Author Archive: Brett Owens

If you hold dividend stocks today, you’re facing a particularly high risk of a dividend cut.

That’s based on the latest numbers from FactSet, which show that 42 S&P 500 companies had payout ratios above 100% as of the end of the second quarter—so they’re paying out more in dividends than they’re earning.

Worse, this is the third-highest total in a decade.

While that may seem like a small percentage, at just 8.4% of the index, would you get on a plane that had an 8.4% chance of crashing?

I know I wouldn’t.

And yes, it’s also true that not all of these companies will be forced to reduce their dividends.… Read more

With the S&P 500 recently off a 9-day losing streak – its longest since 1980 – this is a great time to go shopping. Especially for dividend growers.

These special types of stocks are rarely cheap, because who doesn’t want yield AND upside? But general market jitters about the Fed, the election and the economy have presented us with some early holiday bargains.

Let’s start with five stocks that have traded up over the last three months while the broader market dipped 3.7%. Price strength amidst market weakness is an admirable trait. It can be worth asking yourself why investors and money managers are buying these particular stocks while they dump the rest of their portfolios in a panic.… Read more

If you’ve read my columns on Forbes and Contrarian Outlook, you know my heart belongs to dividend-growth stocks.

The reason is simple: dividend growers outperform every other kind of stock there is.

But don’t just take my word for it. Study after study backs that up, including an exhaustive one by Ned Davis & Associates that zeroed in on the 43-year period from January 1972 through December 2014.

Here’s what they found:

It’s tough to argue with those numbers—especially over a period spanning nearly half a century!

But as I wrote last week, you can’t just run out and buy an exchange-traded fund like the Vanguard Dividend Appreciation ETF (VIG).… Read more

What a difference three months makes.

Back in the summer, real estate investment trusts (REITs) were all the rage—especially after a dismal May jobs report put the final nail in the coffin of a summer rate hike.

Fast-forward to today, and we’re looking at a rate hike that’s a 72% certainty at the Fed’s December meeting, according to traders betting through the Fed funds futures market:

It’s no coincidence that the air has gone out of the SPDR Dow Jones REIT ETF (RWR), a popular REIT index fund, as that late-year increase has grown more certain:

RWR’s Big Rise—and Fall

It’s a classic case of the herd falling for an old myth: that REITs underperform when interest rates rise.… Read more

I hate to say it, but right now, thousands of investors are putting their portfolios on autopilot right when they need to take control the most.

I’m talking about the boom in “passive” investing, or bypassing stock picking and plowing your cash into low-fee exchange-traded funds (ETFs) instead.

Some income-starved investors are going further, piling into ETFs that hold stocks with either above-average yields or strong dividend growth.

A Brilliant Strategy … Until It Isn’t

In theory, it’s a smart move. After all, companies that pay—and better yet regularly hike—their dividends have a history of outperforming stocks with no payout at all.… Read more

No matter who wins the November election, infrastructure stocks should get a bounce. We’ll talk best plays in a minute – but first, let’s recap the rhetoric.

Clinton says she’ll push for a five-year $275 billion plan that, with loans and leverage, would total up to $500 billion. Trump says he’ll double that.

Of course I wouldn’t buy any stock based on a politician’s promise alone. But many industrial companies pay yields at the high end of their historical averages. Some are compelling values, especially when you consider that the global manhunt for yield has driven most payout percentages down near multi-year lows rather than highs.… Read more

A prudent investor takes advantage of market dips. He buys oversold assets when the market panics—and stays the course during recoveries.

Unfortunately, prudent investors looking to add to their portfolios now can’t capitalize on a panicking market. This year saw two great buying opportunities: first in February when the market freaked out over global economic growth, and then again in July when Britain voted to leave the European Union. The Brexit vote only delivered a 4-day window to buy at a discount, and even then the sale was paltry—from peak to trough, the S&P 500 only fell about 5.3%:

Quick Dip, Limited Buying Opportunities

To buy this market during the downturn, you would’ve needed to act fast—and at the time many hesitated to buy in because they feared Brexit was a global catastrophe.… Read more