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Don’t Make This Buying Mistake

A Strategy for Buying Elite Businesses at Bargain Prices
The key is determining whether it’s TRULY a bargain — or deserves to be sold

By Brian Hunt, InvestorPlace CEO

Even elite businesses with juicy dividends suffer share price selloffs from time to time.

Sometimes, these selloffs are caused by short-term, solvable problems within the individual companies.

Sometimes, these selloffs are caused because the overall stock market goes down in value.

These selloffs are almost always opportunities to buy these firms at bargain prices and start collecting steady dividend payments.

When you spend money on any big purchase, like a home or a car, you want to pay a good price. You want to get value for your dollar.

When you buy a car, you want to pay a good price. When you buy a house, you want to pay a good price. You don’t want to overpay. You don’t want to embarrass yourself by getting ripped off.

Yet … when people invest, the idea of paying a good price is often cast aside. They get excited about a story they read in a magazine … or how much their brother-in-law is making in a stock, and they just buy it.

They don’t pay any attention to the price they’re paying … or the value they’re getting for their investment dollar.

Warren Buffett often repeats a valuable quote from investment legend Ben Graham: “Price is what you pay, value is what you get.”

I think that’s a great way to put it.

Like many investment concepts, it’s helpful to think of it in terms of real estate:

Let’s say there’s a great house in your neighborhood. It’s an attractive house with solid, modern construction and new appliances. It could bring in $30,000 per year in rent. This is the “gross” rental income … or the income you have before subtracting expenses.

If you could buy this house for just $120,000, it would be a good deal. Since $30,000 goes into $120,000 four times, you could get back your purchase price in gross rental income in just four years.

In this example, we’d say you’re paying “four times gross rental income.”

Now … let’s say you pay $600,000 for that house.

Since $30,000 goes into $600,000 20 times, you would get back your purchase price in gross rental income in 20 years.

In this example, we’d say you’re paying “20 times gross rental income.”

Paying $600,000 is obviously not as good a deal as paying just $120,000.

Remember, in this example, we’re talking about buying the same house.

We’re talking about the same amount of rental income.

In one case, you’re paying a good price. You’re getting a good deal. You’ll recoup your investment in gross rental income in just four years.

In the other case, you’re paying a lot more. You’re not getting a good deal. It will take you 20 years just to recoup your investment.

And it’s all a factor of the price you pay.

It works the same way when investing in a business …

You want to buy at a good price that allows you to get a good return on your investment. You want to avoid buying at a bloated, expensive price.

This is a vital point.

No matter, how great a business is, it can turn out to be a terrible investment if you pay the wrong price.

If you’re not clear on this point, please read through the home example again. When it comes to buying elite businesses that raise their dividends every year, you can use the company’s dividend yield to help you answer the important question: “Is this business trading for a good price or a bad price?

Here’s how it works …

When a stock’s price goes down and the annual dividend remains the same, the dividend yield rises.

For example, let’s say a stock is $50 per share and pays a $2 per share annual dividend. This represents a yield of 4% (since 2 is 4% of 50).

If the stock declines to $40 per share and the dividend payment remains $2 per share, the stock will yield 5% (since 2 is 5% of 40).

When a selloff causes an elite dividend-payer to trade near the high end of its historical dividend yield range, it’s a bargain … and it’s a good idea to buy shares.

Remember, these companies pay the world’s most reliable dividends.

Their annual payouts only go one way — UP.

When an elite dividend-payer’s share price suffers a decline of more than 15%, consider it “on sale” and buy it.

For example, in the late 2008/early 2009 stock market decline, shares of elite dividend payer Procter & Gamble (NYSE: PG) fell from $65 to $45 (a decline of 30%).

Procter & Gamble is one of the world’s top consumer product businesses. Every year, it sells billions and billions of dollars’ worth of basic, everyday products like Gillette razors, Pampers diapers, Charmin toilet paper, Crest toothpaste, Bounty paper towels, and Tide laundry detergent. It has raised its dividend every year for more than 60 years.

Investors who stepped in to buy this high-quality business after the market decline could have purchased shares at $50.

In the five years that followed, Procter & Gamble climbed to $80 per share. Its annual dividend grew to $2.57 per share.

This annual dividend represented a 5.1% yield on a purchase price of $50 per share … and that yield will continue rising for many years.

Owning one of the world’s best businesses … earning a 5.1% yield on your shares … collecting a safe income stream that rises every year …

Buying the best at bargain prices is a beautiful thing.

If you have the interest, time and knowhow, you can track these businesses yourself. You can find all the information you need on many free financial websites.

Or, you can simply pay an advisor or research firm to do it for you. I’d be remiss not to invite you to check out Neil George’s picks. Neil can recommend plenty of elite dividend-payers, complete with buy-below prices.

Remember, you can make a bad investment in a great business if you pay a stupid price. View your investment purchases just like you would the purchase of a home, a car, or a computer.

Get good value for your investment dollar. And when an elite dividend-payer sells off for some reason, see it as an opportunity to buy quality at a bargain price.

Once you’ve got price on your side, you’ve got to put time on your side. Here’s how.

Regards,

Brian

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These Three Stocks Pass Nearly Every Screener

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.

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Source: Investors Alley

4 Video Game Stocks Breaking Out

Source: Shutterstock

The major U.S. averages are holding near fresh record highs, fueled by optimism over the Federal Reserve’s recent dovish turn. Still, markets remain worried about ongoing geopolitical tensions as well as tepid economic data.

The futures market is eagerly pricing in multiple interest rate cuts before the end of the year.

Setting aside the macroeconomic discussion, the underlying health of the American consumer seems solid as we approach the mid-point of the year — which is about when everyone starts focusing on the holiday shopping season and the stocks that are best poised to perform as spending ramps up. No surprise then that a number of video game stocks are perking up on the heels of the recent E3 entertainment expo in Los Angeles. Hype is building for new titles and a coming console hardware refresh.

Here are four stocks to watch:

Video Game Stocks: Electronic Arts (EA)

Video Game Stocks to Buy: Electronic Arts (EA)

Electronic Arts (NASDAQ:EA) shares are breaking up and over their 50-day and 200-day moving averages, setting the stage for a move up and out of a five-month consolidation range. Analysts at Nomura initiated with an overweight rating.

The company will next report results on July 30 after the close. Analysts are looking for earnings of two cents per share on revenues of $722 million. When the company last reported on May 7, earnings of 69 cents per share beat estimates by 10 cents on an 8.7% rise in revenues.

Video Game Stocks to Buy: Take Two Interactive (TTWO)

Take Two Interactive (TTWO)

Take Two Interactive (NASDAQ:TTWO) stock has been surging, on an upward trajectory since bottoming in March. Analysts at the Benchmark Company recently raise their price target to $130 after witnessing a jubilant reaction to its Borderlands 3 demo at the recent E3 show. They are also looking ahead to the next Grand Theft Auto game. The last installment, Grand Theft Auto V, was initially released in 2013.

The company will next report results on Aug. 1 after the close. Analysts are looking for earnings of four cents per share on revenues of $383 million. When the company last reported on May 13, earnings of 50 cents per share missed estimates by 25 cents on an 18.7% rise in revenues.

Video Game Stocks to Buy: Activision (ATVI)

Activision (ATVI)

Analysts at Needham recently sat down with management of Activision (NASDAQ:ATVI), who noted an intent to focus on monetizing core franchises including Call of Duty and sticking to a more frequent and predictable schedule of content releases. Coverage was recently initiated with a neutral rating by analysts at Citigroup.

The company will next report results on Aug. 1 after the close. Analysts are looking for earnings of 26 cents per share on revenues of $1.2 billion. When the company last reported on May 2, earnings of 58 cents per share beat estimates by 33 cents per share on an 8.7% decline in revenues.

Stocks to Buy: Facebook (FB)

Facebook (FB)

While Facebook (NASDAQ:FB) might not be the first name one thinks of when it comes to video games, the company is a major player both through its Oculus VR subsidiary as well as its social media-based games. Facebook as well as competitors are in the midst of the launch of “Gen 2” VR headsets with better tracking and resolution, among other features.

The company will next report results on July 24 after the close. Analysts are looking for earnings of $1.87 per share on revenues of $16.5 billion. When the company last reported on April 24 earnings of $1.89 per share beat estimates by 27 cents on a 26% rise in revenues.

As of this writing, William Roth did not hold a position in any of the aforementioned securities.

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Source: Investor Place

Buying a Covered Call On Chipmaker Up 75% YTD

There are primarily two companies known for producing the majority of computer graphics cards (GPUs). Most investors are familiar with NVIDIA (NVDA), which tends to be a high-flying, headline grabbing stock.

However, Advanced Micro Devices (AMD) is also a huge player in the industry – but can often fly under the investment community’s radar.

Lately however, it’s AMD that’s been the high-flyer. It’s up a whopping 75% year-to-date. There are several catalysts behind the climb.

First off, investors appear to be big fans of the company’s new products and partnerships. AMD is partnering with Samsung to use its graphics chip in smartphones. Samsung and Apple (AAPL) control most of the smartphone market in the US – so this is clearly a big deal.

In fact, the deal with Samsung is so promising (along with other new PC chips being introduced), that Morgan Stanley (MS) actually admitted its bearish call on the stock was wrong. The investment bank subsequently upgraded the stock.

What’s more, AMD recently announced its chips will be in Microsoft’s (MSFT) next-generation console. That’s yet another huge potential market for the GPU maker. It’s easy to see why investors have been so eager to snap up shares.

While the stock isn’t likely to continue its torrid pace higher, it’s hard not to be bullish on the company over the long-run given the news. Even the trade war with China and threat of an impending recession may not be enough to halt the share’s march to new highs.

So, what’s the best way to trade AMD? Let’s look to the options market for an interesting trade…

A trader with access to a lot of a capital (so probably a fund) purchased 1.5 million shares of AMD versus selling 15,000 January 2020 calls. The share price was $34.19 at the time, and the calls were sold at the 40 strike. The premium collected was $3.80 per call, or $5.7 million in total.

The call premium provides downside cushion for the long (purchased) shares. Since the stock price was at $34.19, the long stock is protected down to $30.39 (because of the $3.80 collected).

What’s more, the premium from the call works out to an 11.1% yield over the life of the trade. With the calls expiring in January of 2020, it works out to roughly 6 months. Annualized, we’re talking about nearly a 22% yield on the trade.

This covered call is moderately bullish because it allows for the stock to appreciate up to $40 before the gains are capped by the short call (at least through January expiration). The stock gains can generate up to 17% profits before the cap is hit.

All told, this trade can make 28% in 6 months (between premium collected and stock growth potential) if AMD is at $40 or above next January. Plus, it provides the downside cushion I mentioned above.

Generally, I’m more of a fan of short-term covered calls (30-45 days until expiration). However, it’s hard to argue with the yield and upside potential of this trade – particularly if you’re at least moderately bullish on AMD. This would also be an easy trade to execute in your own account.

MoneyShow Crashes The Market

The Las Vegas MoneyShow kicked off on Monday with a 600 point drop in the Dow Jones Industrial Average. Not a good stock market start for a conference focused on investment strategies and idea.

My first presentation was one of the earliest on the schedule for Monday morning. The groups I talked to were very interested in learning about dividend-centric strategies that don’t rely on share price appreciation.

Over the last five years, my presentations have evolved to spend more time on developing individual portfolio strategies. I now like to talk with investors about developing individual strategies.

The fact is that without an investment plan, most investors are doomed to the greed and fear cycle of buying high and selling low. Whatever strategy you develop should be designed to take the emotion of your investment decisions.

Here is a good anecdote from this year’s MoneyShow so far. I know the reps and portfolio managers from Reaves Asset Management well.

They have done exclusive online conference calls with my subscribers. I ran into one of the Reaves guys in the hall, said hi, and he was happy to let me know that utilities were the one stock market sector having a up day.

The folks at Reaves Asset Management run private money and a pair of publicly traded utility focused funds. The Reaves Utility ETF (UTES) is the only actively managed utility stocks focused ETF.

The fund has consistently out performed (by a small amount) the utilities index since its 2015 launch. Through April 30, over the last year, UTES has returned 18.2%. To compare, for the same period the SPDR S&P 500 ETF (SPY) returned 13.3%.

UTES is a nice ETF to hold in turbulent times for the stock market.

My presentations are mostly about strategies and techniques individual investors can use to build their own portfolios. However, I know the attendees love to hear stock ideas, and one from my first presentation was also one of the few stocks going up while the market went steeply down.

That stock is NextEra Energy Partners (NEP). This company is in the “Yieldco” category, similar to sponsored oil and gas infrastructure asset stocks.

NEP owns interests in wind and solar projects in the U.S., as well as natural gas infrastructure assets in Texas. The shares yield around 4% and the dividend grows every quarter.

My morning presentation was one of three in what the MoneyShow calls a Master Class. There were three dividend investing experts speaking. One of the others very much likes a stock that has done very well for my newsletter subscribers.

The company is Arbor Realty Trust (ABR), a commercial finance REIT. This stock has had a great run over the last two years, and its nice to see another well respected analyst express a very positive opinion about the stock’s future. ABR yields 7.9% and has been growing the dividend.

Final note on Las Vegas hotels. I can’t stop turning the wrong way every time I come off the elevator. I know I do it so second guess my first choice and it still turns out to be opposite of the direction I wanted to go.

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7 A-Rated Stocks That Are Under $10

Source: Shutterstock

Earnings season is fully upon us now and things are as expected … there are some big winners and some big losers. While growth should be solid this year, it’s not likely to set any records. That makes it important to find the opportunities in the market now, especially since there has been the big tech run-up in Q1. While some of these tech stocks are solid contenders, not all of them can be counted among the top stocks to consider now.

The big run in Q1 just got the market back to breakeven after the horror show in Q4, especially in December.

So now is the time to look for opportunities in select sectors where there should be better than average growth in the coming year. And within those sectors, there are some low-priced stocks with a lot of potential that are worth adding to your portfolio now.

The top stocks under $10 I feature here all have momentum in their favor — as measured by my Portfolio Grader — and their businesses are growing faster than their larger peers. These names also have an A-rating according to my system. Just make sure not to chase them too far from their current prices.

ICICI Bank Ltd ADR (IBN)

ICICI Bank Ltd ADR (IBN)

Source: Shutterstock

ICICI Bank Ltd ADR (NYSE:IBN) isn’t as much a play on the U.S. as it is the growth in India. It is only one of a handful of Indian stocks that trades in the U.S.

Remember, India’s GDP last year was 7% — 10% faster than China’s growth. And it is likely to continue posting numbers like that for years to come.

But like most emerging economies, it has its fits and starts. That’s why owning a solid bank is a good way to get some exposure without taking on too much risk. And that’s where IBN fits in.

IBN is one of only three privately held major Indian banks and it is growing like a tech company. What’s more, it’s also selling Prudential insurance in India through a majority-owned subsidiary ICICI Pru, a new product with huge potential. And insurance also has healthy margins.

With the U.S. and Chinese economies doing well, it’s a good signal that India will continue to prosper and develop. IBN stock is up more than 30% in the past year and has plenty of headroom left.

First BanCorp (FBP)

First BanCorp (FBP)

Source: Shutterstock

First BanCorp (NYSE:FBP) is a Puerto Rico-based bank that also has operations in the Caribbean and in the U.S. It’s on fire.

Given the massive devastation of the island from the recent hurricane, I mean that in a good way. FBP stock is up nearly 30% year-to-date and more than 50% in the past 12 months.

Much of this is due to the rebuilding efforts that are going on in the region now. It takes a while after a major natural disaster for funding to show up and start getting disbursed.

FBP is now in the middle of rebuilding the island and the various other islands where it has operations. And given its status of a territory of the U.S., native Puerto Ricans live in the U.S. and send money back to family there. This is also strengthening the economy of the island.

While fixing the island will happen over a long period of time, at some point it will end, but expanding new opportunities will present themselves and FBP will be on the front line. And it will have a strong balance sheet to help.

Infosys Ltd (INFY)

Infosys Ltd (INFY)

Source: Shutterstock

Infosys Ltd ADR (NYSE:INFY) is a global technology, outsourcing and consulting firm that offers an array of services to some of the largest businesses in the world. It’s headquartered in Bangalore, India and has been around for more than 35 years.

With a $46 billion market cap, this is an established company that continues to grow, taking advantage of expanding economies around the world. And where economies are tight, they also look to INFY to help grow their productivity by outsourcing operations that are being solved efficiently in companies’ current operations.

INFY has a respectable 2.9% dividend and is up 10% year-to-date and nearly 20% in the past year. Its last quarter’s earnings beat expectations by a comfortable margin but it warned that this year may not be as strong. But there are plenty of companies that have pointed this out; it’s not a shock. However, it has meant that the stock has lost some ground and is at a good price.

Telefonaktiebolaget LM Ericsson (ERIC)

Telefonaktiebolaget LM Ericsson (ERIC)

Source: Shutterstock

Telefonaktiebolaget LM Ericsson(NASDAQ:ERIC) is in the 5G wars right now.

As a leading global telecom company, it is stuck between the leading 5G telecom player in the world — China’s Huawei — and the U.S. government. The U.S. is concerned that Huawei equipment may contain surveillance equipment to tap into telecommunications used over the network and has told allies that the U.S. will not allow aid money to be used to buy Huawei equipment or support a 5G network using its equipment.

And while that may seem like a great thing for ERIC — based in Sweden — the problem is, China isn’t interested in making it easy for ERIC to muscle in on its 5G dominance. The U.S. doesn’t have a native company that can scale up 5G, so there’s an uneasy stalemate among the players.

But regardless of how it shakes out, ERIC is still a major global player. And as networks upgrade and expand, ERIC will be a significant source of the work.

The stock is up 11% YTD and more than 30% in the past year. It may be a little bouncy for a while, but as long as the global economy keeps chugging along, ERIC will be in growth mode.

Cousins Properties (CUZ)

Cousins Properties (CUZ)

Source: Shutterstock

Cousins Properties Inc (NYSE:CUZ) is a commercial real estate investment trust (REIT) that has been around since 1958. Essentially, it owns and operates commercial buildings in some of the hottest regions of the Southwest, South and Mid Atlantic.

Having been launched and headquartered in Atlanta, Georgia, it is one city where CUZ has significant holdings. Atlanta is one of the fastest growing cities in the U.S. and that growth is continuing.

It also has properties in the tech mecca of Research Triangle in North Carolina as well as Austin, Texas. It also has properties in major markets in Florida and Arizona.

REITs are particularly hot right now for two reasons. First, low-interest rates and a steadily growing economy are helping make financing and new investments easier. Plus, it’s a good market to raise rents in.

Second is a tax advantage that was written into law in 2018 that allows new tax advantages for REITs and their investors.

Plus, the real estate market has been dormant for a while now, so this revival has been a long time coming.

Also, late last month, CUZ merged with Tier REIT (NYSE:TIER) adding another 50% to its market cap as well as a successful group of properties in many of the same markets.

Cleveland-Cliffs (CLF)

Cleveland-Cliffs (CLF)

Source: Shutterstock

Cleveland-Cliffs Inc (NYSE:CLF) has been around for more than 170 years. It was around 15 years before the Civil War started. That is durability.

Part of the reason it has endured is the fact that it does one thing: It makes iron ore pellets from mines and factories in Michigan and Minnesota for the U.S. steel industry.

This year started strongly on two fronts. First, one of its main competitors, Brazil-based Vale SA (NYSE:VALE) had to cut production when a dam broke at a mining operation in Brazil causing an incredible amount of damage.

Second, the strength of the U.S. economy has meant more demand for steel.

This is why CLF is up 27% YTD and 34% in the past year. And even after this price run, CLF stock is still delivering a 2% dividend.

CLF is a small company — about a $2 billion market cap — but it is a focused company that has seen a lot more economic challenges than most other firms in its sector. It may not be flashy, but it’s hot now and will continue to provide for shareholders.

Vereit Inc (VER)

Vereit Inc (VER)

Source: Shutterstock

Vereit Inc (NYSE:VER) owns and manages single tenant commercial properties in the US.

That means it owns properties that one business occupies, which makes it much more manageable for the REIT. Plus many of its customers are national chains, so it is has a close relationship with major retailers and restaurants.

For example, its top five clients are Red LobsterWalgreens (NASDAQ:WBA), Family DollarDollar General (NYSE:DG) and FedEx (FDX). Its top 10 clients represent 27% of the company’s total income.

As the U.S. economy continues to expand and consumers continue to spend, this all bodes well for VER.

Up 16% YTD and delivering a whopping 6.7% dividend, this is a great REIT at a great price and at a great time.

Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth InvestorBreakthrough StocksAccelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.

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Source: Investor Place

10 Highest Yield Dividend Stocks Going Ex-Div This Week

Stock SymbolEx-Div DatePay DateDiv PayoutYield
PVL04/29/1905/14/190.0227.43%
ORC04/29/1905/31/190.0814.26%
AGNC04/29/1905/09/190.1812.14%
MSB04/29/1905/20/190.8911.88%
GECC04/29/1905/15/190.0811.77%
CLNC04/29/1905/10/190.1411.20%
IGD05/01/1905/15/190.0611.07%
PSEC04/29/1905/23/190.0610.75%
FTF04/29/1905/15/190.0910.75%
CRT04/29/1905/14/190.1110.66%

Data current as of market close 04/25/19.

Pay Your Bills for LIFE with These Dividend Stocks

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.

Click here for complete details to start your plan today.

The Best Electric Vehicle Stock to Buy Today

Electric vehicles (EVs) are taking the market by storm, and soon, auto manufacturers everywhere will fall in line.

In fact, investors watching this shift are gearing up to make a lot of money by investing in electric vehicle stocks.

Just take a look at Volkswagen AG’s (OTCMKTS: VWAGY) most recent announcement: They plan to produce 22 million EVs within the next decade.

And right now, manufacturers everywhere are slowly phasing out gas-powered vehicles. If you don’t believe that, just look at their online catalogs. Check out all the hybrids on the road nowadays.

This is a $1.7 trillion industry where the biggest names are announcing their lineups of hybrids and EVs.

And while most vehicles still run on gas, the above trends show the shift has already started. Whether it’s Ford, BMW, or Volkswagen, they’re all putting money into hybrid and electric vehicles.

5G Revolution: This breakthrough technology is expected to unleash $12 TRILLION in new wealth… and one $6 stock could be better-positioned than any other to skyrocket. Learn more.

Even Money Morning Defense and Tech Specialist Michael A. Robinson sees EVs as the future of the auto industry. In fact, he has a play that can help you get in on the action.

It’s one of the best electric vehicle stocks you can buy. And it’s kind of like owning an exchange-traded fund (ETF) for future automotive technology.

This EV Is Changing the Game

Volkswagen’s goal of 22 million EVs is a game-changer for the auto industry. In fact, it’s a 46% jump from its previous target of 15 million.

And right now, Volkswagen is the best-selling automotive company on the planet. It has even outsold Toyota Motor Corp. (NYSE: TM) for the past three years in a row.

Beyond that, the company predicts 40% of all its vehicles will be EVs in just a few years. By 2050, it expects to be completely carbon-neutral.

Allied Market Research says Volkswagen is a key leader in global EV production. According to their research, it’s a market segment that’s growing more than 22% annually.

AMR even predicts that the company’s EV sales will top $567 billion by 2025. That’s a 380.5% increase from 2017.

With such impressive growth, it’s a golden market for automotive suppliers to jump in and supply components to manufacturers for EVs.

In fact, we have a company that is one of the best suppliers to automotive manufacturers. This company is one of the best electric vehicle stocks to buy today.

So, if you’re a tech investor looking to make big profits, you better take this EV stock out for a spin.

Pay Your Bills for LIFE with These Dividend Stocks

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.

Click here for complete details to start your plan today.

Source: Money Morning

Option Traders Make a Massive Bullish Bet on This Transportation Play

It is nearly impossible to overstate how valuable options can be for traders. The benefits to using options for trading are numerous and straightforward. In many cases, the more traders get used to using options, the more they realize how beneficial they can be.

For example, traders will often begin experimenting with options because of the leverage they provide. Having 1 option equate to control of 100 shares of stocks can certainly lead to greater returns than simply using stocks.

However, options leverage is more than just increasing returns. The leverage component also means traders can trade stock they may not normally be able to afford. Take Amazon(AMZN) for example. It’s nearly an $1,800 stock. With options, you could conceivably control 100 shares ($18,000 worth) of AMZN for a few hundred dollars.

Options can also provide access to strategies traders may not normally be comfortable with, such as short selling stock or trading commodities. Using options can make these strategies simpler and safer than they’d otherwise be.

But options can provide other benefits above and beyond how they’re used in trading. In fact, studying the options market and following options action can be highly instructive and rewarding.

Big investment firms, funds, and trading desks will often use the options market to establish their positions in stocks and ETFs. Traders can often get an idea of what the smart money is doing by following big, block trades in options.

Sometimes, block trades will occur in stocks you’ve never heard of or that rarely trade in big volume. These situations can be particularly useful. Not only are they easier to spot among the noise of everyday trading, but it can often be easy to tell what the goal of the trader is.

For instance, let’s look at a large block trade in Knight-Swift Transportation (KNX). The trucking and transportation company trades about 2.5 million shares a day on average, but only about 2,000 options. So, when a massive options trade hits the wire in this name, it can be an eye-opener.

This particular block was a trader buying 20,000 August 35 calls for $2.35 per contract with the stock trading at $32 per share. What this means is that KNX needs to be at $37.35 or above by August expiration for the trade to break even.

The trader is spending $4.7 million for this trade, which is the max loss potential. So, this clearly is a very bullish trade and the strategist is risking a lot on the call purchase. After all, we’re talking about over a $5 move higher (over 15%) in a stock that doesn’t make big moves all that often.

On the other hand, the trade will generate $2 million for every dollar the stock moves higher than the breakeven point. In other words, there is some substantial upside to this strategy. And, it isn’t likely someone is dropping nearly $5 million on calls on a whim.

This is exactly the sort of situation where copying the trade is a reasonable strategy. KNX options don’t trade that much and a straight up call trade is pretty transparent. Someone thinks this stock is going up in the coming weeks. And, for about $250 – $300 you could control 100 shares of KNX for about 5 months.

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My Top “Fed-Proof” Buy: 7.7% Dividends, Fast 10% Gains

Don’t become complacent with your dividends! Your portfolio and your income are at the whim of Fed Chair Jerome Powell—now more than ever.

I realize he’s acting like a “good boy” at the moment. But what if JP decides to go rogue again and exercise his independence? A surprise rate hike would be catastrophic to many income portfolios.

That means you need to “Fed-proof” your nest egg and your dividends. Today we’ll discuss four funds paying dividends up to 10.7% that do just that.

These four closed-end funds (CEFs) have been left for dead in this market rally. That makes them great “Fed insurance”: they’re cheap, so they’ve got built-in upside if the rally goes into overtime.

If stocks flame out, they’ll likely just trade flat. And we’ll still grab their outsized dividends!

More on these four “Fed-proof” plays—ranked from worst to first—shortly. First, we need to talk about Jerome Powell.

Stocks: Say the Magic Word

Let’s rewind to the holiday season.

Back then, the first-level crowd—beaten down by the selloff—was desperate for any reason to jump into stocks. They found it in early January, when Powell said the central bank would be “patient” with the pace of rate hikes.

Between then and the end of the month, when the minutes of the latest Federal Reserve meeting came out, stocks did this:

“Boring” Fed Excites Investors

Here’s the crazy thing: those January 30 minutes said nothing—the Fed just said “patient” a few more times. And investors doubled down!

More “Patients,” More Gains

No, it wasn’t economic numbers that drove this “second stage” of gains: unemployment was 3.8% in February, a bit lower than 3.9% in December. Fourth-quarter earnings rose double-digits, as they’ve done for five straight quarters now.

That leaves us with the Fed, which we can thank (or curse, if you’re hunting for cheap dividends) for this market run.

Time to Buy “Fed Insurance”

Nobody knows how long this “Fed rally” will last. Powell’s “patient” line could be drowned out tomorrow. Or he could roll out a rate cut, igniting stocks again.

Either way, we’re not going to sit on the sidelines. Our next move starts with …

4 “Fed-Proof” Dividends on the Cheap

As you can see, each is cheap in two critical ways: a double-digit discount to NAV (in other words, their market prices are way below their portfolio values), and NAV gains that have outraced their market-price gains this year.

Translation: management is putting up better numbers than it’s getting credit for!

But that doesn’t mean they’re all great buys now. Let’s take a trip through these four, in order of appeal:

Worst: Templeton Dragon Fund (TDF)

TDF boasts the biggest dividend yield of our quartet (10.6%!), the biggest discount to NAV (11.5%) and a portfolio that has topped the fund’s market price this year.

That’s where the good news ends for TDF.

For starters, as its name suggests, the fund has 78% of its assets in China, whose economy is slowing, partly due to President Trump’s trade war.

A Lead Weight

Source: FranklinTempleton.com

What’s more, TDF’s dividend is as erratic as they come: according to Templeton’s website, the rate is set “based on current market conditions,” and the payout only goes out semi-annually. That makes TDF unappealing for anyone trying to set up a predictable income stream. Check out how lumpy TDF’s payout has been:

TDF’s Gyrating Dividend

Source: CEFConnect.com

So let’s pass on TDF and move on to a fund with a bit more appeal, thanks to its deep roots in the USA.

Mediocre: Boulder Growth & Income Fund (BIF)

BIF sports the biggest discount of our quartet, at 16.9%. It also has the best pedigree, tapping the value-investing strategies of Warren Buffett.

If you’ve wanted to hold Buffett’s Berkshire Hathaway (BRK.A) but have shied away because it lacks a dividend (and a class A share goes for $307,000!), BIF, with its 3.8% yield, is for you: Berkshire accounts for a third of its holdings:


Source: Boulder Growth and Income Fund Fact Sheet

So why is BIF only my third-best pick?

First, the dividend is paltry for a CEF, and BIF recently switched from a quarterly to a monthly payout—a monthly dividend is a better deal if you’re leaning on your portfolio for income, because your cash flow matches up with your bills.

(You can get my favorite monthly payers now in my “8% Monthly Payer Portfolio,” which I’ll give you when you click here).

Second, by leaning so heavily on one stock, management isn’t providing a lot of value for their 0.98% fee. And third, BIF’s 16.9% discount has been locked at a low level for a decade, so it’s tough to see any “snap-back” upside here:

BIF’s Never-Ending Sale

Still, if you want to buy Berkshire and other big caps, BIF could be worth a look; you’ll get a dividend that doubles the yield on the SPDR S&P 500 ETF (SPY).

Better: The Neuberger Berman MLP Income Fund (NML)

NML holds pipeline master limited partnerships (MLPs) and has posted the biggest market-price gain of our group—a run that’s been topped by its NAV. There’s reason to expect more: even after its rebound, NML’s market price is still well off the two-year highs it hit in January 2018.

That’s because it started from a low base: energy generally, and NML in particular, took a hard hit in the 2018 selloff, illustrating a big risk of holding NML: volatility. The CEF sports a beta rating of 1.4, making it 40% more volatile than the S&P 500.

However, it does trade at an 11.3% discount to NAV—below the 9.2% average in the past year—so there’s potential for some discount-driven gains here, too, as US oil production continues to rise: NML’s holdings are all in the US.

The dividend is sustainable at 8.3%, thanks to that big discount. That’s because the yield on NAV—or what NML needs from its portfolio to keep its payout steady—is just 7.3%, way below the 21% total NAV return it’s already seen this year.

Finally, most MLPs will kick you a K-1 tax form around your return deadline and annoy you and your accountant. NML gets around this by issuing you one neat 1099.

But if you’re still leery about the always-wild energy space after this big run-up, put NML on your watch list and go with my top “Fed-proof” buy.

Best: The Tekla Healthcare Opportunities Fund (THQ)

The biggest upside is with THQ, whose NAV has overshot its price by a mile this year. It’s only a matter of time before its price closes that gap again:

THQ’s “NAV Magnet”

Plus, its discount, currently 10.3%, has been as narrow as 6.25% in the last 18 months—the second ingredient for at least 10% upside here.

THQ is no dividend slouch, either, with a 7.7% yield on market price translates to just a 7% yield on NAV, which is already nearly covered by its 6.5% year-to-date NAV return. A 7% yearly NAV return is a cinch for Tekla going forward, too. It employs financial pros and medical researchers to get a jump on the next pharma breakthrough.

That strategy is proven: check out THQ’s lifetime return versus the SPDR S&P Pharmaceuticals ETF (XPH):

Expert Management Pays Off

Finally, THQ pays dividends monthly—a nice extra benefit for retirees and anyone else leaning on their portfolio to pay the bills.

Rx for a Happy Retirement


5 More “Fed-Proof” Monthly Dividends Up to 9.9%

THQ is just one monthly dividend payer I’m pounding the table on now.

My Contrarian Income Report portfolio boasts 5 more monthly paying stocks and funds that are also terrific buys, as the market sits on pins and needles, waiting for Powell’s next change of heart.

Each of these income powerhouses gives us the sky-high yields (7% on average, with one paying an incredible 9.9% in cash!) and steep discounts we need to thrive, no matter what happens with the Fed—or the economy.

They’re just a click away—all you need to do is take CIR for a quick, no-commitment road test to get your hands on these 5 cash machines now, plus all 19 income plays in this dynamic portfolio (average yield: 7.4%; highest yield: 11.9%!).

That’s not all, either, because you also get …

“Monthly Dividend Superstars: 8% Yields With 10% Upside”

This breakthrough Special Report lays out my top monthly paying buys—the very best of the best picks for your portfolio right now. You’ll discover:

  • An 8% payer that’s set to rake in huge profits from an artificially depressed sector.
  • The brainchild of one of the top fund managers that’s giving out generous 9.1% yields.
  • A steady Eddie high-yielder that barely blinks when stocks plummet. (This one is my favorite “Fed insurance” play of all.)

Click here to get full wealth-building package: instant access to my 19 Contrarian Income Report income plays and my top 8%+ monthly paying buys for your portfolio now.

Source: Contrarian Outllook