Danger In Junk Bonds – Sell These Funds Today

Brett Owens, Chief Investment Strategist
Updated: August 19, 2016

More companies are going bankrupt now than any time since the Global Financial Crisis. This is a big problem for everyone, but nowhere is the pain more acute than in the high yield bond universe.

More defaults mean more non-payments on bonds and lower prices for those bonds, causing a junk bond portfolio to fall in both value and income. For anyone who holds corporate bonds or corporate bond funds, it’s time to pay attention.

Usually the market anticipates these trends and discounts bonds before the defaults spike. This happened in 2015. Investors sold junk bonds by the truck full, and a lack of liquidity was a broad market-wide issue.…
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Dividend Cut Alert! Three 12% Payouts In Big Danger

Brett Owens, Chief Investment Strategist
Updated: August 18, 2016

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

PSEC-YTD-Price-Chart

But you should stay away.…
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This is How I Invest My Retirement Money

Brett Owens, Chief Investment Strategist
Updated: August 17, 2016

Vanguard just closed its most popular dividend fund to new money. If you’re not already in, I’m afraid you’re out of luck.

But I’ve got a backdoor way to duplicate – and even best – its winning income strategy. We’ll talk specifics in a minute, including stocks to buy now. But first, let’s discuss this dividend investing strategy to appreciate why it works so well in all market environments.

In a world with no shortage of financial worries, the Vanguard Dividend Growth Fund (VDIGX) is the surest long-term bet you can make with a single click of the mouse. It’s a dividend strategy that I plow 100% of my 401(K) contributions into (as I have to choose from a set list of funds – but at least I have one that always wins over time.)

VDIGX owns the strongest businesses with ever-rising profits driving ever-rising dividends.…
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3 Reasons to Buy These 5 Oil Refineries Right Now

Brett Owens, Chief Investment Strategist
Updated: August 16, 2016

It seems oil’s big recovery may never come. Last week, chatter from the IEA and Saudi Arabia helped oil rebound, but we’re still down 50% from 2014 prices. What’s more, continuing concerns about energy companies’ ability to pay out dividends has caused massive declines for many stocks in 2016, even after steep losses spanning two years. Some people are giving up on energy altogether.

But that would be a mistake.

Now that oil is low, we contrarians can see which companies can survive in a world of cheap energy and which companies are woefully unprepared. Surprisingly, a group of oil refineries are able to survive a world of sub-$40 oil, and now that crude has risen to over $43, these refineries are astoundingly underpriced.…
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2 REITs That Could Plunge 20% – and 2 to Buy Now

Brett Owens, Chief Investment Strategist
Updated: August 15, 2016

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.…
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4 Funds With 5% Yields and Almost No Taxes

Brett Owens, Chief Investment Strategist
Updated: August 12, 2016

Fat 5% dividends are hard to come by as stocks continue to climb. But you can actually still get those high yields – and take on less risk – by looking to the municipal bond market.

Munis also offer something else truly wonderful: tax-free dividends. That’s right, the income from most municipal bonds is tax free for most Americans. However, choosing individual municipal bonds is difficult. High minimum buy-ins force many retirees to concentrate too much of their capital in one project or municipality.

While muni defaults are rare, it’s never safe to concentrate too much money in one place, which is why municipal bond funds are a much safer alternative.…
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3 Utility Stocks to Sell Right Now

Brett Owens, Chief Investment Strategist
Updated: August 11, 2016

I love utility stocks for their stability and high dividends, but sometimes you have to let go of what you love – especially when things get a bit crazy.

And the insanity many investors are facing now is that many utility stocks have soared in 2016 and far outperformed the S&P 500, even when you exclude their massive dividends. These price gains crushed yields – which is why investors should ring the register, sell these stocks and redeploy profits into better yielding alternatives.

Let’s talk about three regional utility that have soared more than 30% over the past year. A great return, but the charts also tell me that we’re reaching a top and there may be little room for these utility stocks to go further.…
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How To Time Your Dividend Buys and Sells

Brett Owens, Chief Investment Strategist
Updated: August 10, 2016

“Are dividend stocks in a bubble? Like… the NASDAQ in 1999?”

A reporter from Kiplinger called me last week, concerned investors were bidding up these issues to irresponsible heights.

While not quite a bubble, many of the “safest” names are the worst places you could put your money today. Some are doomed to grind sideways for years while others have serious downside potential. But there’s an easy test you can run to see if you should buy, hold or sell your favorite dividend stocks – simply chart the share price versus the dividend.

Your Total Returns = Current Yield Plus Payout Growth

Over time your stock market returns will roughly equal the yield you buy today plus the dividend growth you enjoy in the years ahead.…
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Dump These 4 Dividend Darlings Before September 1st

Brett Owens, Chief Investment Strategist
Updated: August 8, 2016

Today I want to tell you about two hidden pitfalls that could threaten your stock returns—and four stocks that could be the first to take a tumble.

First, the pitfalls. You’ve probably heard of the first one: seasonality.

That’s the market’s tendency to outperform—or underperform—at certain times of the year. A prime example is the “sell in May strategy,” in which some investors bow out from May to October, when market gains tend to be muted.

Now the worst month for stocks—September—is nearly upon us. According to the Hulbert Financial Digest, from 1896 through 2014, the Dow Jones Industrial Average fell an average of 1.06% in September, compared to an average gain of 0.75% for all the other months.…
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Massive Dividend Growth and a 4% Yield with These Stocks

Brett Owens, Chief Investment Strategist
Updated: August 5, 2016

The market is on a tear, making it harder than ever for dividend growth investors to find good buys for their money. While many people expect the market will correct itself, you might be missing out on steady gains if the market continues to “melt up” thanks to low interest rates.

Fortunately, there’s a safe way to secure yield with upside to boot. While the market has bid many well-known dividend payers up to silly prices (and caused yields to crash), there are still a few lesser known names paying 4% yields with plenty of payout and price runway from here.…
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