Beware Of These 5 “Low Beta” Dividend Traps

Brett Owens, Chief Investment Strategist
Updated: October 19, 2016

There’s a lot of buzz about beta these days. Should we contrary-minded investors fade the fad?

Beta is industry slang for volatility. It’s generally used when judging a particular investment or portfolio with respect to the broader market, with 1.0 as the benchmark. Lower is better, as that (in theory) means the issue is less volatile than the market.

For example, Campbell Soup (CPB) has a listed beta of just 0.37 – which (again, in theory) means CPB shares are 63% less volatile than the overall market. If the S&P drops 2% in a day, CPB shares should hold steadier and lose less than 1% or so.… Read more

5 Dividend Growth REITs With 100% Upside

Brett Owens, Chief Investment Strategist
Updated: October 18, 2016

REITs have been on a wild ride in 2016. With some names up over 50% year-to-date just a few months ago, the recent correction has come as a bit of a shock. Some REITs have fallen by 10% in the past month, and more declines are feared for many names.

In this situation, investing in REITs requires care and selectivity. We can’t just buy any REIT, or the Vanguard REIT Index Fund (VNQ), because we may be buying overpriced stocks that are destined to fall further. On the other hand, we want to get into this sector now – before the global manhunt for dividends sends these prices soaring.… Read more

The Single Worst Retirement Investment Today (and 3 Better Buys Now)

Brett Owens, Chief Investment Strategist
Updated: October 17, 2016

It’s an old investing saw that should have been taken out behind the barn years ago.

You’ve no doubt heard it before: “As you get closer to retirement, you should shift out of stocks and into fixed-income investments.”

You’ll often hear it in combination with some arbitrary rule, like: “The percentage of your portfolio devoted to stocks should be 100 minus your age.”

An Overblown Fear

On the surface, it seems like sound advice, right?

After all, CDs, Treasuries and the like guarantee your principal, and stocks don’t.

But it’s based on a dangerous misconception: that “guaranteed principal” and “no risk” are the same thing.… Read more

A Safe 4-Fund Retirement Portfolio That Yields 5%

Brett Owens, Chief Investment Strategist
Updated: October 14, 2016

The key to beating the market – AND keeping your nest egg intact – is diversification. If you don’t put all your eggs in one basket, you can avoid the pitfalls of exposure to one particular company.

For example, people who bought and held Wells Fargo (WFC) after seeing Warren Buffett praise the bank as a safe, reliable pick have been horrified to see the stock plummet on the recent fake account scandals. You could have avoided this by investing in a diversified financials ETF like the Financial Select SPDR Fund (XLF). With that fund, you’d be up 1.5% year-to-date and have a 2.6% yield based on today’s current price.… Read more

4 Dirt-Cheap Dividend Growth Stocks

Brett Owens, Chief Investment Strategist
Updated: October 12, 2016

Dividend growth stocks deserve a place in your portfolio, no matter how modest the allocation, simply because they often return 100% to 200% or better relatively quickly as their payouts rise.

You’ve probably noticed you rarely see your favorite stock paying more than 2% or 3%, even if the company raises its dividend every year. That’s because its price gets bid up as its payout rises – so you never quite get the bargain 4% yield you’re always waiting for, unless something really bad happens (like 2008).

Take industrial firm 3M (MMM), which boosted its dividend by 141% over the past decade for 170% total returns:

3M’s Dividend Growth Drives 170% Returns


Yet aside from the financial crisis, you never had a chance to buy the stock at a yield above 3%.… Read more

2 REITs to Avoid, 3 to Buy Now

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

The REIT market has been on a tear in 2016. From the start of the year to October 1, the SPDR Dow Jones REIT ETF (RWR) gained over 6% while heavy-hitters like the Realty Income Trust (O) and Digital Realty Trust (DLR) rose more than 28%.

Now we’re in the midst of a REIT correction, and it’s hitting the best-performing REITs the most. That’s to be expected—after so many months of relentless strength, these names need to come back to Earth. And now it’s happening – just look at this chart:

What Comes Up Must Come Down—But How Far Down?


After months of massively outperforming the market, both O and DLR are now falling fast.… Read more

4 Stocks to Buy for Big October Dividend Hikes

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

Looking for consistent, double-digit dividend hikes?

Bad news: your job is getting harder.

According to S&P Dow Jones Indices, US companies collectively increased their dividends by $6.0 billion in the third quarter (net of cancellations).

Sounds great, right? Too bad that number has plunged from the $7.3 billion in hikes announced in the second quarter—not to mention the $10.0 billion of increases rolled out in the third quarter of 2015.

The bottom line? Dividend growth is slowing—and faster than most investors think.

Worse, your odds of getting whacked by a surprise dividend cut are on the rise: the number of companies slashing their payouts hit 667 in the 12 months ended September 30, up 55.5% from the previous 12-month period.… Read more

How To Retire Comfortably On Just $500,000

Brett Owens, Chief Investment Strategist
Updated: October 7, 2016

Most financial advisor hacks are dead wrong. You CAN comfortably retire on a modest $500,000 investment portfolio.

Of course you’ve heard the warnings that retirement is getting harder – and they’re true. With U.S. Treasuries paying paltry returns, it is harder to find a risk-free income stream for your golden years.

But there are low-risk “bond proxies” that can offer over $50,000 in dividends per year on an initial investment of $500,000. All you have to do is buy now and sit tight. The secret is a superstar dividend growth portfolio that follows a few simple principles.

First, we don’t want to overpay – so we’re only going to choose stocks with P/E ratios below 25 (and most of these stocks actually have a P/E ratio below 20).… Read more

High Yield Closed-End Funds With 15% Price Upside

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

Closed-end funds (CEFs) are finally starting to get their due attention as the yield machines they are. Some can still be purchased at a steep discount to their net asset values (NAVs) – which means you can buy the underlying assets for $0.90 on the dollar, or less.

Last week we discussed how to select the safest 7% yields in the field. In a 2% dividend world, many of these funds look great paying more than triple that.

But you’ll need to choose your CEFs carefully. A steep discount is a great start, but many funds simply grind sideways (including dividends) because they have no means to close that discount window.… Read more

A Tax-Free 6.1% Yield to Trounce Stock Dividends

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

Taxes can eat up investing returns. Anyone who’s bought stocks and filled in a tax form knows this. But you don’t need to pay taxes on your investments—in fact, you can get a higher stream of income without paying any taxes altogether. The secret: municipal bond funds.

This is especially important if you’re in the 25% income tax bracket or higher—and if you’re earning over $36,900, that means you. You can use the IRS’s calculator to calculate your tax obligations, or there’s Paycheck City’s really easy and fast calculator if you want to look at state taxes, too.

Let’s see how municipal bond funds can provide a married couple—we’ll call them John and Jane Doe—with more income immediately thanks to less tax obligations.… Read more