In the past few weeks I’ve received emails from subscribers to my premium newsletter, The Daily Paycheck, who are worried about their energy and energy-related holdings. I’ve also heard from others who are wondering if beleaguered energy securities represent a buying opportunity. Just a year ago, West Texas Intermediate (WTI) crude oil was running at about $87 a barrel. But a strong U.S. dollar and concerns about a slowing Chinese economy have pushed the price of a barrel of WTI down to about $46 dollars. #-ad_banner-#All oil exploration and production company stocks have been hit hard. Their revenues… Read More

In the past few weeks I’ve received emails from subscribers to my premium newsletter, The Daily Paycheck, who are worried about their energy and energy-related holdings. I’ve also heard from others who are wondering if beleaguered energy securities represent a buying opportunity. Just a year ago, West Texas Intermediate (WTI) crude oil was running at about $87 a barrel. But a strong U.S. dollar and concerns about a slowing Chinese economy have pushed the price of a barrel of WTI down to about $46 dollars. #-ad_banner-#All oil exploration and production company stocks have been hit hard. Their revenues are directly impacted by the price of oil. This period of lower oil prices is probably less of a problem for large multinational companies such as ConocoPhillips and Exxon Mobil, which have strong balance sheets and good credit ratings. They are likely able to ride it out. But prolonged low oil prices could be a significant problem for small oil producers — and for investors who hold their stock or bonds. With revenues dropping, oil companies are paying out a higher percentage of their operating cash flow to service their existing debt. Just take a look at this chart from… Read More

​As someone who was taught as a kid to hate waste, I love efficiency. That means doing little things that enable me to run my household for less — and deposit the savings into my portfolio. I wouldn’t necessarily call it penny pinching, just a conscious effort to maximize the return from every dollar spent. As an investor, I look for managers with the same mindset because even minor improvements with multi-billion dollar organizations can mean a big difference on the bottom line. #-ad_banner-#​Take UPS (NYSE: UPS), for example. In an effort to increase efficiency, the… Read More

​As someone who was taught as a kid to hate waste, I love efficiency. That means doing little things that enable me to run my household for less — and deposit the savings into my portfolio. I wouldn’t necessarily call it penny pinching, just a conscious effort to maximize the return from every dollar spent. As an investor, I look for managers with the same mindset because even minor improvements with multi-billion dollar organizations can mean a big difference on the bottom line. #-ad_banner-#​Take UPS (NYSE: UPS), for example. In an effort to increase efficiency, the company has used technology to optimize delivery routes, calculating that a reduction of one mile per driver per day can save $50 million a year. You can’t get at the heart of this important concept by looking at familiar measures like operating margins and earnings. Those earnings must be placed in the proper context. Suppose there are two popular restaurant chains vying for a spot in your portfolio. One posted $515 million in net income last year, while the other earned $710 million. We can’t draw many conclusions from this information alone, except that the second business… Read More

In a world with zero-bound interest rates, excessive quantitative easing (QE) and free trade negotiations everywhere you look, it’s tough to imagine we are still on the brink of recession.  But if you ask any industrial company, especially any that sells its products globally, they might tell you we have already crossed that line. #-ad_banner-#Energy prices have put nearly 10% of the entire U.S. economy into a tailspin. For countries like Canada and Australia, which rely on exporting commodities, the situation is even more dire.  But what has really held back many companies here in the United States from growing… Read More

In a world with zero-bound interest rates, excessive quantitative easing (QE) and free trade negotiations everywhere you look, it’s tough to imagine we are still on the brink of recession.  But if you ask any industrial company, especially any that sells its products globally, they might tell you we have already crossed that line. #-ad_banner-#Energy prices have put nearly 10% of the entire U.S. economy into a tailspin. For countries like Canada and Australia, which rely on exporting commodities, the situation is even more dire.  But what has really held back many companies here in the United States from growing in such a lush monetary environment is the surging dollar. As you can see, the Dollar Index — which measures the strength of the U.S. dollar against a basket of other widely held currencies — the greenback is in high demand. The reason is simple.  Despite interest rates remaining at zero — which is likely to continue for some time — other countries have been participating in QE like the U.S. did over the last several years. Meanwhile, the Fed is still expected to raise rates as early as this year. That threat is enough for investors to… Read More

Do you DRIP? If not, then you may be falling behind the times — and your portfolio might be suffering the consequences. Don’t worry; DRIP isn’t the latest dance craze or some new millennial technobabble phrase. It stands for Dividend Reinvestment Plan, and they’ve been around for decades. But as my colleague Amy Calistri points out in a recent issue of The Daily Paycheck, too few investors take advantage of these plans. For the uninitiated, DRIPs began as a way for companies to offer shareholders a way to invest directly with them. That means no broker (or brokerage fees). You… Read More

Do you DRIP? If not, then you may be falling behind the times — and your portfolio might be suffering the consequences. Don’t worry; DRIP isn’t the latest dance craze or some new millennial technobabble phrase. It stands for Dividend Reinvestment Plan, and they’ve been around for decades. But as my colleague Amy Calistri points out in a recent issue of The Daily Paycheck, too few investors take advantage of these plans. For the uninitiated, DRIPs began as a way for companies to offer shareholders a way to invest directly with them. That means no broker (or brokerage fees). You can simply buy shares by enrolling online or by calling directly, and then the company will reinvest your dividends back into the stock for you. Many investors aren’t aware of such programs, because companies aren’t allowed to advertise them. But today, many online brokerages offer their own DRIP service, which negates the need to deal with a company directly. To counter this, some companies will even offer you a discount on the current share price as an added perk for being a loyal shareholder and dealing directly with them. So Amy did some digging to find stocks with DRIPs that… Read More

Shares of utility companies have been hit hard this year thanks to worries of an interest rate hike and the drop in energy prices, a key component in what utilities can charge. Companies in the formerly hot renewable energy space have been hit even harder in recent months. There is fear that cheap fossil fuels will hurt sales of alternative fuels while the high cost of developing these assets will eat into cash flows. One of the leading utility and renewable energy companies recently announced a plan to return a massive amount of cash to shareholders and dramatically reshape the… Read More

Shares of utility companies have been hit hard this year thanks to worries of an interest rate hike and the drop in energy prices, a key component in what utilities can charge. Companies in the formerly hot renewable energy space have been hit even harder in recent months. There is fear that cheap fossil fuels will hurt sales of alternative fuels while the high cost of developing these assets will eat into cash flows. One of the leading utility and renewable energy companies recently announced a plan to return a massive amount of cash to shareholders and dramatically reshape the company. Investors got spooked and dumped shares, but I’m buying in with a strategy to put even more cash in my pocket. A Cash Machine In A Protected Market NRG Energy (NYSE: NRG) is the largest independent power producer in the United States. It generates over 50 gigawatts of power primarily through oil, coal, gas and nuclear power, which it sells wholesale and to about 3 million residential customers across the country. The company also owns considerable capacity in renewable energy including solar, wind and thermal. Before I tell you more, I want to give you a little background on the… Read More

The bear market investors have been dreading is already here for many individual stocks. While the S&P 500 is down about 7% from the all-time high it achieved in May, roughly a fifth of the index’s components are well into bear territory, having plunged 20% or more from their peaks. #-ad_banner-#However, the selling has created value in many high-quality stocks, including some top dividend names with astonishingly long histories of rising payouts. A perfect example: the well-known replacement auto parts supplier Genuine Parts Co. (NYSE: GPC), with 59 straight years of dividend raises. The firm, best known for its NAPA… Read More

The bear market investors have been dreading is already here for many individual stocks. While the S&P 500 is down about 7% from the all-time high it achieved in May, roughly a fifth of the index’s components are well into bear territory, having plunged 20% or more from their peaks. #-ad_banner-#However, the selling has created value in many high-quality stocks, including some top dividend names with astonishingly long histories of rising payouts. A perfect example: the well-known replacement auto parts supplier Genuine Parts Co. (NYSE: GPC), with 59 straight years of dividend raises. The firm, best known for its NAPA stores, has seen its stock plummet nearly 25% from last December’s $109 peak. The selloff is an over-reaction to a relatively minor catalyst — a few quarters of mixed earnings reports stemming from strong dollar headwinds and transient bouts of inconsistent product demand. But this means one of history’s leading dividend aristocrats, a company that increases its dividend at least 25 consecutive years, is now attractively priced. How GPC Dominates In Auto Parts Last December, Genuine Parts was trading for around 23 times trailing 12-month earnings. Now the stock carries a much lower 18-times multiple,… Read More

For the past 40 years, this firm has become an elite source of income for investors, thanks in large part to the 543 consecutive monthly dividends it has paid. I’m willing to bet most of you have never heard of it. Yet the company I’m referring to has become the very definition of a monthly dividend-paying stock. It’s never missed a single one of its monthly dividends since 1969, shelling out more than $3.5 billion to shareholders during its 40+ year run. And that payout has increased 81 times during that span as well. I’m talking about Realty Income Corp… Read More

For the past 40 years, this firm has become an elite source of income for investors, thanks in large part to the 543 consecutive monthly dividends it has paid. I’m willing to bet most of you have never heard of it. Yet the company I’m referring to has become the very definition of a monthly dividend-paying stock. It’s never missed a single one of its monthly dividends since 1969, shelling out more than $3.5 billion to shareholders during its 40+ year run. And that payout has increased 81 times during that span as well. I’m talking about Realty Income Corp (NYSE: O). Despite this impressive and consistent track record, you may be wondering why you’ve never heard of the company before. That’s because Realty Income is a real estate investment trust (REIT).  The average investor on the street has probably never heard of this lucrative asset class, but it’s exactly the kind of off-the-radar investment I look for to deliver market-beating income in my premium advisory, High-Yield Investing.  You see, thanks to their unique structure, REITs are obligated by law to pass along 90% of their income to investors — in the form of dividends.  That means a company like… Read More

In last week’s article issue, I detailed the first part of my two-part income strategy (if you missed that issue you can read it here). In simple terms, my strategy helps you collect extra payments from some of the best stocks on the market — in addition to dividends and capital gains. What’s more, the payments start arriving within a day or two of buying the stock… and are often much bigger than a dividend payment. My strategy, which involves selling covered calls, is one of the most basic options strategies around, making it easy for anyone to do. However, there… Read More

In last week’s article issue, I detailed the first part of my two-part income strategy (if you missed that issue you can read it here). In simple terms, my strategy helps you collect extra payments from some of the best stocks on the market — in addition to dividends and capital gains. What’s more, the payments start arriving within a day or two of buying the stock… and are often much bigger than a dividend payment. My strategy, which involves selling covered calls, is one of the most basic options strategies around, making it easy for anyone to do. However, there are certain times when this strategy works better than others. Likewise, there are certain stocks that are better to use this strategy with. That’s why I’ve developed a series of indicators that tell me when it’s time to pull the trigger on a particular company. For example, one of my special indicators lets me know if a stock is undervalued. I call it my “magic” number. It is much more useful for determining whether a stock is undervalued than popular valuation metrics like the price-to-earnings (P/E) ratio and price-to-sales (P/S) ratio. When the magic number is less than 1.0, it… Read More

The stock market’s recent swoon has created buying opportunities in several sectors, including one sector all income investors should be watching: utility stocks. Because they are sensitive to movements in short-term interest rates, utility stocks have been subject to a double whammy: not only the correction in the overall U.S. market, but also the hardening consensus that the Federal Reserve Board will raise short-term rates in the coming months.  #-ad_banner-#Rising interest rates are Kryptonite to utility stocks because as regulated businesses, they tend to reward shareholders with above-average dividend yields — funded by reliable cash flow from customers — rather… Read More

The stock market’s recent swoon has created buying opportunities in several sectors, including one sector all income investors should be watching: utility stocks. Because they are sensitive to movements in short-term interest rates, utility stocks have been subject to a double whammy: not only the correction in the overall U.S. market, but also the hardening consensus that the Federal Reserve Board will raise short-term rates in the coming months.  #-ad_banner-#Rising interest rates are Kryptonite to utility stocks because as regulated businesses, they tend to reward shareholders with above-average dividend yields — funded by reliable cash flow from customers — rather than above-average capital gains. When interest rates rise, bonds and other fixed-income investments become more attractive relative to utility stocks. In addition, rising interest rates mean higher costs of capital for utilities, which need to make significant capital expenditures in their own infrastructure (e.g., new power plants). Fed Chair Janet Yellen has stated several times that interest rates are likely to rise this year — a stance she confirmed as recently as last week. Why, then, is this a good time to pick up shares of high-quality utilities? I see two reasons. Rate Fears Have Already Discounted These Stocks —… Read More

I’ll be honest… the key to earning a lasting (and growing) stream of income isn’t rocket science. I’d venture that you already know about this trick. But it’s my experience that while most investors know how to create lasting dividend income, few actually follow through to make it a reality.  There is a well-known way that you can stretch your investment — even if it starts as a single share — to where it can eventually more than provide for any needs you might have. Unfortunately, it’s my experience that not too many investors take advantage. The Secret to Lasting… Read More

I’ll be honest… the key to earning a lasting (and growing) stream of income isn’t rocket science. I’d venture that you already know about this trick. But it’s my experience that while most investors know how to create lasting dividend income, few actually follow through to make it a reality.  There is a well-known way that you can stretch your investment — even if it starts as a single share — to where it can eventually more than provide for any needs you might have. Unfortunately, it’s my experience that not too many investors take advantage. The Secret to Lasting Income So how can you make your investment — no matter how small initially — turn into something that you can actually afford to live on? Simple: Reinvest its dividends. I know. It’s not groundbreaking. But are you actually doing it? Unless you absolutely need the cash now, reinvesting is invaluable. Dividends are one of the most powerful wealth-building tools in an investor’s arsenal because of the phenomenon of compounding. By reinvesting your dividend checks (instead of cashing them), you can buy more shares, which lead to even larger dividend checks. These larger checks can then be used to… Read More