Yellen To Crush Fixed Rate Bonds In 2 Weeks

Brett Owens, Chief Investment Strategist
Updated: December 2, 2015

Worried that rising rates are going to hurt some of the bonds you own? If so, you’d better move some of your fixed-rate bond money into “floating-rate” issues.

As I write to you on this first Wednesday of December, traders are handicapping a 78% probability that the Fed will boost rates in two weeks. Overall they’re projecting a half-percent increase between now and June. And renowned government insider Goldman Sachs is a bit more aggressive – it’s projecting a full percentage point of tightening.

A 0.5% – 1% move would be plenty big to pancake many bonds.

The Fed last began a new rate-raising cycle at the end of June 2004 (yes, it’s been over 11 years).… Read more

2 Dividend Stocks With 20% Upside in 2016

Brett Owens, Chief Investment Strategist
Updated: November 30, 2015

If you’re looking to make double-digit gains on your portfolio in 2016, don’t take your cues from the usual forecasters. They won’t actually tell you where to put your money anyway (as they supposedly save this inside information for their top clients).

Investment bank UBS is calling for a 1.5% gain in the S&P 500. Goldman Sachs Group (GS) sees a measly 1% rise.

But there’s always a bull market in some issues, and numerous studies have shown where to profit from them. Buy companies that pay—and preferably raise—their dividends. Even better if they also buy back their own shares.… Read more

Sell Your Mortgage REITs Now!

Brett Owens, Chief Investment Strategist
Updated: November 27, 2015

Don’t believe every contrarian you read on the internet – not all REITs have interest rate risks sufficiently priced in.

Two weeks back, I highlighted the good performance that REITs turned in during the last rising rate period from June 2004 to June 2006. The Vanguard REIT Index ETF (VNQ) hardly suffered as rates rose from 1% to 5.25%, returning 33% over the 24-month period.

Some REITs didn’t do as well, however. Mortgage REIT favorite Annaly Capital (NLY) posted a total return (dividends included) of -13.4%. If you own similar issues like Redwood Trust (RWT), Capstead Mortgage (CMO), or MFA Financial (MFA) then please pay attention.… Read more

$1.4-Trillion Of Corporate Cash From 1 ETF

Brett Owens, Chief Investment Strategist
Updated: November 23, 2015

Companies that put cash in their investors’ pockets beat the market consistently over time. And there’s one specific “payout loophole” that can be particularly profitable when done properly.

Today, firms have lots of cash to share. As of the end of the second quarter, corporate America was sitting on $1.43 trillion, up 5.5% from a year earlier.

That’s despite the fact that management is doing its best to shovel greenbacks out the door and back to investors. According to Goldman Sachs Group (GS), total spending on dividends and share buybacks will leap 7% in 2016, to just over $1 trillion.

Many first-level investors complain that CEOs should be reinvesting in their companies instead, but they’re doing fine on that front, too: Goldman sees R&D spending rising 5% next year, while capex will gain 6% (excluding the beaten-down energy sector).… Read more

3 Dividend Growers At The Top Of My Watch List

Brett Owens, Chief Investment Strategist
Updated: November 20, 2015

The holiday season won’t be so cheery according to Wall Street. Concerns over dismal holiday retail sales have taken the lift out of October’s rally and weighed on the S&P 500.

Wal-Mart (WMT), (AMZN) and Target (TGT) are under the microscope heading into this upcoming Black Friday. But weekly price gyrations don’t matter as much as earnings and dividend growth. We should use short-term concerns about the sector as potential buying opportunities – especially for perennial dividend growers.

So what can we expect from retailers this holiday season?

According to the October U.S. Retail Spending survey – which increased just 0.1 percent – consumers are spending about the same, but slightly less than analysts were expecting.… Read more

The Best Dividend ETF to Buy & Hold

Brett Owens, Chief Investment Strategist
Updated: November 18, 2015

Many dividend ETFs are down on the year, and trailing the S&P 500 as well. But dividend-focused strategies tend to outperform the market over the long haul. Which means, in theory, it’s a good time for “set it and forget it” income investors to start new dividend ETF positions or add to new ones.

But there are 100+ ETFs that claim a dividend focus. And believe it or not, many of them have underperformed the market since inception – not good considering their inherent advantage!

Let’s first narrow the field by discussing what types of dividend-payers tend to do the best.… Read more

Will Warren Buffett ever pay a dividend?

Brett Owens, Chief Investment Strategist
Updated: November 16, 2015

Every time Warren Buffett issues his annual shareholder letter, investors ask:

“Will Berkshire Hathaway (BRK.A, BRK.B) ever pay a dividend?”

Uncle Warren’s answer is always the same: Berkshire shareholders are better served when the company’s immense riches (it ended Q3 with upwards of $66 billion in cash) are plowed back into the business.

Still, you shouldn’t take that to mean the Oracle of Omaha is against putting cash in shareholders’ pockets. He just he prefers another way of doing it: through share buybacks.

But here too, there’s a caveat. To keep from overpaying (a key buyback risk we’ll talk about in a moment), Berkshire will only repurchase its stock when it’s trading below 120% of book value.… Read more

3 Stocks to Rally First When Natural Gas Bottoms

Brett Owens, Chief Investment Strategist
Updated: November 13, 2015

With the S&P 500’s current yield at just 2%, we have to go beyond the blue chips and search some unpopular sectors to find meaningful dividends.

Sometimes the negative “first-level feelings” on the dogs are justified, and their big payouts are merely yield traps. Other times, we’re rewarded with dividends that are “higher than they should be” thanks to the negative sentiment

Few sectors are as unloved today as energy and natural gas. That’s where I recently uncovered three pipeline plays that are paying high yields that are funded by actual profits.

The case against natural gas has been piling up lately.… Read more

2 REITs To Buy When Yellen Raises Rates

Brett Owens, Chief Investment Strategist
Updated: November 11, 2015

Frantic investors are blindly selling the big dividend payers in an all-out “rate hike panic.” But you’ll usually make money buying into panics rather than selling them. And this time it’s no different.

There are high quality stocks that pay yields of 5-6% or better that should be at the top of your watch list. Conventional wisdom says that they’ll perform poorly in a rising rate environment. That’s a lazy blanket statement from “first-level thinkers” that just hasn’t been the case historically.

If you’re a regular reader, you know that I’ve been eyeing Real Estate Investment Trusts (REITs) lately.… Read more

The Best Defense Stock to Buy for 2016

Brett Owens, Chief Investment Strategist
Updated: November 9, 2015

Many first-level investors hear “defense stocks” and immediately start worrying about budget cuts.

But the two aren’t actually as connected as they think. And they’ve missed out on triple-digit gains as a result.

Despite the endless talk of reining in military spending on Capitol Hill, the defense business is booming.. Just look at how the sector’s top stocks have performed.

Let’s say, for example, you bailed out of Northrop Grumman Corp. (NOC) on December 1, 2012, at the height of the fiscal cliff debate. You’d have missed out on 183% stock-price gains, along with dividend hikes averaging 15.2% a year.… Read more