Displaying items by tag: income

(New York)

2018 was a tough year for most income investors. Rates rose considerably, making the dividend yield of the market look rather poor compared to many other short-term assets. Strong corporate dividend hikes helped, but the big question is what will happen in 2019. Most analysts think the pace of dividend hikes will slow, but so will the pace of rate hikes, meaning that income stocks seem likely to do well. Dividends rose 9% this year and are expected to rise 6% in 2019.

FINSUM: Goldman says that financial firms will raise their dividends by 16% in 2019, more than any other sector. Perhaps that is a good place to look.

(New York)

It might not always feel like it, but rising rates are good if you are an income investor. Rates are most definitely rising. Treasury yields are up strongly and the Fed is hiking quarterly. That can cause some rate driven losses even as yields on fixed income assets rise. One fund manager summarized the risks and benefits this way, saying “Rising rates and/or lower equity valuations should lead to higher long-term expected returns, although the movement from low yields to high yields, or high valuations to low valuations, often requires a painful short-term capital loss”.

FINSUM: The move to “low valuations” sounds terrifying as an investor, but the key is to take advantage of higher yields while holding hedged positions.

(New York)

Want to maintain your portfolio’s income, but also afraid of rising rates? Many are, as it is a difficult challenge keep income high but not experience losses. With that in mind, here are a handful of mutual funds which should help do just that. One area to look for diversified income right now is in multi-asset income funds. Some of the best are the American Funds Income Fund of America (AMECX), the Vanguard Wellesley Income (VWINX), the BlackRock Multi-Asset Income (BAICX), the JPMorgan Income Builder (JNBAX), and the Principal Global Diversified Income (PGBAX).

FINSUM: Many of these funds are quite old and have had great performance. Fees are all over the map, but one of the areas where they tend to succeed is in having good performance with lower volatility than the market as a whole.

(New York)

US dividend stocks are in a curious, if tenuous, positon at the moment. They have done well recently, but rate rises seem poised to bring prices down. Overseas dividend stocks, however, are not in the same predicament, as the rate environment in many other parts of the world is more benign. Accordingly, here are six overseas dividend stocks to consider: Allianz (4.1%), Hang Lung Properties (5%), Heidelberg Cement (2.8%), Nestle (2.9%), Royal Dutch Shell (5.3%), and Sanofi (4.1%).

FINSUM: Not only are these stocks attractive because of the good yields and mild rate environment, but they mostly have very attractive P/E ratios as well.

(New York)

Many investors may be looking for the best possible combination of high dividend yield and stability. Many companies with very high yields are not stable, so there is often a tradeoff between the two. With that in mind, here are three dividend stocks whose payouts should be reliable for decades to come. The first is a smaller REIT called CareTrust (4.6% yield), which is focused on growing its real estate footprint to handle the US’ aging population. Nike (1%) is another option. The dividend yield is not high, but it is hard to think of a more reliable payer. Finally, there is Canadian space stock, Maxar, which is growing strongly and offers a great dividend yield (considering how small and young it is) of 3.3%.

FINSUM: This is a serious mix of options from three entirely different sectors. Definitely some interesting choices to look into.