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Millennials Making More Happen With Less [Chart]

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Millennials Spending Habits [Chart]

Millennials Making More Happen With Less [Chart]

Recent survey sheds light on millennial spending habits

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

Despite the Western world’s general shift towards healthier eating, it may surprise you to learn that McDonald’s shares traded at all-time highs just days ago.

How is this possible?

Part of the reason is that although millennials will tell you otherwise, the name of the game for courting many millennials is still convenience. Price points at a restaurant such as McDonald’s still have wide appeal to a cash-strapped generation.

Based on a recent survey by TD Bank, the convenience trend is still on track. Here’s what we learned on millennial spending habits from the results.

Getting More out of Less

A major finding of the survey was that although millennials “go out” twice as often as Generation X and three times as often as Baby Boomers, they spend less per month on purchases than their older cohorts.

Millennials made more purchases on retail goods and dining than other generations, but spent less money overall. In fact, the only category where Millennials spent more than Gen X and Boomers is on coffee and fast food – demonstrating a need for food on the run and frequent doses of caffeine.

The average millennial went out 13 times each month, spending $103 for an average of $7.90 per transaction. This compares with nine trips with $122 of spend ($17 per transaction) for the average consumer.

The same was the case for grabbing “coffee and food on-the-go”, where millennials said that they went on more trips than the average consumer. Millennials also spent a higher total than others, spending $80 over 11 trips (compared with $67 over eight for the average consumer).

Experiences vs. Material Items

While the survey paints a picture of millennial thriftiness, we also think that there is another lens that can be used to shed light on the results. In particular, we believe this shows that the value that millennials place on having experiences.

To many millennials, “going out” is as much about the experience as the material food itself. Whether it is connecting with old friends at a new thin-crust pizzeria or trying a locally-roasted single-origin coffee with a significant other, it’s often more about sharing an experience with good company. It doesn’t have to be a fancy dinner or involve a $100 bottle of wine purchase to count as quality time.

This could be a partial reason behind a higher frequency of trips out, even though less money gets spent overall.

Cash vs. Credit

A final point of interest from the survey lies in the difference in how millennials make discretionary purchases.

On average, Americans spend $4,700 per year with a credit card, and $2,400 with cash, a debit card and checks for discretionary purchases. Millennials tend to use cash, a debit card and checks more often ($5,200) and charge 22% less ($3,300) than the average consumer

Millennials, many of whom grew up during the Financial Crisis, are more averse to debt. This is corroborated by the results of a different survey showing that seven out of 10 millennials say they would prefer to use a debit card, rather than a credit card, for their purchases.

It’s also an attitude that we’ve covered in a previous chart of the week, where we showed that only 37% of millennials were confident in managing their credit, while 70% of millennials hold their savings and investments in cash.

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Markets

Uncovering Income: Dividend Stocks With Strong Yields

Some companies are cutting or suspending dividends. Which dividend stocks can investors consider for stable distributions and strong yields?

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Dividend Stocks

Uncovering Income: Dividend Stocks with Strong Yields

Amid the current market volatility, attractive income-generating investments can be hard to find.

Treasury bond yields hover near record lows, and U.S. companies face restrictions on issuing dividends if they accept COVID-19 stimulus funds. Moreover, Goldman Sachs estimates dividends for S&P 500 stocks will decline by 25% this year.

Which stocks can investors turn to for stable distributions and relatively high dividend yields? Today’s visualization shows 35 stocks that may meet this criteria, leveraging Goldman Sachs data as published by Forbes.

The Dividend Stocks to Watch

To compile the list, Goldman Sachs identified stocks from the Russell 1000 index that met a number of requirements:

  • A minimum annualized dividend yield of 3%
  • An S&P credit rating of at least BBB+
  • Ample cash on hand
  • Strong balance sheets
  • ”Reasonable” payout ratios
  • At least average performance since the market peak

Dividend yields, which measure dividend income in relation to the share price, were initially calculated March 27. We have updated them as of market close on April 8. Here’s the full breakdown, sorted from highest to lowest dividend yield:

RankCompanyTickerAnnual Dividend YieldSector
1CenterPoint Energy, Inc.NYSE: CNP6.90%Utilities
2Wells Fargo & CompanyNYSE: WFC6.74%Financials
3People's United Financial, Inc.NASDAQGS: PBCT6.34%Financials
4Franklin Resources, Inc.NYSE: BEN6.28%Financials
5Regency CentersNASDAQGS: REG5.82%Real estate
6Truist FinancialNYSE: TFC5.50%Financials
7International Business MachinesNYSE: IBM5.43%Tech
8Omnicom Group Inc.NYSE: OMC4.76%Communication services
9U.S. BancorpNYSE: USB4.71%Financials
10Raytheon Technologies (merger of Raytheon and United Tech.)NYSE: RTX4.69%Industrials
11NetApp, Inc.NASDAQGS: NTAP4.69%Information Technology
12The PNC Financial Services Group, Inc.NYSE: PNC4.62%Financials
13Eaton Vance Corp.NYSE: EV4.34%Financials
14Nucor CorporationNYSE: NUE4.12%Materials
15United Parcel Service, Inc.NYSE: UPS4.09%Industrials
16M&T Bank CorporationNYSE: MTB4.09%Financials
17Exelon CorporationNASDAQGS: EXC4.07%Utilities
18Archer-Daniels-Midland CompanyNYSE: ADM3.95%Consumer staples
193M Company NYSE: MMM3.95%Industrials
20Emerson Electric Co.NYSE: EMR3.84%Industrials
21Sysco Corp.NYSE: SYY3.81%Consumer staples
22Mid-America Apartment CommunitiesNYSE: MAA3.61%Real Estate
23Essex Property Trust, Inc.NYSE: ESS3.55%Real Estate
24MDU Resources GroupNYSE: MDU3.53%Utilities
25Cummins Inc.NYSE: CMI3.51%Industrials
26Sonoco Products Co.NYSE: SON3.50%Materials
27Cisco Systems, Inc.NASDAQGS: CSCO3.45%Information Technology
28American Electric Power Company, Inc.NYSE: AEP3.36%Utilities
29The Hartford Financial Services Group, Inc.NYSE: HIG3.36%Financials
30NiSource Inc.NYSE: NI3.30%Utilities
31Caterpillar Inc.NYSE: CAT3.23%Industrials
32Everest Re Group, Ltd.NYSE: RE3.13%Financials
33Bristol-Myers Squibb CompanyNYSE: BMY3.09%Health care, pharmaceuticals
34The Home Depot, Inc.NYSE: HD3.08%Consumer discretionary
35Bank of America CorporationNYSE: BAC3.07%Financials

Note: From the original list, 5 stocks have been excluded as they no longer meet the 3% annualized yield threshold.

Centerpoint Energy, an electric and natural gas utility company, is at the top of the list. Since utility stocks are generally considered to be recession-resistant, investors may benefit from both the company’s yield and its defensive qualities.

Financials are the most-represented sector, with 11 companies on the list. Although regulators have pressured European banks to suspend dividend payments, U.S. banks will likely be able to continue their distributions. Top banking executives have argued they have sufficient capital to weather the COVID-19 crisis, and that halting payments would be “destabilizing to investors.”

There are also a number of well-known names on the list, including Home Depot, IBM, and 3M. The latter is the largest maker of respirator masks worldwide, and has been providing critical supplies to the U.S., Canada, and Latin America.

Caution: Volatility Ahead

As the pandemic’s financial impact continues, it’s likely many companies will delay or suspend their dividends. To avoid falling into “yield traps”—a trap in which an attractive yield could be due to a fundamental business problem—investors can screen for the qualities laid out above.

A strong balance sheet, good credit rating, and average or better performance since the downturn can all help point towards stability.

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Investor Education

Bridging the Gap: Wealth Isn’t Just for the Wealthy

The UK has a financial adviser gap, leaving about 51 million adults without advice. Learn how wealthtech makes investing accessible for everyone.

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wealthtech

In the UK, money is the #1 cause of stress—ranking above physical health, work, or family.

When people begin investing, they see immediate emotional benefits compared to non-investors. In fact, investors are 16 percentage points happier, and 23 percentage points more positive about their well-being.

However, only 37% of Brits hold market-based investments. So why aren’t more people taking steps to invest? Today’s infographic from BlackRock outlines the barriers people face, and how wealthtech can help address these issues at scale.

wealthtech

The Wealth Problem

A variety of hurdles keep people from taking control of their finances.

  1. Lack of Resources: 59% of Brits feel they don’t have enough money to invest.
  2. Lack of Knowledge: 39% say a lack of knowledge holds them back.
  3. Fear of Failure: 34% are afraid of losing everything if they invest.

All of these factors culminate in insufficient investing. In fact, 50% of the €26 trillion European wealth market is currently in uninvested cash, earning zero interest.

What’s the Current Solution?

Traditionally, investment advisers helped tackle these issues. However, investors have faced challenges accessing professional advice in recent years.

A shortage of UK advisers is a main contributing factor:

  • There are only 26,700 advisers, who can service an average of 100 clients each.
  • This leaves over 51 million adults without professional advice.

Among available advisers, many impose investment minimums or fees that create barriers for lower-income populations. Financial advisers charge an average of £150/hour, and half of all surveyed advisers turned away clients with less than £50,000 to invest.

With so many hurdles to overcome, how can Brits take charge of their investments?

A Modern Solution

Wealth technology—or simply wealthtech—helps address these issues at scale, offering four main digital-first solutions:

  1. Helps investors build better portfolios.
    Gone are the days of rudimentary spreadsheets. With the help of algorithms and machine learning, investors can now automatically build sophisticated portfolios.
  2. Helps advisors scale their services.
    The automation of time-consuming processes allows advisers to service more clients.
  3. Reaches more people.
    Wealthtech is accessible for all, not just the wealthy. For example, micro-investing apps allow investors to make small, regular contributions without paying a commission.
  4. Modernises infrastructure.
    Wealthtech updates old legacy systems with more streamlined, automated systems. As a result, paper-based processes are replaced with mobile transactions that can be done with the click of a button.

These benefits can be applied across various branches of wealth management.

The Wealthtech Ecosystem

Investors can choose one of three main paths, based on their level of knowledge and interest.

“Do It Yourself” Investing
Confident investors who enjoy managing their own money can trade securities through self-directed online platforms.

“Do It For Me” Investing
Novice investors can use platforms that execute trades on their behalf, such as micro-investing or robo-advisers.

“Do It With Me” Investing
For investors in the middle of this spectrum, certain platforms offer a hybrid of digital transactions and professional advice.

With a wide variety of solutions available, investing has never been easier.

Inclusive Wealth-Building

It’s clear Brits are open to the shift: 64% say new technology would help them be more involved in their investments.

As wealthtech evolves, it will be seamlessly integrated into daily life as part of a holistic financial services offering. Traditional barriers will be broken down, empowering individuals to take charge of their financial future.

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