This “Barbell” Strategy Pays You 7.8%

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The Vanguard Dividend Appreciation ETF (VIG) is the largest and most popular dividend ETF on Wall Street. It boasts an amazing $60 billion in assets under management, and holds about 300 of the largest dividend stocks.

And it yields a miserable 2.1%.

That’s because, like many index funds, VIG weights stocks by size. That means companies like $450 billion drugmaker Johnson & Johnson (JNJ) and $1.8 trillion Big Tech icon Microsoft Corporation (MSFT) alone represent about 7% of the portfolio – even though they pay relatively light yields of 2.5% and 1.1%, respectively.

The false promise of index funds like the Vanguard Dividend Appreciation ETF is that you can “set it and forget it.”… Read more

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Nobody’s perfect. And in 2022, it’s particularly hard to pretend that you never make a losing trade as the market has been incredibly volatile through no fault of our own.

That said, there’s the old saying that the definition of insanity is doing something over and over but expecting different results. So if you have a habit of making bad trades, maybe the bigger problem isn’t the stock market… but your strategy.

One particularly risky strategy that I see some income investors cling to is the notion of placing a priority on yield above everything else. And like Captain Renault, these investors always seem to be shocked – shocked!… Read more

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With the market melting down, dividend stocks have built-in cushions. Unlike profitless tech shares, which rarely pay, our dividend payers’ yields go up when prices go down.

The result? Stronger price action for our favorite yield plays, thanks to attention from NASDAQ refugees.

But we need to be extra vigilant about dividend cuts. They, after all, provide a sickening “double whammy.” We lose our cash flow and some capital as the shares get repriced lower post-cut. And the drop can be even worse in panicked markets like today’s.

AT&T Investors Suffer Over and Over—From 1 Dividend Cut

AT&T (T) is a prime example.… Read more

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At some point, someone probably gave you the following investment “advice”—or some version of it:

“All you need to do to make money in stocks is buy a company with a big-name brand, sit back and let the gains roll in.”

Sounds logical, right? After all, a household name is critical if companies want to keep their millions of fanboys (and girls) hooked.

Well, not anymore. Here’s the proof.

Big Brands: Falling Left and Right

Just look at the worst performers last year: this rogue’s gallery was stuffed with companies boasting so-called “unbeatable” brand names.

Like General Electric (GE), whose banner ranks No.… Read more

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Let’s jump into the Kraft-Heinz (KHC) mess—because it tells us a lot about how to protect our nest egg from a Dumpster fire just like it in the future.

“Dumpster fire” is no exaggeration. KHC (which investors tend to buy for safety, remember) cratered 31% in a day on February 22, after slashing its dividend 36%.  Imagine what that would have done to your retirement portfolio (and hopefully you only have to imagine!).

Further on, we’ll smoke out three stocks (including one that pays an absurd 12.9% dividend) that could easily be the next Kraft-Heinz. If you hold them, the time to sell is now.… Read more

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The U.S. and China held another round of trade talks in Washington D.C. this week, ahead of the looming March 1 deadline for potential tariff increases. Trading activity was relatively quiet during the holiday-shortened week and the Nasdaq Composite Index ended an eight-session winning streak on Thursday.

Fed on Hold, Q4 GDP on Deck

Investors digested the minutes from the January FOMC meeting on Wednesday and Fed funds futures are now factoring in a 92% probability that the committee will take no action with interest rates in either direction in 2019.

Looking ahead to next week, Fed Chairman Powell will be on Capitol Hill on Feb.… Read more

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If rising rates and this whipsawing market have you wondering where to put your cash now, don’t worry: you’re not the only one.

The good news? I’ve got 5 perfect contrarian buys for you to snap up now.

Each of these 5 stocks is set to pull off something that’s proven to line shareholders’ pockets when rates spike: all 5 “outrun” rates by giving us a high dividend yield now or fast payout growth—and sometimes both in one buy!

More on these 5 smart rising-rate plays in a moment.

First, we need to talk about another group of stocks that might look like a great contrarian opportunity now, but is anything but.… Read more

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Even legends can lose their edge. This applies to acclaimed investors and dividend aristocrats alike.

2018 was an explosive news year that will be remembered for many reasons. But one thing that will go under the radar is how this year has been a turning point for numerous old-guard dividend stocks. These companies have been no-brainer holdings in countless retirement portfolios for years – in fact, chances are you hold one if not several of them.

I’m going to highlight five of these revered but poorly aging blue chips in a minute. But first, I want to show you the danger of avoiding warning signs, even in legendary investments.… Read more

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Lazy financial writers like to say that higher bond yields will hurt dividend stocks. This blanket statement may sound reasonable, but it’ll cost you money if you take it at face value.

Pundits have called sleepy dividend stocks like General Mills (GIS) “bond proxies” in recent years. GIS has paid 3% (more or less) over the last three years. That compared favorably with the 10-year note, which paid 2% (more or less) over that time period.

So, the story goes, investors had been buying stocks like GIS instead of safe bonds like Treasuries to scrape an extra 1% or so. But with Treasuries rallying to 3%, these same investors have “demanded” a higher yield from GIS.…
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A few weeks back, I revealed my proven 3-step process for a “do-it-yourself” 10% dividend yield.

I’ll sum it up for you in 5 words: buy stocks with “accelerating” dividends. That is, payouts that grow faster and faster every year.

It’s a double win!

Take Royal Caribbean Cruise Lines (RCL), a stock I focused on in a March 6 article (and still like today). Plenty of dividend investors look at RCL’s current dividend yield—a meager 2.0%—shrug and walk away.

Terrible move!

I’ll show you why in 2 charts … well, make that one chart with 2 different layers.

Let’s start with this one:

“Accelerating” Payout Drives a 500% Income Boost!
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