Author Archive: Brett Owens

Still think the Federal Reserve may not hike rates this month?

It’s time to change that view.

Traders betting through the Fed futures market now see the odds of rates staying where they are at a measly 1.4% after strong employment and consumer confidence numbers last week.

And if you’ve tried to take out a mortgage lately, I don’t have to tell you which way interest rates are headed: no thanks to a spike in 10-year Treasury yields, which hit a 17-month high last week, you’re now paying more than 4.0% on a 30-year mortgage.

Borrowers Get Mauled

So, time to hold off on dividend stocks, then, right?… Read more

First-level investors mistakenly think that real estate investment trust (REIT) profits will be hurt if rates rise. In three instances, they’re dead wrong – and missing out on big, secure dividends with upside to boot.

At these REITs, top insiders – who of course know better than armchair observers – are currently buying up their own shares like crazy. While corporate insiders may sell stock for many reasons, they only buy because they believe the payout is safe and price is likely to rise.

In the short run, the “rates up, REITs down” theory puts on quite the show. If you hold REITs in your portfolio, I can tell you how it’s trading (up or down) on any given day by considering only one number: the 10-Year Treasury Rate.… Read more

Today I’m going to share three of my favorite dividend stocks from an ignored corner of the market set to soar in President Trump’s first year.

Which corner? The “little guys”: small and mid-cap stocks.

In many ways, the cat’s already out of the bag. As they’ve done with financial stocks, investors have bid up small- and midcaps since Trump’s win. Look at the how the SPDR S&P 600 and the S&P Midcap 400 have performed vs. the S&P 500:

That’s a huge gap … and it makes sense. With the US dollar soaring and Trump threatening to toss trade deals in the shredder, the market’s small fry (which tend to be more domestically focused) are in the catbird seat.… Read more

Donald Trump has income investors scrambling for rate-hike (and even inflation) insurance. Fixed yields are out, while floating yields – which adjust higher in tandem with rates – are in.

Even if you’re skeptical (as I am) that we’ll see rates continue meaningfully higher anytime soon, inflation insurance is never a bad thing provided that:

1. It pays a decent current yield (sorry, gold).
2. We can buy it at a fair price.

The sudden popularity of “floating rate” issues may have you rightfully wondering whether or not this trade is already too crowded. Fortunately, my preferred vehicle for buying them is currently out of favor itself!… Read more

Forget the pundits—they totally blew the call on this election. And I sure hope you didn’t take their stock advice, either.

Ahead of the vote, one economics professor said the market would drop 7% if Trump won. Another analyst said you should go to cash “if you’re not already there.”

I could go on.

If you followed that advice, you’ve missed a 2.1% rise in the S&P 500 since Election Day. It’s worse if you were overweight financials, as the sector has been on an absolute tear, with the iShares US Financials ETF (IYF) surging 7.0%.

Sad!

But not surprising, as banks will benefit most from higher interest rates—and a selloff in the bond market has pushed the yield on the 10-year Treasury to around 2.25% from 1.87% on November 8.… Read more

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