Author Archive: Brett Owens

With valuations stretched and earnings sagging—a forecast 7.9% drop for S&P 500 companies in the first quarter—it’s getting tougher to find reliable dividend growers at bargain prices.

You won’t find much comfort in the latest research from FactSet, either: in the fourth quarter, S&P 500 dividend per share (DPS) growth came in at 9.5%. That’s still healthy, but it’s the first time that figure has dipped into single digits since 2011.

But you should take that news with a huge grain of salt, because one sector—energy—carries most of the blame. In Q4, year-over-year DPS growth plunged to 2.4% among S&P 500 energy stocks, from 11.6% in Q3.… Read more

Real estate investment trusts (REITs) are a more reliable source of income than many comparable high yielding stocks in volatile sectors like energy. That’s because REITs are legally required to hand over the bulk of their income to investors. This unique structure, which is the result of legislature from the 1960s, makes REITs an attractive addition to an income-producing portfolio.

The five biggest REITs pay an average yield of nearly 3%. These dividends are secure, and growing thanks to expanded operations and improving profitability. Some of them have lost favor in recent months, and although they have recovered a bit from recent 52-week lows, they still remain affordable buys today.… Read more

Benjamin Graham, the father of value investing, liked bargains. In The Intelligent Investor, he told investors to look for stock prices at or below 15-times earnings (specifically less than 15X their three year average), and at or below 1.5-times book value.

And like us, he liked dividends. He’d only buy companies that paid dividends for each of the last 20 years prior.

His stringent formula should still outperform the broader market, and keep you out of trouble today. Problem is, it was outlined in 1949. And 67 years later, it’s challenging to find stocks that meet his stringent criteria because equity valuations have been high for the better part of 30 years now.… Read more

A couple of weeks ago, I discussed the value of investing in the S&P 500 Dividend Aristocrats, the 50 companies in the index that have hiked their dividends for at least 25 consecutive years.

It boils down to performance: in the last decade, this vaunted group has returned an average of 10.3% a year (including dividends), compared to just 6.3% for the S&P 500 as a whole.

It’s also a list that doesn’t change much. Last year, there was just one adjustment, and it was a removal, after Family Dollar Stores was taken over by Dollar Tree (DLTR).

But in the next 14 months, four companies will punch their tickets to this elite club.… Read more

A couple weeks ago, I showed you how to zero in on something every investor longs for: growth at a reasonable price.

These days, it’s a tall order. With the S&P 500 back near breakeven after this winter’s flame-out, valuations are again ticking higher.

But no matter where the broader market’s headed, there are always top-quality dividend payers on sale. The key is to comb through unloved sectors and tease out strong businesses that have been tossed out with the laggards.

Here are two examples of companies investors have (unfairly) punished. Their stocks won’t be long in detention, however—these businesses are too good, with management teams that are too shareholder friendly, to stay down for much longer.… Read more

This aging bull market in U.S. stocks turned seven last month. It’s a bit expensive and past its prime for my liking. But another “niche bull run” is kicking off right now. And no matter what happens with the broader market, these issues – and their dividends – will roll higher for decades.

There are 77 million Baby Boomers that make up 28% of the U.S. population. Any companies that make products they buy are usually doing great. This massive generation made baby products makers rich in the 1950s, and homebuilders rich in the 1990s and 2000s.

Now, they’re transitioning their spending again.… Read more

The Federal Reserve’s slowing approach to rate hikes is a big positive for firms that practice financial wizardry. Fed Chair Janet Yellen told The Economic Club of New York earlier this week that she considered it “appropriate for the Committee to proceed cautiously in adjusting policy.”

Translation – they’re going to keep moving slowly. Inflation isn’t yet in the picture, and until it is, the Fed can keep rates low for longer than most think. And that’s bullish for business development companies, or BDCs.

BDCs invest mostly in privately-held small to middle market companies ($10 million to $1 billion in revenues).… Read more