There are a growing number of stocks and funds yielding over 12%, luring in unsuspecting investors. Earning $12 in income for every $100 invested sounds great – unfortunately, it’s often too good to be true.

Generally, stocks have outsized yields when the market thinks that their income source is threatened. When that happens, a dividend cut ensues, turning the big dividend into a tiny one.

For example, ConocoPhillips (COP) was a blue chip with decades of dividend growth behind it and a handsome 4% dividend yield for much of the last five years. As energy prices declined along with Conoco’s stock price, its yield skyrocketed… until it slashed its dividend by over 66% at the beginning of this year.… Read more

Whether you’re relying on your portfolio for income or reinvesting your payouts, buying monthly dividend stocks makes a lot of sense.

After all, your bills roll in every 30 days or so, so why not your dividend income, too? And while a well-built portfolio will drop dividends into your account at all times of the year, you’re still left with an income stream that’s “lumpy”—soaring one month and dipping the next.

But throw in a handful of monthly payers, and you’ll bring some order to the cash-flow chaos.

Of course, convenience isn’t the only reason I love monthly dividend payers. They also let you reinvest your payouts quickly, amping up the power of compounding—and putting thousands of extra dollars in your pocket over the long haul.… Read more

Billionaire “Bond God” Jeffrey Gundlach just shared his favorite short idea at the Ira Sohn investment conference last Wednesday. Dividend investors take note – the high priest of fixed income just panned your longtime standby!

Utilities aren’t safe, says Gundlach. Their valuations are stretched to the upside, and their yields are too low. So he recommends a pair trade that shorts the Utilities Select Sector SPDR (XLU), which pays a meager 3.3% today:

Utility Yields At 7-Year Lows

A low yield can be OK if dividend growth is meaningful, but few utilities are boosting their payouts at a fast enough pace to compensate.… Read more

If you’re one of the many investors counting on a 7% average yearly return from your portfolio—or better—you’re putting your retirement at risk.

You’ve probably heard this 7% figure before. It’s gospel for many financial planners, and even Warren Buffett brings it up from time to time. It’s the S&P 500’s average annual return, adjusted for inflation, between 1928 and 2014.

With a time frame like that, it seems like a safe bet, right?

Wrong. Because over the next several decades, we’re way more likely see average yearly returns of 4% to 6%—and probably toward the lower end of that range.… Read more

In the energy sector, a number of companies operate as master limited partnerships (MLPs) to avoid double taxation and offer a high income yielding asset for investors to buy on the open market. MLPs were solid performers until late 2014, when oil began to fall, looking desperately for a bottom that never seemed to come.

Oil remains far below its prices earlier this decade, and it may fall again to $30 per barrel. But if oil prices drop again, the decline won’t be as aggressive as the dramatic plunge we just saw.

Crude’s Breathtaking Drop

The chart continues to look ugly, but some tailwinds are likely to keep oil from falling below $30 for very long.… Read more

High yielding dividend stocks are an appetizing part of any portfolio and it’s easy to see why. They act as risk moderators, balancing out a portfolio and amplifying gains over time. But stocks are a lot like the surface of a placid lake with torrential currents underneath that may not be obvious at a glance.

Sometimes a juicy high yielding dividend stock isn’t all its cracked up to be and unwary investors snap up the bait only to realize their mistake after it’s too late. Remember the old adage, “if it looks too good to be true, then it probably is.”… Read more

Most investors think it’s a good thing to be long alongside the “Big Money.” But professionals’ favorites are actually the riskiest stocks you could own. Let me explain why – and share three beloved names you should sell today.

Ten days ago, Barron’s published its latest Big Money poll, where money managers shared their top stocks for the next 12 months. Three “digital utilities” were particularly popular, and why not? All three had reasonable valuations, strong cash flows and of course healthy dividends.

Last week, two reported earnings – and both got clobbered. Here’s how they’ve performed since their Barron’s love letter:

Big Money’s Tech Darlings Get Dumped

The beauty of an earnings report – and really any “news” a company reports – is in the eye of the beholder.… Read more

If you “sell in May and go away” this year, you could be putting a whole year’s worth of returns at risk.

Now is the time to be adding top-notch dividend stocks to your portfolio. I’ll give you four my “second-level analysis” has uncovered in a moment.

First, here’s why “sell in May” is a flawed strategy that could cost you money.

True, stocks typically struggle in the summer months: since 1950, the Dow Jones Industrial Average has gained an average of 0.4% from May through October, according to the Stock Trader’s Almanac, compared to a 7.5% rise from November through April.… Read more

On Wall Street, there’s a familiar saying: the next crisis won’t look like the last one. If true, it means the next crisis won’t be in the mortgage market—it will be somewhere else.

There are reasons to feel confident about this hypothesis. Mortgage delinquency rates are falling significantly, according to data from the Federal Reserve. Back in the first quarter of 2010, delinquencies on single-family mortgages peaked at 11.26% – they’ve declined steadily since, and are quickly approaching 5%.

Mortgage Delinquency Rates Continue to Decline

Several analysts believe that on-time mortgage payments will continue to improve. Delinquencies are still high by historic standards – throughout most of the 1990s and in the 2000s, defaults stayed below 3%.… Read more

The buy-the-headline crowd is at it again. This time, they’re dumping real estate investment trusts (REITs) based on a small uptick in 10-year bond yields.

Earlier this week, the yield on the 10-year Treasury broke through 1.90% after moving in a range between 1.70% and 1.80% for the better part of April.

As is often the case, the jump had the opposite effect on REITs. Here’s how the Vanguard REIT Index ETF (VNQ), my favorite REIT ETF and a good proxy for the sector, has performed in the past week:

Why the decline? Investors are worried rising rates will make REITs less attractive, as yields on so-called “safe” investments like Treasuries shoot higher.… Read more