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Heading into the peak holiday season, some shoppers are still paying off the gifts they purchased in 2023.
Still, Americans, overall, are doing better when it comes to managing their credit card debt compared with previous years.
Recent wage gains and lower inflation “may be driving consumers toward a financial equilibrium,” said TransUnion’s Paul Siegfried.

Americans tend to overspend during the holiday season.
In fact, some borrowers are still paying off debt from last year’s purchases.

To that point, 28% of shoppers who used credit cards have not paid off the presents they bought for their loved ones last year, according to a holiday spending report by NerdWallet. The site polled more than 1,700 adults in September.  
However, this is a slight improvement from 2023, when 31% of credit card users had still not paid off their balances from the year before.
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Growth in credit card balances has also slowed, according to a separate quarterly credit industry insights report from TransUnion released Tuesday.
Although overall credit card balances were 6.9% higher at the end of the third quarter compared with a year earlier, that’s a significant improvement from the 15% year-over-year jump from Q3 2022 to Q3 2023, TransUnion found.

The average balance per consumer now stands at $6,329, rising only 4.8% year over year — compared with an 11.2% increase the year before and 12.4% the year before that.
“People are getting comfortable with this post-pandemic life,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “As inflation has returned to more normal levels in recent months, it has also meant consumers may be less likely to rely on these credit products to make ends meet.”
Recent wage gains have also played a role, according to Paul Siegfried, TransUnion’s senior vice president and credit card business leader. Lower inflation and higher pay “may be driving consumers toward a financial equilibrium,” he said.

Still, spending between Nov. 1 and Dec. 31 is expected to increase to a record total of between $979.5 billion and $989 billion, according to the National Retail Federation.
Shoppers may spend $1,778 on average, up 8% compared with last year, Deloitte’s holiday retail survey found. Most will lean on plastic: About three-quarters, 74%, of consumers plan to use credit cards to make their purchases, according to NerdWallet.
“Between buying gifts and booking peak-season travel, the holidays are an expensive time of year,” said Sara Rathner, NerdWallet’s credit cards expert. However, this time around, “shoppers are setting strict budgets and taking advantage of seasonal sales.”

How to avoid overspending

“There’s no magic wand, we just have to do the hard stuff,” Candy Valentino, author of “The 9% Edge,” recently told CNBC. Mostly that means setting a budget and tracking expenses.
Valentino recommends reallocating funds from other areas — by canceling unwanted subscriptions or negotiating down utility costs — to help make room for holiday spending.
“A few hundred dollars here and there really adds up,” she said. That “stash of cash is one way to set yourself up so you are not taking on new debt.”

How to save on what you spend

Valentino also advises consumers to start their holiday shopping now to take advantage of early deals and discounts or try pooling funds among family or friends to share the cost of holiday gifts.
Then, curb temptation by staying away from the mall and unsubscribing from emails, opting out of text alerts, turning off push notifications in retail apps and unfollowing brands on social, she said.
“It will lessen your need and desire to spend,” Valentino said.
If you’re starting out the holiday season debt-free, you’re in a “strong position” to take advantage of credit card rewards, Rathner said.
Credit cards that offer rewards such as cash back or sign-on bonuses will offer a better return on your holiday spending, she said.
However, if you are planning on purchasing big-ticket items to work toward such bonuses, make sure you’re able to pay off the balance in full to avoid falling into holiday debt, Rathner said.

What to do if you have debt from last year

People walk by sale signs in the Financial District on the first day back for the New York Stock Exchange (NYSE) since the Christmas holiday on December 26, 2023 in New York City.
Spencer Platt | Getty Images

If you have credit card debt from last year, the first thing you can do is “look for ways to lower the interest you’re paying on that debt,” said NerdWallet’s Rathner. 
A balance transfer card, for example, typically offers a 0% annual percentage rate for a period of time, which usually spans from months to even a year or more.
If you move your debt from a high-rate credit card, it may help you save hundreds or even thousands of dollars in interest payments, depending on how much you owe, Rather said.
“That keeps your debt from growing,” she said. 
But you need to pay off the debt in full before the interest-free period ends to fully benefit, Rathner noted.
Additionally, there are a few caveats: You generally need to have good-to-excellent credit to qualify for the balance transfer and there may be fees involved. A transfer fee is typically 3% to 5% of the balance that you transfer over, Rathner said. 
While you may need to budget for that detail, “the savings on the interest might be higher than the fee you would pay,” she said.
Otherwise, you may be able to consolidate into a lower interest personal loan, depending on your creditworthiness. Similarly, cardholders who keep their utilization rate — or the ratio of debt to total credit — below 30% of their available credit may benefit from a higher credit score, which paves the way to lower-cost loans and better terms.
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ETF Strategist

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ETF Strategist

Investors who want income may turn to dividend-paying strategies.
When choosing between funds, it’s important to consider whether the strategy fits your goals and what you will pay, experts say.

Jamie Grill | Tetra Images | Getty Images

For investors who want income, dividends may provide an answer.
Dividends are corporate profits that companies pay to shareholders in the form of either cash or stock.

In comparison to other income-paying investments — such as certificates of deposit, bonds or Treasurys — dividends may provide the opportunity for more appreciation, said Leanna Devinney, vice president and branch leader at Fidelity Investments in Hingham, Massachusetts.
“Dividends can be very attractive because they offer the opportunity for growth and income,” Devinney said.
Dividend investment options may come in the form of single company stocks or dividend-paying funds, like exchange-traded funds or mutual funds.

More from ETF Strategist

Here’s a look at other stories offering insight on ETFs for investors.

With individual stocks, it’s easy to see the dividend a company may offer in exchange for owning its share, Devinney said. Notably, not all companies pay dividends.
However, dividend-paying funds like ETFs or mutual funds may provide a broader exposure to dividend securities, often at lower costs, she said.

For investors who are considering putting a portion of their portfolios in dividend-paying strategies to fulfill their income-seeking goals, there are some things to consider.

What kind of dividend-paying fund fits my goals?

Generally, there are two types of dividend funds from which to choose, according to Daniel Sotiroff, senior analyst for passive strategies research at Morningstar.
The first group focuses on high dividend yield strategies. Dividend yield is how much a company pays in dividends each year compared to its stock price. With high-yield strategies, the investor is trying to get higher income than the market generally provides, Sotiroff said.
High-yield dividend companies tend to have been around for decades, like Coca-Cola Co., for example.
Alternatively, investors may opt for dividend growth strategies that focus on stocks expected to consistently grow their dividends over time. Those companies tend to be somewhat younger, such as Apple or Microsoft, Sotiroff said.

To be clear, both of these strategies have trade-offs.
“The risks and rewards are a little bit different between the two,” Sotiroff said. “They can both be done well; they can both be done poorly.”
If you’re a younger investor and you’re trying to grow your money, a dividend appreciation fund will likely be better suited to you, he said. On the other hand, if you’re near retirement and you’re looking to create income from your investments, a high-yield dividend ETF or mutual fund is probably going to be a better choice.
To be sure, some fund strategies combine both goals of current income and future growth.

How expensive is the dividend strategy?

Another important consideration when deciding among dividend-paying strategies is cost.
One dividend fund that is highly rated by Morningstar, the Vanguard High Dividend Yield ETF, is well diversified, which means investors won’t have a lot of exposure to one company, he said. What’s more, it’s also “really cheap,” with a low expense ratio of six basis points, or 0.06%. The expense ratio is a measure of how much investors pay annually to own a fund.
That Vanguard fund has historically provided a yield of about 1% to 1.5% more than what the broader U.S. market offers, which is “pretty reasonable,” according to Sotiroff.

While investors may not want to add that Vanguard fund to their portfolio, they can use it as a benchmark, he said.
“If you’re taking on higher yield than that Vanguard ETF, that’s a warning sign that you probably have exposure to incrementally more volatility and more risk, Sotiroff said.
Another fund highly rated by Morningstar is the Schwab U.S. Dividend Equity ETF, which has an expense ratio of 0.06% and has also provided 1% to 1.5% more than the market, according to Sotiroff.
Both the Vanguard and Schwab funds track an index, and therefore are passively managed.
Investors may alternatively opt for active funds, where managers are identifying companies’ likelihood to increase or cut their dividends.
“Those funds typically will come with a higher expense ratio,” Devinney said, “but you’re getting professional oversight to those risks.” More

With household budgets already strained, many Americans are concerned about how they’ll manage holiday spending this year.
To that end, experts weigh in on the best ways to save money in the weeks ahead.

As the U.S. presidential election laid bare, economic anxiety is top of mind.
High costs have weighed heavily on household finances, with 2 in 3 Americans concerned about how they’ll manage holiday expenses, when the temptation to splurge is heightened.

This year, holiday spending, between Nov. 1 and Dec. 31, is expected to increase to a record $979.5 billion to $989 billion, according to the National Retail Federation.
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Even as credit card debt tops $1.14 trillion, holiday shoppers expect to spend, on average, $1,778, up 8% compared with last year, Deloitte’s holiday retail survey found.
Meanwhile, 28% of holiday shoppers still have not paid off the gifts they purchased for their loved ones last year, according to a holiday spending report by NerdWallet. 

How to save money over the holidays

Heading into the peak holiday shopping season, there are a few steps you can take to help maximize your cash.

1. Pay attention to holiday sales
With Black Friday and Cyber Monday falling later on the calendar this year, “it’s a shorter holiday season and that will force the retailer’s hand to be pretty promotional in November,” according to Adam Davis, managing director at Wells Fargo Retail Finance.
Major retailers tend to heavily discount some of their products as the holiday season unfolds. While some sales events earlier in the year are becoming more common, it makes sense for consumers to pay attention to what products are tagged for those events. 

A shopper looks at clothes inside a store at Twelve Oaks Mall on November 24, 2023 in Novi, Michigan. 
Emily Elconin | Getty Images

“Retailers need to stay proactive and nimble to ensure they are not stuck over-inventoried after holiday, and you will see deeper discounts as we get closer to the holiday on items not moving off shelves,” Davis said.
Nearly half, or 47%, of all consumers are waiting for discounts on clothes or accessories, followed by electronics, at 45%, according to Morning Consult.
To snag the best price, shoppers can use online tools to track and search for sales products and items, said Sara Rathner, a credit card expert at NerdWallet. 
2. Consider trading down
Some shoppers are also more willing to alternate higher-cost products for cheaper or less expensive versions, Morning Consult found. 
For instance, shoppers are more likely to trade down from high-end skin and hair care products to less expensive alternatives, said Sofia Baig, an economist at Morning Consult.
“Maybe they’re not shopping for luxury items at Sephora, they’re going to Target instead to get something that is a little bit more in their budget,” she said.
Whether that means trading down to a lower-priced retailer or specific brand, consumers are actively looking for bargains this year, Davis said.
Gen Z and millennial shoppers, in particular, tend to often walk away from name brand products and “dupe” shop instead to save some cash. 
Davis also recommends shopping secondhand to save on big-ticket items.
3. Try ‘slow shopping’
So-called “slow shopping” promotes the importance of taking time to think through each purchase to make more intentional buying decisions, according to consumer savings expert Andrea Woroch.
“Slow shopping encourages consumers to think through each potential purchase rather than jumping on impulse,” Woroch said.
“This allows you to be mindful about what you’re buying, why you’re buying and who you’re buying for while also giving you time to save up, compare prices and look for coupons,” Woroch added.

In many cases, there are good reasons to wait.
Slow shopping allows you to time your purchase based on when it’s on sale for the lowest price, Woroch said.
Identifying and eliminating spending triggers can also help you avoid impulse spending that leads to debt, she said, such as unsubscribing from store emails, turning off push notifications in retail apps and deleting payment information stored online.
4. Dog-ear this date for travel discounts
While some people booked their travel plans for the season, about 45% of travelers have not purchased plane tickets yet because the price was too high, Morning Consult found.
While mid-October may have been the best time to book your holiday travel, you might have one last chance. “Travel Tuesday,” or the Tuesday that follows Black Friday, is a date to pay attention to, according to Hayley Berg, lead economist at travel site Hopper. 
In 2023, Travel Tuesday saw a spike in hotel, cruise and airline bookings by travelers in the U.S., according to McKinsey & Company.
Some experts recommend booking a trip or experience in lieu of presents to keep the holiday expenses in check. “Spending time together is better than any gift you could give,” Woroch said.
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“We’re going to open up tracks of federal land for housing construction,” Trump said during a Aug. 15 news conference. “We desperately need housing for people who can’t afford what’s going on now.”
While building more homes is the simpler answer to address the housing issue in the country, other promises Trump has made could deter affordability efforts, experts say.

Scott Olson | Getty Images News | Getty Images

President-elect Donald Trump wants to address housing affordability in the U.S. by fomenting the construction of new homes.
“We’re going to open up tracks of federal land for housing construction,” Trump said during an Aug. 15 news conference. “We desperately need housing for people who can’t afford what’s going on now.”

As of mid-2023, there has been a housing shortage of 4 million homes in the U.S., according to the National Association of Realtors.
“It’s clear that the prescription for that crisis is more building,” said Jim Tobin, president and CEO of the National Association of Home Builders. 
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There has been a small increase in new homes being built this year, but it’s still not enough to meet the high demand for housing, leaving a significant gap in the market where there are not enough homes available for buyers, experts say.
Single-family housing starts in the U.S., a measure of new homes that began construction, grew to 1,027,000 in September, according to U.S. Census data. That is a 2.7% jump from August.

While building more homes is the simpler answer to address the housing issue in the country, other promises Trump has made could deter affordability efforts, experts say.
For instance, Trump has talked about enacting a mass deportation of immigrants in the U.S. But doing so might lead to higher building costs, as the construction industry depends on immigrant labor, said Jacob Channel, senior economist at LendingTree.
He also claimed that he would pull down mortgage rates back to pandemic-era lows, although presidents do not control mortgage rates, experts say.
Here’s how some of Trump’s policies could affect the housing market during his administration, according to experts:

1. Deregulation to increase affordability

At the end of Trump’s first presidency, he signed an executive order creating “Eliminating Regulatory Barriers to Affordable Housing: Federal, State, Local and Tribal Opportunities.” 
“That could be a blueprint going forward,” said Dennis Shea, executive director of the Bipartisan Policy Center’s Terwilliger Center.   
During his 2024 campaign, Trump called for slashing regulations and permit requirements, which can add onto housing costs for homebuyers. Experts say that regulatory costs trickle down to the prices homebuyers face.
“We will eliminate regulations that drive up housing costs with the goal of cutting the cost of a new home in half,” Trump said in a speech at the Economic Club of New York on Sept. 5. 
About 24% of the cost of a single-family home and about 41% of the cost of a multifamily home are directly attributable to regulatory costs at the local, state and federal level, Tobin said. 
“If we reduce the regulatory burden on home construction or apartment construction, we’re going to lower costs [for] the consumer,” Tobin said.   

2. Impacts on construction workforce

Trump has also blamed rising home prices on a surge of illegal immigration during the Biden administration. However, experts say that most undocumented immigrants are not homeowners.
Instead, they live in homes owned by U.S. citizens, Channel said. If a mass deportation were to happen, such homes would remain occupied, he added.
Yet, proposals like mass deportations and tighter border control could impact housing affordability, Tobin said.
About a third, or 31%, of construction workers in the U.S. were immigrants, according to the NAHB.
“Anything that threatens to disrupt the flow of immigrant labor will send shock waves to the labor market in home construction,” Tobin said. 
It’s been difficult to recruit native-born workers into the construction industry, experts say.
According to a 2017 NAHB survey, construction trades are an unpopular career choice for young American adults. Only 3% showed interest in the field, the poll found.

Therefore, a mass sweeping of available workers can create a labor shortage in construction. And with fewer workers, wages might increase, which “will likely be passed onto consumers” through higher home prices, Channel said.
What’s more, it will take longer for construction companies to complete housing projects and therefore slow down efforts to increase supply, he added.
While “we are doing a better job” training the domestic workforce through trade schools, apprenticeship programs and other initiatives, the industry still heavily relies on immigrant labor, Tobin said.

3. Tariffs could hike building costs

Trump has proposed a 10% to 20% tariff on all imports across the board, as well as a rate between 60% and 100% for goods from China.
A blanket tariff at 10% to 20% on raw building materials like lumber could push housing costs higher, as well as materials for home renovations, experts say. 
“Any tariffs that raise the cost of the products are going to flow directly to the consumer,” Tobin said.
On average, construction costs for single-family homes is around $392,241, according to a data analysis by ResiClub, a housing and real estate data newsletter.
“It depends on what the tariffs look like,” said Daryl Fairweather, chief economist at Redfin. “There could be varying impacts.”

Overall, homebuilders expect to construct about 1.2 million new single-family homes and around 300,000 multifamily units over the next year, Tobin said.
“We’re not quite building back up to the pace that we need to, but it’ll be higher,” he said. “It’ll be higher than this year.”
It might be too soon to tell if the Trump administration will prioritize housing costs as much as a Harris administration would have. And the aid Trump has mentioned might not help densely populated areas, said Fairweather.
Trump mentioned plans to release federal lands for housing, but federal lands tend to concentrate in rural areas, she said.
“That doesn’t do anything for these densely populated blue cities that really need the most help,” Fairweather said.

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About 59% of adults ages 18 to 29 in Puerto Rico are financially fragile, compared to 47% of those 30 to 54 and 41% of those 55 or older on the island, the report titled “An Overview of Factors Tied to the Financial Capability of Adults in Puerto Rico” found.
“It highlights things that people feel and experience, but that are hard to find numbers for,” said Harold Toro, Research Director and Churchill G. Carey, Jr. Chair in Economic Development Research at the Center for a New Economy.

Parade attendees wave Puerto Rican flags on Fifth Avenue in Manhattan during the annual Puerto Rico Day Parade. 
Luiz C. Ribeiro | New York Daily News | Tribune News Service | Getty Images

Young adults in Puerto Rico are on shaky financial ground, a study finds.
About 47% of respondents in the U.S. territory are financially fragile, meaning they lack confidence in their ability to absorb a $2,000 economic shock, according to a September report from the Financial Industry Regulatory Authority Investor Education Foundation.

“This is the first time a study of this nature has been done on Puerto Rico,” said report co-author Harold Toro. He is also the research director and chair in economic development research at the Center for a New Economy, an economy-focused think tank based on the island.
“It highlights things that people feel and experience, but that are hard to find numbers for,” Toro said.

More than half, or 59%, of adults ages 18 to 29 on the island are financially fragile, compared to 47% of those ages 30 to 54 and 41% of those age 55 or older, FINRA found. The organization in 2021 polled 1,001 adults who live in Puerto Rico.
“The financial fragility and capability more broadly in Puerto Rico … it’s pretty dire when we compare it to the mainland United States,” said report co-author Olivia Valdés, senior researcher at the FINRA Investor Education Foundation.
Financial fragility, particularly for young adults, is much higher in Puerto Rico than on the mainland U.S. More than half, or 59%, of 18 to 29-year-olds are financially struggling in Puerto Rico compared to 38% of the same age group in the U.S., according to FINRA data.

About 30% of U.S. residents overall were considered financially fragile in 2021, according to FINRA’s latest Financial Capability in the United States report, which polled 27,118 U.S. adults in 2021. The Puerto Rico survey was separate, but fielded at the same time.

The younger generation has experienced financial strain for over two decades.

Vicente Feliciano
founder and president of Advantage Business Consulting, a market analysis and business consulting firm in San Juan, Puerto Rico

Many young adults leave Puerto Rico to try and improve their financial situation, by seeking education or employment in the United States or in other countries. For the young adults who stay, the generation must contend with an economy under recovery, an electric grid hanging on by a thread and sky-high costs for basic needs like housing.
Understanding why young Puerto Ricans are financially fragile could help with efforts to retain younger residents and bring working professionals back to the island, experts say.
But “living in Puerto Rico can’t just be a matter of survival, it also has to be a place where you can thrive,” said Fernando Tormos Aponte, an assistant professor of sociology at the University of Pittsburgh.

Young Puerto Ricans are ‘having a tougher time’

To be sure, a certain degree of financial strain is typical for people just starting out. Generally speaking, financial standing gets better with age.
But financial fragility is more prominent among young adults in Puerto Rico compared to the U.S.
“People who are younger seem to be … having a tougher time,” Toro said.
Adults age 18 to 29 in Puerto Rico are less likely than adults ages 30 and over to report having emergency and retirement savings, FINRA found.

Less than a quarter, 22%, of 18- to 34-year-olds in Puerto Rico have any type of retirement account. Among that age group on the mainland U.S., 43% do, according to the broader FINRA analysis.

Young adults in Puerto Rico are also more likely than older residents to have student loan and medical debt.

Younger generations only know a Puerto Rico in crisis

Puerto Rico’s economy “is doing quite well,” said Vicente Feliciano, founder and president of Advantage Business Consulting, a market analysis and business consulting firm in San Juan, Puerto Rico.
The job market has improved, and salaries are growing at a faster pace than inflation, thanks to the increase in minimum wage, Feliciano said. While the federal minimum wage in the U.S. is $7.25, it’s $10.50 in Puerto Rico.

Employment in the private sector was at a 15-year high since mid- 2022, according to the Federal Reserve Bank of New York.
Still, the median household income on the island was just $25,621 in 2023, less than a third of the $80,610 median household income in the mainland U.S., per Census data.
Even though the last couple of years have been better, for adults under 40 in Puerto Rico, “most of their working lives have been overshadowed by the depression that Puerto Rico fell through from 2006 through 2015,” Feliciano said.
“The younger generation has experienced financial strain for over two decades,” he said. “They have seen many of their friends leave the country. They are frustrated. They blame the traditional [political] parties for something that may or may not be their fault, but is very real.”

‘We want people to come back’

Alejandro Talavera Correa moved to Washington, D.C. in 2019 for a job in finance. The role and pay were too good to pass up, he said: “People have to leave in order to get a competitive salary.”
But within a few years, he found himself moving back to Puerto Rico.
Talavera Correa, now 28, found an opportunity to return to Puerto Rico through El Comeback, an online job board that is tailored to include job postings that meet market salary standards or offer benefit packages for prospective applicants.

“We want people to come back,” said Ana Laura Miranda, project manager of El Comeback. “We need to be realistic. We need to invest in employees and if we don’t have the salaries, then we need to create benefit packages.”
According to Miranda, the audience that mostly uses the platform are in their late 20s to those in their mid to late 30s. They vary from single adults to families with kids.
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The initiative is still in its early stages, and has attracted and retained 51 candidates, Miranda said.
Candidates are often looking to be close to family or regain the sense of belonging or warmth that comes with being in Puerto Rico, said Miranda. But young workers returning to Puerto Rico may face new financial challenges.
“There’s always going to be a certain pay cut,” as six figure salaries are not as common on the island as they are in the U.S. And “Puerto Rico is not cheap,” said Miranda. “The cost of living … it’s real. We cannot miss that.”
The island — like the mainland U.S. — has a housing market that’s unaffordable for many residents, and having a car is essential to get around because public transportation services can be unreliable.

Talavera Correa was fortunate to buy a condo during the pandemic when mortgage rates were low.
“If you don’t have that kind of money, you’re essentially stuck either renting or living with your parents,” said Talavera Correa.
Yet, like most Puerto Ricans on the island, he still struggles with regular blackouts and electricity problems. Those send him to his mom’s house, where service is more reliable due to her solar panels.
“Blackouts and problems with electricity are quite recurrent,” said Advantage Business Consulting’s Feliciano. “Electricity is a major distinction between the U.S. and Puerto Rico and it hits the younger generation harder than it hits the wealthier, older generation.” 

Despite the challenges, Talavera Correa is happy with his decision.
“It’s essentially the quality of life that you can have here in Puerto Rico. You have the beaches, everything outdoors, and the opportunity that you can have to have a happy life,” he said.
“But if that comes with economic restraints, or just overall living situations regarding the electricity, water … that disappoints a lot of people [who] come back.” More

The IBM logo is displayed on a smartphone in Poland.
Omar Marques | Lightrocket | Getty Images

The major averages have been on a sharp upward turn since Donald Trump won the presidential election last week, but investors who want to buffer their portfolio from future market shocks may want to add dividend stocks.
To select the right dividend stocks, investors can consider the recommendations of top Wall Street analysts, who have a strong track record and provide useful insights based on a thorough analysis of a company’s fundamentals.

Here are three dividend-paying stocks, highlighted by Wall Street’s top pros on TipRanks, a platform that ranks analysts based on their past performance.
Enterprise Products Partners
This week’s first dividend pick is Enterprise Products Partners (EPD), a midstream energy services provider. For the third quarter of 2024, EPD announced a distribution of $0.525 per unit, reflecting a 5% year-over-year increase. EPD offers a high yield of 6.9%.
The company also enhances shareholder returns through share repurchases. During Q3 2024, EPD made repurchased about $76 million worth of its common units.
Following EPD’s Q3 results, RBC Capital analyst Elvira Scotto reiterated a buy rating on the stock with a price target of $36. The analyst noted that the company’s Q3 earnings before interest, tax, depreciation and amortization of $2.442 billion was in line with Wall Street and RBC’s estimates, with increased natural gas marketing contributions offsetting a decline in the margins of the octane enhancement business and crude oil marketing.
Scotto highlighted EPD’s robust backlog of organic growth projects, with notable projects expected to come online next year and fuel the company’s growth. The analyst also expects the company to benefit from the recently completed acquisition of Pinon Midstream.

“We continue to believe the steady cash flow and EPD’s strong balance sheet (+/- 3.0x financial leverage target) can comfortably handle the spend and drive meaningful long-term growth,” said Scotto.
Scotto ranks No. 20 among more than 9,100 analysts tracked by TipRanks. Her ratings have been profitable 70% of the time, delivering an average return of 21.6%. See EPD Stock Buybacks on TipRanks.
International Business Machines
We move to the next dividend stock, IBM (IBM). The tech giant recently reported mixed results for the third quarter. Earnings exceeded analysts’ estimates, but the top line fell short of expectations as the solid growth in Software revenues was partially offset by lower Consulting and Infrastructure revenues.
In Q3, IBM generated free cash flow of $2.1 billion and returned $1.5 billion to shareholders through dividends. IBM stock offers a dividend yield of 3.1%.
Following investor meetings with IBM management, Evercore analyst Amit Daryanani reaffirmed a buy rating on IBM stock with a price target of $240. The analyst stated that after the meetings, he has a “more constructive view of the durability of the company’s long-term growth and their critical role as an enabler of hybrid IT + AI technologies.”
Commenting on IBM’s Enterprise artificial intelligence positioning, Daryanani thinks that IBM is capable of addressing the AI opportunity in both its Software and Consulting businesses. He highlighted that IBM’s AI book of business has increased to more than $3 billion, up from $1 billion a quarter ago, with about 80% of the bookings coming from the Consulting business.
Daryanani noted the strength in IBM’s Software business and expects this momentum to continue, driven by persistent growth in Red Hat (acquired in 2019), transaction processing growth, demand for AI/data solutions, and mergers and acquisitions. Further, the analyst expects the Consulting business to recover next year.
Overall, Daryanani is confident about IBM’s prospects under the leadership of CEO Arvind Krishna. He is optimistic about the company’s ability to grow its profit at a higher rate than revenue, thanks to the increasing Software mix, operating scale and cost optimization efforts.
Daryanani ranks No. 316 among more than 9,100 analysts tracked by TipRanks. His ratings have been successful 58% of the time, delivering an average return of 12.3%. See IBM Hedge Fund Activity on TipRanks.
Ares Capital
Finally, let’s look at Ares Capital (ARCC), a specialty finance company that provides financing solutions to private middle-market companies. ARCC recently reported solid third-quarter results, attributing them to strong new investment activity and healthy credit performance.
Also, Ares Capital announced a dividend of 48 cents per share for the fourth quarter, payable on Dec. 30. ARCC stock offers a dividend yield of 8.9%.
Following the Q3 print, RBC Capital analyst Kenneth Lee reaffirmed a buy rating on the stock and slightly raised the price target to $23 from $22. The analyst’s bullish stance is backed by ARCC’s “strong track record of managing risks through the cycle, well-supported dividends, and scale advantages.”
Lee lowered his adjusted EPS estimates for 2024 to $2.36 from $2.39, and he trimmed them for 2025 to $2.13 per share from $2.17 per share to account for reduced yield assumptions and changes in dividend income assumptions. Nonetheless, he is optimistic about the company’s potential due to its solid credit performance and less downside risk owing to a favorable macro backdrop.
Lee highlighted that ARCC’s portfolio activity was greater than expected, with Q3 witnessing net additions of more than $1.32 billion, much greater than RBC’s estimate of over $800 million. He also noted the company’s improved credit performance, with non-accruals moving down to 1.3% in Q3 from 1.5% in the second quarter.
Overall, Lee thinks that ARCC has the potential to deliver above peer-average return on equity and views its scale as a competitive advantage.
Lee ranks No. 34 among more than 9,100 analysts tracked by TipRanks. His ratings have been profitable 70% of the time, delivering an average return of 17.2%. See ARCC Stock Charts on TipRanks. More

Rafael Henrique | SOPA Images | AP

Company: Verona Pharma (VRNA)

Business: Verona Pharma, a clinical stage biopharmaceutical company, focuses on development and commercialization of therapies for the treatment of respiratory diseases with unmet medical needs. The company’s product candidate is ensifentrine, an inhaled and dual inhibitor of the phosphodiesterase (PDE) 3 and PDE4 enzymes that acts as both a bronchodilator and an anti-inflammatory agent in a single compound. This medication is in Phase 3 clinical trials for the treatment of chronic obstructive pulmonary disease, asthma and cystic fibrosis. The company is developing ensifentrine in three formulations, including nebulizer, dry powder inhaler and pressurized metered-dose inhaler. Verona Pharma was incorporated in 2005 and is headquartered in London.
Stock Market Value: ~$3.16B ($38.58 per share)

Stock chart icon

Verona Pharma shares in 2024

Activist: Caligan Partners LP

Ownership: n/a
Average Cost: n/a
Activist Commentary: Caligan Partners was founded by former Carlyle Group managing director David Johnson, and it launched its main fund in 2022. It invests in a concentrated portfolio of small and midcap life sciences companies, using activism as a tool to unlock value. Caligan looks for companies with differentiated intellectual property and durable assets that have underperformed their peers. The firm will take board seats when it thinks it can add value. The way the firm thinks about biopharma investing is somewhat unique. It looks for companies that are first in class and best in class in their therapies; companies where it has some downside protection; companies with a good management team; and opportunities where the firm thinks it could add value. Caligan looks to work constructively with boards and management but will not shy away from a proxy fight, if necessary.

What’s happening

On Oct. 22, Caligan announced that it has taken a position in Verona Pharma.

Behind the scenes

Verona Pharma is a clinical stage, pre-revenue, biopharmaceutical company that focuses on the development and commercialization of therapies for the treatment of respiratory diseases with unmet medical needs. The company’s current product candidate and potential value creator is ensifentrine (commercially “Ohtuvayre”), an inhaled and dual inhibitor that acts as both a bronchodilator and an anti-inflammatory agent. Ohtuvayre was recently approved by the FDA for maintenance treatment of chronic obstructive pulmonary disease (COPD) on June 26. Back in May 2022, prior to this approval and when Caligan began building their initial position, the stock was trading in the mid-single digits and at essentially cash value. With the commercial launch of Ohtuvayre, Verona’s first-ever marketed product, scheduled for the third quarter of 2024, the stock has soared. Still, Caligan thinks there is a lot more value to be realized.

COPD, known as “smoker’s lung,” is the third leading cause of death worldwide that affects over 380 million patients globally. Not only is this a humanitarian crisis, but a challenge for our health-care systems. In just the U.S. alone, over $24 billion in health-care costs are associated with COPD management. A successful drug like Ohtuvayre would not just increase the life expectancies of patients with COPD, but it would lower costs for both health-care providers and COPD patients. Currently, there are over 8.6 million U.S. COPD patients with over 4 million remaining symptomatic despite treatment from the current commercial therapies.
There is still a huge gap in this market, and Verona is currently on the trajectory of filling it with strong Phase III data showing a significant increase in lung function and a reduction in exacerbations with minimal side effects. This supporting data and the number of unsuccessfully treated patients in the current market suggests that Verona could achieve a 20% patient share for Ohtuvayre. If Verona can get 10% patient share, this could translate into $4.5 billion of revenue for Ohtuvayre. But the story gets even more exciting with potential indication expansion for utilizing Ohtuvayre for non-cystic fibrosis bronchiectasis (“NCFB”), a progressive inflammatory disease that causes permanent lung damage with no current approved therapies and whose symptoms mimic COPD. With a greater than 1 million patient population, this could be a huge avenue for expansion for Ohtuvayre if it were to get approved as an NCFB treatment. The only other potential player in the NCFB market is biopharma peer Insmed’s drug brensocatib. The drug had mediocre success, showing a 21% rate of reduction in exacerbations in Phase III testing. Still, this was enough to skyrocket Insmed’s valuation over $7 billion in one month. In early pooling analysis, Ohtuvayre showed a 41% reduction in exacerbations in COPD patients, almost double brensocatib.
When Caligan announced its Verona position last month, the stock was trading at $33.40 per share or a $2.5 billion enterprise value. If it can attain a 10% patient share for COPD and $4.5 billion of peak revenue, it is trading at one half of peak revenue. Mergers and acquisitions for similar companies are generally done at 3-times to 4-times peak revenue, which would give Verona a price of $115 per share. If Ohtuvayre continues to move through trials for NCFB and gets traction with patients, like Insmed, Caligan thinks that Verona Pharma could be worth 7-times its valuation, or $218 per share.
Caligan exclusively invests in the health-care sector and has seen a lot of success. In October 2023, Caligan announced an activist position in MorphoSys AG, a similarly modeled biopharma company with a Phase III drug, that was set to commercialize in Q4 of 2023. At the time, the stock was trading at 26.08 euros a share. After successfully commercializing its star drug pelabresib, MorphoSys was subsequently sold to Novartis in February 2024 for 2.7 billion euros or 68 euros per share. Caligan learned from that experience that if a drug can improve the standard of care for patients, it will be valuable. In an industry with $140 billion coming off patent relatively soon, larger pharma companies need to do acquisitions, and those deals are usually in the $1 billion to $10 billion range. Both of those points bode very well for Verona, Caligan’s largest position in its portfolio.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More

FA Playbook

Financial psychology plays a big role in people’s financial success.
Adopting a “rich” versus “poor” mindset can help anyone become a millionaire, says behavioral finance expert Brad Klontz.

Bernd Vogel | Stone | Getty Images

Brad Klontz was drawn to financial psychology after the tech bubble burst in the early 2000s.
Klontz had tried his hand at stock trading after seeing a friend earn more than $100,000 in one year. But he felt immense shame after the market crashed and his investments evaporated.

He set out to discover why he took such risks and how he could behave differently in the future.
Today, Klontz is a psychologist, a certified financial planner and an expert in behavioral finance. He is a member of the CNBC Financial Advisor Council and the CNBC Global Financial Wellness Advisory Board.
In his estimation, psychology is perhaps the biggest impediment to people’s financial success.

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Klontz’s new book, “Start Thinking Rich: 21 Harsh Truths to Take You from Broke to Financial Freedom” — co-authored with entrepreneur and social media influencer Adrian Brambila — aims to break down the mental barriers that get in the way of financial freedom.
CNBC chatted with Klontz about these “harsh truths” and why he says people earning a McDonald’s salary can still become millionaires by tweaking their mindset.

The conversation has been edited and condensed for clarity.

‘It’s all about the psychology’

Greg Iacurci: Why is psychology important when it comes to personal finance?
Brad Klontz: The basics of personal finance are actually quite simple. Financial literacy has its place, but I think it’s mostly [about] psychology.
Here’s my argument for that: The average American, the two biggest problems we have is we spend more than we make, and we don’t save and invest for the future. And I’ve literally yet to meet an adult who doesn’t know that they shouldn’t do those two things. So, everybody knows it. Nobody stays broke because they don’t know the difference between a Roth IRA and a traditional IRA. That’s not the problem we have.
It’s not really about the lack of knowledge. I think it’s all about the psychology. 
GI: So how does people’s psychology tend to get in the way?
BK: The biggest impediment: money scripts. Most people aren’t aware of their beliefs around money. And there’s a whole process for discovering what those are. Part of it is looking at your financial flashpoints: these early experiences you have around money or that your parents have had, or your grandparents have had. People tend to repeat the pattern in their family, or they go to the extreme opposite. 

The difference between ‘broke’ and ‘poor’

GI: You write very early in the book that there’s a difference between being broke and being poor. Can you explain the difference? 
BK: We’re talking about a poor mindset.
Being broke means you have no money. I’ve been broke, my co-author was broke, our families have been broke, a lot of people have been broke. We differentiate between being broke, which is a temporary condition, hopefully, to a poor mindset, which will keep you broke forever.

It’s not really related to money, because I know people who make six figures and multiple six figures, and they have a poor mindset. We all know stories of people who win the lottery, or they win a big sports contract or music contract, and then all of a sudden [the money is] gone. Why is it gone? They have a poor mindset. That’s the distinction we make.
GI: Does this suggest that people, no matter their socioeconomic circumstances, can lift themselves out of poverty if they adopt a rich mindset?
BK: Yes.
GI: Is that one of your “harsh truths”?
BK: Yeah. We frame it in different ways based on the [book] chapter titles. For example, “It’s not your fault if you were born poor, but it is your fault if you die poor.” That’s a pretty harsh reality that we’re throwing in people’s face.  

Adopt a ‘rich’ vs. ‘poor’ mindset

GI: What is a rich mindset?
BK: It’s an approach to life and an approach to money.
Some of it goes against our natural wiring. There’s a future orientation. You have to have a vision of the future. A poor mindset [is] really focused on the here and now, not really thinking about the future. And if you don’t have a clear vision of your future, you’re not going to save, you’re not going to invest, you’re not going to live below your means.
A rich mindset puts an emphasis on owning their time versus owning a bunch of stuff. A poor mindset, as we describe it, [is] very willing to trade time for stuff.
GI: What do you mean by that?
BK: A poor mindset is like, I want this fancy car. And I’m very willing to work an extra 10 hours a week so I can drive that car around. And the problem with that is that mindset goes everywhere: “I’m gonna buy the biggest house I can get, I’m gonna get the nicest clothes I can get, a big watch.” And then people have no net worth. They’re not saving any net worth.

Meanwhile, a rich mindset is like: How can I own as much time as possible? You might think of that as retirement, where I don’t need to work anymore to fund my life. They have a future orientation, and they think, “Every dollar I get, I’m taking some of that money and I’m going to put it over here so that I can own my time and eventually have that money fund my entire life.”

One of the ‘most destructive beliefs about money’

GI: I thought this was a great line. You write: “The belief that rich people are big spenders could be one of the most destructive beliefs about money ever.”
BK: I’ve done research on this. In one study, we looked at a group of people who [each] had about $11 million in net worth, and we compared them to a group of people who [each] had about $500,000 in net worth. These people had almost 18 times more money. And what we found is they only spent twice as much, on their house, their vacation, their watch and their car.
They had the money to spend 18 times as much, right? The people who are the wealthiest, when it comes to money scripts [they] have money-vigilant money scripts, which is the belief that it’s important to save.
The ones who are the flashiest spenders [have] “money status beliefs.” They had lower income, lower net worth. They’re more likely to come from poorer homes. It’s like, “I’m gonna show the world I’ve made it.” But that keeps you broke.
And I had it, by the way. All these insults about this poor mindset, I had it all.

How to work at McDonald’s and be a millionaire

GI: So what is the No. 1 thing people can do to save themselves?
BK: The first part is embracing some of these harsh realities: Your political party is not going to save you. Your corporation doesn’t care about you. Your beliefs about money are keeping you poor.
These are all meant, in different ways, to just help you shift from an external locus of control to an internal locus of control: The outcomes I’ve been getting in my life are because of me. It’s because of what I did, what I didn’t do, what I didn’t know. It’s a difficult mindset to grasp.  
You need to wake up to the fact that it doesn’t matter who the president is in terms of your financial freedom. None of them are going to make you financially free. They’re not going to send you a check. Your company? They don’t want you to be financially free. The replacement cost for you is really high. Your teachers can’t teach you to do that. They can teach you history and English. But they’re not financially free themselves.
The bottom line is, you have to do this yourself.
Then the next question is, well, what am I supposed to do? And that’s where we want to get people, because that’s a much easier answer.

Bradley T. Klontz, Psy.D., CFP, is an expert in financial psychology, behavioral finance and financial planning.
Courtesy Bradley T. Klontz

GI: And what is the answer?
BK: The answer is really, really simple.
Here’s the rich mindset: $1 comes into your life; you are going to put a percentage of that towards your financial freedom before you do anything else.
You can work at McDonald’s your entire life and be a millionaire if you have that mindset.

Save 30% of your income — or get a roommate

GI: What is the percentage people should be aiming for?
BK: It just depends on how rich you want to be and how fast you want to be rich. That determines the percentage. You’ll hear personal finance experts say you should be saving and investing at least 10% of everything you make. I advocate for 30%; that’s what I shot for, just because I think it helps you get there faster.
And people are like, “Oh my gosh, 30%.” Well, it’s real easy before you get your first job if you have this mindset. It’s real tough if you’ve designed your entire life around 100% of your paycheck. That’s where you have to make cuts.
We have a chapter on cutting expenses. It’s called “Get a roommate, get on the bus, get sober, get bald, and get a side hustle or shut up about being poor.”
We [hear] this all the time: “I can’t afford to invest.” We’re calling bulls— on it. Yes, you can.
We looked at the average amount that Americans spend on rent, on cars, on going to the salon, and on alcohol. Two thousand dollars a month is average rent; if you have a roommate, it cuts it down to $1,000. Just that alone, if you invested the difference, in 25 years you’d have $1.3 million. Now, if you had three roommates, it would go all the way up to $2 million. Just think about that. You now are a multimillionaire just from that, doing nothing else. And by the way, that’s average market returns.
But then when you add in: Take the bus, stop drinking alcohol, shave your head? [That’s] $2.8 million in 25 years.
GI: If you do all those things?
BK: If you do all those things. That’s just one roommate, riding the bus, not drinking alcohol and not going to the salon — watch YouTube [or] get your friend to cut your hair. The richest people I know, this is the kind of stuff they do. And yeah, $2.8 million.
I would say to you all: That sounds terrible.
OK, so why don’t you just go ahead and invest 30% of every dollar you make? Then you don’t have to do any of that s—. If that’s your mindset, it’s impossible for you not to become a millionaire. Unless you do something stupid, like take your investments and do something crazy. More