The Best 7%+ Dividends for 2017

Brett Owens, Chief Investment Strategist
Updated: January 4, 2017

What will 2017 hold for income investors?

Let’s sort through the current hysteria regarding interest rates, Trump and inflation. Thanks to some first-level insanity, there are once again pockets of value that pay meaningful dividends of 6%, 7% or better.

And many have some price upside to boot! Why?

Because Rate Hikes Will Probably Disappoint

This time last year, the Fed was promising four rate hikes over the next twelve months. The “smart money” crowd (via Fed Funds futures prices) was betting on two. And both parties were too aggressive as we saw just one rate hike in 2016.

Today we have Yellen & Co promising three hikes in 2017, while the futures markets say just two:

The Smart Money Bets 2 Hikes in 2017


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4 Cheap Dividend-Growth Stocks to Buy for 2017

Michael Foster, Senior Analyst
Updated: January 3, 2017

2016 is in the books, and the S&P 500 gained over 11% on the year. That’s great news if you’re already in the stock market … but it’s bad news if you’re looking to buy.

The market’s price-to-earnings (P/E) ratio is now 26.1, which is 17.6% higher than it was at the beginning of the year. In other words, if you buy stocks now, you’re paying nearly a fifth more for those companies’ earnings than you would have nearly 12 months ago.

Stocks Getting Expensive

4-Cheap-Dividend-Growth-Stocks-to-Buy-for-2017

Making matters worse is the fact that the S&P 500 has soared over 8% in the last two months alone—accounting for much of the year’s total gains.

“Trump Bump” Reboots Stocks

SPY-Post-Election-Gains
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These 3 Dividends Could Get Slashed in 2017

Brett Owens, Chief Investment Strategist
Updated: January 2, 2017

The S&P 500 is near record highs. The pundits see an elderly bull market with more room to run. The Federal Reserve says it will likely hike interest rates multiple times in the next 12 months.

Sound familiar? It should. Because it’s exactly what we were as 2016 dawned.

Here’s what happened in the following six weeks:

SPY-Q1-Dip-2016

I know what you’re thinking: Yes, but the index did go on to recoup those losses and more, with big rallies following the Brexit vote in June and Donald Trump’s surprise win last month. In the end, it wound up the year with a 10.1% rise.

These-3-Dividends-Could-Get-Slashed-in-2017

All true.

But as you can see above, the Trump bump is starting to look sleepy. …
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How to Beat the Market and Collect an 8.5% Yield in 2017

Michael Foster, Senior Analyst
Updated: December 30, 2016

It’s been a great year for high-yield bonds. If you’ve held them during 2016, congratulations.

But if you’re like me, you’re probably wondering whether to keep holding or take your profits and invest them somewhere else.

That’s the question I’m facing with a high-yield bond fund that has gone up over 22% since my purchase.

To decide what to do, I first want to look at how the asset has performed relative to alternatives. The leading index for this asset class (the Bank of America Merrill Lynch US High Yield B Total Return Index) has risen 17% in 2016:

HY-Bond-Index-Soars-Chart

High-Yield Bond Index Soars

Meanwhile, the S&P 500 has gone up 13% in the same period, including dividends:


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3 Emerging Market Funds Paying 6.4%, With 30% Upside

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

When you think of emerging markets, what comes to mind? Growth opportunities are likely first on the list … followed ever so closely by stomach-churning volatility.

What you probably don’t think about is income. But even in EMs, investors can dredge up some considerable dividend yield.

We all know the basic emerging market investment thesis: These “emerging” countries typically feature much more robust economic growth and quickly expanding middle classes. As a result, the companies there are expected to rapidly grow as they both feed off that greater economic pie, and as their operations become international in nature, building revenues around the rest of the world. Better yet, EMs are a diversified investment, offering returns that aren’t strongly tethered to the U.S. stock market.

With the rewards come the risks: …
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Why Rising Interest Rates Won’t Kill Stocks (and What to Buy Now)

Michael Foster, Senior Analyst
Updated: December 29, 2016

I’m sick of hearing people worry about the Federal Reserve raising interest rates.

The mainstream media and the market go into panic mode when they fear rates are going up. I’m hearing more worries about a major stock correction coming in 2017. Since Janet Yellen’s interest rate hike, the market has taken a dip—and the trend is worrying:

SPY-December-2016-Price-Action

The Rally Is Over

Investors are losing faith in the Trump rally, and many people are anticipating more declines to come. The Fed said it’s going to raise rates three times next year—and each rate hike is expected to drive more investors out of the stock market and into safer and better-yielding US Treasuries.

I’ve seen this before. Many times, in fact. …
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4 Cheap Dividend Growers With 20% Upside in 2017

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

Looking for cheap stocks throwing off double-digit dividend hikes in 2017?

Bad news: it’s getting tougher to dig up these hallowed companies—and easier to fall victim to a dividend cut.

Consider the S&P 500, the be-all-and-end-all for most people when it comes to stock picking.

According to FactSet, 44 of the index’s constituents had payout ratios (or the percentage of earnings headed out the door as dividends) that were above 100% in Q3. That’s nearly 9% of the index, the second-highest total in a decade.

Not good.

Payout-Ratios-Too-High

Meantime, the S&P 500’s average payout ratio hit 40.2% during the quarter, the highest level in seven years. And to say valuations are stretched is an understatement, with the index now boasting a nosebleed P/E ratio of 26. …
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2 Beaten-Down Funds to Buy for 9.4% Dividends – and 3 to Avoid

Michael Foster, Senior Analyst
Updated: December 23, 2016

2016 has been a crazy year—so it’s no surprise closed-end funds (CEFs) have been offering crazy returns.

As we’ll see in a moment, the best fund is up over 50%, which crushes just about every unleveraged ETF and mutual fund out there. Plus, that fund pays a whopping 7.6% yield—which is pretty typical for CEFs. If you bought in when it was at its 52-week low, you would have been getting an unbelievable 14.7% yield throughout 2016, while also seeing your portfolio’s market value go up and up.

This is the power of getting into the right CEF at the right time, and it shouldn’t be ignored.

But even after its huge run-up, buying this fund, and funds like it, would give you over $76,000 in annual income on a million-dollar nest egg, compared to a depressing $26,000 if you put that money in US Treasuries instead. …
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3 Stocks With Big “Moats” Paying 5%

Brett Owens, Chief Investment Strategist
Updated: December 22, 2016
castle-moat

It’s actually easy to find dividend stocks that yield more than 5%. No, really. You can go to a screener like the one at FinViz.com and actually search for dividend stocks that yield more than 5%. As of right now, about 450 stocks hit that bar.

But that’s merely a list – a list that more closely resembles a minefield.

Buried in that list of high-yield dividend stocks is a horde of time bombs. These are stocks that threaten your hard-earned nest egg in any number of ways.

Some of these big yields are simply a result of big stock losses, which in turn are a reflection of deteriorating financials that could lead to payout cuts or suspensions in the future. In fact, in some cases, these stocks are paying out far more in distributions each quarter than they earn! …
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8 Rules for 8% Income Investing in CEFs

Brett Owens, Chief Investment Strategist
Updated: December 21, 2016

The 10-year’s yield up to 2.6%? Big deal – you and I still aren’t retiring off it!

Hence the appeal of closed-end funds (CEFs), which often pay 8% or better. That’s the difference between a paltry minimum-wage income of $26,000 on a million bucks in capital, or a respectable $80,000 annually.

And if you’re smart about your CEF purchases, you can even buy them at discounts and snare some price upside to boot!

Unfortunately this rising rate environment has income seekers scared of CEFs. Many of our Contrarian Income Report subscribers are writing in to ask if they should bail on our high paying vehicles. The financial media is in their heads, and they’re concerned that their funds are suddenly going to drop in price.


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