In the world of income investing, dividends reign supreme. Treasuries and CDs are offering historically low yields and are no longer considered the ultra-safe cash generators that they once were. #-ad_banner-#In previous issues of StreetAuthority Daily, I detailed the raw power of dividend investing (here) and taught you my method for finding these high yielders (here), but this isn’t the whole story. You see, there’s a little-known group of stocks that offer huge dividend payouts, but their yields are not displayed to the public on financial websites like Yahoo! Finance or Morningstar. This phenomenon… Read More

In the world of income investing, dividends reign supreme. Treasuries and CDs are offering historically low yields and are no longer considered the ultra-safe cash generators that they once were. #-ad_banner-#In previous issues of StreetAuthority Daily, I detailed the raw power of dividend investing (here) and taught you my method for finding these high yielders (here), but this isn’t the whole story. You see, there’s a little-known group of stocks that offer huge dividend payouts, but their yields are not displayed to the public on financial websites like Yahoo! Finance or Morningstar. This phenomenon is due to a glitch in the way the financial media reports certain companies’ financial information. We call this group of stocks “Hidden High Yielders.” And if you know where to look, you can find companies yielding three, six… even seven times more than the yield posted on financial websites. For Hidden High Yielders, their true payout is actually much higher because there are dozens of supplemental dividends that go unreported each quarter. But by “unreported,” I don’t mean some secret way of transferring cash to a select group of well-connected insiders. Read More

Right now, we’re facing one of the most challenging environments for income investors in history. #-ad_banner-#The average one-year CD yields just 0.28%. Yields on 20-year Treasuries have dipped below 2.5%. Even so-called high-yield “junk” bonds are paying just 6% — a far cry from what they once paid. Stocks aren’t much better, either. The average yield in the S&P 500 is only 1.9%. With rates like that, it would take you nearly 40 years to double your money, after accounting for inflation. And that’s only if the market… Read More

Right now, we’re facing one of the most challenging environments for income investors in history. #-ad_banner-#The average one-year CD yields just 0.28%. Yields on 20-year Treasuries have dipped below 2.5%. Even so-called high-yield “junk” bonds are paying just 6% — a far cry from what they once paid. Stocks aren’t much better, either. The average yield in the S&P 500 is only 1.9%. With rates like that, it would take you nearly 40 years to double your money, after accounting for inflation. And that’s only if the market doesn’t fall, which is never a guarantee. Of the 13,980 stocks listed on U.S. exchanges, a mere 166 yield 10% or above. And most of them are companies like Seadrill (NYSE: SDRL), which cut its dividend in 2012 and is down nearly 75% over the past 12 months. Don’t get me wrong. I’m not against dividends, CDs and the like. You’d probably be wise to have some money in them. I’m simply pointing out that market conditions have made it very difficult to produce sufficient income from these investments alone. Yet 99% of… Read More

When NXP Semiconductors (NASDAQ: NXPI) announced the takeover of Freescale Semiconductor (NYSE: FSL) at the beginning of the month, investors seemed more than a little pleased. Shares of FSL jumped 11.8%, while NXPI blasted 17.3% higher on news.  This was just the latest run in NXPI’s powerful advance that has seen shares more than double since my system signaled it was a “buy” in December 2013. The combined company will be the No. 1 automotive semiconductor supplier, and the merger also allows NXPI to diversify across other markets. Moreover, the $40 billion, nearly all-cash deal speaks to management’s… Read More

When NXP Semiconductors (NASDAQ: NXPI) announced the takeover of Freescale Semiconductor (NYSE: FSL) at the beginning of the month, investors seemed more than a little pleased. Shares of FSL jumped 11.8%, while NXPI blasted 17.3% higher on news.  This was just the latest run in NXPI’s powerful advance that has seen shares more than double since my system signaled it was a “buy” in December 2013. The combined company will be the No. 1 automotive semiconductor supplier, and the merger also allows NXPI to diversify across other markets. Moreover, the $40 billion, nearly all-cash deal speaks to management’s confidence in the health of its company and the industry. #-ad_banner-#​In this extremely low interest rate environment, cash-rich companies have been forced to find alternative methods to grow their money, which has helped spur M&A activity. From corporations to individuals, everyone is searching for better yields. Most investors focus on dividend yields, but there is another yield that is even more important that most investors overlook. I call it the “hidden yield,” and if you are ignoring it, you’re missing roughly half of the cash companies distribute to investors. NXPI doesn’t pay a dividend, yet it has a… Read More

  In the past 15 years, the obituary for the traditional “brick-and-mortar” retailer seems to have been written many times over. However, a decade-and-a-half later, online shopping only accounts for just 6%-7% of all retail sales.   #-ad_banner-#To be sure, e-commerce has clearly altered the face of retail, just not as expected. Rather than making physical store locations obsolete, an online presence has become a complementary part of the retail landscape. These days, the successful brick-and-mortar retailer is one that can deftly merge physical store and online operations to best serve customers and move inventory.   Few do this as… Read More

  In the past 15 years, the obituary for the traditional “brick-and-mortar” retailer seems to have been written many times over. However, a decade-and-a-half later, online shopping only accounts for just 6%-7% of all retail sales.   #-ad_banner-#To be sure, e-commerce has clearly altered the face of retail, just not as expected. Rather than making physical store locations obsolete, an online presence has become a complementary part of the retail landscape. These days, the successful brick-and-mortar retailer is one that can deftly merge physical store and online operations to best serve customers and move inventory.   Few do this as well as Nordstrom, Inc. (NYSE: JWN), a century-old high-end department store chain that is known for its top-notch customer service.   Though the company’s upscale image remains intact, it has evolved with the times. Today, Nordstrom Rack discount locations actually outnumber traditional Nordstrom department stores (167 to 119), while e-commerce paves the way for future growth.   Investors are clearly pleased: During the past three years, shares returned more than 57%, compared with a roughly 52% gain for the S&P 500. The outperformance of Nordstrom’s stock makes sense. During the past five fiscal years… Read More

Warren Buffett and many other top value investors have one simple rule: “Buy good stocks when they’re down.” These days, such investors should be giving a fresh look at Swiss pharmaceutical giant Roche Holding AG (OTC: RHHBY).   #-ad_banner-#The company’s stock has slid out of favor following unfavorable results from a pair of high-profile clinical trials last year.   One involved Roche’s experimental Alzheimer’s drug, Gantenerumab, which showed such low efficacy that the trial was stopped early. In the second trial, results were insufficient to extend indications for one of Roche’s existing breast cancer treatments, Kadcyla. Read More

Warren Buffett and many other top value investors have one simple rule: “Buy good stocks when they’re down.” These days, such investors should be giving a fresh look at Swiss pharmaceutical giant Roche Holding AG (OTC: RHHBY).   #-ad_banner-#The company’s stock has slid out of favor following unfavorable results from a pair of high-profile clinical trials last year.   One involved Roche’s experimental Alzheimer’s drug, Gantenerumab, which showed such low efficacy that the trial was stopped early. In the second trial, results were insufficient to extend indications for one of Roche’s existing breast cancer treatments, Kadcyla.   Since the results of the two trials were released in December, shares of Roche are down roughly 8%.   A significant drop in earnings last year, related to a transient spike in operating costs, have also helped turn investors against Roche.       However, it’s only a matter of time before the negative sentiment wears off. Once investors realize that Roche remains a leading provider of cancer drugs and that the company produces robust dividends, the share price could quickly recover.   Roche still has Herceptin, Avastin and Rituxan, a blockbuster trio used to treat breast,… Read More

Rock bottom interest rates have driven income-seeking investors away from bonds and toward dividend paying stocks.   #-ad_banner-#Trouble is, the shift has pushed stock prices much higher and their valuations are getting rich. Shares of the SPDRS S&P Dividend ETF (NYSE: SDY) increased more than 12% over the last year and trade for 20.7 times trailing earnings.   As an income investor, I fear that rising rates will dim the appeal of dividend-paying stocks. As investors start to again look to bond yields for safety, the appeal of that quarterly paycheck may not be enough to support valuations. Read More

Rock bottom interest rates have driven income-seeking investors away from bonds and toward dividend paying stocks.   #-ad_banner-#Trouble is, the shift has pushed stock prices much higher and their valuations are getting rich. Shares of the SPDRS S&P Dividend ETF (NYSE: SDY) increased more than 12% over the last year and trade for 20.7 times trailing earnings.   As an income investor, I fear that rising rates will dim the appeal of dividend-paying stocks. As investors start to again look to bond yields for safety, the appeal of that quarterly paycheck may not be enough to support valuations.   Fortunately, there is another side of the cash yield equation.   Nearly three-quarters of the companies in the S&P 500 repurchased their own shares in the third quarter of 2014. On a trailing twelve month basis ended September 2014, $567 billion in stocks was bought back. That represented an increase of 27% over the same period in 2013, bringing the buyback yield over 3% and nearly a full percent above the dividend yield.   Companies that repurchased shares over the 10 years to 2014 outperformed both the S&P 500 and companies that did not make repurchases, according to Factset… Read More

With the exception of energy, 2014 was a good year for nearly all of the major market sectors. Healthcare, utilities, technology, consumer staples and other groups have all logged healthy double-digit gains. But when you examine performance by market capitalization rather than by sector, a different story unfolds. Read More

As a value investor, I hate to overpay. That’s not just true of stocks, but pretty much anything else… tools, lawn equipment, you name it. My kids call that cheap, but they don’t really understand.  #-ad_banner-#The goal isn’t just to buy the cheapest option in any particular category. In some cases, I buy the top-of-the line model. What matters is the relationship between price (what you pay) and value (what you get). In short, I strive to get my money’s worth and maximize my returns.  But how do we determine value? Price… Read More

As a value investor, I hate to overpay. That’s not just true of stocks, but pretty much anything else… tools, lawn equipment, you name it. My kids call that cheap, but they don’t really understand.  #-ad_banner-#The goal isn’t just to buy the cheapest option in any particular category. In some cases, I buy the top-of-the line model. What matters is the relationship between price (what you pay) and value (what you get). In short, I strive to get my money’s worth and maximize my returns.  But how do we determine value? Price is right there in black and white, but value can be much harder to quantify. Usually, the best way to approximate what an asset is worth involves comparisons to similar items.  In real estate, home appraisals are based on comparisons to other properties of similar age and square footage in the surrounding neighborhood. And if you’re trying to assess the value of a pre-owned 2009 Honda Accord, there are resources to see what other buyers have paid for that particular make and model. Armed with this information, you have a much better idea of… Read More

But I’ve been very successful in this low-interest-rate environment. I’ve closed 85 straight winning trades in my Income Trader newsletter since its inception in February 2013. And I’m not talking about single-digit gains either. The average trade has provided an annualized return of 53%. #-ad_banner-#Before I get into how I was able to do this, I want to look at the risks income investors face today. I’m sure most traders are aware that when the Fed eventually raises rates, fixed-income investments like bonds will drop in value. But I’m not sure many… Read More

But I’ve been very successful in this low-interest-rate environment. I’ve closed 85 straight winning trades in my Income Trader newsletter since its inception in February 2013. And I’m not talking about single-digit gains either. The average trade has provided an annualized return of 53%. #-ad_banner-#Before I get into how I was able to do this, I want to look at the risks income investors face today. I’m sure most traders are aware that when the Fed eventually raises rates, fixed-income investments like bonds will drop in value. But I’m not sure many understand how much money they will actually lose on their investments. Many analysts expect the Fed to begin raising short-term rates sometime this year. By next summer, the market is predicting they could reach 1%, according to the rate implied by Fed funds futures.  A 1% increase doesn’t sound like much, but this small move could result in very large losses. Investors earning 2.4% in long-term Treasuries could see 17.6% of their principal disappear by next summer. That’s more than seven years’ worth of interest payments at the current yield.  I believe some income investors are taking on more risk… Read More

Most of the companies in the S&P 500 have now delivered Q4 results (with the exception of retailers), and insiders are free to buy and sell shares in their companies. This is the time in the quarter when insider buying and selling tends to cluster, because in a matter of weeks, a Q1-related “quiet period” will compel these insiders to cease their trading activities. #-ad_banner-#I tend to closely study the daily moves of insiders while it’s the active part of the quarter. First, I identify any massive clusters of coordinated selling. When a group of… Read More

Most of the companies in the S&P 500 have now delivered Q4 results (with the exception of retailers), and insiders are free to buy and sell shares in their companies. This is the time in the quarter when insider buying and selling tends to cluster, because in a matter of weeks, a Q1-related “quiet period” will compel these insiders to cease their trading activities. #-ad_banner-#I tend to closely study the daily moves of insiders while it’s the active part of the quarter. First, I identify any massive clusters of coordinated selling. When a group of insiders head for the exits at the same time, so should you. Such a bearish move often signals either tougher times ahead, or at least a fully valued stock. Second, I like to see which stocks hold buying appeal for insiders. Please note that I don’t consider a decision to exercise stock options and then retain shares as a form of insider buying, as some insider trackers do. Also, I often (but not always) ignore the move of major outside shareholders, even though their purchases can often portend a bullish move in a stock. I look at these investors, and… Read More