Buy This Dip for 8.7% Dividends and Massive Gains in 2018

There’s one income-producing sector you probably hold in your portfolio—and you may be wondering why it’s crashing out this year.

I’m talking about utilities, which are famous for their rock-steady dividends (and predictable dividend hikes). These companies literally power the economy. But if utilities are so important, why are they in the toilet while the rest of the market is on fire?

Investors Loathe Utilities

Before we go further, if you’ve noticed your portfolio’s utility sleeve taking a dive like the one above—or bigger—don’t worry. This dip is a buying opportunity! I’ll give you one option paying a fat 8.7% dividend below.

First, the big driver behind utilities’ plunge is the recovery in energy prices. Oil and natural gas are soaring after 2017’s bear market and the cold snap that kick-started this year’s commodity consumption. Higher energy costs hurt utilities’ profits, which, in turn, lowers their stock prices.

The Upside of Down

But if you’re an income seeker, this crash is an excellent opportunity to bulk up your income stream. Consider the Utilities Sector SPDR ETF (XLU), which is now yielding 3.5%, its highest level in over a year:

Utilities’ Income Rises

Let’s put some numbers behind this to understand what’s going on.

If you put $500,000 into XLU at the start of 2018, you would have gotten a $16,500 annual cash payout from the fund’s then-decent 3.3% dividend. But if you buy XLU today, you’ll get $17,350—a 5.2% raise! And that’s just because of a 0.2% increase in yield.

That is the power of dividends. And now I’m going to show you how we can kick that payout into overdrive.

Double Your Income in One Buy

There are a lot of funds out there paying a 6% dividend yield, or higher, while still investing in those same utilities XLU does. They’re called closed-end funds (if you’re not familiar with CEFs, click here for a quick and easy-to-follow primer), and they operate in an important way that supercharges their income stream.

The secret? Discounts.

When you buy $1 in XLU shares, you get $1 of XLU’s portfolio. That’s pretty straightforward. But CEFs are different: they often trade at a discount to their portfolio’s net asset value (NAV, or the market value of their holdings). And that makes their dividend yield even higher.

For instance, the Duff & Phelps Global Utility Trust (DPG) trades at an 11.5% discount to NAV—or its “true” value—which helps it cover a nice 8.7% dividend to shareholders.

Now let’s put some numbers behind this to see what we’re talking about. That $500,000 investment in XLU that paid $16,500 in annual cash dividends? Put it in DPG and suddenly you’re getting $43,450 a year. That’s a 163% raise!

Think there’s a catch? Let me put your mind at ease.

One of the first things investors do when they hear about a CEF is track its performance history. Do this with DPG, and things look bad. Let’s compare the price charts of DPG and XLU over the last year:

The Seeming Laggard

XLU is up nearly 4% while DPG is flat—a sucker’s bet, right?


The mistake most folks make is to look just at the price return of a fund and not the total return, including dividends. That’s because the media has trained us to obsess over the S&P 500, the Dow Jones Industrial Average and the Nasdaq 100—indexes that pay paltry dividends (you’ll get 2% on the S&P if you’re lucky). Paltry dividends don’t add much to total returns, which are the value of the dividend payouts and the price changes.

But CEFs typically yield 6% or more, so their dividends are a much more important component of their total returns. So now let’s look at a total return chart of DPG and XLU, including the dividends both funds paid out:

Laggard No More!

All of a sudden, DPG doesn’t look like a sucker’s bet anymore.

It’s a chronic problem with markets—a lot of investors do the most basic amount of research and give up. What exactly are they giving up? In this case, a 163% higher dividend, along with superior returns. If that isn’t a good enough reason to do deeper research, I don’t know what is.

So should you buy DPG now?

If you’re looking for a big income stream and you’re in it for the long haul, DPG is a good option. There are others, though. Some utility CEFs have bigger yields, and some have much better long-term returns than DPG. A basket of these funds, bought when their discounts are most attractive and their portfolios best positioned to guarantee their dividends, is ideal for most investors.

But, of course, as you’re shopping around for the right CEF, do make sure you look at total returns.

4 Better Buys Than DPG (Incredible Cash Payouts Up to 10.4%)

And I haven’t gotten to your best option yet: let me do the legwork for you.

In fact, I’ve already done it! And today I’m pounding the table on 4 bargain CEFs that hand you an average yield of 8.1% and even bigger upside (I’m talking gains of 20%+ here) than you’ll get from DPG in 2018.

One of these little-known picks hands you an astounding 10.0% payout and I expect it to be one of my biggest gainers in 2018, thanks to its massive discount to NAV. Just imagine banking an income stream like that while you watch your nest egg streak higher.

Editor's Note: The stock market is way up – and that’s terrible news for us dividend investors. Yields haven’t been this low in decades! But there are still plenty of great opportunities to secure meaningful income if you know where to look. Brett Owens' latest report reveals how you can easily (and safely) rake in 8%+ dividends and never worry about drawing down your capital again. Click here for full details!

Source: Contrarian Outlook 

7 Stocks to Buy That Are Winning With Tech

Source: Shutterstock, Inc. (NASDAQ:AMZN) made a major announcement Jan. 22. After more than a year getting the bugs out, the Seattle e-commerce company opened Amazon Go to the public.

Using artificial intelligence and cameras to keep tabs on the shoppers in the store — Amazon Go provides cashier-free grocery shopping — technology is changing the way consumers shop for groceries.

One of its customers is Amazon CEO, Jeff Bezos.

“Jeff [Bezos] has been aware. He loves the store — he definitely has shopped it,” VP of Amazon Go Gianna Puerini said. “He’s been super supportive and wonderful.”

So, depending on your point of view, Amazon is either a tech company using e-commerce as its end product or service or an e-commerce company using tech to sell its products and services.

While it’s using technology to grow its revenue, I’m going to pass on Amazon.

However, there’s no mistaking these seven stocks to buy that are all growing because of the intelligent use of new technology. 

Stocks to Buy Winning With Tech: Toyota (TM)

Stocks to Buy Winning With Tech: Toyota Motor (TM)

Source: Shutterstock

Toyota Motor Corp (ADR) (NYSE:TM) is one of the world’s largest automotive companies. To sell as many cars as it does, it needs supply chain management that’s second to none. Before its Jan. 23 announcement that it would start using Ottawa-based Kinaxis Inc’s cloud-based supply chain management solution, it was doing all of its planning by hand.

That’s no way for Toyota to be handling such a critical piece of its business planning.

“We are looking forward to working with Kinaxis to optimize inventory and enable more flexible responses to customer demand,” said Iwao Nakano, General Manager Corporate IT Division at Toyota. “RapidResponse will help us unify sales and production and will become the foundation upon which we can continue to realize improvement in demand and supply planning.”

Although Kinaxis isn’t well known outside Canada, many of its customers are; they’ve chosen the company’s RapidResponse solution because it dramatically improves supply chain management. Expect this to make Toyota even more efficient than it already is.

Stocks to Buy Winning With Tech: McDonald’s (MCD)

If I told you that technology could help McDonald’s Corporation (NYSE:MCD) improve its comparable store sales by 100 basis points in 2018 alone, would you buy the Golden Arches’ stock? I sure would.

“MCD is cultivating a digital platform through mobile ordering and Experience of the Future (EOTF), an in-store technological overhaul most conspicuous through kiosk ordering and table delivery,” Cowen & Company analyst Andrew Charles wrote in a note to clients last June. “Our analysis suggests efforts should bear fruit in 2018 with a combined 130 bps [basis points] contribution to U.S. comps [comparable sales].”

In Q3 2017, McDonald’s grew its global comps by 6%. Through the first nine months of fiscal 2017, those comps rose by 5.6%, which means a 130 basis point increase amounts to a 23% gain.

Combine these technology initiatives with the rollout of its $1 $2 $3 Dollar Menu and it’s no wonder MCD stock is hitting all-time highs.

Stocks to Buy Winning With Tech: Adidas (ADDYY)

Stocks to Buy Winning With Tech: Adidas (ADDYY)

Source: Shutterstock

The MIT Technology Review named Adidas AG (ADR) (OTCMKTS:ADDYY) one of its 50Smartest Companies 2017.

“The sneaker maker is changing the way it manufacturers shoes, launching a robot-intensive microfactory in Ansbach, Germany, where it will begin to produce locally and on demand later this year.,” stated the magazine. “A similar factory offering customization and faster reaction times to local fashion trends has been announced in the U.S.”

In addition to its move to robotics, it’s working with another company on MIT’s list — Carbon is ranked 18th — to deliver state-of-the-art athletic equipment including 4D shoes. According to the magazine, Adidas will print 100,000 pairs of shoes using Carbon’s technology by the end of 2018.

“Technology has also allowed Adidas to streamline some operations while also improving customer experience,” the Sourcing Journal’s Caletha Crawford wrote Jan. 18. “By teaming with FindMine, which uses visual algorithms to help merchandise products online, Adidas is able to better curate suggestions for shoppers.” 

Given how much growth Adidas experienced in 2017, it’s clear the investment in technology by the company is paying dividends.

Stocks to Buy Winning With Tech: Wal-Mart (WMT)

A definite upside to Amazon capturing such a big chunk of U.S. e-commerce sales — estimated at 44% in 2017 — is that Wal-Mart Stores Inc (NYSE:WMT) has been forced to get proactive about the use of technology, especially when it comes to online sales.

“Once viewed as a customer experience laggard, Walmart has turned to innovative tech to stay relevant, even leapfrogging some of the big e-tailers with a bold vision, …” stated Brennan Wilkie, an expert in customer experience intelligence, in an October 2017 article in Forbes. “At the end of the day, if what a brand promises does not line up with what customers want and expect, all the newfangled technology in the world won’t matter.”

InvestorPlace contributor Lawrence Meyers recently wrote that Walmart’s acquisition of was a smart move to accelerate the company’s online ambitions. However, he’s not sure it will make a difference to the bottom line which has been slowly deteriorating in recent years.

I, on the other hand, consider Walmart’s willingness to embrace technology as a sign it’s willing to do whatever it takes to turnaround its business. Given WMT stock gained 46% in 2017, other investors feel the same.

Stocks to Buy Winning With Tech: Fiserv (FISV)

Stocks to Buy Winning With Tech: Fiserv (FISV)

Source: Shutterstock

Fiserv Inc (NASDAQ:FISV), one of the World Most Admired Companies according to Fortune, is using technology and automation to provide a better digital experience for financial services customers. For many banks, the transition between physical banking and digital banking is anything but seamless. It’s Fiserv’s job to make that more fluid.

By introducing new products such as voice banking through devices such as Alexa and other uses of artificial intelligence, the company hopes to bridge the gap.

“We need to begin to change the mindset,” Jamie Dominguez, director of product management for financial technology provider Fiserv told Bank Innovation. “Digital isn’t just about mobile and online, it’s really about a fluid experience.”

The use of technology to help financial institutions innovate has been profitable for FISV shareholders in recent years. Up almost 7% year to date through January 24, Fiserv hasn’t had a negative annual total return since 2008.

My instincts tell me Fiserv shareholders will continue to reward in the years ahead.

Stocks to Buy Winning With Tech: Nasdaq (NDAQ)

Stocks to Buy Winning With Tech: Nasdaq (NDAQ)

Source: Shutterstock

Nasdaq, Inc (NASDAQ:NDAQ) is the world’s largest operator of stock exchanges. It has embraced technology throughout its history, whether we’re talking about the introduction of electronic trading in 1971 or recently by using machine learning and data analytics to provide investors with the most comprehensive information and analysis possible.

Nasdaq had three priorities to execute this past year, one of which was to commercialize disruptive technologies such as blockchain, the cloud, and machine learning.

In November, Nasdaq filed a patent application with the U.S. Patent and Trademark Office that would create distributed ledgers using blockchain technology to store information regarding the ownership of assets.

“The application notes each block’s cryptographic hash value as an attractive feature, stating that the fact that a blockchain cannot be modified by malicious actors acts as an effective security function in protecting asset ownership data,” wrote Coindesk’s Nikhilesh De on Nov. 17, 2017.

Although Nasdaq admits that a lot more research is necessary before it would implement this technology, it’s easy to see why this is a significant development. For example, in places where the rule of law isn’t quite as robust, a secure and private network detailing the ownership of assets would provide greater protection for investors.

This type of innovation is what you want from a company like Nasdaq.

Stocks to Buy Winning With Tech: Stitch Fix (SFIX)

Stocks to Buy Winning With Tech: Stitch Fix (SFIX)

Source: Stitch Fix

Stitch Fix Inc (NASDAQ:SFIX) went public Nov. 16, 2017, at $15 a share. Since then, the online personal-styling service and clothing retailer’s stock is up 39.1% through Jan. 24.

Stitch Fix has taken mass customization to the limits using algorithms to figure out what customers want to wear.

“Like many personalized radio services (think Pandora), this service is designed to get better the more that you use it,” stated Stitch Fix founder Katrina Lake in a 2015 interview with Harvard Business Review. “Algorithms produce recommendations for stylists who use their personal experience and knowledge of the customer to curate those recommendations down to just five items per fix. As you purchase, answer questions and/or communicate with your stylist, each fix becomes increasingly accurate.”

People are starved for time. The number one rule for a creating a successful business, in my opinion, is to offer something to your customers that save people time or money. Stitch Fix does both.

As far as the seven stocks to buy winning with tech go, Stitch Fix is at the top of the list. Its service is tailored perfectly to the modern shopper.

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Source: Investor Place