Utility stocks have had a great year, but it isn’t too late to get into this sector at a reasonable valuation and lock in a 7% yield. Of course, you could always just buy the Utilities SPDR ETF (XLU) and wait for the rising tide to drive this indexing fund higher.

But there are two big problems with this approach. First, the ETF is up over 15% year-to-date thanks to the run-up in utilities:

Too Great a Year for Utilities?

The other problem: this fund yields just 3.2%. Now that isn’t bad compared to the S&P 500, but that’s less than 1 percentage point above the more stable and lower risk SPDR S&P Dividend ETF (SDY):

Low Dividends Not Compensating for Risk

If we’re going to get into utilities after they’ve run up 15%, we’re going to have to be more selective to get a better yield and less risk.… Read more

In a world where you need to hold a U.S. Treasury for 10 years to get a measly 1.5%, real estate investment trusts (REITs) have become an incredibly attractive income-yielding alternative. So attractive, in fact, that the SPDR Dow Jones REIT ETF (RWR) has soared over 12% in the last year:

REITs Rally

That also means the ETF’s dividend yield has fallen, and it now pays less than 4%. On top of that, RWR’s dividend is uneven because of the complexity of its constituents’ payouts, making this income stream an unreliable one. Dividends were $1.03 in March and 78 cents in June, and the dividend usually bounces around from quarter to quarter.… Read more

This time, Warren Buffett actually IS losing his touch.

Historically, of course, there are few better examples to follow. If you’d invested in the Oracle of Omaha’s holding company, Berkshire Hathaway (BRK.A), 30 years ago, for example, you’d be sitting on a 3,000% gain today, compared to “only” a 953% total return for the S&P 500:

But even Buffett makes the odd bad call, and I think he’s done just that by buying—and holding on to—the two stocks below. Ironically, they’re both moves the Street seems to be giving him the benefit of the doubt on—for now.

Further on, we’ll look at a canny pick the Oracle’s right to hold on to, even though the rest of the “smart money” has thrown in the towel.… Read more

Double-digit yields are seductive – but like sirens coaxing Odysseus’s men from the deep, they can also lead the unwary to disaster. And with more reliable dividend payers yielding less and less in this red-hot stock market, the call from those sirens is getting louder and louder. Here’s why you should plug your ears and stay the course.

One particularly popular dividend payer, Prospect Capital Corporation (PSEC), has many red flags. Currently yielding 12%, it beckons investors to come and get $10 per month for every $1,000 invested. The fact that it’s a monthly payer makes it look even more attractive, and that’s helped the stock perform well for 2016:

A Rare Bull Run for PSEC

But you should stay away.… Read more

Are real estate investment trusts in a bubble? The evidence is mounting—especially in the big names many investors see as sacred.

Today we’ll look at two “frothy” trusts you should watch like a hawk if you hold them … and avoid if you don’t. Further on, I’ll show you two REITs that are terrific buys now. Both boast gaudy 6.0%+ dividend yields and have big growth ahead, too.

“O” Is for Overpriced

First, we need to talk about Realty Income (O), a giant among REITs, with a $17.9-billion market cap and 4,600 retail properties across the U.S. The stock has soared 46% in the past year, nearly tripling the 16% gain in the benchmark Vanguard REIT Index ETF (VNQ) and leaving the S&P 500, with just a 3% rise, in the dust.… Read more