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The Income Investor

Latest Articles

High-Yield, Low Risk ETFs Outpacing the S&P 500

By Dr. Carla Pasternak

 

The markets have undergone a seismic  shift of massive proportions since November 8th, and after-shocks are in the wind.

 

Industrials, small caps, and banks have seen major gains on expectations that President-elect Donald Trump will push for tax cuts and deregulation that could accelerate economic growth and stoke inflation. Trump's fiscal policies could force the Federal Reserve to raise interest rates more aggressively, which would help bank stocks benefit from higher lending rates.

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BDCs Yielding 10% - Primed for Higher Interest Rates

By Dr. Carla Pasternak

 

Utilities and other safe income plays often lose their luster as rates rise. These so-called bond-like equities trade like bonds. Their share prices retreat when rates are expected to rise, and their yields, which move inversely to the share price, rise to compete with higher bond yields.

 

But not all income stocks trade like bonds. One class of dividend payers, sporting average yields of about 10%, is actually set to benefit from rising interest rates.

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Small Cap Stocks Marching Higher

By Dr. Carla Pasternak

 

Small cap stocks have been on a tear since February. Companies with roughly $250 million to $2 billion in market capitalization (share price times outstanding shares) in the Russell 2000 Small Cap Index have surged nearly 30%, almost twice the gains of large cap stocks in the S&P 500.

 

Small caps haven't always done so well. For two years through late 2015, they under-performed, with  small caps losing nearly 2% versus gains of  better than 7% for mid-caps and 8% for large caps.

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Adding this Chemicals Stock for its 5-Year Average Annual Return of 30%

By Dr. Carla Pasternak

 

The year 2016 should be dubbed the year of recovery for chemical stocks. Stocks in the S&P Chemicals Index have surged nearly 20% off their October 2015 lows, on pace with the S&P 500 for the past year.

 

Boosted by stronger domestic automotive and housing markets -- both big markets for chemicals -- chemicals manufacturing is expanding to meet demand for its products used in metals, glass, and wood.

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Technology Income Plays: Undervalued and Outperforming

By Dr. Carla Pasternak

  

They're called "bond-proxy" stocks because of their attractive dividend yield secured by an abundance of predictable cash flow and cash reserves. This select group of stocks has delivered double the returns of the S&P 500 in the past three months, but are still attractively priced relative to their large cap peers. The group is trading at a trailing price-to-earnings (PE) of just 16; in contrast the S&P 500 is trading at a trailing PE of 25. This discount is all the more compelling considering this group carries an average dividend yield of 3.5%, far more generous than the average 2.1% of large cap dividend payers in the S&P 500.

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Safe Haven Utility Stocks Yielding Nearly 4%

By Dr. Carla Pasternak

 

The fear gauge has seen wild swings lately. The CBOE Volatility Index, or VIX, spiked 49% the day after Brexit became a reality. Two trading days later, it plunged 21%. Since then, volatility has been reverting to the norm, but the next volatility trigger could be just around the corner.

 

Gold and U.S. Treasuries are often seen as the first line of defense in an uncertain market, and both asset classes certainly have their place in an investment portfolio. But neither throw off much dividend income. For income investors looking to hedge their portfolios from market swings, the place to turn is a defensive high-yield sector, such as utilities.

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