Morningstar Runs the Numbers

Inspired by Harper's Index (with a tip of the hat to FiveThirtyEight's Significant Digits blog), Morningstar Runs the Numbers uses a numbers-based approach to highlight recent Morningstar research, along with some outside news stories.

5 With a requirement to pay out 90% of their net income as a dividend, REITs are highly sought-after investments for income-oriented investors. However, dividend yields are quite variable across the sector, so finding an attractive investment with a high, safe dividend combined with the potential for outperforming the market presents a unique challenge. Equity analyst Kevin Brown highlights five large-cap REITs that provide both a high yield and the potential for positive returns.

$14 Vice president of research John Rekenthaler explores the ABC World News claim that a person who begins investing at age 23 can retire with $1 million by investing $14 daily into a "low-cost S&P 500 fund." His verdict? Despite many caveats, as a general illustration of the results of long-term investing, as well as an indication of the benefits of starting early, the segment is broadly accurate.

4 Value funds have lagged their growth-focused peers not only in 2018 but over three-and five-year periods as well. Mid-value funds in particular have gained just 2.8% for the year to date through July compared to double-digit gains for small- and large-growth funds. Investing in a mid-value fund in this growth-fueled market is a bit of a contrarian play and could round out a portfolio. Director of equity strategies research Katie Reichart explores four highly rated mid-value funds that are still open to new investors.

10 Companies that have a history of paying (or increasing) their dividends tend to be the types of businesses that investors like to own: Many are competitively well-positioned, steady cash-generating businesses. To find some investment opportunities among wide-moat companies that are well-positioned to increase their payout, we sorted the 450-plus constituents in the US Dividend Growth Index to find the 10 cheapest stocks relative to our analysts' estimate of their intrinsic value.

$175 Wide-moat Salesforce reported second-quarter earnings on Wednesday that were at the upper end of our expectations; we raised our fair value estimate to $175 per share, said equity analyst Billy Fitzsimmons. He believes Salesforce benefits from strong switching costs and a network effect in terms of its platform offerings. With shares trading at a discount to our fair value estimate, even after an impressive year-to-date run, Fitzsimmons still anticipates additional upside for Salesforce sees this as an attractive point of entry.

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