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The Best ETFs for Yield-Starved Investors

The following first appeared on InvestorPlace.com as The 10 Best ETFs to Buy for Yield-Starved Investors 

Call it the tyranny of choice, but investors looking for income via dividend exchange-traded funds have almost too many options to choose from these days. A simple screen returns nearly 200 dividend-focused ETFs. But in a list that long, how do go about finding the best ETFs?

Do you simply narrow the list to high-yield ETFs? Or do you try to find a balance between current yield and the potential for growth? And what about international or sector diversification?

It’s hard to believe that the Federal Reserve has been raising rates for nearly two years now. After all, savings and money market accounts still yield next to nothing, and even the 10-year Treasury barely yields 2.4%. It’s still a rotten market out there for yield-hungry investors … which explains why dividend ETFs keep sprouting up like weeds.

Today, we’re going to narrow the list down to 10 of the best ETFs for investors looking for income. This list will include both high-yield ETFs and dividend-growth ETFs, as well as targeted sector and international plays. Diversification is important here, as high-yield ETFs can react very differently than dividend-growth ETFs to changes in bond yields or to Fed policy.

With a new Fed Chairman taking office early next year, there is a little more uncertainty than usual, and we want to be prepared.

So, with no further ado, here are 10 of the best ETFs for investors looking for income.

I’ll start with the granddaddy of dividend ETFs, theiShares Select Dividend ETF (DVY). Dividend investing really came back into style following the bursting of the tech bubble and the 2000-2002 bear market, and the iShares fund was the first ETF to jump on that trend. DVY started trading in late 2003.

DVY tracks the Dow Jones U.S. Select Dividend Index, which is composed of 100 of the highest-yielding stocks in the Dow Jones U.S. Index, excluding REITs. In order to make the cut, a stock has to have had dividend growth over the past five years and must have an average dividend coverage ratio of at least 167% over the past five years. The stocks should also have positive earnings over the past 12 months and should have a market cap of at least $1 billion with an average daily trading volume of at least 200,000 shares. The goal is to limit the selection to high-quality companies that are unlikely to slash their dividends any time soon.

DVY sports a current dividend yield of 3%. That might not be exceptionally high, but its more than 50% higher than the S&P 500 these days.

To read the rest of the article, please see The 10 Best ETFs to Buy for Yield-Starved Investors 

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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Monthly Dividend Stocks for Income You Can Count On

The following first appeared on Kiplingers.com as 7 Monthly Dividend Stocks for Income You Can Count On

Cash management can be one of the biggest challenges in retirement. Your bills – everything from your mobile phone service to your rent or house payment – come on a monthly cycle. When you work, and get paid every month or two weeks, that isn’t a problem. But once you retire, it can get a lot more complicated.

Sure, your Social Security payment comes monthly. But your dividend stocks generally only pay out quarterly, and bond coupon payments are typically only twice per year. This can cause your cash flows to be lumpy, which can make planning difficult. And frankly, when you’re retired, you do not want to plan cash flow with your free time. That’s what your working years were for.

This is where monthly dividend stocks come in handy.

A monthly dividend calendar better aligns with your living expenses. But the benefits actually go beyond financial planning. If you’re still working and reinvesting your dividends for growth, a monthly dividend will compound faster over time. It won’t make much of a difference in a single year or two, but over an investing lifetime, it adds up. Playing with the numbers, $100,000 invested in a stock delivering a 7% yield compounded quarterly will grow to $801,918.34 over 30 years. That same $100,000 would grow to $811,649.75, if the compounding were switched to monthly.

Today we’re going to look at seven monthly dividend stocks to reliably pay your bills in retirement. Not all pay jaw-dropping high yields – in fact, I tend to avoid exceptionally high-yielding dividend stocks, as those yields generally come with much greater risk. That high dividend won’t do you a lot of good if it gets cut tomorrow. Instead, we’re going to focus on stocks with attractive but sustainable yields.

LTC Properties (LTC)

LTC Properties (LTC) is a real estate investment trust (REIT) specializing in skilled nursing and senior living properties. In fact, “LTC” is short for “long-term care.”

About 86% of LTC’s portfolio is invested in properties in the skilled nursing and assisted living market, with the remainder invested in mortgages and notes backed by properties in the sector. The property portfolio is diverse, spanning 207 properties run by 29 operators in 28 states. And perhaps best of all, the properties are rented on a triple-net basis, meaning that taxes, insurance and maintenance are the responsibility of the tenants. Once the properties are operational, LTC’s responsibility is limited to collecting the rent checks.

And thankfully, most of the revenues backing those rent checks is paid by private patients and their insurers, not Medicare or Medicaid.

REIT expert Brad Thomas, editor of Forbes Real Estate Investor, recently wrote that due to the triple-net model, “There is no operator risk and the total portfolio is 52% private pay … I consider LTC a high-quality monthly dividend payer that can now be purchased at sound value.”

Since 2005, the company has raised its dividend at a 4.9% compound annual rate, well above the rate of inflation. And today, you can collect a respectable 4.8% current yield.

LTC is the sort of reliable dividend payer you want in a retirement portfolio. Its business model is simple, and demographic trends – namely the aging of the Baby Boomers – suggest healthy growth for the foreseeable future.

Read the rest of the article at Kiplingers.com

Disclosures: Charles Sizemore was long LTC at time of writing.

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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Best Dividend Stocks for 2018

The following first appeared on InvestorPlace.com as 10 Blue-Chip Dividend Stocks to Buy for 2018

As we enter the homestretch of 2017, it’s already time to start planning ahead for 2018. And if next year proves to be anything like this year, we should expect the unexpected. I’m a big believer in finding the best dividend stocks to buy — and particularly blue-chip dividend stocks — in virtually any market environment. But not all dividend stocks move in lockstep, and some are clearly better suited for certain environments than others.

Eight months into office, President Donald Trump and the Republican-controlled Congress have yet to agree on any major legislation or spending priorities. That has helped to keep inflation expectations and bond yields relatively low. But seeing as how we have a midterm election next November, you can bet that Trump and the congressional Republicans will be scrambling to get legislation passed to ensure they still have a job come 2019. This should favor lower-yielding but faster-growing stocks over high-yielding dividend stocks.

So, with no further ado, here are 10 blue-chip dividend stocks that I expect to outperform in 2018. They run the gamut, including everything from old-economy auto stocks to cutting-edge technology stocks, but all have a solid history of paying and raising their dividends. And I expect that to be a winning theme in 2018.

General Motors Company (GM) 

I know I might get a few howls of protest for including auto giant General Motors Company (GM) on a list of “blue-chip” dividend stocks given the company’s past failures. But under Mary Barra’s leadership, GM has focused on being a leaner, more profitable company. Earlier this year, GM unloaded its slow-growth European business to focus on its higher-growth North American and emerging market businesses.

Of course, I should also mention that GM was my pick this year in InvestorPlace’s Best Stocks for 2017 contest. As of this writing, I’m up 35% for the year and in fourth place. But we still have over two months to go in 2017, and as the great Yogi Berra observed, it ain’t over till it’s over.”

General Motors got a major shot in the arm following Hurricanes Harvey and Irma and the hundreds of thousands of cars that now need to be replaced. But the bigger picture here is that the company has abandoned its old objective of growth at all costs and has instead focused on being profitable. Meanwhile, even after its fantastic run this year, the stock is still ridiculously cheap at just eight times earnings.

At current prices, GM yields a respectable 3.5%, and I expect them to raise their payout within the next few quarters.

To continue reading, please see 10 Blue-Chip Dividend Stocks to Buy for 2018

 

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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Versatile Dividend Stocks You Can Own No Matter Your Age

The following is an excerpt from 5 Versatile Dividend Stocks No Matter Your Age:

When you think of a “retirement” stock, certain things come to mind. Retirees need income, so their portfolios tend to be chock full of dividend stocks. They also tend to prefer stable, established companies over new and unproven up-and-comers. Growth is important, but safety and stability are more important. Leave the flashy growth stocks to the kids.

The outperformance of dividend stocks is not random. Paying a dividend forces company management to be more disciplined. Every dollar paid out to investors is a dollar that isn’t retained in house, so management is forced to prioritize and, ideally, eliminate value-destroying empire building via acquisitions.But while we tend to think of retiree stocks in this light, investors of all ages would be smart to take the same balanced approach. After all, value stocks have massively outperformed growth stocks over time, and dividend stocks outperform their non-dividend-paying peers … and with less volatility to boot.

Furthermore, in investing you win by not losing. By limiting your portfolio to dividend stocks, you immediately exclude younger and unproven companies — or those most likely to spectacularly blow up.

The safest dividend is the one that was just hiked. If management was confident enough to raise the dividend, it generally means that company is bringing in ample cash for future dividends. So, by further limiting your list of dividend stocks to those with a good recent history of raising the payout, you better increase your odds for outperformance.

So, today we’re going to take a look at five dividend stocks that would be every bit as appropriate for a young investor just starting to save as for a retiree living on the golf course.

I’ll start with Microsoft Corporation (MSFT). It wasn’t that long ago that Microsoft looked like a has-been on the slow road to irrelevance. The company missed the mobile revolution completely, leaving Apple and Alphabet to make it a two-horse race. PC sales — which ultimately drive Windows licenses — have been in decline for years. With more and more computing happening on mobile devices, Microsoft appeared to be doomed.

But then, along came Satya Nadella, who upon taking over as CEO in 2014, refocused Microsoft as a cloud services company that is now rivaled by only Amazon.com, Inc.’s (AMZN) AWS.

That’s the beauty of Microsoft. Its businesses were strong enough to survive more than a decade of unimaginative leadership under Steve Ballmer.

Nothing is permanent in technology, of course. But some trends last at least as long as the average retirement. For example, the “PC era” as we think of it lasted a good 20 years. The “mobile era” has been going on for over a decade now and shows no sign of slowing down. I have no reason to believe that Microsoft’s cloud business doesn’t have a long, profitable life in front of it.

And in the meantime, Microsoft will continue to be a dividend-paying machine. Over the past 10 years, Microsoft has grown its dividend at 15.7% annual clip. And any shares of Microsoft you might have bought a decade ago now trade at a yield on cost of nearly 7%. (Yield on cost is today’s dividend divided by your original purchase price.) That’s something that should be exciting for any investor, regardless of their stage of life.

To see the remainder of the list, go to 5 Versatile Dividend Stocks No Matter Your Age

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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Stocks That Could Double Their Dividends In 3 Years

The following is an excerpt from 7 Dividend Stocks Whose Payouts Could Double in 3 Years.

The legendary Wayne Gretzky famously said that “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.”

Well, it’s not all that different with dividend stocks. If you’re looking for good long-term returns, you’ll buy a stock sporting an attractive dividend yield. But if you want great returns, you’ll look for stocks raising their dividends year after year.

Over a long time horizon, high-dividend-growth stocks are a lot more likely to keep pace with inflation. Plus, let’s face it — it’s nice getting a raise every year, and that’s exactly what dividend growth stocks do. With every passing year, the amount of cold, hard cash they put in your pocket increases.

But dividends also tell a far more important story. An exceptionally high dividend yield is often a sign of financial distress … and a sign that dividend cuts are a lot more likely than dividend hikes. But dividend growth is a sign of company health. Company boards of directors only vote to raise the payout if they believe a lot more cash will be coming in to replace it.

I don’t have a crystal ball, and I can’t say with 100% certainty which dividend stocks are going to grow their payout the fastest in the years ahead. But by looking at recent dividend growth history gives us a good starting point.

So, today we’re going to take a look at seven stocks that I expect to double their dividends over the next three years. None are what I consider monster dividend yielders today, but all pay a respectable current dividend that promises to get a lot bigger in the years to come.

You’re going to notice a lot of banks on this list, and there’s a good reason for that. After the 2008 meltdown, most banks had to slash or completely eliminate their dividends. And ever since, the Federal Reserve has kept them on a short leash, massively restricting their ability to pay or raise a dividend.

Well, that’s changing. After the most recent stress test by the Fed, most large banks were given the green light to boost their payouts … and they are doing so with gusto.

Take Citigroup Inc (C), for example. Citi just doubled its dividend last month and raised its stock buyback plan to boot.

But even after a monster dividend hike like that, Citi’s dividend payout ratio is an extremely modest 24%. Citi could double its dividend again tomorrow, with no change in earnings outlook, and not put itself at risk of financial distress. And that is exactly what I like to see.

Citi’s dividend growth will depend on its profitability over the next three years, which will in turn be affected by interest rates and by the overall health of the economy. Assuming that we avoid a major recession and that the Fed continues to gradually raise rates, the pieces are in place for very respectable profit growth. And given how low the payout ratio is at current levels, I’d be shocked if Citi didn’t double — or triple — its dividend over the next three years.

To read the rest of the article, please see  7 Dividend Stocks Whose Payouts Could Double in 3 Years.

Disclosures: Long C

 

Disclaimer: This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities nor is it intended to be investment advice. You should speak to a financial advisor before attempting to implement any of the strategies discussed in this material. There is risk in any investment in traded securities, and all investment strategies discussed in this material have the possibility of loss. Past performance is no guarantee of future results. The author of the material or a related party will often have an interest in the securities discussed. Please see Full Disclaimer for a full disclaimer.

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