Large swings in the Dow Jones Industrial Average and other major market averages always seem to increase the level of fear in business news headlines. Here are some good ones we’ve seen in the past: “Panic selling returns to fragile markets” “Investors urged to avoid panic moves as markets plunge” “Chart shows the peak of U.S. investor panic today” #-ad_banner-#I don’t think these headlines truly reflect the attitude of most individual investors. Personally, I believe recent experience has taught many individual investors to take market pullbacks in stride. We’ve gone through two major bear markets in a little more than… Read More

Large swings in the Dow Jones Industrial Average and other major market averages always seem to increase the level of fear in business news headlines. Here are some good ones we’ve seen in the past: “Panic selling returns to fragile markets” “Investors urged to avoid panic moves as markets plunge” “Chart shows the peak of U.S. investor panic today” #-ad_banner-#I don’t think these headlines truly reflect the attitude of most individual investors. Personally, I believe recent experience has taught many individual investors to take market pullbacks in stride. We’ve gone through two major bear markets in a little more than 15 years, and both times the markets have recovered. In the middle of the last major recession, Warren Buffett — one of the world’s greatest investors — wrote an op-ed for The New York Times explaining why he was still buying stocks. It wasn’t because he thought the market had bottomed. In fact, he clearly stated that timing a bottom was not his intent (which was a good thing because he missed the mark by a number of months). Instead, Buffett was still buying stocks because they do well in the long term, even in the face of daunting headlines. Read More

We’ve received a lot of questions and comments from subscribers in the past few weeks. In general, most are centered on one idea: What to do about the volatility the market has experienced since the start of the year. These questions and concerns are understandable. After all, owning a solid investment does nothing for you if you can’t sleep at night. So I decided to address these questions by talking about an idea that many investors ignore all too often. #-ad_banner-#I’m talking about risk management.  You see, I can’t think of a single investor I know who’s better at managing… Read More

We’ve received a lot of questions and comments from subscribers in the past few weeks. In general, most are centered on one idea: What to do about the volatility the market has experienced since the start of the year. These questions and concerns are understandable. After all, owning a solid investment does nothing for you if you can’t sleep at night. So I decided to address these questions by talking about an idea that many investors ignore all too often. #-ad_banner-#I’m talking about risk management.  You see, I can’t think of a single investor I know who’s better at managing risk than my colleague Amy Calistri. This especially serves her well when it comes to her premium newsletter, The Daily Paycheck. At roughly 60 holdings across the portfolio, and with a mandate to use the power of dividend reinvestment to grow that portfolio into a robust income stream, it’s imperative that she watch each and every one of those holdings like a hawk. As Amy puts it, managing the risk in her portfolio is a far better use of her time than actually worrying about what’s going on in the world or in the… Read More

If you’re a regular reader of StreetAuthority, you know I love getting — and reinvesting — dividend paychecks. Simply put, my goal is to earn a paycheck every day of the month by owning a basket of solid income securities — and then grow the size of those paychecks by harnessing the power of compounding through dividend reinvestment. So far, the results have been very rewarding. From an initial $200,000 investment, I earned a total of $19,449 in dividends last year year (or $1,620 a month) using this strategy. And that doesn’t even include a penny from the healthy capital… Read More

If you’re a regular reader of StreetAuthority, you know I love getting — and reinvesting — dividend paychecks. Simply put, my goal is to earn a paycheck every day of the month by owning a basket of solid income securities — and then grow the size of those paychecks by harnessing the power of compounding through dividend reinvestment. So far, the results have been very rewarding. From an initial $200,000 investment, I earned a total of $19,449 in dividends last year year (or $1,620 a month) using this strategy. And that doesn’t even include a penny from the healthy capital gains I’ve made from most of my holdings over the years. #-ad_banner-#But as I said, you may have already heard this before. My goal today is to show you how to get the most out of your income investments using a simple yet effective three-part strategy. I call it the “Dividend Trifecta,” and it’s the cornerstone of my Daily Paycheck Retirement Strategy. The great thing about the Dividend Trifecta is that it’s fully customizable to your own needs. You can use it to multiply your wealth over time, preserve capital — even bring in a second income to fund your… Read More

Last week, I provided updates on three recommended stocks. Today, let’s follow suit with three of the income-oriented stocks I’ve recommended in recent months.  Emerson Electric (NYSE: EMR), which I recommended in this article, is a diversified electrical-equipment conglomerate that sells products and services in industrial process management, automation, climate control, network support, power technology, motors and construction and maintenance tools. The company markets its products in more than 150 countries. It’s been hurt by the oil and gas sector’s weakness; declining demand from China, Brazil and other emerging markets; and the strong dollar, which boosts relative prices of Emerson’s… Read More

Last week, I provided updates on three recommended stocks. Today, let’s follow suit with three of the income-oriented stocks I’ve recommended in recent months.  Emerson Electric (NYSE: EMR), which I recommended in this article, is a diversified electrical-equipment conglomerate that sells products and services in industrial process management, automation, climate control, network support, power technology, motors and construction and maintenance tools. The company markets its products in more than 150 countries. It’s been hurt by the oil and gas sector’s weakness; declining demand from China, Brazil and other emerging markets; and the strong dollar, which boosts relative prices of Emerson’s products for international buyers. #-ad_banner-#Emerson is unlikely to stage a strong earnings rebound until the oil and gas sector recovers. But analysts think that could happen this year, and in the meantime Emerson will muddle through just fine thanks to its strong market shares in myriad businesses. I also expect surprisingly good results from its electrical equipment used in the renewable energy industry. And as I wrote in December, with Emerson you get paid while you wait. Emerson shares yield 4.2%, supported by strong cash flows. The company has increased its dividend for 59 years in a row, a streak… Read More

After many years in the investment newsletter business, I’ve been fortunate enough to build quite a following — particularly in my premium income advisory, The Daily Paycheck. And one thing I’ve learned in this business is that even after personally spending countless hours researching income securities to recommend to my subscribers, sometimes the best recommendations come from the readers themselves. Back in May of last year, I encouraged my readers to submit the names of securities I didn’t already hold in my portfolio. I promised to research each and every one of them and then offer my take on whether… Read More

After many years in the investment newsletter business, I’ve been fortunate enough to build quite a following — particularly in my premium income advisory, The Daily Paycheck. And one thing I’ve learned in this business is that even after personally spending countless hours researching income securities to recommend to my subscribers, sometimes the best recommendations come from the readers themselves. Back in May of last year, I encouraged my readers to submit the names of securities I didn’t already hold in my portfolio. I promised to research each and every one of them and then offer my take on whether they were suitable candidates for the kind of dividend reinvestment strategy I use each month in my newsletter. #-ad_banner-#Many of my subscribers suggested the names of some great real estate investment trusts (known as “REITS”). If you’re not familiar with these investments, they’re tax-advantaged companies that own income-producing real estate assets — usually in the form of things like apartments, retail space, medical facilities or office buildings. And because they are legally required to pass along at least 90% of earnings to shareholders, they usually offer market-beating dividend yields for investors. But one REIT suggestion from a subscriber stood out… Read More

January was a volatile month in the market. The S&P 500 was down 5.1%, and we saw a number of daily swings — up and down — of 1% or more. If you ever wanted a test in risk tolerance, January has given you one. If you had a few sleepless nights, you might want to stick with less volatile securities going forward. Or you might want to sell the one or two holdings that have caused you the most worry. #-ad_banner-#I don’t like a down or volatile market any better than the next investor. But I’ve learned not to… Read More

January was a volatile month in the market. The S&P 500 was down 5.1%, and we saw a number of daily swings — up and down — of 1% or more. If you ever wanted a test in risk tolerance, January has given you one. If you had a few sleepless nights, you might want to stick with less volatile securities going forward. Or you might want to sell the one or two holdings that have caused you the most worry. #-ad_banner-#I don’t like a down or volatile market any better than the next investor. But I’ve learned not to worry about day-to-day gyrations. For one thing, the portfolio in my premium newsletter, The Daily Paycheck, isn’t as volatile as the market. So far, I’m only down 1.7% year-to-date. Sure, it’s not ideal, but it’s far better than what the overall market has done so far. That’s mostly due to the income that streams in on a regular basis. Dividend-paying securities act as a buffer against the bumps. I also know that, through dividend reinvestment, I’m continually adding shares at lower prices and higher yields. And that gives me a big advantage over the long term. That’s not to say… Read More

Many investors think in binary terms. Often times, that means when looking at a particular stock, they tend to distinguish between whether it is a “value” or “growth” stock.  Value investors like to focus on companies with low valuations — whether based on the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio or something similar. Growth investors, on the other hand, focus on things like earnings growth, expecting share price to follow profits higher. #-ad_banner-#There are many studies showing specific valuation tools can work — if we define “working” as delivering market-beating results over a long-enough time horizon. In other words, value… Read More

Many investors think in binary terms. Often times, that means when looking at a particular stock, they tend to distinguish between whether it is a “value” or “growth” stock.  Value investors like to focus on companies with low valuations — whether based on the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio or something similar. Growth investors, on the other hand, focus on things like earnings growth, expecting share price to follow profits higher. #-ad_banner-#There are many studies showing specific valuation tools can work — if we define “working” as delivering market-beating results over a long-enough time horizon. In other words, value investing often means you have to be patient through years of underperformance — a time horizon many growth investors don’t share.  But growth investing has its own caveats. For instance, a stock’s price can fall as quickly as it rose if a company’s growth slows or if a competitor bursts onto the scene.  Despite the seemingly stark contrast between value and growth investing, I tend to blur the lines between the two disciplines.  For instance, I often use the PEG ratio, which combines a company’s P/E ratio and its earnings per share (EPS) growth rate. The PEG ratio recognizes that… Read More

When I first heard this, I thought it sounded impossible. Many investors could be looking at 10% yields from a stock that yielded just 3% five years ago. How, you might ask? By not doing a single thing. #-ad_banner-#That’s right, by doing nothing more than buying the right stock, these investors could be collecting over $1,000 in dividends per year for just a $10,000 investment. That’s 54 times more than what a five-year bank CD pays today. And almost anyone can start collecting giant yields like this every year — all… Read More

When I first heard this, I thought it sounded impossible. Many investors could be looking at 10% yields from a stock that yielded just 3% five years ago. How, you might ask? By not doing a single thing. #-ad_banner-#That’s right, by doing nothing more than buying the right stock, these investors could be collecting over $1,000 in dividends per year for just a $10,000 investment. That’s 54 times more than what a five-year bank CD pays today. And almost anyone can start collecting giant yields like this every year — all from a single stock purchase. To be sure, there are dozens of stocks that could deliver equally high yields for investors. I’d be willing to bet that you’ve already invested in some of these companies. But before we talk about companies that can give you giant yields like these, I need to tell you one thing about this investment opportunity. And many investors won’t like it. In fact, some may hate it… As with any great goal, this one will take time to reach. Try… Read More

Investors fled the mortgage REIT space ahead of higher short-term borrowing costs and the end of the Federal Reserve’s purchases of mortgage-backed securities. But a look at how one high-yield mortgage REIT performed over the past two cycles of higher rates may indicate the worst is over. Annaly Capital Management (NYSE: NLY) is the largest publicly traded mortgage REIT. It invests mostly in government-sponsored and agency mortgage-backed securities.  Agency debt doesn’t pay as high a yield but carries an implicit guarantee by the government, so it involves almost no credit risk. That means the company is able to… Read More

Investors fled the mortgage REIT space ahead of higher short-term borrowing costs and the end of the Federal Reserve’s purchases of mortgage-backed securities. But a look at how one high-yield mortgage REIT performed over the past two cycles of higher rates may indicate the worst is over. Annaly Capital Management (NYSE: NLY) is the largest publicly traded mortgage REIT. It invests mostly in government-sponsored and agency mortgage-backed securities.  Agency debt doesn’t pay as high a yield but carries an implicit guarantee by the government, so it involves almost no credit risk. That means the company is able to borrow on extremely low short-term rates and lend on higher long-term rates. #-ad_banner-# The downside is that the interest spread is extremely low — just 0.76% in the third quarter. To increase profits, companies use debt many times the equity on their balance sheets. Annaly has significantly reduced its debt leverage over the past decade though. Its debt-to-equity ratio was as high as 9.8 in 2005 but fell to just 5.9 last year. This is well below the industry average of 8 times equity. Even if management decides to maintain a conservative balance sheet, it could still increase leverage to… 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