Investing

Americans are still feeling the pinch from the high cost of single-family rentals, according to a new report based on the second quarter of 2023.
California metro areas dominated the top spots for highest median rent, while areas around the Sun Belt were most affordable.
But if you’re considering a move, financial advisors say to beware of unexpected costs.

Downtown Los Angeles.
TheCrimsonRibbon | Getty Images

5 U.S. metro areas with highest monthly rents

These U.S. metropolitan real estate markets had the highest median single-family monthly rents during the second quarter of 2023:

Los Angeles; Long Beach, California; Anaheim, California: $4,984
San Diego; Carlsbad, California: $4,862
Naples, Florida; Immokalee, Florida; Marco Island, Florida: $4,821
Bridgeport, Connecticut; Stamford, Connecticut; Norwalk, Connecticut: $4,750
San Jose, California; Sunnyvale, California; Santa Clara, California: $4,629

5 U.S. metro areas with lowest monthly rents

These U.S. metropolitan real estate markets had the cheapest median single-family monthly rents during the second quarter of 2023:

Little Rock, Arkansas; North Little Rock, Arkansas; Conway, Arkansas: $1,267
Montgomery, Alabama: $1,394
Birmingham, Alabama; Hoover, Alabama: $1,441
Louisville, Kentucky; Jefferson County, Kentucky and Indiana: $1,492
Cleveland, Ohio; Elyria, Ohio: $1,506

Beware of the ‘hidden’ costs of moving

Some 40% of Americans are eyeing a move at some point in 2023, according to a recent survey from moving website HireAHelper, and financial pressures are among the top reasons for relocating.
However, financial experts warn consumers about some of the unexpected expenses.
“Probably the most overlooked hidden cost is when you are looking for the next job,” said certified financial planner Michael Hansen, co-founder and managing partner of Frontier Wealth Strategies in Walnut Creek, California.

What you might save in dollars, you may lose in connection, collaboration and community.

Eric Roberge
Founder of Beyond Your Hammock

It may be appealing to move to a cheaper state to work remotely, but telecommuting may not be possible for your next role, he said. Before moving, you should consider your new city’s job market and possible in-person job opportunities.
“What you might save in dollars, you may lose in connection, collaboration and community,” said CFP Eric Roberge, who recently decided to move back to Boston after living in a lower-cost area.
“Although you can’t necessarily quantify that and put it in a spreadsheet the same way you can a budget with a rent or mortgage payment, being with your people is absolutely worth something,” said Roberge, founder of financial planning firm Beyond Your Hammock. More

The job market is gradually cooling as metrics like job openings and “quits” fall from record highs.
Workers, who enjoyed unprecedented bargaining power in 2021 and 2022, are seeing that leverage start to wane, economists said.
However, there are pockets of strength. That means it’s now more important for job seekers to understand what’s going on in their industry, one expert said.

Luis Alvarez | Digitalvision | Getty Images

The job market is cooling. Though it remains strong — and workers still have leverage — their power doesn’t seem to be as broad based as it was earlier in the pandemic, say labor experts.
These days, whether employees still enjoy considerable leverage — to find a new job or get a raise, for example — “depends on what industry workers are in,” said Daniel Zhao, lead economist at career site Glassdoor.

“That’s a different response than might have been given in 2021 or 2022, when the market seemed to be hot all over the place,” Zhao said.
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Job openings surged to historic highs as the U.S. economy started to reopen after a pandemic-era lull. Americans, buoyed by their job prospects, also quit their jobs at a record pace, a trend that came to be known as the “great resignation.” Wage growth surged at the fastest rate in decades amid stiff competition for labor; layoffs dropped to historic lows.
Put simply: Workers across the economy enjoyed unprecedented job security.
Evidence suggests that dynamic is gradually easing.

Job openings fell slightly in June to about 9.6 million — still well above historical norms but down from the peak of more than 12 million in March 2022, according to the monthly Job Openings and Labor Turnover Survey issued Tuesday.

The “quits” rate — the number of people quitting in June as a share of total employment — is hovering near its pre-pandemic level. And the rate of hiring among employers declined in June to 3.8%, roughly in line with pre-pandemic levels, according to the JOLTS report.
“The JOLTS data are consistent with further immaculate cooling of the labor market,” wrote Jason Furman, an economist at Harvard University and former chair of the White House Council of Economic Advisers during the Obama administration.
The Federal Reserve has raised borrowing costs aggressively — with the aim of slowing the economy and inflation — and banks have tightened lending, all of which ultimately affect the job market.

Conditions have ‘normalized substantially’

Though conditions have “normalized substantially” since the great resignation’s peak from mid-2021 to mid-2022, 8% more employees are quitting their jobs each month than before the pandemic, and layoffs remain 22% lower, said Julia Pollak, chief economist at ZipRecruiter.
Now, worker leverage is more industry specific, economists said.
For example, the finance and insurance sector in June saw job openings below their pre-pandemic level in February 2020.
Conversely, “arts, entertainment and recreation” saw record low layoffs and record high quits, Pollak said.

“Workers are in high demand across the sector as Americans flood back to concerts, baseball games and movie theaters,” Pollak wrote. “Quits in the industry hit an all-time high, and workers found it easier to switch into better jobs.”
Job openings across state and local government are also at all-time highs, suggesting municipalities “are now on a hiring spree” now that competition for workers is a bit less intense in the private sector, she said.
“Certain industries are still very hot,” Zhao said. “It’s more important for job seekers to understand what’s going on in their industry than it might have been a year or two ago.” More

Life Changes

The Mega Millions jackpot has soared above $1 billion for the fifth time in history.
However, the winner will pay a significant chunk to Uncle Sam before seeing a penny of the windfall.
The next Mega Millions drawing is at 11 p.m. ET on Tuesday.

The Mega Millions jackpot soared to $1.05 billion on July 31, 2023.
Shannon Stapleton | Reuters

The Mega Millions jackpot has soared to more than $1 billion for the fifth time in the game’s history.
Currently, the 30-year annuitized payout is worth $1.05 billion, Mega Millions’ fourth-largest prize to date. Winners may also choose the popular lump-sum option for a $527.9 million payout.

However, both options are pretax estimates and the winner will pay a sizable chunk to the taxman before seeing a dollar of the proceeds.
Tuesday’s drawing is at 11 p.m. ET.

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Whether you choose the lump sum or annuitized 30-year payout, it’s important to seek expert guidance, said Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
“Call your estate planning attorney before you do anything,” he said.
Lucas recommends the winner hire a team of experts, including a financial advisor, tax professional, estate planning attorney, bank specialists and more, to navigate a range of financial decisions.

The chance of hitting the Mega Millions jackpot is roughly 1 in 302 million.

Withholding shrinks the prize by nearly $127 million

Before seeing a penny of the billion-dollar jackpot, the Mega Millions winner will pay a sizable chunk in taxes. There’s a mandatory 24% federal withholding for winnings above $5,000 that goes straight to the IRS.
If you choose the $527.9 million lump sum, the 24% federal withholding shrinks the prize by nearly $127 million.
However, that’s not the total tax bill, because the top tax bracket is currently 37%, according to Lucas, who encourages the winner to set aside 40% “just to be conservative.”

How federal tax brackets work

The Mega Millions jackpot easily pushes the winner into the top federal income tax bracket, which is currently 37%. But they won’t pay 37% on the entire windfall because “it’s going to flow through the brackets,” Lucas said.
For 2023, the 37% rate applies to taxable income of $578,126 or more for single filers and $693,751 or higher for couples filing together. You calculate taxable income by subtracting the greater of the standard or itemized deductions from your adjusted gross income.
Single lottery winners will pay $174,238.25, plus 37% of the amount over $578,125. But for couples filing jointly, the total owed is $186,601.50, plus 37% of the amount above $693,750.

The 24% federal withholding may cover a large amount of taxes, but the final bill will likely represent millions more, depending on several factors.
You may also be on the hook for state taxes, depending on where you live and where you bought the ticket. Some states don’t tax lottery winnings or don’t have income taxes, but others may levy above 10% in the top bracket.
Tuesday’s Mega Millions drawing comes less than two weeks after a single ticket sold in California won Powerball’s $1.08 billion jackpot. That game’s top prize is back down to $74 million, with roughly 1 in 292 million odds of winning the jackpot. More

More than half of all U.S. adults currently live paycheck to paycheck, according to a new report.
The number of Americans who say they are stretched thin has remained stubbornly high despite recent signs that inflationary pressures are cooling.

By many measures, consumers who have been squeezed by higher prices should be experiencing some relief.
Recent releases show that, at least compared with the soaring inflation of a year ago, prices have begun to ease. The consumer price index, which measures inflation, increased 3% from a year ago, which is the lowest level since March 2021, while the personal consumption expenditures price index also notched the lowest annual level in more than two years.

And yet, as of June, 61% of adults still say they are living paycheck to paycheck, according to a new LendingClub report, unchanged from a year ago.
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Lower-income workers have been the hardest hit by price spikes, particularly for food and other staples, since those expenses account for a bigger share of the budget, studies show. Roughly three-quarters of consumers earning less than $50,000 annually and 65% of those earning between $50,000 and $100,000 were living paycheck to paycheck in June, based on LendingClub’s numbers.
Fewer top earners have been struggling to make ends meet. Of those earning $100,000 or more, only 45% reported living paycheck to paycheck, the report found. 
A majority, or 52%, of adults, including high earners, said they have felt more financially stressed since before the Covid pandemic began in 2020, according to a separate CNBC Your Money Financial Confidence Survey conducted in March — largely due to inflation, rising interest rates and a lack of savings.

That survey found that 58% of Americans are living paycheck to paycheck.

‘Credit cards are filling the gap’

Still, more than half of all U.S. consumers struggle to afford their day-to-day lifestyle, which is forcing some to rely more on credit cards or dip into savings, making them financially vulnerable.
“Budgets are still very stretched and, for a lot of households, credit cards are filling the gap,” said Greg McBride, Bankrate’s chief financial analyst. 
“People aren’t financing purchases at 20% because they have other options,” he added. “They’re doing that because it’s their only option.”

For its part, the Federal Reserve raised interest rates again last week in its continued effort to tame inflation.
Following the hike, Fed Chairman Jerome Powell said that future decisions on rate moves would be based on incoming data rather than a preset course on policy.
Central bank officials generally believe that inflation is still too high despite the recent positive trends and want to see multiple months of solid data before changing direction.
Subscribe to CNBC on YouTube. More

Life Changes

The Biden administration has launched a beta application for its new repayment plan for student loan borrowers.
The Saving on a Valuable Education, or SAVE, plan is an income-driven repayment plan that may cut many borrowers’ previous monthly payments in half, and will leave some people with no monthly bill.

U.S. President Joe Biden, joined by Education Secretary Miguel Cardona, speaks on student loan debt in the Roosevelt Room of the White House August 24, 2022 in Washington, DC.
Alex Wong | Getty Images News | Getty Images

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How the SAVE student loan plan works

Instead of paying 10% of their discretionary income a month toward their undergraduate student debt under the previous Revised Pay As You Earn Repayment Plan, or REPAYE, plan, borrowers will eventually be required to pay just 5% of their discretionary income under the SAVE plan.
Those who make less than $15 an hour won’t need to make any payments under the new option, the Education Department says.
“The SAVE plan is very generous to borrowers, almost like a grant after the fact,” said higher education expert Mark Kantrowitz.

Some of these benefits of the SAVE plan, including the change from 10% of discretionary income to 5%, won’t fully go into effect until next summer because of the timeline of regulatory changes.

Still, the Education Department says borrowers who sign up for the plan this summer will have their application processed before student loan repayments resume in October.
Borrowers who sign up during the beta application period will not need to enroll again later, Kantrowitz said.

How to apply for SAVE, and what info you need

You can apply for SAVE directly on the Education Department website. Most borrowers finish the application for an income-driven repayment plan within 10 minutes, according to the administration.
You typically need to provide your federal student aid ID, contact and financial information.

More relief in the works as payments resume More

The employee retention credit, worth thousands per employee, was enacted to support small businesses affected by shutdowns during the Covid-19 pandemic.
Scrutiny of the pandemic-era tax credit intensified this week among lawmakers, the IRS and tax professionals.
“The further we get from the pandemic, we believe the percentage of legitimate claims coming in is declining,” IRS Commissioner Danny Werfel said this week.

IRS Commissioner Daniel Werfel testifies before a Senate Finance Committee hearing on Feb. 15, 2023.
Kevin Lamarque | Reuters

Scrutiny of a pandemic-era tax credit intensified this week as lawmakers, the IRS and tax professionals sought solutions for the wave of small businesses that wrongly claimed the tax break. 
The employee retention credit, or ERC, was enacted in 2020 to support small businesses affected by shutdowns during the Covid-19 pandemic and is worth thousands of dollars per employee. There’s still time for eligible businesses to amend returns and claim credits, which has sparked a cottage industry of firms, known as “ERC mills,” pushing the credit to businesses that may or may not qualify.

“While it was a great opportunity and much-needed lifeline to small businesses, it is fraught with fraud,” said Roger Harris, president of accounting and tax firm Padgett Advisors, speaking at a House Ways and Means Committee hearing Thursday.
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“Any time this amount of money is being handed out through the tax system, the bad actors show up, and they have shown up in large numbers,” he said.
As of July 26, the IRS said, it had roughly 506,000 unprocessed Form 941-X amended payroll tax returns.
As the IRS works through its backlog of unprocessed amended returns, it’s unclear how many small businesses may have wrongly claimed the credit. But a future audit “could ruin them,” according to Harris.

The IRS has received more than 2.5 million ERC claims since the beginning of the program, but processing has slowed due to the “complexity of the amended returns,” according to the agency.

“The joy of getting the money could very quickly be replaced with the terrifying reality that because you weren’t eligible, you could be put out of business because of the amount of money you now owe back to the federal government,” Harris said.
The true ERC claim backlog may be significantly higher because of professional employer organizations, or PEOs, which provide payroll benefits and other HR services, according to Pat Cleary, president and CEO of the National Association of Professional Employer Organizations, who also testified at the House hearing. That’s because a single PEO claim can represent many small businesses.

IRS says legitimate ERC claims are declining

The IRS has issued several warnings about “ERC schemes” and added the issue to the top of its “Dirty Dozen” list of tax scams for 2023. This week, the agency said it has “increased audit and criminal investigation work” in this area.
“The further we get from the pandemic, we believe the percentage of legitimate claims coming in is declining,” IRS Commissioner Danny Werfel said at the IRS Nationwide Tax Forum in Atlanta this week. “Instead, we continue to see more and more questionable claims coming in following the onslaught of misleading marketing from promoters pushing businesses to apply.”  

The further we get from the pandemic, we believe the percentage of legitimate claims coming in is declining.

Danny Werfel
IRS Commissioner

Currently, small businesses have until April 15, 2024, to amend returns for 2020 and until April 15, 2025, to amend returns for 2021. “That raises future concerns,” and the agency is weighing an earlier end date, Werfel said.

Tax professionals need a ‘real-world solution’

Meanwhile, questions linger for tax professionals fielding questions from small businesses about ERC claims.
“As practitioners, we need guidance,” Larry Gray, a certified public accountant and partner at AGC CPA, said in written testimony for the House hearing. “We need guidance to be able to show our clients clearly why they do or do not qualify.”

He said ERC specialists help companies amend payroll tax returns, but aren’t amending income tax returns to reflect the change, which sends clients back to him.
What’s more, “claiming the credit and correcting the tax return are likely not done by the same people,” since many tax professionals don’t handle payroll tax returns, Gray said.
Harris stressed the need for a “real-world solution” for small businesses that wrongly claimed the credit because “there’s no way in the world we’re going to audit our way out of this problem.”  More

Scott Mlyn | CNBC

While many growth stocks have recovered this year, investors continue to look for attractive dividend picks that can offer steady income and the potential for long-term capital appreciation.
Here are five dividend stocks worth considering, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.

IBM

related investing news

Tech giant IBM (IBM) recently reported mixed results for the second quarter. While revenue fell short of expectations, the company’s earnings smashed estimates due to improved gross margin.
IBM is transforming its business and focusing on growth areas like hybrid cloud computing and artificial intelligence. It generated free cash flow of over $3.4 billion and paid dividends worth $3 billion in the first six months of 2023. IBM expects to deliver free cash flow of $10.5 billion for the full year.
Earlier this year, IBM increased its quarterly dividend by a modest 0.6% to $1.66, marking the 28th consecutive year of dividend hikes. IBM’s dividend yield is about 4.6%.
Following the results, Stifel analyst David Grossman increased his price target for IBM stock to $144 from $140 and reiterated a buy rating. The analyst slightly raised his 2023 and 2024 estimates based on the organic and inorganic growth in the company’s software business.
“IBM has been a source of funds YTD and remains most appropriate for the dividend sensitive value investor looking for a defensive market hedge,” said Grossman.

Grossman is ranked 389th among more than 8,500 analysts tracked by TipRanks. His ratings have been profitable 64% of the time, with each one delivering an average return of 14.4%. (See IBM Blogger Opinions & Sentiment on TipRanks)

Chord Energy

Next up is Chord Energy (CHRD), an oil and gas operator with assets in the Williston Basin. The company rewards shareholders through a quarterly base dividend, a variable dividend and share buybacks.
For the first quarter, Chord declared a total cash dividend of $3.22 per share, including a variable dividend of $1.97 per share.
RBC Capital analyst Scott Hanold sees the possibility of the company exceeding its 75% minimum shareholder payout if excess cash builds and no other accretive acquisition opportunities arise. Hanold expects Chord to declare a variable dividend of $0.15 per share for the second quarter, along with a base dividend of $1.25 per share and share buybacks in the range of $25 million to $30 million.    
Ahead of the upcoming results, Hanold lowered his Q2 2023 earnings per share and cash flow per share estimates due to lower benchmark commodity prices, wider price differentials, and lower production. He also reduced his price target for CHRD to $180 from $185 to reflect his new commodity price forecast. 
Nonetheless, Hanold is bullish on CHRD and reiterated a buy rating on the stock, saying, “The company’s balance sheet is strong and leverage is de-minimis, providing the opportunity to allocate a significant portion of FCF to shareholder returns.”
Hanold, who ranks 43rd out of more than 8,500 on Tipranks, has a success rate of 63% and each of his ratings has returned 21.4%, on average. (See Chord Energy Hedge Fund Trading Activity on TipRanks)     

Energy Transfer LP

Another RBC Capital analyst, Elvira Scotto, is bullish on dividend stock Energy Transfer (ET), a publicly traded limited partnership that operates a vast pipeline network spanning 41 U.S. states.
On July 25, Energy Transfer announced a quarterly cash distribution of $0.31 per common unit for the second quarter, marking a 0.8% increase compared to the first quarter of 2023. That brings the dividend yield to over 9%. The company is targeting a 3% to 5% growth in its annual distribution.
Heading into second-quarter results, Scotto expects the performance of midstream companies to be affected by lower commodity prices. Nonetheless, the analyst reiterated a buy rating on Energy Transfer stock with a price target of $17.
“We believe ET has one of the most attractive integrated asset bases across our midstream coverage universe and view ET as a compelling investment opportunity, trading at a discount to large cap peers on EV/EBITDA and at a FCF [free cash flow] yield of ~14%,” said Scotto.    
The analyst thinks that ET is well positioned to generate significant rise in cash flows, which, coupled with its solid balance sheet, could drive higher cash returns through increased distributions to unitholders.
Scotto holds the 53rd position among more than 8,500 analysts on TipRanks. Additionally, 65% of her ratings have been profitable, with an average return of 19.6%. (See Energy Transfer Stock Chart on TipRanks)   

EOG Resources

Another energy name this week is EOG Resources (EOG), a crude oil and natural gas exploration and production company. Last year, the company returned $5.1 billion through regular and special dividends, representing 67% of its free cash flow.  
For the first quarter of 2023, EOG declared a regular quarterly dividend of $0.825 per share, payable on July 31. Moreover, the company repurchased $310 million worth shares in Q1. EOG offers a forward dividend yield of about 2.6%.
Mizuho analyst Nitin Kumar recently revised his estimates for EOG ahead of its upcoming results, to reflect actual pricing and improving Delaware well productivity based on the data from his firm’s proprietary database. Kumar’s Q2 2023 volume estimates are biased toward the higher end of the outlook range.
The analyst projects that EOG will deliver free cash flow of $753 million in the second quarter, despite his expectation of a 10% fall in aggregate pricing compared to the first quarter.
“Compared to the base dividend burden of ~$484mm and over $5bn of cash on hand at March 31, the company should have excess cash to pursue buybacks opportunistically,” said Kumar, who reiterated a buy rating on EOG with a price target of $146.
Kumar ranks 111th among more than 8,500 analysts on TipRanks. His ratings have been profitable 69% of the time, delivering an average return of 22.5%. (See EOG Insider Trading Activity on TipRanks)  

Morgan Stanley

Finally, we will look at a dividend stock in the financial sector: Morgan Stanley (MS). Recently, the global financial services giant reported market-beating second-quarter results, as the strength in its wealth management division offset lower trading revenue.
Last month, Morgan Stanley announced that it will hike its quarterly dividend per share to $0.85 from $0.775, commencing with the dividend to be declared in the third quarter of 2023. With this hike, Morgan Stanley’s forward dividend yield stands at about 3.6%. The bank’s board also reauthorized a $20 billion multi-year share repurchase program, beginning in the third quarter of 2023.
The bank’s upbeat second-quarter results prompted BMO Capital analyst James Fotheringham to increase his forward estimates by 1% to 2% and raise his price target for MS stock to $103 from $100. The analyst reiterated a buy rating on the stock, noting that the wealth management division remains the “bright spot.”
“Following two lackluster quarters for capital markets, MS noted the emergence of ‘green shoots’ across its businesses, supportive of a near-term improvement in deal activity,” said Fotheringham.
Fotheringham holds the 215th position among more than 8,500 analysts on TipRanks. Additionally, 65% of his ratings have been profitable, with an average return of 12.4%. (See Morgan Stanley Financial Statements on TipRanks) More

Federal student loan payments will be due again in roughly two months.
Interest will start accruing in September and due dates will vary among borrowers, but the government will be lenient regarding late payments.
Here’s what to know.

Johnnygreig | E+ | Getty Images

Interest will start accruing in September

Although federal student loan payments won’t be due until October, interest will continue collecting on your debt again on Sept. 1, the Education Department says.
The accrual of interest has been suspended on most federal student loans since March 2020.

Due dates will vary

There will be some variation in due dates among borrowers, depending on their account details, including their payment schedule before the Covid pandemic.
You can contact your loan servicer or log in to StudentAid.gov to learn your exact due date, said higher education expert Mark Kantrowitz.
Recent graduates, meanwhile, may get even more time if they’re still in their grace period, Kantrowitz said. Grace periods usually span six months from graduation.

Borrowers will be given leeway with late payments

What’s more, the Education Department has said it will institute a 12-month “on ramp” to repayment, which will run from this Oct. 1 through Sept. 30, 2024.
During that period, borrowers will be shielded from the worst consequences of missed payments.
For example, loans will not go into default and delinquencies will not be reported to credit reporting agencies, Kantrowitz said. Late fees won’t be charged, either.
“The 12-month on-ramp is similar to a forbearance in many ways,” Kantrowitz said.

But as is the case with a forbearance, interest will continue accruing on your debt while you don’t make payments. As a result, Kantrowitz recommends borrowers start repaying their bills, if they can.
“Doing otherwise will eventually hurt them,” he said.
Still, consumer advocates say this leeway is essential.
“Borrowers are not ready to resume payments,” said Persis Yu, deputy executive director at the Student Borrower Protection Center, in a recent interview with CNBC. “Even if the risk from the virus has diminished, the financial fallout has not.” More