Displaying items by tag: yields

(New York)

Rates are rising, and with it, investors need to take a closer look at their portfolios. Rising rates can have serious effects on some dividend-focused sectors, such as utilities, REITs, or consumer discretionary, and most bonds. With that in mind, here is an ETF to help combat rising rates. One fixed income ETF built for the current rate environment is the iShares Interest Rate Hedged Corp Bd ETF (LQDH). What makes this ETF special versus others is that it is actively managed and has longer-term fixed income exposures, which stands in sharp contrast to the mostly short-term bonds these funds typically hold. It holds a 3.62% yield and charges 0.24% per year.

FINSUM: That seems a good expense ratio and yield given that this is an actively managed fund. Interest rate hedged ETFs seem like a good idea right now given the strong economy and increasingly hawkish Fed.

(Washington)

The market took a big hit yesterday following the Fed’s expected rate hike. However, it was not the rate hike itself that caused the problems, rather it was the Fed’s statement and its dot plot. The Fed removed the word “accommodative” (regarding its policy) from its statement, which combined with its more hawkish dot plot, got investors worried. The Fed funds rate is now higher than inflation for the first time in several years. Stock markets fell on the news, with the Dow dropping 0.4%.

FINSUM: The Fed getting more hawkish should make investors worried, as the more restrictive Fed policy becomes, the sooner (and more likely) a recession will arrive.

(New York)

Treasury yields stayed pinned for most of this year. For many months it seemed like they were stuck in the ~2.85% range. This raised some hopes that we might have reached the crest in this hiking and rate rise cycle. However, Treasury yields have jumped considerably higher lately, and are now sitting close to their seven-year high of 3.11% from May. Yields have been moving higher as the trouble in emerging markets and Italy has waned, making investors turn to more pro-risk investments.

FINSUM: Yields are going to move in line with macroeconomic movements, especially right now. If the trade war worsens, or starts to show signs of hurting EM economies, expect a big retreat in yields.

(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.

(New York)

Retirees are looking for dividend stocks that can pay them steadily and over the long term. The higher the yield, the better, but generally one wants stable underlying companies that are not going to spend too high a percentage of cash. With those factors in mind, here are three names to consider: Verizon (4.3% yield), master limited partnership MPLX (6.85%), and mining giant Rio Tinto (~6%).

FINSUM: Verizon seems like a good bet to us, and we expect they might raise the dividend given that it is at an all time low relative to AT&T.