3 Big Dividends About to Be Slashed—and 3 to Buy Instead

Brett Owens, Chief Investment Strategist
Updated: September 26, 2016

Today I need to warn you about a common mistake I’ve seen burn investors over and over. I’ll also show you 3 bargain dividend growth stocks that are great buys for your retirement portfolio now; more on those in a moment.

First, the mistake.

It’s called “reaching for yield” and its latest victims are investors who bought SeaWorld Entertainment (SEAS) based solely on the stock’s 6.5% dividend yield.

Too bad that high yield was because everyone else saw the company’s problems—falling revenue and shrinking operating margins as the public soured on SeaWorld’s killer-whale shows—coming from a mile away … and jumped overboard. In the 6 months prior to the announcement, the stock sunk 39%!

That drove its dividend yield way up (because you calculate yield by dividing the annual dividend by the current share price)—setting up a dangerous “yield trap” ready to spring on the unwary: …
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How To Get 5% Dividends Tax Free

Brett Owens, Chief Investment Strategist
Updated: September 23, 2016

Municipal bonds are popular with retirees because they provide tax-free income. Some pay secure yields above 6%, which translates to 10% tax-equivalent payouts to folks in high tax brackets.

But buying individual municipal bonds isn’t easy. Many brokers don’t offer them, and the ones that do usually try to sell low quality munis that big institutions have avoided because they know the bonds are poor quality – like the dogs issued by Puerto Rico or Detroit.

But most munis are perfectly secure. Ideally, you want to get your hands on the municipal bonds that institutions are buying. Many people think that’s impossible, but it isn’t—it just means we need to think laterally.

There is a universe of municipal bond funds that are purchased and managed by large institutional investors. …
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Ranking Hot Retirement Stocks Worst to First

Brett Owens, Chief Investment Strategist
Updated: September 21, 2016

The hunt for bond proxies is in full swing – but how good are these untested replacement players?

A 100% dividend-only income stream is the goal of any responsible “no withdrawal” retirement portfolio. Which of course is superior in every way to the fatally flawed 4% retirement myth, but difficult to achieve in a world where payout yields have been bid down towards 2%.

Fortunately, there are still a few promising pockets for income investors. I’m talking about yields of 6% to 8% plus upside. We’ll review them in a minute – but first, let’s make sure we avoid the high-risk low-reward traps.

Consumer “Staples” are Dangerous Reaches for 2-3%

Long term, I’m concerned that the dividend aristocrats of today will become the dividend disasters of tomorrow. …
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A Simple All-ETF Portfolio That Pays 4.3%

Brett Owens, Chief Investment Strategist
Updated: September 20, 2016

The stock market is complicated and volatile. This is why professional investors diversify their investments into a large batch of stocks. But buying many different companies is not easy—the more you diversify, the more research you need to do to make sure you aren’t buying a dud.

This is why ETFs have become incredibly popular. They give investors the opportunity to buy a basket of stocks in a single market sector or asset class. But now there are thousands of ETFs out there, and some of them come with hefty fees and poor performance. For good returns, we should avoid these dogs.

So where can we go instead for diversification and yield? With this 5-fund portfolio, and you can net dividends over 4% with some of the lowest management fees in the ETF universe: …
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3 Stocks To Buy Before The Fed Hikes Rates – And 2 To Sell Now

Brett Owens, Chief Investment Strategist
Updated: September 19, 2016

Legendary value investor John Templeton said it best: “Invest at the point of maximum pessimism.”

For income investors, today is that point.

And I’m going to show how to take maximum advantage with 3 unloved stocks in a beaten-down sector poised to rally with the next interest-rate hike. Sir John would almost certainly “back up the truck” for these 3 incredible bargains today.

More on them in a moment. First, here’s a quick recap of why dividend-seekers are so down-in-the-mouth these days.

For one, payout growth is slowing. According to FactSet, dividends per share grew 7.5% year-over-year in the 12 months ended in the first quarter; that will likely slide again, to 4.9%, in the next 12.

Meantime, the gap between the valuations of the S&P 500’s “safest” sectors and the profits supporting them is frighteningly wide: …
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Utilities Or Refineries? Sell One, Buy The Other

Brett Owens, Chief Investment Strategist
Updated: September 16, 2016

Today I want to talk about a corner of the market that has been overlooked for far too long despite offering sustainable high yields of 4% or more—with dividends primed to soar even more.

This sector is a distant cousin to a more familiar group of stocks: utilities. Utility stocks were once Wall Street’s best kept secret: high dividends, cheap valuations, sustainable business models, and steady revenues were all reasons why many big investors quietly bought these small regional companies. Sadly, the cat’s out of the bag. Utility stocks are up nearly 14% year-to-date as investors pile into the sector:

Utilities Gone Haywire


Just look at the performance of the SPDR Utility ETF (XLU), which is up massively even after a recent correction from its shocking 22% year-to-date return earlier this summer. …
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The Best, and Worst, Preferred Stock Funds

Brett Owens, Chief Investment Strategist
Updated: September 14, 2016

Not yet familiar with preferred shares? With “common” shares paying so little, it’s time to get acquainted.

You can double your yields, and actually reduce your risk, by trading in your common shares for preferreds. I’ll explain how – and will also warn you about an overlooked pitfall you should avoid.

Most investors only consider “common” shares of stock when they look for income. These are the shares in a company you receive when you place an order with your broker.

Problem is, most dividend darlings don’t pay much on their common shares today. You’ll be hard pressed to find a dividend aristocrat with a yield above 3% or a P/E ratio below 20 – evaporating business models or not!

A Bear Market in Common Yields
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4 High Yield Stocks To Sell Now

Brett Owens, Chief Investment Strategist
Updated: September 13, 2016

So far, 2016 is shaping up to be a great year for just about anyone in the stock market. With the S&P 500 up 7% year-to-date, it’s been pretty tough to lose money in this year’s market.

That’s caused a lot of money to flow into high income yielding stocks, although some aren’t covering their dividends and some have grown wildly overvalued.

For now, income investors are ignoring these developments, since they’ve been getting paid cash dividends while their tickers trend up. This has also encouraged a growing number of investors to pile into business development corporations (BDCs), a group of specialty lending firms that pay dividends of 8% or more—sometimes much more. As a result the ETF tracking this market, the UBS E-tracts BDC Fund (BDCS)
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3 Unloved Dividend Stocks to Buy Now – and 2 to Sell

Brett Owens, Chief Investment Strategist
Updated: September 12, 2016

Today I’m going to take you inside an ignored corner of the market where you can still find cheap stocks throwing off quarterly dividends that grow 10%—and more—year in and year out.

Then we’ll zero in on three of these under-the-radar companies, all of which should definitely be on your buy list now. Along the way, we’ll unmask two dividend darlings that are actually “yield traps”—their dividend histories make them look tempting … but buying now could be a recipe for steep losses.

The Best-Kept Secret in Stock Investing

So where is this income investors’ wonderland, you ask?

I’m talking about mid-cap stocks, or companies with market capitalizations between $2 billion and $10 billion. They actually form the biggest segment of the market, but you’d never guess that, because for most analysts and investors, stock investing begins and ends with the sacred cows of the S&P 500. …
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A Safe 3-Stock Portfolio That Pays 5.9%

Brett Owens, Chief Investment Strategist
Updated: September 9, 2016

When planning for retirement, most investors try to split their assets between stocks (higher risk, higher return) and federal U.S. government bonds (lower risk, and these days, much lower return).

Problem is, stocks are enjoying an overextended winning streak. The S&P 500 is up over 7% year-to-date:

S&P 500 Moves Up and To the Right


That’s quite nice, especially after the 1.4% return that the same index had last year. But when we consider its performance in 2014 (13.5%), 2013 (32.2%), and 2012 (15.9%), investors are right to give pause. Has the market outperformed for too many years in a row?

Perhaps. The S&P’s price-to-earnings ratio (P/E ratio) shows that the index is roughly twice as expensive now as it was 5 years ago: …
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