Articles

Utilities are a particularly enjoyable sector for income investors because they offer sustainable and growing dividends—if you choose the right companies.

This boring and predictable model means utilities tend to attract risk-averse investors who jump out during times of extreme caution—even when there’s really nothing to be cautious about. That’s why the Utilities Select Sector SPDR ETF (XLU) erased much of its 2016 gains in the second half of the year, when the months leading up to the presidential election led to market panic.

Surprising Volatility

What’s even more interesting is that utilities continued to fall even after Donald Trump won and the so-called “Trump rally” began.… Read more

Healthcare real estate investment trusts (REITs) are at the crossroads of some very powerful investing themes that make them a one-two punch of potential growth and extremely generous yield. Today, I want to show you a trio of these double-threat dynamos that pay secure dividends up to 7.6%.

I love healthcare because it’s broadly unbeatable as a recession-proof investment. Plus the aging of the baby boomers is driving spending through the roof. Consider this: 10,000 baby boomers are reaching full retirement age every single day. No wonder, then, that the Centers for Medicare and Medicaid Services projecting that annual healthcare spend will grow 5.8% every year through 2025!… Read more

Let’s face it: people make a lot of stupid mistakes.

You see it every day: they turn on to the freeway without signaling. They fall for obvious scams. They throw money away on useless things.

But here’s the good news: It’s possible—even easy—for savvy investors to profit from humanity’s lousy judgment.

How? By being a contrarian.

Contrarian investing means heading away from the crowds: buying heavily when everyone is fleeing in fear and selling when everyone says the asset is a sure thing. (I’ll show you 2 unloved funds ready to pop—plus 2 overbought names ready for a fall—in just a moment.)… Read more

There are, literally, a billion reasons to avoid the energy sector right now.

Hedge funds now own a billion barrels worth of bets that crude oil prices are heading higher. Problem is, these guys are usually wrong – especially when they wager with such conviction!

In April 2014, I warned that then-$103 crude oil was due for a drop. U.S. crude oil inventories were at 5-year highs, yet money managers were “net long” 336,000 contracts on crude oil future. They were doubling down on the goo at the worst possible time.

When oil prices began to roll over, hedgies were forced to liquidate their bad bets in unison.… Read more

Things are tough for contrarian investors these days.

Back in August, for example, I recommended buying financial stocks. It was an easy call to make.

At the time, the Financial Select Sector SPDR Fund (XLF) was down 4% from a year earlier, and the worst performers had fallen much further. I specifically saw value in Wells Fargo (WFC), KeyCorp (KEY) and PNC Financial Services (PNC), which had fallen 14.5%, 17.6% and 12.0%, respectively.

I bought heavily into these three stocks at the time, expecting financials to recover over the short term, especially if Trump won the election.

Here’s how they’ve done since then:

Financials Rebound With Gusto

The strong recovery since August has convinced me to back off on financials, since the market has finally seen in these firms what I saw in them last summer.… Read more

With the Trump bump squeezing stocks higher, retirees (and near-retirees) are asking me two questions a lot these days:

Is it still a good time to buy? And if so, what the heck should I buy?

The answer to the first is, undoubtedly, yes.

And it’s no secret what’s behind the second: according to FactSet, this market is trading at a forward price-to-earnings (P/E) ratio that hasn’t been seen in 13 years.

Investors Double Down

Source: FactSet

No wonder folks are struggling with what to buy!

One thing I recommend avoiding now is an index fund like the SPDR S&P 500 ETF (SPY).… Read more

Tax season can be a cringe-inducing affair for most investors, who have to fill out their 1040s, 1099s and K-1s with Uncle Sam hovering above, looking for his cut. But for investors who have bought into one of the five high-yielding funds I want to share with you today, this time of year is a friendly reminder of the greatness of municipal bonds and their fat, tax-free yields.

Most investors have money stashed away in bonds of some sort. Often, those bonds will be U.S. Treasury bills (debt issued by the federal government), though frequently, investors will have some exposure to corporate bonds (debt issued by companies).… Read more

Most investors buy stocks and hope they’ll go up in price. They do nothing in the interim to generate cash flow from those stocks while they sit in their portfolio – like writing covered calls.

“Write” what?

I’ll explain. And I’ll also highlight some popular exchange-traded funds (ETFs) and closed-end funds (CEFs) that will help you generate 8% yields or better from this income strategy without actually handling an options contract yourself.

A call option is a contract that gives its buyer the right to purchase a stock from the seller for a certain price within a certain period of time.… Read more

I love passive investing—but not for the reason you might think.

I love it because, as I’ll demonstrate in a moment, it’s caused plenty of stocks to become mispriced, creating opportunities for active stock pickers who do their homework.

This makes the market more of a meritocracy: the people who work harder, smarter and spend more time and energy on their investments can get a higher return than those who buy index funds like the Vanguard Total Stock Market ETF (VTI) and call it a day.

Why?

Because the more people buy VTI and other index products, the more they drive up the prices of all the stocks in that index.… Read more