Dividends

  • 30 Mar
    Looking For Dividend Yielders Abroad

    Looking For Dividend Yielders Abroad

    • The 1.92% dividend yield offered by the S&P 500 is ranked 32nd out of 39 countries.
    • It isn’t difficult to find blue chip companies globally that have dividend yields north of 4%.
    • Currency fluctuations should be a benefit if you respond in a smart way.

    Introduction

    Yesterday we discussed how high dividend yielders can easily turn into a trap because the dividends are unsustainable and depend on uncontrollable variables like commodity prices or interest rates.

    A global look will show us that there are good companies around the world that offer higher dividend yields for the same risk. These companies are found in countries with better demographics and higher economic growth, which should strengthen their local currencies and increase future dollar dividends. More →

  • 29 Mar
    Are High Dividend Yields Worth It?

    Are High Dividend Yields Worth It?

    • High dividend yielders are worth it if you know what you’re doing, i.e. you know the sector in detail and understand the macro environment. However in most cases, high yielders are traps with a high risk of permanent capital loss.
    • Less risk can be obtained by investing in dividend aristocrats. Most are fairly priced or overpriced, but some still pay nice dividends. The complete list is provided.
    • As always, I would look abroad for yield. The dollar is currently strong which makes such investments cheap. A currency reversal will give you higher yields in the future.

    Introduction

    Dividend investors have really enjoyed the last three decades as interest rates have been declining. Lower interest rates make stocks that pay stable dividends more attractive while also enabling management to use more leverage to increase those dividends.

    You can read more about what to expect from the dividend world here. However, low interest rates also push the price of stable dividend yielders into the sky making new investments less attractive. More →

  • 22 Mar
    Here’s What You Need To Know If You’re Counting On Dividend Income

    Here’s What You Need To Know If You’re Counting On Dividend Income

    • I’ll analyze the dividend environment by describing the risk reward scenario for dividend income investors.
    • The ‘monthly dividend company’ will still remain so, but you’ll be able to buy it at a 30% off, or even cheaper.
    • Whatever you’re doing, just don’t chase yields as that is the fastest way to lose a lot of money in this market.

    Introduction

    What dividend investors don’t like is uncertainty, especially uncertainty related to their dividend income. Nevertheless, uncertainty is exactly the feeling many investors have in this environment, not because of the market as the indexes are constantly breaking records, but because there is a certain feeling in the air that things might soon change and nobody knows how the financial world will look afterward. More →

  • 15 Jan
    Sunday Edition: A Deep Dive On High Dividend-Paying Stocks

    Sunday Edition: A Deep Dive On High Dividend-Paying Stocks

    As you know, dividends are one of the primary points of focus of the Rebel Income and Retirement Revival investing systems. I’ve written in the past about why I think dividends should be an intrinsic part of a successful income generation system, and why dividend-paying stocks generally have a stronger fundamental profile than stocks that don’t pay a dividend. I’m calling today’s article a “deep dive” because I’ve noticed a lot of buzz in the media lately about high-dividend stocks. There’s a real temptation to focus on stocks paying the highest dividends possible, but the truth is that sometimes that high dividend is really a warning sign of risks that you need to be aware of. More →

  • 01 Jan
    Sunday Edition: Pitfalls & Risks Of Chasing Yields

    Sunday Edition: Pitfalls & Risks Of Chasing Yields

    When the purpose of your investments is to generate useful income, it’s natural to look around at all of the different investment vehicles available to you to find the highest yield for your dollar. The problem is that in today’s economic environment, investment yields work much differently than they did 20 or 30 years ago. More →

  • 29 Dec
    Is Your Value Being Destroyed? Sven Tells You How To Spot It

    Is Your Value Being Destroyed? Sven Tells You How To Spot It

    • Buybacks and dividends continuously exceed earnings creating a financialized corporate environment and leaving less money for innovation and investments.
    • Such a situation isn’t sustainable in the long term.
    • We’ll close with an example of somebody willing to spend $21.5 billion of shareholders’ money to increase his salary by a few million.

    Introduction

    The end of each quarter is an excellent time to analyze what’s going on with buybacks and dividends. FactSet’s comprehensive analysis of quarterly buybacks and dividends for the S&P 500 is a great place to start.

    It’s of extreme importance to know what it is that management is doing with your money and if they are increasing or decreasing shareholder value. Today, we’ll analyze the situation and give you a few hints to enable you to easily analyze if the managers of the stocks you own add or subtract value with dividends and buybacks. More →

  • 11 Dec
    Sunday Edition: Pigs Get Fat – Hogs Get Slaughtered

    Sunday Edition: Pigs Get Fat – Hogs Get Slaughtered

    The saying I’m using for today’s headline gets used in a lot of different settings, so the odds are pretty good that just about everybody has heard it at one time or another. When I started to learn about directional, short-term trading strategies like swing and trend trading, I had this idea drilled into my head to reinforce the mindset that acting quickly on exit signals, especially if I was profitable, was far better than waiting on the mere hope the stock might keep moving in my favor and give me a bigger profit. It was useful to me then because it helped me start to learn and develop the discipline to disconnect my emotions as much as possible from the investments I made. More →

  • 09 Dec
    Check Your Dividend Yielders Before It’s Too Late

    Check Your Dividend Yielders Before It’s Too Late

    • Higher interest rates will increase required returns while higher debt costs will lower available cash for dividends.
    • However, things vary extremely among sectors so check your portfolio stock by stock.
    • The current 5% shareholder yield is unsustainable with aggregate earnings yielding 3.93%.

    Introduction

    Things are changing!

    We have been enjoying a period where yielders were in high demand as interest rates declined. However, there are two things that will have a severe impact on dividends and asset prices. The first is that low interest rates enabled companies to take on more debt and increase their return to shareholders while keeping their interest expenses low. The second is that with the Fed about to increase interest rates and the yield on the 10-year treasury note up 75% from its July low, the value of your dividend yielders is also about to collapse because stocks simply carry more risk than treasuries. More →

  • 16 Oct
    Sunday Edition: Is The Oil Market Doomed Or Is There A Deep Long Term Value Play?

    Sunday Edition: Is The Oil Market Doomed Or Is There A Deep Long Term Value Play?

    Four safe companies yielding 3% – 6% revealed below.

    It’s essential to understand that fundamental value will be only one of the factors determining a security’s price on the day you buy it. Try to have psychology and technicals on your side as well.

    – Howard Marks

    In my opinion, Howard Marks of Oaktree Capital is one of the savviest contrarian investors on Wall Street. It is in the spirit of trying to put the fundamentals, psychology, and technicals on your side that I’m sharing this series on the Elliott Wave Theory. More →

  • 10 Oct
    You Might Want To Sell Your Dividend Yielders…

    You Might Want To Sell Your Dividend Yielders…

    • Fundamentals aren’t the reason behind your dividend yielders’ excellent performances.
    • Yields have marginally increased and the impact on dividend stocks is significant.
    • Do you think about risk when thinking about dividend income?

    Introduction

    A chase for yields has pushed the price of dividend yielding stocks to extreme levels.

    Looking at the S&P 500 Low Volatility High Dividend Index—which tracks the performance of the 50 least-volatile high dividend-yielding stocks in the S&P 500—you can see it has almost been a four bagger (3.7x) since the Great Recession, growing from 1,720 points to its current 6,395 points. More →