Articles

With all this talk of rising rates, it’s surprising that bond funds are doing so well. The largest bond ETF, the iShares Core Total US Bond Market (AGG), is up over 4% in 2016 and hasn’t paused its bull run throughout the year:

Investors are Hungry for Bonds

Tax-exempt bonds aren’t doing as well, but they’re still strong. The USAA Tax Exempt Intermediate-Term Bond mutual fund (USATX) is up 2% for 2016, and has not pulled back year-to-date, even during February’s market meltdown:

Tax-Free Bonds Hold Their Value

When we look at the yields of these funds, their steady performance is even more surprising.… Read more

Right now, plenty of investors are quaking in their boots, wondering if they should sell their real estate investment trusts (REITs) this month.

Why? Two reasons. Let’s debunk them one at a time. (Then I’ll reveal two REITs that are screaming buys because of this situation and two you need to avoid—or sell right away if you hold them.)

A Costly Mistake

The first worry has to do with an old adage that just won’t go away. Stop me if you’ve heard it before: “REITs perform poorly when interest rates rise.”

It’s true that the Federal Reserve will probably hike rates at least once before we ring in 2017—likely in December, according to traders betting via the Fed funds futures market.… Read more

We all know the secret to successful investing is buying low and selling high. But what does that mean, exactly – do we simply buy companies growing their top lines aggressively in today’s low-growth world?

There are dangers in this approach, which put you at risk for drastic losses. Take, for example, people who bought Twitter (TWTR) when its revenues were doubling, sure that they were getting a piece of the next big thing:

Big Losses for Twitter Enthusiasts

Smart, cautious investors avoid these dramatic losses by buying high quality, established companies when their earnings are cheap. Even better, they buy stocks that pay dividends – and raise them consistently.… Read more

Legendary investor Peter Lynch was fond of saying that corporate insiders may sell their shares for a variety of reasons (estate planning, divorce, sending the kids to college). But there’s only one reason they buy – because they think the price is going up.

Insiders at dividend growers have one more reason, however – they obviously believe their payout is going up, too.

Which means when we’re looking for the next dividend accelerator and its 100% upside, we should consider insiders’ favorite payouts. Here are five candidates with big dividend growth and heavy insider buying:

Western Refining (WNR) CEO Jeff Stevens just picked up 100,000 shares last week for a cool $2.3 million.… Read more

Utility stocks have had a great year, but it isn’t too late to get into this sector at a reasonable valuation and lock in a 7% yield. Of course, you could always just buy the Utilities SPDR ETF (XLU) and wait for the rising tide to drive this indexing fund higher.

But there are two big problems with this approach. First, the ETF is up over 15% year-to-date thanks to the run-up in utilities:

Too Great a Year for Utilities?

The other problem: this fund yields just 3.2%. Now that isn’t bad compared to the S&P 500, but that’s less than 1 percentage point above the more stable and lower risk SPDR S&P Dividend ETF (SDY):

Low Dividends Not Compensating for Risk

If we’re going to get into utilities after they’ve run up 15%, we’re going to have to be more selective to get a better yield and less risk.… Read more

In a world where you need to hold a U.S. Treasury for 10 years to get a measly 1.5%, real estate investment trusts (REITs) have become an incredibly attractive income-yielding alternative. So attractive, in fact, that the SPDR Dow Jones REIT ETF (RWR) has soared over 12% in the last year:

REITs Rally

That also means the ETF’s dividend yield has fallen, and it now pays less than 4%. On top of that, RWR’s dividend is uneven because of the complexity of its constituents’ payouts, making this income stream an unreliable one. Dividends were $1.03 in March and 78 cents in June, and the dividend usually bounces around from quarter to quarter.… Read more

This time, Warren Buffett actually IS losing his touch.

Historically, of course, there are few better examples to follow. If you’d invested in the Oracle of Omaha’s holding company, Berkshire Hathaway (BRK.A), 30 years ago, for example, you’d be sitting on a 3,000% gain today, compared to “only” a 953% total return for the S&P 500:

But even Buffett makes the odd bad call, and I think he’s done just that by buying—and holding on to—the two stocks below. Ironically, they’re both moves the Street seems to be giving him the benefit of the doubt on—for now.

Further on, we’ll look at a canny pick the Oracle’s right to hold on to, even though the rest of the “smart money” has thrown in the towel.… Read more