain previous highs.

So what does that do to a whole generation? You had declining dividend yields. You had declining stock prices that took almost a generation to recover. Who would want to own stocks ever again? That's what happened. And the paradigm didn't start to shift back until after the Second World War into the late 1950s. And you started to get broad equity multiple expansion once again. Stocks became attractive once again.

and then you had dividend yields go lower as stock prices went higher. You also had an end to back then there was yield curve control by the government post-WW2 because of all the money that we had to borrow to finance the war, and bond yields ended up resuming higher and going above dividend yields of stocks, and so on and so forth. And so what we would say to that is if you looked at what was called the nifty 50, if you remember that term from back then, they actually still grew dividends through that entire period coming out of that post-war era.

And I would say for us, it's less of a concern because we're focusing on individual companies versus worrying about the macro of taxation or fiscal policy or anything else that can come down the pike. All those things will work out. And the history will show that good companies with high free cash flow can weather the storms and continue to raise dividend payments over time. But that's my comments on that subject. We could probably write a whole book on it. But I appreciate the question from Justin H. So that's what I've got for you today.

I hope it was helpful. Reach out with your questions. I'll be back with you tomorrow on Dividend Cafe. The Bonson Group is a group of investment professionals registered with Hightower Security's LLC, member FINRA and SIPC, and with Hightower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities LLC. Advisory services are offered through Hightower Advisors, LLC. This is not an offer to buy ourselves securities.

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