Dividend Investors May Want to Be Cautious in Current Market

I monitor a number of financial newsletters and investment advisory services. A number of them are focused on income investing, recommending sound dividend stocks. There is a clear trend developing, which I hinted at in my last article, when I mentioned how it is getting difficult to find attractive entry points to dividend stocks.As stock prices rise on many of the stocks we all watch, the dividend yield for new money drops. Many of these publications, which offer their readers recommendations to find high yielding investments, are having a tough time finding stocks with decent yield... more

Debating Dividends: What Would You Want Your Company to Do With Its Excess Cash?

For more than a year, there has been spirited discussion on Seeking Alpha about the merits of dividends. Camps of dividend-lovers, dividend-agnostics, and dividend-haters have formed. The question comes down to what you want a company that you own to do with its last dollars of earnings, its “excess cash.” Should the company distribute some of those dollars as dividends or not? This should not be an emotional topic, but it has turned out to be one. Some seem determined to prove that their approach is the one and only correct approach. Others state that they are willing to “agree to disagree,” only to get mocked for being willing to let it go at that. Still others reason that the way one thinks about dividends may be a function of a particular investment strategy or one’s stage... more

Real Estate vs. High Yield Equities: What's the Better Choice for Investors?

Many investors and economists believe that we have reached a bottom in the housing market. Whether this is the case or not, is it still a good idea to buy investment property as part of your financial portfolio. As a prerequisite, an individual's own home is not a investment (hopefully people have learned this from the current housing bust), rather it is consumption because you are forgoing the returns of rental income to live in the property yourself. There are plenty of other reasons to own a home instead of renting (stability, customization, replacing rent with forced saving, etc.), but capital gains is not one of them. First lets look at the performance of real estate versus the stock market and high yield stocks over the past thirty years:As you can see with the exception of the... more

Preserving Income: One Strategy for Protecting Profits and Dividend Yield

As investors start off June processing the fourth consecutive week of losses for major indices and rather weak recent economic data, stock holders should contemplate ways to hedge a portion of their profits (and income) from risk of a second half slowdown. The weak ADP data yesterday confirms that the job market remains challenged and proves that this has been a jobless recovery. Macro Risks Remain Investors have a significant amount of macro risk to consider including: End of QE2 in June 2011 A relatively weak economic recovery Stubbornly high level of unemployment Weak housing market U.S. debt ceiling debates Fiscal issues at the state and local level leading to cutbacks Lingering European periphery credit issues Rise in commodity prices Uncertainty in the Middle East ... more

Trading Preferred Stocks: Opportunity for Generous Yield and Quality Capital Gains

This post is a follow up to Preferred Stock ETFs: Beware the Heavy Concentration in Financials and 5 Preferred Stocks for High Income and Safety both of which are the latest in an ongoing series first introduced in the article Best Post-QE2 Opportunities Lie Beyond Stocks providing a detailed analysis on investment strategies outside of the stock market leading up to the end of QE2.Trading opportunities are available in preferred stocks just like they are in regular common stocks. Sure, most invest in preferred stocks for their yield. But this doesn’t mean that you have to buy it today and hold it until it gets called away. One of the great things about preferred stocks is that, when selected at the right time, they can offer attractive high quality capital gains opportunities to go... more

4 High Yield Tobacco Stocks to Enhance With Covered Calls

As yields on the 10-year U.S. Treasury briefly breached 3.0%, investors are clearly hungry for yield. For investors clamoring for yield, the goal should be to focus on assets that provide safe yield with the potential upside to the dividend in an inflationary environment. Large capitalization, dividend paying equities have helped fill the yield void for many investors. We provide analysis below on four U.S. tobacco companies that pay dividends in excess of the 10-year Treasury and provide investors with the potential for dividend growth in a strengthening economy (or an inflationary environment). Due to the recent weakness in the general market, we advise investors to contemplate overwriting out-of-the-money call options to further enhance their short-term yield on these stocks over the... more

8 Stocks Providing Positive Feedback With Higher Dividends

It seems that every investing article ends with the same conclusion - you should be buying dividend stocks. Beyond the simple concepts, some of the writers are making really bad recommendations and cross-breeding dividend investing with their preferred form of investing. Dividend growth investing is not about exit points, momentum swings, relative strength, sector rotation; instead it is about studying fundamentals, selecting superior stocks and building a portfolio with a long-term horizon. When we buy a dividend stock, we hope to hold it forever. This week several companies provided their shareholders positive feedback with increased cash dividends: Lowe's Companies, Inc. (LOW) operates as a home improvement retailer in the United States, Canada, and Mexico. May 27th the... more

17 High Dividend ADRs With Tremendous Growth Rates

We suggest investors look for opportunities in emerging markets. We like investing in emerging markets for three reasons. First, emerging market stocks are cheaper based on current P/E ratios. Second, emerging countries have higher GDP growth rates. Third, emerging market currencies are usually undervalued, and they will eventually catch up with the U.S. dollar. Emerging markets can be very volatile and the losses for short term investors may be dramatic especially in down trends. However, long term investors with diversified portfolios can protect themselves from dollar inflation and benefit from emerging markets’ higher growth rates. American Depository Receipts (ADRs) are one of the most effective instruments to invest in foreign markets. First, ADRs provide convenience in terms... more

The Dow's 10 Best Dividend Stocks

For the long term investor, dividend stocks have significant benefits in terms of providing income and growth potential. We continue to examine different portfolios to see what we can learn and use to further our investment portfolios. We are looking at the hit parade of dividend stocks. We have already looked at the bottom 20 and we now look at the top ten stocks and we can compare their performance along with the performance of a dividend ETF portfolio.Jake Lynch of The Street compared the pessimism of Pimco and Ken Fisher in terms of whether there is a strong future for stocks. He concluded that the case for stocks is compelling, given the low yields offered by bonds and the government's commitment to accelerate economic growth. Among the cheapest stocks in the U.S. market are Dow... more

Comparing Dividend Stocks With ETFs

There are so many different stock ideas and portfolios being recommended that we can easily be overwhelmed and shot down. The way to solve this is to focus on what works in the long term, allowing us to filter out what may work in the short term but won't stand the test of time. We continue to examine different portfolios to see what we can learn and use to further our investment portfolios. Jake Lynch of TheStreet compared the pessimism of Pimco and Ken Fisher in terms of whether there is a strong future for stocks. He concluded that the case for stocks is compelling, given the low yields offered by bonds and the government's commitment to accelerate economic growth. Among the cheapest stocks in the U.S. market are Dow components, which offer clean balance sheets, powerful brands... more