Articles

3 Utility Stocks to Sell Right Now

Brett Owens, Chief Investment Strategist
Updated: August 11, 2016

I love utility stocks for their stability and high dividends, but sometimes you have to let go of what you love – especially when things get a bit crazy.

And the insanity many investors are facing now is that many utility stocks have soared in 2016 and far outperformed the S&P 500, even when you exclude their massive dividends. These price gains crushed yields – which is why investors should ring the register, sell these stocks and redeploy profits into better yielding alternatives.

Let’s talk about three regional utility that have soared more than 30% over the past year. A great return, but the charts also tell me that we’re reaching a top and there may be little room for these utility stocks to go further.…
Read more

How To Time Your Dividend Buys and Sells

Brett Owens, Chief Investment Strategist
Updated: August 10, 2016

“Are dividend stocks in a bubble? Like… the NASDAQ in 1999?”

A reporter from Kiplinger called me last week, concerned investors were bidding up these issues to irresponsible heights.

While not quite a bubble, many of the “safest” names are the worst places you could put your money today. Some are doomed to grind sideways for years while others have serious downside potential. But there’s an easy test you can run to see if you should buy, hold or sell your favorite dividend stocks – simply chart the share price versus the dividend.

Your Total Returns = Current Yield Plus Payout Growth

Over time your stock market returns will roughly equal the yield you buy today plus the dividend growth you enjoy in the years ahead.…
Read more

Dump These 4 Dividend Darlings Before September 1st

Brett Owens, Chief Investment Strategist
Updated: August 8, 2016

Today I want to tell you about two hidden pitfalls that could threaten your stock returns—and four stocks that could be the first to take a tumble.

First, the pitfalls. You’ve probably heard of the first one: seasonality.

That’s the market’s tendency to outperform—or underperform—at certain times of the year. A prime example is the “sell in May strategy,” in which some investors bow out from May to October, when market gains tend to be muted.

Now the worst month for stocks—September—is nearly upon us. According to the Hulbert Financial Digest, from 1896 through 2014, the Dow Jones Industrial Average fell an average of 1.06% in September, compared to an average gain of 0.75% for all the other months.…
Read more

Massive Dividend Growth and a 4% Yield with These Stocks

Brett Owens, Chief Investment Strategist
Updated: August 5, 2016

The market is on a tear, making it harder than ever for dividend growth investors to find good buys for their money. While many people expect the market will correct itself, you might be missing out on steady gains if the market continues to “melt up” thanks to low interest rates.

Fortunately, there’s a safe way to secure yield with upside to boot. While the market has bid many well-known dividend payers up to silly prices (and caused yields to crash), there are still a few lesser known names paying 4% yields with plenty of payout and price runway from here.…
Read more

4 Big Dividends Slashed: What To Do Next

Brett Owens, Chief Investment Strategist
Updated: August 3, 2016

Your favorite dividend stock just chopped its payout – should you sell?

It depends. Believe it or not, some dividend cuts are actually wildly bullish signals. They mark the bad news being officially “priced in” as shares soon embark on a furious contrarian rally.

Other payout cuts, however, are red flags begging you to sell before you lose even more money. They are truly a white flag of financial distress that shows the firm failed at its sole responsibility to shareholders – to get the dividend paid.

We’ll discuss post-cut strategies in a moment, including specifics on recent dividend disappointments from the likes of American Capital Agency Corp (AGNC), Potash (POT), Williams Cos (WMB) and the iShares US Preferred Stock ETF (PFF).…
Read more

Better Than Cash: 5 Recession-Proof Payouts Up To 10.3%

Brett Owens, Chief Investment Strategist
Updated: August 2, 2016

With stocks are at nosebleed levels, how about some high income issues that double as portfolio insurance? Today we’re going to discuss five dividend payers with an average payout north of 5%. All five boast recession-proof businesses.

Of course there are plenty of things to worry about in today’s financial world. Income inequality is high, restaurant sales are plummeting, and few people seem confident in America’s increasingly contentious political quagmire. Then of course there’s the slowdown in China, growing political unrest around the world, exploding student loan debt in America and rising subprime defaults in the auto loan sector. This was all reflected in Friday’s disappointing GDP results for the second quarter.…
Read more

These 4 Dividend Darlings Could Drop 20%

Brett Owens, Chief Investment Strategist
Updated: August 1, 2016

I know I don’t have to tell you it’s a minefield out there for income investors.

Ten-year Treasuries yield a pathetic 1.5%, and dividend-growth stocks have been on a tear. The ProShares S&P 500 Dividend Aristocrats ETF (NOBL), which holds shares of companies that have hiked their payouts annually for 25 years or more, has soared 12% year-to-date, more than doubling the S&P 500’s gain:

NOBL-YTD-Chart

That’s left many Dividend Aristocrats overvalued and ripe for a fall. Worse, it’s driven their dividend yields to historic lows.

Just take a look at food distributor Sysco (SYY), which yields 2.4% today, barely above the S&P 500 average and near lows not seen in nine years:

SYY-10yr-Dividend-Yield-Chart

To get that meager yield, investors are buying a stock with a trailing-twelve-month price-to-earnings (P/E) ratio of 37, way above its five-year average of 23!…
Read more

3 Secure 8% Yields To Buy Now, 3 More To Sell

Brett Owens, Chief Investment Strategist
Updated: July 29, 2016

The market is on fire right now, which is great if you’re fully invested. But if you have cash on the sidelines, you might be worried about jumping in. And with good reason–with the S&P 500 reaching nosebleed valuations, “safe” indexing is going to expose you to potential losses.

There’s an alternative, and it’s particularly compelling because it also nets a high income stream while you wait for your holdings to go up in value. I’m talking about yields of 8% with strong upside in the form of capital gains potential to boot.

These big payouts are paid by funds that are undervalued for one simple reason: ignorance.…
Read more

7 Monthly Dividend Payers At 10-15% Discounts

Brett Owens, Chief Investment Strategist
Updated: August 4, 2016

Dividend stocks are a “no brainer” compared to Treasuries says Bob Doll, the chief equity strategist for Nuveen Asset Management. He told Bloomberg Radio that with dividends outpacing yields on government bonds, it’s an easy decision in favor of equities.

But which high yield stocks should be bought, and which are already overbought?

Anything that pays is hot. Yields on most utility stocks, for example, are at their lowest levels this decade with popular payers such as Southern Company (SO), Duke Energy (DUK) and Dominion Resources (D) dishing investors between 3.4% and 4% – well below their historical payouts.

Utility Yields Driven Down by Dividend-Hungry Investors

image7-27--16-1

With respect to the 10-Year Bill’s sad 1.6% yield, these dividends look great.…
Read more

Two 10%+ Yields in Danger, And 3 Safer Income Buys

Brett Owens, Chief Investment Strategist
Updated: July 26, 2016

The market keeps reaching record highs and many analysts worry equities are overvalued in a post-Brexit, stagnant global economy. But that isn’t stopping irrational exuberance from causing overvalued stocks to climb ever higher.

We are at risk of rapidly declining stock prices when the market comes to its senses. And in the world of high yield investments, there is an additional risk: dividend cuts would cause those stocks to fall even further. This is especially worrying risk right now, as many high yield stocks have been pushed higher even though their metrics indicate a dividend cut could come soon.

The stocks facing this risk the most are some business development corporations (BDCs), which are legally required to pay out 90% of their income or more.…
Read more