The press has a complicated relationship with annuities. On the one hand, some investors love them and the relative predictability they offer, while on the other, there are loads of stories of abuse. That said, they still have utility for investors, and with that in mind, here is a list of some of the best across six different categories. For immediate income, Minnesota Life has some well rated products with good payouts. Penn Mutual Life and Lincoln National Life also have strong offerings. For deferred income annuities there are some other providers to check out, including Symetra Life, CUNA Mutual, Principal Financial, and Guardian Life.
FINSUM: Guaranteed income at certain life thresholds is a valuable proposition for clients, it is the irresponsible way in which they have sometimes been sold that raises issues. This article lists some good candidates.
Investors are always looking for good yields. While bonds are seeing higher yields now, high paying stocks offer something special because of the chance of capital appreciation. Such investors might be tempted by financial stocks right now, which are sporting juicy yields. However, Goldman Sachs is warning that investors need to beware. JP Morgan and other banks have been beaten up over the last year and are sporting payouts of above 3% in some cases. However, the big risk that is financial stocks are highly rate sensitive and tend to lose value as rates fall because of their lower profitability in such times. This pushes up dividends, but moves prices lower.
FINSUM: If you think we are even close to heading into a recession, buying financials is not a good idea. If you think this is a false signal, then banks may be a great buying opportunity right now.
Advisors tend to really like dividend stocks, and it makes sense why: clients need good income as they head into retirement. However, this desire leads some (especially retail investors) to overreach, choosing high paying, but ultimately fragile or unsustainable stocks. Right now is a good time to be looking for quality dividend payers, as their valuations relative to the market are the lowest in about 20 years. Some high quality names to look at include Macy’s (6.2%), General Motors (4.1%), Kellogg (4.1%), and Verizon (4.2%).
FINSUM: One of the best ways to judge the quality of dividend stocks is through focusing on free cash flow as that measure shows whether companies can really afford what they are paying out without hurting their underlying business.
Markets have moved so fast that investors are now once again braced with the question that plagued them for almost a decade—how to get some income in a low yield world. Ten-year Treasuries are now yielding a very weak 2.36%, way down from the 3.2% they reached in 2018. That means investors need a place to park money. High yield savings accounts are still looking like a strong option, while a plethora of dividend funds and dividend stocks now look much more appealing than just a couple of months ago. Yield-sensitive sectors like REITs and utilities also have good outlooks.
FINSUM: The good news for investors is that short-term yields are still high, so it is not nearly as hard to get good yielding, low duration, investments as it was a few years ago.
Midcaps are perhaps the least loved of the market cap grouping. Small caps get a lot of attention, as do large and megacaps, but midcaps are a bit “neither here nor there”. That said, they offer some compelling opportunities, and today we will highlight some of those on the dividend front. Midcaps are generally good dividend payers, with 275 of the S&P MidCap 400 paying dividends. Five stocks to look at include: SABER (SABR), Manpower Group (MAN), Webster Financial (WBS), National Instruments (NATI), and j2Global (JCOM). All the shares pay 2% or more in dividend yield.
FINSUM: Megacaps seem to get the least love because they comprise some of the less exciting companies in the market and at first glance don’t seem to have the growth potential of small caps, or the momentum potential of large caps.