There were 4 million children born in 1991, which was squarely in the middle of a surge in birth rates that began in the early 1980s and continued clear through the Y2K era. Of course, we refer to the offspring of this era as “millennials”. Those children are now turning age 25 at the rate of 4 million per year, or about 77,000 per week. This is the prime age for settling into a career and beginning a family. #-ad_banner-#​Millennials aren’t often portrayed in the media as hardworking and industrious — more like starry-eyed… Read More

There were 4 million children born in 1991, which was squarely in the middle of a surge in birth rates that began in the early 1980s and continued clear through the Y2K era. Of course, we refer to the offspring of this era as “millennials”. Those children are now turning age 25 at the rate of 4 million per year, or about 77,000 per week. This is the prime age for settling into a career and beginning a family. #-ad_banner-#​Millennials aren’t often portrayed in the media as hardworking and industrious — more like starry-eyed dreamers at a Bernie Sanders campaign rally. But make no mistake: it’s only a matter of time before millennials control most of the nation’s wealth. Within the next seven years, this generation will comprise more than half of the U.S. workforce. And by the time my son reaches age 25 in 2028, tens of millions of millennials will have reached their peak earning years. At that point, they will be taking home a projected $8 trillion in annual net income, according to Merrill Lynch. Where will they be spending all that cash? Discover the… Read More

I have a feeling that some growth-oriented readers out there might groan a little at this stock pick. But in my experience, some of the most successful investments come from “boring” industries that may not be all what they appear. In today’s fast-paced digital world, the mundane money transfer business seems so last century. Who even carries cash anymore, right? #-ad_banner-#To some, this service is about as relevant as a telegram. That argument is largely true here in the United States. But Western Union (NYSE: WU) serves customers in 200 countries — 199 of… Read More

I have a feeling that some growth-oriented readers out there might groan a little at this stock pick. But in my experience, some of the most successful investments come from “boring” industries that may not be all what they appear. In today’s fast-paced digital world, the mundane money transfer business seems so last century. Who even carries cash anymore, right? #-ad_banner-#To some, this service is about as relevant as a telegram. That argument is largely true here in the United States. But Western Union (NYSE: WU) serves customers in 200 countries — 199 of which are not the United States. And while cash may no longer be fashionable in New York or Los Angeles, it’s still the preferred means of exchange in cities like Johannesburg, South Africa, and Mumbai, India. Here’s what is happening. There is a planet-wide population shift of workers moving from poor countries to wealthier ones in search of higher pay. Odds are, you have probably crossed paths with one of these transplants. My wife has one co-worker from Bosnia and another from Nepal. I recently met a young sales person who had traveled all… Read More

What’s better, a stock that appreciates 7% over the next year along with a 3% dividend yield, or one that appreciates 3% and yields 7%?  Tax implications aside, there isn’t much difference. Both will give you a total return of about 10%. If anything, option two would be preferable, as it throws off income more quickly and would net a slightly higher return when factoring in dividend reinvestment.  #-ad_banner-#But when it comes to popular valuation metrics, all the focus is on the growth side of the equation, while income is all but forgotten. So investors that rely on these yardsticks… Read More

What’s better, a stock that appreciates 7% over the next year along with a 3% dividend yield, or one that appreciates 3% and yields 7%?  Tax implications aside, there isn’t much difference. Both will give you a total return of about 10%. If anything, option two would be preferable, as it throws off income more quickly and would net a slightly higher return when factoring in dividend reinvestment.  #-ad_banner-#But when it comes to popular valuation metrics, all the focus is on the growth side of the equation, while income is all but forgotten. So investors that rely on these yardsticks will be inclined to buy the stock that is poised to grow 7% and overlook the one that is poised to grow just 3%.  That can lead to missed opportunities. Earnings growth usually translates into a rising share price over time. And generally speaking (although there are certainly exceptions), companies that return most of their excess profit through dividends will have slower growth than companies that pump their profits back into the business.  So let’s rewind back to the beginning on the two stocks above. Let’s suppose the first stock had projected earnings growth of 10%, while the second had… Read More

I love to read stories about the rise and fall of business ventures. Not only are they entertaining, but these case studies can also reveal some important investing insights.  One in particular that has stuck with me over the years is the tale of Greyhound Bus Lines. Back in 1994, the transportation company was running on fumes. It had recently made the difficult decision to raise fares, which didn’t sit well with customers. Passenger volume was declining sharply, taking a heavy toll on revenues and earnings.  #-ad_banner-#Even more troubling, there was an ongoing feud between management and labor. Bus drivers… Read More

I love to read stories about the rise and fall of business ventures. Not only are they entertaining, but these case studies can also reveal some important investing insights.  One in particular that has stuck with me over the years is the tale of Greyhound Bus Lines. Back in 1994, the transportation company was running on fumes. It had recently made the difficult decision to raise fares, which didn’t sit well with customers. Passenger volume was declining sharply, taking a heavy toll on revenues and earnings.  #-ad_banner-#Even more troubling, there was an ongoing feud between management and labor. Bus drivers had already walked off the job a few years earlier in a lengthy strike. The two sides eventually reached a delicate agreement, but tensions were starting to flare again.  These issues created quite a bit of anxiety for investors. But the market really panicked when credit rating agency Standard & Poor’s downgraded the firm’s debt to “CCC,” a level indicating high risk of default and bankruptcy. Greyhound shares plummeted as low as $1.50, and the outlook was grim. About that same time, a small group of investors dug into the financial statements and saw something that the crowd had missed… Read More

I’ve said it before, but it bears repeating. There are only two ways to increase a stock’s dividend yield: either raise the payout (which takes time) or decrease the share price (which can happen with lightning speed).  While everyone loves the former, they tend to despise the latter. That’s understandable if the stock is retreating because of a material change that might pose a serious threat to earnings. But in many cases, the fundamentals are sound and then stock is simply moving along with the broad market current.  #-ad_banner-#The S&P 500 has dropped more than 8% just since January 1. Read More

I’ve said it before, but it bears repeating. There are only two ways to increase a stock’s dividend yield: either raise the payout (which takes time) or decrease the share price (which can happen with lightning speed).  While everyone loves the former, they tend to despise the latter. That’s understandable if the stock is retreating because of a material change that might pose a serious threat to earnings. But in many cases, the fundamentals are sound and then stock is simply moving along with the broad market current.  #-ad_banner-#The S&P 500 has dropped more than 8% just since January 1. The overwhelming majority of stocks have fallen by more than 20% over the past three months.  So that $20 stock with the $0.50 per share annual dividend is now a $16 stock. Suddenly, what was once a 2.50% dividend yield is now a stronger 3.12%. We could get the same increase in yield if the dividend rose from 50 cents to 62 cents. But even at a healthy 10% annual pace, that would still take more than two years.  Though we hate it, the falling share price got us to that goal much more quickly. There’s also the added benefit… Read More

The story I’m about to share with you today is one I’ve shared with my High-Yield Investing premium subscribers before. But I think it bears repeating, because something big and entirely unexpected happened a couple of weeks ago, and few investors noticed. And to put it simply, the implications could be huge for many income investors. #-ad_banner-#But more on that in a moment… The day before Thanksgiving in 1996, Rich Kinder left his post at Enron. He was disappointed that Kenneth Lay had passed him over for the CEO job. Soon after, an old college buddy, Bill Morgan, approached Kinder… Read More

The story I’m about to share with you today is one I’ve shared with my High-Yield Investing premium subscribers before. But I think it bears repeating, because something big and entirely unexpected happened a couple of weeks ago, and few investors noticed. And to put it simply, the implications could be huge for many income investors. #-ad_banner-#But more on that in a moment… The day before Thanksgiving in 1996, Rich Kinder left his post at Enron. He was disappointed that Kenneth Lay had passed him over for the CEO job. Soon after, an old college buddy, Bill Morgan, approached Kinder with a business proposition. Morgan had just bought some assets Enron had no use for: a couple of small pipeline systems and a coal terminal. He needed someone like Kinder to run the business. Kinder agreed, and the partnership was christened Kinder Morgan Inc. in February 1997. Kinder doubled the company’s market capitalization to nearly half a billion dollars by watching costs and shipping more volume through the pipelines. He did all of that in just seven months. Today, Kinder Morgan Energy Partners (NYSE: KMI) is a $35 billion business, operating more than 80,000 miles of pipeline and roughly 180… Read More

The world is on high alert for terror after the savage attacks in Paris that left 130 people dead and many others injured. This terrible act reminds us that there are more important things than money. Yet, I fear that terrorism itself is becoming a wild-card factor that all investors must weigh and consider. #-ad_banner-#Before Paris, ISIS claimed responsibility for taking down a Russian passenger jet returning from Egypt. Investigators combing through the wreckage discovered evidence of a bomb. And there has since been another attack within the past few days by al-Qaeda that left dozens dead at a Radisson… Read More

The world is on high alert for terror after the savage attacks in Paris that left 130 people dead and many others injured. This terrible act reminds us that there are more important things than money. Yet, I fear that terrorism itself is becoming a wild-card factor that all investors must weigh and consider. #-ad_banner-#Before Paris, ISIS claimed responsibility for taking down a Russian passenger jet returning from Egypt. Investigators combing through the wreckage discovered evidence of a bomb. And there has since been another attack within the past few days by al-Qaeda that left dozens dead at a Radisson Hotel in Mali. There have been other recent attacks in Nigeria, Denmark, Lebanon and Turkey. I don’t know what will happen in the days and weeks ahead. I would like to think that the worst is over. We all would. But common sense says otherwise. By all accounts this jihadi cancer is spreading, and it’s far more likely that the United States and other western nations will be drawn into further conflict. Normally, I would be talking to you about economic or financial matters today. To be sure, I’d much rather be discussing employment reports or factory orders. But my… Read More

We are nowhere near April 15th on the calendar. Still, for millions of taxpayers seeking to limit their liability this spring, the clock is ticking. The deadline to close out trades that went south to deduct capital losses is December 31.  Given the natural inclination of procrastinators to wait until the last minute, there is always a flurry of activity as millions of investors dump their losers in the final weeks of the year. Institutional mutual fund managers are also busy removing laggards and adding winners to window dress their portfolios.  #-ad_banner-#This doesn’t do much for performance — it is… Read More

We are nowhere near April 15th on the calendar. Still, for millions of taxpayers seeking to limit their liability this spring, the clock is ticking. The deadline to close out trades that went south to deduct capital losses is December 31.  Given the natural inclination of procrastinators to wait until the last minute, there is always a flurry of activity as millions of investors dump their losers in the final weeks of the year. Institutional mutual fund managers are also busy removing laggards and adding winners to window dress their portfolios.  #-ad_banner-#This doesn’t do much for performance — it is purely a cosmetic enhancement right before annual reports go out. So many stocks that struggle during the year are beaten down even further in December. Once the loss is harvested, the proceeds usually rotate back into the market shortly after, sometimes into the same stocks, as investors anticipate a rebound. Aside from tax harvesting in December and reinvesting in January, many workers also plow year-end bonuses into their accounts shortly after the New Year begins. All of this means that January is typically a good month for inflows into stocks and equity mutual funds. In fact, market observers as far… Read More

According to the U.S. Department of Labor, the economy added 211,000 jobs for the month. That’s good growth right on the heels of October’s job report, which, at 298,000 jobs for the month, was the strongest job creation this year, shattering estimates for around 180,000.  This is just one report. Still, when taken with other indicators such as job postings and unemployment claims, the big picture suggests a labor market that is firmly on the mend. The unemployment rate has fallen to 5.0%, the lowest level since April 2008. I should note that this figure doesn’t reflect the number of… Read More

According to the U.S. Department of Labor, the economy added 211,000 jobs for the month. That’s good growth right on the heels of October’s job report, which, at 298,000 jobs for the month, was the strongest job creation this year, shattering estimates for around 180,000.  This is just one report. Still, when taken with other indicators such as job postings and unemployment claims, the big picture suggests a labor market that is firmly on the mend. The unemployment rate has fallen to 5.0%, the lowest level since April 2008. I should note that this figure doesn’t reflect the number of people on the sidelines that have stopped trying to look for work. The labor force participation rate of 62.4% is still the lowest in 38 years. But after a summer lull, recent strong job growth is an encouraging sign. Even better, average hourly wages have also ticked up by $0.09 (or 2.5%) to $25.50 per hour. It’s been a long time since we’ve seen any upward pressure on wages.  The main upshot of this is the U.S. Federal Reserve now has a stronger argument in favor of lifting interest rates at the December meeting. Based on testimony from Chair Janet… Read More

I get a lot of questions each month from subscribers to my premium income newsletter, High-Yield Investing. With such a devoted following, I make it a point to read every single message. And every once in a while, I’ll come across a question from a subscriber that I think is worth sharing. #-ad_banner-#The following came across my desk from a subscriber, Megan P. from Phoenix, asking whether the strong dollar would present some attractive opportunities for investors. Q: Are there any high-quality dividend payers temporarily hurt by the strong U.S. dollar that could be attractive turnaround candidates? Here was my… Read More

I get a lot of questions each month from subscribers to my premium income newsletter, High-Yield Investing. With such a devoted following, I make it a point to read every single message. And every once in a while, I’ll come across a question from a subscriber that I think is worth sharing. #-ad_banner-#The following came across my desk from a subscriber, Megan P. from Phoenix, asking whether the strong dollar would present some attractive opportunities for investors. Q: Are there any high-quality dividend payers temporarily hurt by the strong U.S. dollar that could be attractive turnaround candidates? Here was my answer… Yes, there are some strong turnaround candidates that have taken a hit recently, and I’m tracking a few of them for my portfolio. For some background, the strong dollar has been a thorn in the side of many large multinational companies over the past few quarters. A stronger greenback not only makes exported goods less competitive overseas, but also erodes the value of sales conducted in foreign markets when revenues denominated in yen, euros and rubles are converted back into dollars. One such opportunity is Genuine Parts Company (NYSE: GPC). This specialty retailer is best known for… Read More