After 2022, some dividend investors remain convinced that slow and steady is the way to go to prevent further damage to their portfolio. In fact, some folks are actively moving out of the stock market entirely, and into bonds for low-risk income.
That’s just plain crazy!
Sure, the 10-year T-Note is yielding about double what it was a few months ago. But that’s still just 3.5% as of this writing. That means if you have a $1 million portfolio, you’re generating a meager $35,000 a year. Maybe you can pay your grocery and power bills with that, but it’s hardly the generous retirement you deserve.
Besides, rates are still rising. That means pressure on bond prices that is equal to the downtrend in stocks; over the last 12 months, the iShares 7-10 Year Treasury Bond ETF (IEF) dipped 12% compared with about 14% for the S&P 500 in the same period… and longer-dated bonds have done even worse, as evidenced by the -25% slump for the iShares 20+ Year Treasury Bond ETF (TLT).
Not exactly “safer,” are they?
Some people are talking about a “great rotation” out of stocks and into bonds… but anyone who makes that move is making a great, big mistake.
The fact is that there are still stocks out there that offer tremendous yield as well as significant upside for shares. Case in point, my favorite consumer stock right now Hanesbrands Inc. (HBI).
With a yield of about 7.4% and with shares up more than 35% from where they were a month ago, this dividend darling is putting bonds to shame.
Hanes has the Inside Track to Huge Yields and Big Upside
Hanes is a consumer apparel company that does a brisk business in staples like undergarments under its eponymous Hanes nameplate as well as Playtex and Maidenform lingerie and Champion athletic wear. It’s not exactly a high-growth or premium business, but it’s a reliable one.
While some consumer stocks have struggled amid inflationary pressures, HBI just noted that it will top previous Q4 guidance on revenue. What’s more, inventories also ended a bit below the prior year’s level to prove that Hanes is being responsible with its operations and isn’t overproducing out of unwarranted optimism.
Part of the reason for this success is the “Full Potential plan,” unveiled by management in 2021. Though the title isn’t particularly creative or original, the plan itself involves growing the global Champion brand specifically as part of efforts to elevate the brand portfolio. There’s also an important supply-chain optimization strategy going on, which is a necessity in the wake of logistical disruptions over the last few years for companies of all shapes and sizes.
Wall Street believes there’s clearly more than just wishful thinking going on here, or short-term optimism. Just look at recent share price performance as proof… HBI is putting both the S&P 500 and the bond market to shame lately.
The real appeal for dividend investors, however, should be Hanesbrands’ commitment to dividends. The company currently pays 15 cents a share each quarter, good for a mammoth yield of 7.4%. What’s more, that tally is less than two-thirds of total earnings based on projections for FY2022 and FY2023 – meaning payouts are not just sustainable, but potentially due for an increase if this success keeps up.
With shares that are moving steadily higher and a yield that is more than 2X that of 10-year Treasuries… why in the world would you opt for bonds instead of a stock like this?
Forget Traditional Fixed Income Strategies … and Retire on Dividends Alone
Hanesbrands is looking great right now. And while it’s a rare dividend stock, it’s not alone. The fact is that there is a whole family of 7%+ payers that offer significant upside.
These stocks are in the sweet spot for retirement investors. They have businesses in stable sectors, a share price built on strong underlying value and a mammoth dividend that allows investors to cash in on dividends alone – without withdrawing a penny of principal.
At its core, this is why bonds appeal to so many right now. The only way to ensure you have a safe retirement is to depend on income rather than hoping you can sell your shares at the right price, at the right time.
But HBI (and other stocks like it in our “No Withdrawal Portfolio”) offer you the ability to cash in on dividends – and to largely ignore the day-to-day gyrations in the stock market at the same time!
We’ve just published 2 Special Reports detailing this powerful, low-risk retirement strategy. In them, you’ll find all the details – including three more rock-solid dividend investments that offer yields of as much as 12% annually!
Don’t fall victim to the fear of 2022, giving up on dividend stocks and allocating your nest egg towards bonds. You have to be selective in this environment, to be sure, but you don’t have to settle for yields that are half of what you deserve.
Click here for access to our “No-Withdrawal” strategy — and learn how to get our 3 top high yielders paying up to 12%!