Author Archive: Brett Owens

On Monday, we reviewed Warren Buffett’s favorite bank stocks. No surprise, they’re all large caps – Uncle Warren has to invest a lot of money for any returns to matter, after all.

His “problem” of having too much cash to deploy is not one that keeps me up at night. But Buffett did once famously say that he’d earn 50% per year investing in smaller companies if he were only managing a few million bucks. So let’s talk about the banks he’d love to buy if he could.

Most sub-behemoth banks have relatively straightforward business models – focused on banking, of all things.… Read more

You can take it to the bank: the zero-interest rate era will soon be dead.

That’s bad news if you have a hefty credit card balance, but it’s terrific if you invest in bank stocks. And now is a great time to do so.

That’s not just my opinion. Some of the country’s smartest investors—including Warren Buffett himself (see below)—share it. They’ve bulked up their bank holdings lately, and it doesn’t take a stock-market genius to connect that to a rate hike the market sees as 78% certain at the Federal Reserve’s December 16 meeting.

Let’s be honest, a one-off, quarter-point increase won’t mean much for bank profits.… Read more

Worried that rising rates are going to hurt some of the bonds you own? If so, you’d better move some of your fixed-rate bond money into “floating-rate” issues.

As I write to you on this first Wednesday of December, traders are handicapping a 78% probability that the Fed will boost rates in two weeks. Overall they’re projecting a half-percent increase between now and June. And renowned government insider Goldman Sachs is a bit more aggressive – it’s projecting a full percentage point of tightening.

A 0.5% – 1% move would be plenty big to pancake many bonds.

The Fed last began a new rate-raising cycle at the end of June 2004 (yes, it’s been over 11 years).… Read more

If you’re looking to make double-digit gains on your portfolio in 2016, don’t take your cues from the usual forecasters. They won’t actually tell you where to put your money anyway (as they supposedly save this inside information for their top clients).

Investment bank UBS is calling for a 1.5% gain in the S&P 500. Goldman Sachs Group (GS) sees a measly 1% rise.

But there’s always a bull market in some issues, and numerous studies have shown where to profit from them. Buy companies that pay—and preferably raise—their dividends. Even better if they also buy back their own shares.… Read more

Don’t believe every contrarian you read on the internet – not all REITs have interest rate risks sufficiently priced in.

Two weeks back, I highlighted the good performance that REITs turned in during the last rising rate period from June 2004 to June 2006. The Vanguard REIT Index ETF (VNQ) hardly suffered as rates rose from 1% to 5.25%, returning 33% over the 24-month period.

Some REITs didn’t do as well, however. Mortgage REIT favorite Annaly Capital (NLY) posted a total return (dividends included) of -13.4%. If you own similar issues like Redwood Trust (RWT), Capstead Mortgage (CMO), or MFA Financial (MFA) then please pay attention.… Read more

The holiday season won’t be so cheery according to Wall Street. Concerns over dismal holiday retail sales have taken the lift out of October’s rally and weighed on the S&P 500.

Wal-Mart (WMT), Amazon.com (AMZN) and Target (TGT) are under the microscope heading into this upcoming Black Friday. But weekly price gyrations don’t matter as much as earnings and dividend growth. We should use short-term concerns about the sector as potential buying opportunities – especially for perennial dividend growers.

So what can we expect from retailers this holiday season?

According to the October U.S. Retail Spending survey – which increased just 0.1 percent – consumers are spending about the same, but slightly less than analysts were expecting.… Read more

Many dividend ETFs are down on the year, and trailing the S&P 500 as well. But dividend-focused strategies tend to outperform the market over the long haul. Which means, in theory, it’s a good time for “set it and forget it” income investors to start new dividend ETF positions or add to new ones.

But there are 100+ ETFs that claim a dividend focus. And believe it or not, many of them have underperformed the market since inception – not good considering their inherent advantage!

Let’s first narrow the field by discussing what types of dividend-payers tend to do the best.… Read more