On the lookout for safe dividends? (Who isn’t, right?)

These days, you generally have three options: large-cap stocks with long dividend histories, municipal bonds and US Treasuries.

Treasuries are considered the safest of that group, and large-cap stocks the riskiest, but they’re still much safer than plenty of other investments, such as small caps and junk bonds.

I’ll show you two low-risk investments that are great buys now in a moment. But first, I want to tell you why recent events have called the safety of some of the options I just named into question.

Let’s start by looking at the following chart:

“Safe” Assets Turn Volatile

First, note how the iShares S&P National AMT-Free Municipal Bond Fund (MUB), a good proxy for municipal bonds as a whole, is the least volatile of the three funds shown above.… Read more

Still think the Federal Reserve may not hike rates this month?

It’s time to change that view.

Traders betting through the Fed futures market now see the odds of rates staying where they are at a measly 1.4% after strong employment and consumer confidence numbers last week.

And if you’ve tried to take out a mortgage lately, I don’t have to tell you which way interest rates are headed: no thanks to a spike in 10-year Treasury yields, which hit a 17-month high last week, you’re now paying more than 4.0% on a 30-year mortgage.

Borrowers Get Mauled

So, time to hold off on dividend stocks, then, right?… Read more

There’s no doubt Donald Trump’s election win has been great for stocks.

Municipal bonds? Not so much.

In the last month alone, “munis” have lost over 3% of their value—a huge decline for an asset class that’s supposed to be safe and stable.

So is it time to sell your munis, give up on safe income and try to ride the Trump rally in stocks?

No way. In fact, if you’re just thinking of doing that now, you’re probably too late.

The Trump rally reversed course after Thanksgiving, with a down day that threw a damper on the stock market’s post-election euphoria.… Read more

First-level investors mistakenly think that real estate investment trust (REIT) profits will be hurt if rates rise. In three instances, they’re dead wrong – and missing out on big, secure dividends with upside to boot.

At these REITs, top insiders – who of course know better than armchair observers – are currently buying up their own shares like crazy. While corporate insiders may sell stock for many reasons, they only buy because they believe the payout is safe and price is likely to rise.

In the short run, the “rates up, REITs down” theory puts on quite the show. If you hold REITs in your portfolio, I can tell you how it’s trading (up or down) on any given day by considering only one number: the 10-Year Treasury Rate.… Read more

Today I’m going to share three of my favorite dividend stocks from an ignored corner of the market set to soar in President Trump’s first year.

Which corner? The “little guys”: small and mid-cap stocks.

In many ways, the cat’s already out of the bag. As they’ve done with financial stocks, investors have bid up small- and midcaps since Trump’s win. Look at the how the SPDR S&P 600 and the S&P Midcap 400 have performed vs. the S&P 500:

That’s a huge gap … and it makes sense. With the US dollar soaring and Trump threatening to toss trade deals in the shredder, the market’s small fry (which tend to be more domestically focused) are in the catbird seat.… Read more

It’s a classic death spiral.

I’m talking about the flight to dividend-paying—and dividend-growing—stocks in the past eight years.

It’s easy to see what triggered it: US Treasuries don’t offer pay enough to cover inflation, and despite President-Elect Trump’s inflationary policies—more on those below—that won’t change anytime soon.

That’s prompted income-starved investors to pile into higher-yielding options, like municipal bonds, utility stocks, corporate bonds and dividend-growth stocks. These are all good choices, of course.

But here’s where the death spiral comes in: the rush into these investments has dragged down their dividend yields (because you calculate yield by dividing the annual dividend by the current share price), sending investors into even riskier areas of the market.… Read more

Donald Trump has income investors scrambling for rate-hike (and even inflation) insurance. Fixed yields are out, while floating yields – which adjust higher in tandem with rates – are in.

Even if you’re skeptical (as I am) that we’ll see rates continue meaningfully higher anytime soon, inflation insurance is never a bad thing provided that:

1. It pays a decent current yield (sorry, gold).
2. We can buy it at a fair price.

The sudden popularity of “floating rate” issues may have you rightfully wondering whether or not this trade is already too crowded. Fortunately, my preferred vehicle for buying them is currently out of favor itself!… Read more

If you’ve invested in municipal bonds lately, you may be coming down with a serious case of buyer’s remorse.

But you shouldn’t, as I’ll explain in a moment. In fact, now is the perfect time to double down and buy more of these high-yielding, ultra-stable investments.

First, let’s look at why “munis” have fallen off a cliff, setting up an excellent buying opportunity for you and me.

“Off a cliff” is no exaggeration. Take a look at what’s happened to the five biggest muni-bond ETFs in the past month:

Muni Bonds Tank

When investments as stable as these put on a drop like that, you’d expect, say, a looming global financial crisis.… Read more

Forget the pundits—they totally blew the call on this election. And I sure hope you didn’t take their stock advice, either.

Ahead of the vote, one economics professor said the market would drop 7% if Trump won. Another analyst said you should go to cash “if you’re not already there.”

I could go on.

If you followed that advice, you’ve missed a 2.1% rise in the S&P 500 since Election Day. It’s worse if you were overweight financials, as the sector has been on an absolute tear, with the iShares US Financials ETF (IYF) surging 7.0%.

Sad!

But not surprising, as banks will benefit most from higher interest rates—and a selloff in the bond market has pushed the yield on the 10-year Treasury to around 2.25% from 1.87% on November 8.… Read more