The S&P 500 Dividend Aristocrats are a group of stocks beloved as “widows-and-orphans” investments – can’t-miss companies whose stability and rock-solid dividends will keep you into old age and will exist long after you’ve passed. It’s a reassuring thought, but ultimately, it’s an illusion. Like the broader S&P 500 and the stock market as a whole, some of its members are good investments, and some – including five losers I plan on highlighting today – are not.

I love the term “dividend aristocrat” … but only because it’s more honest than most people realize. The word “aristocrat” can refer to people who are many things, including superior, better able, smarter and wiser.… Read more

The S&P 500 now sports a price-to-earnings ratio of more than 26—a huge number at a time when corporate profits are actually down more than 5% since 2014.

You read that right. Investors appear to be overpaying for falling profits.

Look closer and things seem scarier. In August 2000, at the height of the dot-com bubble, the S&P 500 had a P/E ratio of 28, just 6% above its current level. If the stock market continues to perform as it has in the last few months, we could get to that same level by summer.

Then look at volatility.

The CBOE Volatility Index, often called the “fear indicator,” is currently 13 and was below 10 just a few months ago.… Read more

There’s been a mini-wave of insider buying in the BDC (business development company) sector. This is worthy of our attention for three reasons:

1. These firms pay fat 10%+ yields,
2. Their stocks are trading far below book value, and
3. The buyers are all founders who know exactly where their corporate bodies are buried.

So do they also know when their stock is too cheap?

We’ll analyze each case in a moment. First, let’s consider why – contrary to popular belief – certain BDCs may indeed be poised to roll higher alongside interest rates.

Traditionally, BDCs suffer as rates rise because they generate income from fixed rate investments.… Read more

We might be at the start of a correction. This doesn’t mean it’s time to sell, but it does mean it’s time to be really, really choosy.

Just look at financial stocks. I’ve been closely following this sector and timing buys and sells for myself based on the market’s irrational overreactions to news.

That means I recommended buying financials in August 2016, then recommended avoiding the sector at the end of last month. Here’s what’s happened since then:

Financials Drop, Utilities Jump

So financials have underperformed everything else. But it’s still too early to jump into the sector, since it’s still up 21% over the past year.… Read more

If you’re worried about a pullback, I don’t blame you. But don’t sit in cash and earn nothing when you can hedge your portfolio AND collect yields up to 8%.

Let’s talk about a couple of funds that use a well-worn options tactic – writing “covered calls” – that can generate generous yields typically between 7% and 9%. Conveniently, you never have to deal with the complications of options contracts – these funds do all the work for you!

But, why covered calls, and why now?

Covered calls are an options strategy in which you sell call option contracts against stocks you hold.… Read more

“If you’re not growing, you’re dying” is a well-worn phrase slathered all over the business and investment world, for good reason: It’s true. And it strikes a particularly loud chord when it comes to dividend investing. If your retirement portfolio is full of stocks that are paying the same dividend they did years ago, then, you’re certainly losing the war with inflation, and your nest egg probably isn’t performing to its full potential.

But if your retirement portfolio is stuffed full of companies like the five dividend growers I’ll share with you today, then you’ll stay ahead of the pack, year after year.… Read more

There’s no way around it: the S&P 500 now has a P/E ratio of more than 26 going into the first earnings season of 2017, and even the “safest” bets are starting to look scary.

Unless we see massive profit growth all around, there’s a real risk this bull market is going to stutter—or worse.

So where do you go for value? It’s getting harder than ever, but there is one corner of the market that got way ahead of the S&P 500 and has since taken a step back. I’m talking about real estate investment trusts (REITs).

And now, there are three REITs that combined provide over 9% in income with over 200% average dividend coverage.… Read more

The Federal Reserve just dropped the first of three potential interest-rate bombs on Wall Street – a quarter-rate hike that was supposed to send rate-sensitive assets scurrying. Instead, blue-chip dividend stocks, MLPs, REITs – almost everything headed higher, including the trio of heavy-yielding business development companies (BDCs) I want to show you today.

Investors often look at interest rates and dividend-yielding stocks as a water-and-oil relationship. You know the drill. If interest rates go up, and Treasuries and other bonds begin to yield more in response, they’ll look more attractive versus similar (and even slightly higher-yielding) dividend stocks.

After all, as secure as even the bluest, chippiest blue-chip stocks might seem, they pale in comparison to the full faith and credit of the United States government.… Read more