Generally, I’m not a big fan of stock screeners. I’ve found that it causes investors to be overly mechanical in their approach.
However, if investors use screeners as a first step in the investing process, then I think it can help them achieve their investment objectives.
With that in mind, I want to share with you what I call “the world’s easiest stock screener.”
You can use the basic screener at www.finviz.com, which is free. I call it the most effortless screen because it only has three steps.
Step #1: Screen for stocks with dividend yields above 3%.
Step #2: Screen for stocks with low levels or long-term debt.
Step #3: Sit by the pool.
Let me take a step back and explain some details. I use dividend yield because it’s a decent (though not perfect) measure of valuation. Of course, there are exceptions. You want to steer clear of stocks that are in a death spiral. They might have high yields because their share is down, and future dividends are in doubt.
Also, companies may list elevated dividend yields because they’re based on a one-time special dividend that can’t be counted on In the future. Think of the dividend yield as a way to avoid too much risk in an investment.
I also like dividends because it’s something tangible. The accounting department can endlessly manipulate earnings and cash flow. Companies also use “adjusted” earnings and share buybacks to make the corporate balance sheet appear the way they want it to. Dividends, by contrast, represent real money that goes to you.
The second screen is too much debt. There are lots of ways to measure this, but a good one is to look for companies whose long-term debt is less than 40% of their equity. Don’t worry about the exact dividing line, but that’s an excellent place to start.
The issue we want to avoid is companies that borrow too much and in effect, use their debt fund their dividends. That’s a big no-no. That’s why these two screens worth together. It’s an efficient way to find companies with organic growth. Too often, companies use their balance sheet to buy growth instead of earning it.
As a very general rule of thumb, a deteriorating balance sheet is often a sign of business trouble. Companies will try to use their finances to mask over difficulties that their products are having. You always have to look behind the numbers.
Their other screens you can use to fine-tune your results. For example, you may only want stocks in the S&P 500. Or stocks above $40 per share. Or stocks based in the United States. There are good arguments for all of these, but don’t lose sight of the basic idea.
Our screener is useful because it focuses on price and quality. As long as you do that, you’re investing correctly.
Now let’s look at three stocks that currently pass our screener:
At the top of the list is ExxonMobil (XOM), the largest energy company in the world. Declining energy prices have hurt the stock, but the current yield is 4.6%. That’s excellent protection. Long-term debt currently registers at 21% of equity. That’s not bad. Also, rising geopolitical tensions in the Persian Gulf could be a boost to oil. XOM will report earnings on August 2.
Our next candidate is Bristol-Myers Squibb (BMY). The pharmaceutical company currently yields 3.8%. BMY’s long-term debt is equal to 37% of its equity. The shares have been beaten down this year. BMY is down about 16% in 2019. I like that the shares are currently going for less than ten times next year’s earnings. This could be the time for a turnaround.
Lastly, we have the Cheesecake Factory (CAKE). The chain restaurant stock has a yield of 3% and their debt position is quite good. CAKE’s long-term debt is just 4% of its total equity. The next earnings report is due out on July 31. Wall Street expects 81 cents per share. Look for an earnings beat. High calories will never go out of business.
To clarify, our stock screener is just a first step in finding good stocks. You still want to make sure you own high-quality shares that are fundamentally sound. The three I’ve just given you fit the bill.
Most importantly, don’t forget the final step this summer. Relax by the pool.
Get your hands on my most comprehensive, step-by-step dividend plan yet. In just a few minutes, you will have a 36-month road map that could generate $4,804 (or more!) per month for life. It's the perfect supplement to Social Security and works even if the stock market tanks. Over 6,500 retirement investors have already followed the recommendations I've laid out.
The stock market has racked up high returns for the first half of 2019. The second-quarter corporate earnings reports so far have not been stellar. So far it’s tough to envision a scenario where the major stock indexes tack on another 10% to 15% in gains for the second half of the year. I think it’s likely that what performs well in the second half of 2019 will be much different from what made investors money in the first half.
While growth stocks have done well so far this year, a lot of high-yield stocks have lagged the major market indexes. High-yield is a different world. The primary investor concern is whether a company can continue to pay those big dividends. High-yield comes with what I call the binary outcome potential. On one side is the company will continue to pay the dividend.
This is the desired outcome, and the significant yield becomes your expected return. The flip side is the dividend cut the market has priced into the shares. A high-yield is the indicator that the market has built in the probability of a dividend reduction. A dividend reduction cuts twice, first your income gets reduced, and second, the reduction usually produces a significant share price drop.
Your goal as an income stock investor is to seek out higher yield stocks where you have conviction the dividend is secure. If you can find stocks with 10% plus yields and the dividends keep coming, you have a good chance to outperform the stock market for the rest of 2019. To find “good” high yield stocks, you need to understand how the individual companies generate cash flow to pay the dividends.
Further, you’ll need to monitor each company every quarter to make sure the dividend is secure. If you like high-yield, but don’t want to become a corporate accountant or Wall Street analyst, consider signing up for my Dividend Hunter service.
To get you started, here are three stocks with yields over 10% where currently the dividend looks secure. They are good ideas for where to begin your research.
GasLog Partners LP (GLOP) is a publicly-traded partnership that owns a fleet of 15 liquid natural gas (LNG) carrier vessels. Most of the fleet is on long term lease to Royal Dutch Shell plc (RDS.A). The leases provide predictable cash flow, and even with its high yield, GLOP has been growing its dividend by 3% to 5% each year.
The danger is that dividend coverage is very tight, with a first-quarter distributable cash flow of just 1.03 times the dividend. Global LNG trade is a growth business, which is positive for the long-term success of GasLog Partners. The stock currently yields 10.1%.
Global Net Lease (GNL) is a $1.6 billion market cap real estate investment trust (REIT). The company focuses on sale/leaseback transactions, where it buys commercial properties and leases them back on triple-net leases to the selling company.
Portfolio properties are evenly split between the U.S. and Europe, with 55% of the portfolio being office buildings. The danger for GNL is after the initial lease period expires if the tenant company doesn’t renew, the expense to retrofit and release will be very high. The shares currently yield 11,2%.
New Residential Investment Company (NRZ) is a finance REIT which has operations in the various phases of the residential mortgage market. Its primary investments are in mortgage servicing rights (MSR). These are fee stream paid on every individual residential mortgage.
The danger to NRZ is that high refinancing activity will deplete the MSR payments stream. To counter this, New Residential has diversified into other sectors of the mortgage business. The shares currently yield 13.1%.
Get your hands on my most comprehensive, step-by-step dividend plan yet. In just a few minutes, you will have a 36-month road map that could generate $4,804 (or more!) per month for life. It's the perfect supplement to Social Security and works even if the stock market tanks. Over 6,500 retirement investors have already followed the recommendations I've laid out.
If this were any “normal” time, we’d be able to buy safe bonds and collect enough income on our nest egg to fund our retirements. Unfortunately, this is the “new normal” where the Fed is not the friend of us current and hopeful retirees!
Jay Powell is afraid for his job, which means he’s going to cut rates and keep them low for a long time. This means we must look beyond traditional bonds for meaningful income.
What about blue chip dividend-paying stocks? Well, an 11-year stock market rally has ruined that idea. Anyone putting new money in a pricey dividend aristocrat is “buying and hoping” that the stock continues to levitate while the firm dishes its dividend.
And about that dividend. Blue chips don’t pay more than 2% or, at most, 3% today. On a $1 million portfolio that’s less than $30,000 in annual income. Not enough to retire on!
Fortunately, there’s a better way. I’ve developed the Perfect Income Portfolio to safely double, triple, and even quadruple the payouts on your 2% payers. You can turn these misers into 6%, 7% and even 8% yields (for $80,000 on that million bucks) without doing anything risky.
And oh by the way, you can grow your capital base, too! Whether it’s $250,000, a million or $2.5 million (or anywhere lower, higher or in between) you can bank these big yields and enjoy price appreciation to boot.
How do I know? Because we’ve done it. In the four years I’ve been managing our Perfect Income Portfolio, our investors have enjoyed 11.4% returns per year since inception. This means they’ve collected their 6%, 7% and 8%+ cash yields while enjoying additional price appreciation on their investments.
Our “secret” has been three safe yet lesser-known income vehicles. Their obscurity creates opportunity for us contrarian income seekers. I’ll explain by showing you how we buy bonds for less than their face value.
Perfect Income Vehicle #1: Buy $1 in Bonds for Less
Many investors believe bond ETFs are a convenient way to add a basket of bonds to their portfolio. Problem is, they’re not getting any deals buying them.
ETFs never trade at discounts. Their sponsors simply issue more shares to capitalize on any increased demand, which means anyone who buys one of these popular vehicles always pays list price.
But we don’t have to pay full price for a bond. Ever. Which is why we should look past ETFs and consider underappreciated closed-end funds (CEFs) instead.
The “closed” in CEF means that the fund’s pool of shares is fixed. Which is why these vehicles can have wild price swings above and below the values of their actual assets. (Good for us contrarian income seekers – we can buy below fair value to maximize our yields and upside.)
They are also “closed” in their actual communications with the financial world. Fund information is often limited (sometimes to one-page fact sheets) and it’s difficult to get management to talk to you.
(Also good for us, because it makes bargains more prevalent in this “mysterious” corner of the income world. Especially for us persistent types).
Plus, we can hire the best bond managers on the planet to handpick our bond buys for free!
Take the DoubleLine Income Solutions Fund (DSL), the vehicle run by the “bond god” Jeffrey Gundlach himself. Its holdings pay plenty, boasting coupons of 7%, 8% and even 9% and higher!
Granted, DSL’s bond holdings are a bit obscure (63% foreign corporate bonds, for example). But there are deals to be had and that’s exactly why we hired Gundlach to search the globe for us for big fixed income payments. He’s the man in Bondland and often gets the first phone call on new juicy deals. You and I can’t buy these bonds as individual investors, but the bond god can buy them for us.
My income subscribers have indeed enjoyed 61% total returns (including dividends) courtesy of Gundlach’s DSL.
When We Were Bond Gods
And they make CEFs in more traditional bond flavors, too. Some provide you with ways to trade in your mere “common” shares for preferred stock that pays more.
Perfect Income Vehicle #2: One-Click to Double Your Yields
Not familiar with preferred shares? You’re not alone—most investors only consider common shares of stock when they look for income. But you can double your yields or better and actually reduce your risk by trading in your common shares for preferreds.
A company will issue preferred shares to raise capital, just as it offers bonds. In return it will pay regular dividends on these shares and, as the name suggests, preferred shareholders receive their payouts before common shares.
They typically get paid more and even have a priority claim over common stock on the company’s earnings and assets in case something bad happens, like bankruptcy. They are “preferred” over common stock and come after secured debt in the bankruptcy pecking order.
So far, so good. The tradeoff? Less upside. But in today’s expensive stock market that may not be a bad substitution to make. Let’s walk through a sample common-for-preferred exchange that would nearly double your current dividends with a simple trade-in.
As I write, the common shares from JPMorgan (JPM) pay 2.8%. But the firm recently issued Series DD preferreds paying 5.75%. JPMorgan shareholders looking for more income may be happy to make this tradeoff.
Meanwhile, Bank of America (BAC) common pays 2% today. But B of A just issued some preferreds that pay a fat 5.88%. That’s a 194% potential income raise for shareholders who want to trade in their garden-variety shares. But how exactly do we buy these as individual investors? Which series are we looking for again?
A big problem with preferred shares is that they are complicated to purchase without the help of a human broker. So, many investors attempt to streamline their online buys and simply purchase ETFs (exchange-traded funds) that specialize in preferreds, such as the PowerShares Preferred Portfolio (PGX) and the iShares S&P Preferred Stock Index Fund (PFF).
After all, these funds pay up to 5.9% and, in theory, they diversify your credit risk. Unfortunately, many ETF buyers have little understanding of preferred shares, let alone how a particular fund invests in them. Should we entrust the selection of preferred shares to a mere formula baked into an ETF?
Again, no! Another problem with the ETF model is that it doesn’t account for credit risk as accurately as an expert human can. Which means a better idea is — you guessed it! — to find an active manager to handpick your preferred portfolio. Buying a discounted closed-end fund (CEF) is the best way to do this.
Here’s a Perfect Income Portfolio favorite outperforming its more popular ETF cousins since we bought the CEF in late 2015:
Why We Prefer CEFs
When we’re shopping in the preferred aisle, it’s a “no brainer” to go with the CEF concierge service. They yield more, they appreciate in price more, and again, the money manager is free when we buy at a discount.
Perfect Income Vehicle #3: Doubling Your Money with Dividends
We’re going to switch gears and jump into stocks. But don’t worry, these aren’t overpriced, underpaying blue chips that the Wall Street fanboys push. No, these are hidden gems that get no coverage from the (lame) mainstream financial media.
We can thank the giant firms that manage most of the investment money in the US for these bargains being available. Think Wells Fargo, Morgan Stanley, Merrill Lynch, your neighborhood Edward Jones, and even Fidelity, Schwab and Vanguard.
These firms serve hundreds of thousands of clients, with millions and millions of dollars, around the country and the world. They offer the same approaches for people of similar situations, which means they can only buy stocks which there are “enough of” (have enough liquidity) for everyone.
That means one simple thing. The familiar names can’t recommend our high-income producers to you. Instead, they stick you in pretty much what everyone has.
Apple has a market value of more than $900 billion. And shares yield just 1.5%. Convenience, familiarity, and liquidity come at the expense of the stock’s current payout.
Let’s contrast Apple with hospital landlord Medical Properties Trust (MPW). The firm pays a generous 5.4% on the capital you invest today, 3.5X as much as Apple! And its focus, the hospital, is arguably even more indispensable than the iPhone (which does have competition from Samsung and others).
But MPW the stock isn’t large enough for the big pension funds to buy or for the brand-name money managers to pile into. With a modest market cap of $7 billion, MPW is plenty liquid for you and me—and exclusive enough to provide us with this generous yield premium!
Plus, just like Apple, it raises its dividend every year. And dividend growth is, over the long haul, the main driver of higher stock prices. We added MPW to our Perfect Income Portfolio stock in November 2015 and received three dividend raises over the ensuing three-and-a-half years. The result? We enjoyed 105% total returns and really crushed the broader S&P 500:
Perfect Income Vehicle #3: Dividends with 100%+ Upside
The Perfect Income Portfolio also adds years to our lives. We don’t need stock prices to stay high to retire! Most investors who sell shares for income spend their days staring at every tick of the markets.
You can live better than this, generate more income and even enjoy more upside by employing our contrarian approach to the yield markets. We live off dividends alone. And we buy issues when they are out-of-favor (like right now) so that our payouts and upside are both maximized.
Plus 8% Dividends, Paid Monthly, Make Retirement Even Easier
And by the way, you can even use my “no withdrawal” strategy to make sure you’re:
Banking 8% annual dividends,
Enjoying additional price upside, and
Getting paid monthly to boot!
If this interests you, I’d recommend starting with my all-star retirement portfolio. It contains 8 of the absolute best-preferred stocks, REITs and CEFs out there.
If you’re scratching your head at these terms, you’re not alone. These are investments that you won’t hear about on CNBC or read about in the Wall Street Journal. Which is why we have these fantastic opportunities available in this “no yield” world.
I’ll explain more about them in a minute. I’ll also show you why my 8% eight-pack is well diversified across all types of investments and sectors, and the cash flows funding these dividends will do well no matter what happens in the broader economy or stock market.
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!
Successful dividend investing is simple, though not necessarily easy. There are nuances which trip up many investors (including most professionals!) These twists and turns create “yield alpha” opportunities for contrarian-minded income investors like us.
If everyone else in the market were perfectly grounded and calculated, there would be no chance for us to make above-average returns. After all, the 11.3% and 17.5% annualized returns that my Contrarian Income Report and Hidden Yields readers are earning would be snapped up in a perfectly efficient market.
Thanks to these inefficiencies, we are able to bank big yields and price returns in Dividend Land. Ready to retire on dividends? Follow these seven steps and we’ll do it together. Let’s start with an obvious yet underappreciated rule for income investors.
Step 1: Count Your Dividends
Since we focus on high yield, most of our returns come from the “yield” component of stocks. So let’s not forget about them when figuring out our returns!
For example, we added this preferred stock fund to our portfolio in October 2015 and its price-only returns look quite pedestrian:
Don’t Fixate on Price Alone…
We’ve gained 51%, while the price is up only 13%. The majority of our fat 51% gains have been delivered via cash dividends. So let’s make sure we add in the orange (top) line below to reflect the big driver of our profits!
… Remember to Add Those Dividends!
Step 2: Find Price Upside, Too
While we could build a portfolio that’s 100% invested in these types of safe bonds and do just fine, we’re better off putting 50% or so of our cash in stocks. The upside is too good to ignore.
Dividend growth is, over the long haul, the main driver of higher stock prices. We added this stock in November 2015 and received three dividend raises over the ensuing three-and-a-half years. The result? We enjoyed 105% total returns and really crushed the broader S&P 500:
Why We Buy Dividend Stocks, Too
Step 3: Monitor Dividend Coverage
A dividend hike is the ultimate sign of dividend safety, so I prefer stocks that consistently raise their payouts. The likelihood that a company is going to raise its dividend (or cut it) is directly related to its payout ratio or the percentage of its profits (or cash flows) that it is dishing out to shareholders as dividends.
As a rule of thumb, a payout ratio below 50% is a sign of dividend safety. Some capital efficient firms can pay more and real estate investment trusts (REITs) can pay up to 90% of their cash flows as dividends.
It depends on the company (and if you don’t feel like following the payouts and cash flows of 20 stocks and funds yourself, I’ll gladly do it for you as part of your subscription!)
Dividend cuts are no fun. Not only are they a monthly pay cut for us, but (worse) they destroy capital. Take the case of CenturyLink (CTL), which has been writing its investors dividend checks that it couldn’t cash since I called out this “paper telecom tiger” in May 2016 (and many times since!)
At the time, CTL was paying out 135% of its earnings as dividends. The company wasn’t growing profits, either, so the payout eventually had to go. Mr. Market eventually sniffed this out and CTL’s management team finally made the inevitable cut earlier this year:
Stocks Rise and Fall with Their Dividends
Remember the rising dividend that drove our gains in step two? The opposite happened to unfortunate CTL investors here, as their stock’s price dropped 59% while they received a 54% pay cut!
Step 4: Don’t Fight the Fed
“Don’t Fight the Fed” was chapter four in investing wizard Martin Zweig’s legendary book Winning on Wall Street. Here’s why we’ll make it step four here.
Zweig devoted 40 thoughtful pages to teach readers why they should “go with the flow” with respect to the Fed’s trend at any given moment.
Is the Fed raising rates? Then we should favor floating-rate bonds because their coupons (and values) tend to tick higher as rates climb.
Has the cycle topped? When the Fed is prioritizing “easy money,” we should trade in our floaters for fixed-rate bonds, which gain in value as rates fall.
Step 5: Favor Out-of-Favor
What did our winners in step one and two have in common? Two things:
They were well run, and (most importantly)
We bought them when each was out-of-favor.
Contrarian investing should be uncomfortable. We want to buy stocks when their yields are high with respect to their norms. To put it plainly, we want to buy this stock when our “dividend per dollar” (as reflected by the orange line) is high. It means the price is low!
High Historical Yield Meant Low Price
And likewise, we want to purchase closed-end funds (CEFs) when they are trading at discounts to the value of the assets on their books. This is a unique feature of CEFs because they trade like stocks, with fixed pools of shares. They can and will trade at premiums and discounts to their portfolios, which means we can sit back and wait for bargains.
Step 6: Get (and Stay) Fully Invested
The stock market goes up about two-thirds of the time. Permabears miss out on compounding and it’s not as easy to be a part-time bear as it sounds.
To illustrate this let’s consider a study by Hulbert Financial. The firm looked at the best “peak market timers”–the gurus who correctly forecasted the bursting of the Internet bubble in March 2000 and the Great Recession in October 2007.
These were the clairvoyant advisors who had their clients out of stocks and mostly in cash when the S&P 500 was about to be chopped in half. Surely their clients did great over the long haul, given their capital was largely intact at the market bottoms, right?
Wrong. None of these advisors turned in top performances. The reason? While they were good at timing tops, they were terrible at timing bottoms! The bearish advisors didn’t get their clients back into stocks anywhere near the bottom. They had their capital intact, but they didn’t deploy it–and they largely missed out on the epic bull markets that followed these crashes.
Think about the advisors and investors who sold in late December when the “bear market” became official. They moved to cash at the worst possible moment and have been on the sidelines waiting for a low risk “retest” of the lows. Mr. Market loves to confuse the most amount of people, and he really outdid himself this time!
Barely a Bear Market…
… And Right Back to a Bull!
We can be smart about staying in the market by focusing on “pullback-proof” names.
Step 7: Prepare for Pullbacks
Where’s the market going from here? Well, if you own pullback-proof dividend payers, you probably don’t care.
My readers are often asking for safe income ideas. For stocks that pay dividends and never drop in price. It’s a very difficult task, but not quite impossible.
For most long-term investors who want big dividends–I’m talking 6%, 7% and even 8%+ current yields–I recommend holding safe dividend-paying bonds and funds through any market turbulence.
Big dividends are the rubber duckies of the investing world. Wall Street hysteria may push their prices underwater for days or weeks at a time, but as the months and years pass these stocks bounce back to the surface. Let’s revisit our dividend machine from steps two and five. Did its investors even realize we had a market collapse in the fourth quarter of 2018? No.
Q4 2018’s Dividend Rubber Duckie
There’s nothing quite like a pullback-proof dividend machine! And if it’s “2008-proof” then even better. After all, we’re 11 years older now and few of us can afford a 50% drawdown.
If you need big income without the drawdowns, I do love the short and long-term prospects for five 2008-proof dividend payers yielding an average of 7.5%. If you’re worried about a repeat of 2008 (and again let’s be honest, who isn’t), here are five solid payouts you can purchase today without worrying about an overdue pullback (or worse, an all-out crash).
Introducing the “2008-Proof” Income Portfolio Paying 7.5%
The “cash or bear market” no-win quandary inspired me to put together my 5-stock “2008-Proof” portfolio, which I’m going to GIVE you today.
These 5 income wonders deliver 2 things most “blue-chip pretenders” don’t, such as:
Rock-solid (and growing) 7.5% average cash dividends (more than my portfolio’s average).
A share price that doesn’t crumble beneath your feet while you’re collecting these massive payouts. In fact, you can bank on 7% to 15% yearly price upside from these five “steady Eddie” picks.
With the Dow regularly lurching a stomach-churning 1,000 points (or more) in a single day during pullbacks, I’m sure a safe—and growing—7.5% every single year would have a lot of appeal.
And remember, 7.5% is just the average! One of these titans pays a SAFE 8.5%.
Think about that for a second: buy this incredible stock now and every single year, nearly 9% of your original buy boomerangs straight back to you in CASH.
If that’s not the very definition of safety, I don’t know what is. These five stout stocks have sailed through meltdown after meltdown with their share prices intact, doling out huge cash dividends the entire time. Owners of these amazing “2008-proof” plays might have wondered what all the fuss was about!
These five “2008-proof” wonders give you the best of both worlds: a 7.5% CASH dividend that jumps year in and year out (every year), with your feet firmly planted on a share price that holds steady in a market inferno and floats higher when stocks go Zen.
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!
You can’t deny that the technology sector is fast-paced. It’s ever-changing as new fads, trends, devices, and applications come and go. Today, it’s cloud computing. A few years ago, it was wearable devices. And who can forget the hype surrounding B2B stocks during the dotcom days?
But as these trends shifted, so too have the various tech stocks. The sector is littered with former leaders that have now turned into losers.
Not all former high-flying tech stocks are worthy of the dust bin, though.
In fact, there are plenty of decidedly old-school technology firms that are still making plenty of profits, cash flows and even dividends for their shareholders.
For investors, these now-forgotten tech stocks could be huge potential values in the making. Sure, they require some patience and a little luck, but the potential rewards are great. All in all, making some room in a portfolio for a few forgotten tech stocks could make a ton of sense.
But which ones actually have the goods to outperform over the long haul? Here are three former high-flying tech stocks that could be big bargains.
eBay (EBAY)
While Amazon (NASDAQ:AMZN) and even Walmart (NYSE:WMT) capture most of investor’s e-commerce love, old school tech stock eBay (NASDAQ:EBAY) continues to rack up sales and profit growth.
The firm is still one of the largest online retailers in the world — with more than 179 million active users and an average of over 1.9 billion listings on its site at any one time. Meanwhile, as a third-party listing service, EBAY features some pretty high margins and cash flows when it comes to people actually making a purchase on the site.
And it turns out, the firm has some tricks up its sleeve to get its former mojo going.
After eBay jettisoned PayPal (NASDAQ:PYPL), growth at the firm slowed to a trickle. In order to get that growth back, the firm is starting to copy a playbook that has helped both AMZN and WMT: sponsored ads and promoted listings.
EBAY charges sellers a fee in order to boost the prevalence of their products and quicken the pace of a sale. The beauty is that EBAY will still get the standard commission fees when the item does sell.
These promoted ads are starting to work wonders. During the first quarter, eBay managed to generate more than $65 million in extra revenues from them. Better still, this only improves the firm’s margins. Adding in moves to refresh and simplify the buying experience, eBay is back on track to post some significant gains this year.
Despite the potential, new dividend, and increased estimates, EBAY stock trades at a forward P/E of 13. When it comes to tech stocks, eBay should not be forgotten.
Groupon (GRPN)
Source: Shutterstock
A strange thing recently happened at a summer kick-off barbecue I attended. Multiple people were talking deals that they had scored on Groupon (NASDAQ:GRPN).
About a decade ago, the deal-making site became a huge fad as it promoted its voucher system for local restaurants, goods, and various services. You could pay a low cost to save as much as 80% on dinner, a movie, and even dog grooming services. These days, GRPN is moving away from that system and into a potentially more lucrative one for consumers and its bottom line.
Groupon now offers what’s called card-linked deals. Instead of buying a voucher for a service later on, consumers are able to link a credit card to the account and then get cash back after they buy a good or service advertised on the platform. The benefit is that customers don’t pay until the point of service and can use deals an unlimited number of times.
At the same time, it has revamped its voucher-based products by adding appointments for certain services and experience segments. These two moves are designed to create a more seamless interaction between customers and businesses. Moreover, it’s designed to make using GRPN a habit. The tech stock just sits back and collects the fees.
And while it’s easy to write GRPN off as a former fad, the firm continues to be free cash flow positive, have a huge $1 billion in cash on its balance sheet, and see improving results. In the end, Groupon may be a former high-flyer, but today, investors are getting a huge sale on the discount provider.
Dell Technologies (DELL)
Dude, you’re getting a Dell … again. However, these days Dell Technologies (NASDAQ:DELL) is a far better and perhaps more important tech stock than it was during the go-go dotcom days.
The story of how DELL got here is perhaps a bit convoluted. The PC maker was public throughout the internet boom and was taken private by founder Michael Dell and Silver Lake Partners. During that time, the firm made a big splash when it bought enterprise software specialist EMC Corporation, which also included a stake in VMware(NASDAQ:VMW). This led to a tracking stock covering Dell’s VMW holding.
Which brings us to today. Dell decided to roll-up that tracking stock and once again IPO as its former ticker DELL.
And while it may have fallen out of the public eye in the five or so years it wasn’t openly traded, DELL has become a monster of an integrated tech stock. The PC and server business is still there — which is booming thanks to rising data center demand. Meanwhile, the firm is a leader in cloud computing and virtualization software, cybersecurity via RSA as well as various infrastructure-as-a-service (IaaS) products. Today’s DELL is looking like a real contender among leading tech stocks. That fact has shown up in its first-quarter results. First quarter revenue clocked in at $21.9 billion — an increase of 3%.
In the end, Dell may be a blast from the past. But this is one forgotten tech stock ready to rewrite its future.
At the time of writing, Aaron Levitt held a long position in AMZN.
July marks the start of the 2019 third quarter, and in a few weeks, earnings season starts, with a flood of quarterly earnings reports. With income stocks, quarterly earnings often are closely led or followed by dividend announcements.
Common stock dividends are note sure things until they are announced. It’s even better when a dividend announcement comes with a payout rate increase.
If you expect a dividend increase is coming soon, you can put the stock on your watch list to pick up shares during any price dip in the weeks leading up to the announcement date. Today I am giving you lead time warning on some projected dividend increases for next month.
Real estate investment trusts (REITs) pay attractive current yields and regularly increase their dividend rates. I maintain a database of about 140 REITs, out of which about 100 have histories of dividend growth.
Most of these companies increase the quarterly dividend once a year, and then pay the new rate for the next four quarters. Even though individual REITs increase their dividends just once a year, those announcements are spread across almost every month of the year.
To capture those share price gains, you want to buy shares a few weeks to a month before the next dividend increase announcement is published. Now in early July, it is a great time to look at those REITs that should increase dividends in August.
Here are a few REITs from my database that historically have boosted their payouts in August.
Federal Realty Investment Trust (FRT) is a $10 billion market cap REIT that owns, operates, and redevelops high quality retail real estate in the country’s best markets.
FRT has increased its dividend for over 50 consecutive years, the longest growth streak of any REIT. Over the last 5 years, the average annual dividend increase has been 6%. Last year the dividend was increased by 2.0%. Based on management guidance, an increase close to the 5% annual average is in the cards for this year.
The company announces its new dividend rate in early August. The ex-dividend date will be in mid-September with payment about a week later.
This is a very high-quality REIT. The stock yields 3.1%.
Eastgroup Properties Inc. (EGP) is a $4.3 billion market value REIT that focuses on development, acquisition and operation of industrial properties in major Sunbelt markets throughout the United States with an emphasis on the states of Florida, Texas, Arizona, California and North Carolina.
The industrial properties sector is currently one of the best performing real estate sectors.
The company has increased its dividend for 23 of the last 26 years, including the last seven in a row. Last year the payout was increased by 12%. This year my forecast is for a 5% to 7% increase.
The new dividend rate should be announced in late August or early September, with a mid-September ex-dividend date and end of the month payment date.
EGP yields 2.5%.
Healthcare Trust of America, Inc. (HTA) is a $5.7 billion REIT that acquires, owns and operates medical office buildings. The company reduced its dividend in 2012 and 2013, which was followed by small increases in each of the next four years.
Last year the dividend was bumped up by 1.7%; comparable to the increase of the previous year. In 2018, the funds available for distribution per share increased by 1.2%, and for the 2019 first quarter, FAD per share was flat compared to a year earlier.
Management has been very conservative with the dividend growth and I expect a small increase comparable to the last couple of years. Last year the new dividend rate was announced in early August, with an end of September ex-dividend date and early October payment date.
The stock currently yields 4.5%.
Bonus Recommendation:
Weyerhaeuser Company (WY) is a $20 billion market cap company that converted to REIT status in 2010. The company owns forest land and generates revenue by harvesting trees and processing the trees into lumber and pulpwood products.
Since the REIT conversion, the dividend has steadily increased, but not on a regular schedule. The current rate has been paid for four quarters, so an increase is due with the next announcement.
Last year the WY dividend increased by 6.3%. The next dividend announcement will be in late August with mid-September record date and end of September payment.
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The trade-war panic is in full retreat—and it’s left us three ridiculously cheap funds set to soar even higher than the market in the coming months.
Best of all, we’ll bag some very nice dividends from this trio: I’m talking outsized yields up to 7.4%!
Before I show them to you, let’s talk about why the market looks set to head higher.
Right now, the SPDRS&P 500 ETF (SPY) is up 18.3% for 2019. This sounds too good to last, but keep in mind that this jump started near the depths of the late 2018 correction—a low level.
That makes the year-to-date number misleading; a longer-term view shows signs of consistent and slow recovery from 2018’s major volatility:
A Steadying Market
There are a lot of reasons for this, but the two most important ones are good signs for stocks.
For one, US GDP growth is strong, up 3.1% in the first quarter, and second-quarter growth is forecast at a still-robust 1.9%, according to the Federal Reserve. That means the recession fears that were priced into stocks in 2018 were wrong—and stocks still need to rise to fully price in this current growth clip.
Speaking of the Fed, the market now expects the central bank to cut interest rates, and the Fed itself has said as much. Why? Because even with strong growth, inflation is stubbornly low, so there’s no reason to keep raising rates, as the Fed has already done over the last five years.
So if America’s economy is growing and interest rates are about to fall again, we should expect American stocks to benefit the most. But which will be the biggest winners?
Instead of picking them one by one, let’s look at three funds that not only choose stocks well, thanks to smart strategies, but also pay out above-average dividends to investors from the capital each fund earns.
Dividend Fund #1: Playing 2 Disrespected Sectors for Big Gains
The first fund playing this economic growth right is Source Capital (SOR), which has put a quarter of its assets in companies like Broadcom (AVGO), United Technologies (UTX) and American International Group (AIG)—three stocks that alone account for 10% of SOR’s assets. Those holdings are up 24.5% since the start of the year, but we’ve only seen tech and financials begin to recover from their 2018 weakness—setting us up for more gains ahead.
Monster Gains for Source’s Wise Picks
More importantly, SOR trades cheap, which means you get these stocks at a discount. That’s because SOR is a closed-end fund (CEF), a type of fund that often trades at market prices below their net asset value (or NAV), another name for the liquidation value of a CEF’s portfolio.
And right now, SOR’s market price is 13.7% lower than its liquidation value, so you’re getting these stocks cheaper than if you got them through an index fund like the Invesco QQQ Trust (QQQ), or if you bought them one by one.
Dividend Fund #2: A 6% Dividend From a CEF All-Star Team
There is a downside: SOR’s dividend yield is just 2.8%, which is low for a tech-heavy CEF. If you want more income and top-performing tech stocks, the BlackRock Science and Technology Trust (BST) might be for you. It yields 5.7%.
BST has a dividend yield over five times higher than that of QQQ and it’s still able to outperform the index fund by a huge and growing margin.
How does it do it?
The answer may surprise you: management. BST’s managers have consistently picked winning stocks that outrun the well-known stalwarts of the tech world.
What this means is that, beyond the FAANG stocks you’d expect (those account for 25% of BST’s portfolio), the fund’s managers have shrewdly picked and timed purchases in breakout names like top holdings Alibaba (BABA), Salesforce.com (CRM) and Tencent (0070).
That strong record usually comes at a price, though; thanks to its market-beating returns, BST has attracted a high valuation in the past and recently traded at a 9% premium to NAV. But today it’s trading at a rare 1.5% discount, which means the premium could very easily return in the coming months.
Dividend Fund #3: Greater Income, Greater Safety
If 5.7% still isn’t enough of a dividend yield, I have just the fund for you: the Eaton Vance Tax-Advantaged Dividend Income Fund (EVT), which trades at its NAV and pays a huge 7.4% dividend yield.
EVT has given investors a monster 29% total return over the last year, versus just 19% for the S&P 500, making it yet another market outperformer.
That’s not surprising; EVT’s biggest holdings are popular S&P 500 names like JPMorgan Chase (JPM) and Johnson & Johnson (JNJ). This fund is very balanced, with about 10% or less of its assets in sectors such as tech, industrials, healthcare, energy, utilities and real estate.
Its biggest exposure is to the financial sector, which is up 15.4% in 2019 and set to keep going higher thanks to the booming economy.
20 More Rock-Solid Dividends—Up to 10.5%—Waiting for You Here
Steering you toward safe—and growing—7%+ payouts is exactly what I do in my CEF Insider service.
And right now I’m ready to share my very latest high-yield picks with you: I’m talking about a fully stocked portfolio of 20 CEFs yielding 7.3% on average (with two throwing off monster payouts of 10% and up!).
This portfolio is the beating heart of CEF Insider—and you should NOT miss this special invitation: you get to “kick the tires” on all 18 funds in my portfolio with no obligation whatsoever!
The buys you’ll discover are poised to hand you 7% to 15% price upside in the next 12 months, along with their outsized dividends. That puts the total returns on many of these picks 20% and even more, thanks to the incredible discounts they’re trading at now.
Good luck finding a gain-and-income punch like that in your typical S&P 500 stock!
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For me, there are few things more patriotic than earning fat dividend checks from U.S. companies. I like dividends more than apple pie.
For some fun today, I want to highlight a few attractive, dividend paying stocks with at least a plausible tie to an All-American theme.
I hope you have some fun plans for the 4th of July. It is one of my favorite holidays. I think it comes from my time in the U.S. Air Force and because it comes right in the middle of summer. This year, with the holiday falling on a Thursday, I am sure if your holding down a job, there will be temptation to turn this into a four-day holiday weekend. That’s my plan!
Let’s get to my Independence Day themed list of stocks going.
What could be more American than the Ford F-150 pickup truck. As Ford Motor Company (F) is proud to remind us in their ads, the F-150 has been the top selling vehicle for 42 consecutive years.
I find it an interesting fact, considering how much the investing public is focused on electric cars. Unfortunately for electric car manufacturers, two-thirds of vehicle sales are trucks and SUVs, with the percentage of cars declining each year.
According to CNBC, Ford is forecast to be selling 90% trucks and SUVs by 2022. Ford shares are a solid dividend investment.
The current yield is 5.9% and the dividend has been increased for seven straight years.
One thing Americans like to do when they drive their F-150’s is to go shopping. While the financial media may be convinced that e-commerce is taking over America, the U.S. Census Bureau reported than in the 2019 first quarter e-commerce sales accounted for 10.2% of total sales. My math calculation from that says that almost 90% of retail still occurs in brick-and-mortar stores and shopping centers.
Tanger Factory Outlet Centers (SKT) is the only shopping center REIT that is a pure play outlet mall investment. The Tanger share price has been hit hard over the last three years on the e-commerce will take over the world theme. I think the numbers show that belief is not backed by data.
Tanger has increased its dividend for 26 consecutive years.
The current low share price means SKT yields 8.75%. This is a great turnaround story.
Another theme tied to the 4th of July, or at least to summer, is air conditioning. I am sure you know how your power bill goes up as you keep your home cool this time of year.
NextEra Energy (NEE) is the world’s largest utility company one of the best dividend growth utility stocks. NextEra primarily provides power in Florida, operating as Florida Power & Light Company.
The NEE dividend has been increased for 24 straight yields. Dividend growth has been at a 9.5% compound growth rate for the last decade and increased at 13% compounded for the last three years. Current yield is 2.4%.
The dividend growth rate is the force to power the stock higher.
Get your hands on my most comprehensive, step-by-step dividend plan yet. In just a few minutes, you will have a 36-month road map that could generate $4,804 (or more!) per month for life. It's the perfect supplement to Social Security and works even if the stock market tanks. Over 6,500 retirement investors have already followed the recommendations I've laid out.
