Dividends

4 Smart Retirement Buys for 7.2% Dividends and Big Gains

Today I’m going to show you 4 funds that, when put together, give you a juicy 7.2% dividend yield.

And that’s just the start. In addition to giving you $595 per month in income for every $100,000 invested, this “instant” 4-fund portfolio gives you diversification that limits your risk of losing cash in a market downturn.

Oh, and there is capital gains upside here for you, too.

The reason for that upside is that all of these funds are trading at a pretty big discount to their net asset value (NAV).

Let me explain.

Each of these picks is a “closed-end fund,” a unique type of fund that has a few key advantages over more familiar mutual funds and exchange-traded funds. A big one is that CEFs can—and very often do—trade on the market at a price that is below the actual market price of all of the assets inside the CEF.

How is this possible?

It boils down to this: CEFs set how many shares are in the fund when they do an initial public offering and don’t release new shares in the future. That weird mechanism means funds will often trade for less than their NAV—and those discounts can be really big.

Which brings me to…

“Instant Portfolio” Pick #1: A Real Estate Titan With a 7.9% Dividend

Every real estate developer, landlord and house flipper’s dream is to get their hands on a property that’s selling for 17% below its actual market value. But those deals are hard to come by.

In CEF land, however, they’re easy to get.

All you need to do is buy shares in the RMR Real Estate Income Fund (RIF), a CEF that’s been around since 2005 and not only survived the bursting of the 2008–09 real estate bubble but has also been paying out massive dividend checks ever since.

And right now, RIF is paying out a 7.9% yield.

The fund’s portfolio makes this possible. RIF owns shares in some of the largest real estate investment trusts (REITs) in the world—basically companies whose sole purpose is to buy, manage and rent out real estate.

And since RIF’s portfolio is diversified across 125 REITs, shareholders are getting a slice of literally thousands of properties in all kinds of sectors: retail outlets, assisted-living facilities, offices and even data centers for cloud-computing companies.

And here’s why you want to buy now:

A Big Sale Ending Soon

Notice how the fund’s discount to its NAV has gone off a cliff in recent years—but it’s starting to recover? The current 16.7% discount is a bargain that may end soon thanks to a pile-in back into CEFs. That makes this one a fund to consider now—because buying at this point could set you up for 25% capital gains while this fund’s discount disappears.

“Instant Portfolio” Pick #2: Peace of Mind and a Tax-Free 5.7% Payout

The Nuveen Quality Municipal Income Fund (NAD) is not only a great option because of its 5.7% dividend yield but also because of the diversification and low volatility it provides.

Let me explain by comparing this fund to the S&P 500, which we will do with the benchmark SPDR S&P 500 ETF (SPY). In 2017, the stock market famously saw extremely low volatility, steady gains and little fear, which resulted in stocks climbing up and up, with few corrections.

Then 2018 happened.

Fear Is Back!

The orange line here represents volatility in price changes over the last month for SPY, and you can see how the line fell sharply and stayed low throughout 2017.

But this is an aberration. Big spikes, like we saw in 2015 and 2016, are the norm—moments when the market goes into a panic and starts selling shares. The blue line, however, represents the volatility we saw with NAD, a fund with bonds from as diverse places as Utah and New York.

Although the fund’s price swings did accelerate a bit in late 2016, after Donald Trump was elected president (and the market worried about how his tax plans would affect municipal bonds), the blue line stays pretty quiet all the time.

There’s a reason for this: municipal bond values do not go up and down a lot. That means buying NAD gets you steady income without big paper losses when the market freaks out.

That’s why you need to diversify your portfolio so you aren’t forced to sell when the market collapses. With NAD, you can hedge against a market downturn by diversifying beyond stocks and into these low-volatility, high-quality municipal bonds.

And if you’re worried about missing out on gains, don’t be. Here are NAD’s total returns over the last decade:

Strong Gains in a Safe Haven

A 6.8% average annual return from a fund with such low risk shouldn’t be possible. But here it is.

“Instant Portfolio” Pick #3: A 7.1% Dividend From Top-Quality Stocks

Of course, we still need stocks in our portfolio so we can profit from the good times in the stock market—and I see many of those still to come. As I wrote in a March 8 article, stocks are set for a good year, thanks to rising earnings and a better economic environment, and we want to be part of that.

That’s why you should take a serious look at the AGIC Equity and Convertible Income Fund (NIE).

Not only does NIE pay a 7.1% dividend, but it also has an enviable portfolio full of winners, such as Amazon.com (AMZN), Microsoft (MSFT), Alphabet (GOOGL) and Visa (V). NIE is able to turn big gains from these stocks into steady income for shareholders. That’s why the fund has been able to deliver this massive 9.8% average annualized return over the last decade:

Strong and Steady Returns

The fund also makes its dividend safer with convertible bonds. Let me explain.

In addition to shares in the best companies in the world, NIE also buys and trades a group of unique bonds that smaller and riskier companies issue. These “convertible bonds” are a kind of debt with a special agreement that, if the company’s stock rises to a certain level, the bonds will turn into common stock.

NIE buys these convertibles because it gets them a reliable income stream from these companies and the potential upside of owning actual shares in the firm. The fund has a long track record of using these to secure its dividend and provide more capital gains upside for shareholders.

And despite its amazing track record, NIE is selling at a 10.4% discount! That’s why it’s time to buy now.

“Instant Portfolio” Pick #4: A Rock-Steady Corporate-Bond CEF With a 7.3% Dividend

Speaking of bonds, we should also add some corporate bonds to our “instant” portfolio. Not only can we get a 7.3% dividend by doing this with the Western Asset High Yield Defined Opportunity Fund (HYI), but we can also dip our toes in this asset class at a massive 10.2% discount.

And now is clearly the time for HYI to shine.

That’s because the market has turned its back on this fund for too long, despite the recent improvements management has made. Specifically, HYI has focused more on companies that are on the cusp of getting credit upgrades that will raise the value of their bonds. Just take a look at how its discount to NAV has trended over the last few years:

The Discounts Just Get Bigger

The market has sold off HYI in a big way, sending it from an 8% premium to NAV to an 11.2% discount.

And there was a good reason for that back in the mid-2010’s: HYI was not doing well. Its total return was about 17.5% from mid-2010 to 2014, which isn’t great and definitely lagged the S&P 500 over the same period (SPY rose 65% during that same timeframe).

But that’s been changing. Take a look at this chart.

Gains Accelerating for HYI

HYI is up 25% from the beginning of 2016, and its strong gains are just getting started. Why? Because, again, the economy is improving—which means the credit quality of the bonds HYI holds is starting to go up. That increases demand for them, resulting in higher prices on the market and profits for HYI shareholders.

Exposed: The “Billionaires Only” 7.6%+ Dividends You Can Buy NOW

Here’s something else you may not know about CEFs: some of the world’s richest billionaires have been quietly cashing in on them for years.

I’m talking about financial titans like Bill Gates, Bill Ackman and Jeffrey Gundlach, the legendary “Bond God.”

Then there’s Boaz Weinstein, who made a fortune betting against the ridiculous trades of JPMorgan’s so-called “London Whale” back in 2012.

In 2017, Weinstein dropped a cool billion into—you guessed it—CEFs.

Here’s what he had to say about the big profits waiting to be made from these funds:

“You go into it hoping the discount will narrow on its own, but one of the nicest points about this investment is that while you wait, you earn an above-average yield, given the discounted price.”

He also called CEFs “a rare corner of the market where retail investors can get an edge over institutions.”

I couldn’t have said it better myself!

And now is your chance to grab your share of the profits from this exclusive corner of the market.

The 4 CEFs I just told you about are a great start. But right now I’m pounding the table on 4 OTHER funds throwing off fatter average dividends—7.6% as I write—and one of these unsung cash machines even pays an amazing (and growing!) 8.1%.

Better yet, all 4 trade at even more outrageous discounts to NAV, putting you well on your way to 20%+ GAINS in the next 12 months! Throw in that 7.6% average dividend and you’re looking at a fast 28%+ gain here—with a big chunk of that in CASH!

Returns like these are common in the CEF space. No wonder billionaires like Weinstein, Gates and others have silently flocked to them.

Your opportunity to join this “billionaire’s club” through the 4 very best funds in the space is open now. But the weird discounts on these stout 7.6%+ payers are already starting to slam shut, so you need to make your move!

Michael Foster has just uncovered 4 funds that tick off ALL his boxes for the perfect investment: a 7.4% average payout, steady dividend growth and 20%+ price upside. — but that won’t last long! Grab a piece of the action now, before the market comes to its senses. CLICK HERE and he’ll tell you all about his top 4 high-yield picks.

Source: Contrarian Outlook

Uncategorized

The 7 Best Stocks from Each Sector Through Q2

We are now rolling into the second quarter of 2018. So far this year the markets have been undeniably jumpy. Just last week global markets posted sharp losses as talk of a trade war continues to spook investors. But for the stocks listed below 2018 hasn’t been so bad at all.

In fact, it’s been something of a blessing. Bearing in mind the recent turbulence, all these stocks have defied the market and posted exceptional first-quarter gains. Here we dive in and take a closer look at the best-performing stock from each sector and what has prompted these out-sized movements.

Some are obvious picks — Netflix, Inc. (NASDAQ:NFLX) for example — while others slide in relatively under the radar; Whiting Petroleum Corporation (NYSE:WLL) anyone? But the crucial question is: Are these stocks capable of recording similar high-growth levels in the coming months?

Using TipRanks we can see both the overall Street take on each stock’s outlook and specific insights from the Street’s top analysts. And if the stock isn’t looking so promising for the next quarter, I suggest a better stock pick to boost your 2018 portfolio. Ready? Let’s take a closer look:

Best Sector Stocks Through Q2: Healthcare: TG Therapeutics (TGTX)

Source: Shutterstock

Sector: Biotech

Shares in TG Therapeutics, Inc. (NASDAQ:TGTX) have exploded by a whopping 76% over the last three months. This innovative biotech is focused on developing novel treatments for devastating blood cancers and autoimmune diseases.

“We believe TG is generating a complete B-cell therapy franchise that is unique in the oncology space, which could provide substantial value across various B-cell cancers” cheers B.Riley FBR’s Madhu Kumar. He selects TGTX as an Out the Gate 2018 Pick, due to his “reasonable confidence in success in the Phase III UNITY-CLL trial, with interim data expected in 2Q18.”

For investors looking for some serious upside potential, five-star HC Wainwright analyst Edward White sees the stock spiking to $38 (154% upside potential). He reiterated his buy rating on March 21. White bases his valuation on the potential revenue and success of the company’s two main drugs ublituximab and umbralisib. Combined, he is projecting very promising 2026 revenue for these drugs of $990 million.

Bear in mind that so far White has struck gold with his TGTX recommendations. Across his 20 TGTX ratings he scores an 85% success rate and 38.3% average return.

Overall four analysts have published recent buy ratings on TGTX. No “hold” or “sell” ratings here. And with an average analyst price target of $27.50, on average analysts are predicting huge upside potential of over 80%. Conclusion: for risk-tolerant investors, this top stock still seems like a bargain!


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Best Sector Stocks Through Q2: Twilio (TWLO)

TWLO Stock

Source: Web Summit Via Flickr

Sector: Tech

Cloud communications platform Twilio Inc. (NYSE:TWLO) is no stranger to volatility. After going public in June 2016 at $15/share, prices surged to $71. But a 7-million secondary share offering saw the stock plummet just as fast. And on the shock loss of major customer Uber, shares sunk to just $23.

Now TWLO is on a roll again. In the last three months, prices have climbed almost 61% to $40. So what does all this mean? Will this bumpy ride continue? Well word on the Street is decidedly bullish. Analysts are excited about the recent unveiling of Twilio Flex, a programmable contact center vertical that is poised to become a major new platform for Twilio.

Following Twilio’s strong 4Q17 results, Oppenheimer analyst Ittai Kidron takes a deep dive into the company’s growth metrics. Even though sentiment is improving, the stock’s long-term potential is still underappreciated.

Kidron explains: “We believe that (1) expectations still underestimate Twilio’s growth potential; (2) expansion into traditional enterprise is showing early signs of success and offers a long runway ahead; (3) gross margin is likely to bottom in 1Q18 and has the potential to recover thereafter; and (4) Twilio continues to outperform the competition.”

In total, this ‘Strong Buy’ stock boasts 7 recent buy ratings vs 3 hold ratings. On average these analysts see just 5% upside potential from current levels. However, on the high-end Drexel Hamilton’s $47 price target from Brian White suggests much more appealing upside of almost 18%.


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Best Sector Stocks Through Q2: Bofl Holding (BOFI)

Source: Shutterstock

Sector: Financials

Internet-based Bofl Holding, Inc. (NASDAQ:BOFI) is proof that banks don’t need physical branches to succeed. Over the last five years, BOFI has posted life-changing returns 344%. Even in the last quarter shares climbed 35% to $39.45 due to better-than-expected earnings results.

For top B.Riley FBR analyst Steve Moss this is a top-notch stock with multiple positives. We are looking at “a quality franchise with clean credit, solid loan growth, ample capital, and strong profitability.” However, bearing in mind the stock’s sharp gains, he removes BOFI from his Alpha Generator list. He notes a “significant narrowing of its valuation relative to peers.”

Nonetheless, his report ends on a bullish note with a price target ramp from $42 to $45 (14% upside potential). Moss puts the move down to ‘increased confidence’ in estimates following H&R Block‘s (NYSE:HRB) disclosure of $1.07 billion in refund anticipation loans. Indeed this is the first year BofI is the exclusive provider of HRB’s refund anticipation loans giving the company huge cross-selling potential.

In total, this Strong Buy stock has recorded 3 recent buy ratings vs just 1 hold rating. Meanwhile the $43.25 average analyst price target indicates upside potential of just under 10%.


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Best Sector Stocks Through Q2: Fossil Group (FOSL)

Fossil Group, Inc. (NASDAQ:FOSL)

Source: Joe King via Flickr (Modified)

Sector: Consumer

Is Fossil Group, Inc. (NASDAQ:FOSL) making a comeback? The fashion watch and accessories maker jumped nearly 67% in Q1 on a resound Q4 earnings beat. Specifically, FOSL reported earnings of 64 cents per share, topping analysts’ expectations of 40 cents per share. In addition, revenue came in at $920.8 million, ahead of Wall Street’s estimate of $890 million.

However, don’t bring the champagne out just yet. Top Oppenheimer analyst Anna Andreeva is going into party-pooper mode. She reiterates a Perform rating on FOSL shares as: “On the surface, FOSL appears to be playing better defense” but wearables growth is moderating, and even traditional watches are resetting lower with partners managing inventories down.

She concludes that the: “Stock is heavily shorted and is up big AMC on covering; net/net, in our view, not much has changed fundamentally: sales guided down sharply for 1Q18, profitability improvement aided by financial fixes as underlying trend is still negative.”

If we take a step back, we can see that Wall Street is not rooting for FOSL stock’s success. Based on 4 recent analyst ratings, TipRanks analytics exhibit FOSL as a Hold. However- boosted by the 1 bullish rating- the average analyst price target of $15 indicates 24% upside potential.

A far better investment proposition in the consumer good sector is semiconductor stock Lam Research (NASDAQ:LRCX). As the memory chip industry goes from strength to strength this stock is flourishing right now. With 32% upside potential and 14 recent “buy” ratings this is a stellar company I highly recommend checking out.


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Best Sector Stocks Through Q2: Netflix (NFLX)

Netflix NFLX stock

Source: via Netflix

Sector: Services

Streaming giant Netflix, Inc. (NASDAQ:NFLX) has popped over 56% in Q1 to an all-time-high. Now NLFX is worth approx. 130 billion, just short of Disney’s $150 billion. Of course, at these levels, we need to ask: how sustainable are these gains, and where can the stock price go now? And here the Street is- not surprisingly- divided. Let’s take a look:

On the one hand we have Pivotal analyst Jeffrey Wlodarczak. He is out with a bullish research note on NFLX after conducting thorough country by country research. The analyst’s verdict? “As long as NFLX continues to beat and raise on subscribers we believe the stock will continue to work.” Indeed, his $400 price target suggests big upside potential of 32%.

Long term international subscribers are looking better than ever, with Wlodarczak now angling for 250 million international subscribers by 2024. Netflix is even finally showing traction in Japan with upward trends detected across Asia as a whole. Following Netflix’s fourth quarter print, “the market appeared to effectively give NFLX management carte blanche to spend aggressively to drive healthy subscriber growth” highlights Wlodarczak.

Top Loop Capital Markets analyst Alan Gould is more restrained. Yes Netflix has an “unstoppable lead” in the US streaming TV business but ultimately: “with the stock up 66 percent in the first 11 weeks of the year, we find it hard to justify a bullish rating.”  Even so, his Hold rating comes with a $325 price target indicating 8% upside potential.

Overall, the stock has a mixed bag of ratings. We can see that the price target average for the last three months indicates downside potential. But crucially the average price target from ratings over just the last month comes out at $348. So now we are looking at 15% upside potential. Not so bad after all for one of the fastest-growing stocks out there!


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Best Sector Stocks Through Q2: Whiting Petroleum (WLL)

Whiting Petroleum Corp

Sector: Basic Materials

Haven’t heard of Whiting Petroleum Corporation (NYSE:WLL) before? Well now’s your chance. This is a top crude oil producer in North Dakota which also operates substantial assets in northern Colorado. Shares soared over 30% in Q1 after the shale driller reported stronger-than-expected fourth-quarter results and a bullish 2018 outlook.

On the news Seaport Global analyst Mike Kelly upgraded Whiting Petroleum to Buy from Hold. He also increased his price target to $40 from $30 citing confidence in the Bakken development post Q4 results and the experience of new CEO, Brad Holly. He is pushing WLL toward its goal “of becoming a top-tier E&P company as measured by capital efficient growth and free cash flow generation.”

However even though the stock posted stellar gains this quarter, I would recommend not to invest at this point. Top analysts in particular appear unconvinced by WLL’s success story and there are better stocks worth checking out. Instead consider a ‘Strong Buy’ basic materials stock like MasTec, Inc. (NYSE:MTZ).

While MTZ hasn’t posted Q1 gains like WLL, it has big upside potential and has just been named a top mid-cap idea by Canaccord Genuity.


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Best Sector Stocks Through Q2: Axon Enterprise (AAXN)

Source: Shutterstock

Sector: Industial Goods

Arizona-based Axon Enterprise, Inc. (NASDAQ:AAXN) is best known for its flagship product: electroshock tasers. In fact, the company used to be known as TASER International. However, the company actually develops a wide range of technology and weapons for military, law enforcement and personal defense usage. Right now, it is focusing on developing on-body cameras and digital evidence software.

Over the last few quarters, it is fair to say that AAXN has not been a top performer. However, in Q1 all that changed with an impressive 43% increase in share prices. AAXN finally showed that it is delivering on its promise of better discipline and positive changes. After two quarters of GAAP operating break-even, Axon Enterprises posted the best operating profit in a year. This was on adjusted EBITDA basis the best in three years and a near record.

Top Oppenheimer analyst Andrew Uerkwitz believes that a ‘positive change is occurring.’ Operating expense was still up and there was yet another quirky one-time cash tax expense but “for the first time in several quarters, we are raising our numbers.” However even though he “liked what he heard,” for now Uerkwitz is staying sidelined. “We want to see where the stock settles in the near term and spend time on new growth initiatives such as fleet and RMS” explains Uerkwitz.

For investors looking to invest in the industrial goods sector, I would suggest trying major U.S. defense contractor Raytheon Company (NYSE:RTN) instead. Shares are up 15% in the last three months and with multiple big contract wins the stock has 100% Street support right now.


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Technology

5 Stocks to Buy in the AI Race Between the U.S. and China

While President Trump fights the battle to save jobs in old-line industries such as steel, he may be losing the war for the future (despite the imposition of direct tariffs on China). The United States has always been predominant in new technologies, such as artificial intelligence (AI). But now China is rapidly closing the gap.

Think about some examples of U.S. prowess in AI: DeepBlue, which defeated chess grandmaster Garry Kasparov, was developed by IBM (NYSE: IBM), as was Watson, which defeated champion Jeopardy players in 2011. The robot Stanley, which demonstrated the feasibility of driverless cars in 2005, was developed at Stanford University in the heart of Silicon Valley. And don’t forget that one reason for U.S. dominance has been Darpa (Defense Advanced Research Projects Agency), the U.S. military research funding agency, whose backing was behind many of the most prominent research papers in AI.
However, one recent example highlighted how China has come to the fore in AI.

In January, companies from all over the world subjected their artificial intelligence systems to questions from the Stanford Question Answering Dataset, which assess reading comprehension. The winning AI systems came in at a few percentage points above the average human score of 82.3%. The two winning companies (in a virtual tie) were Microsoft (Nasdaq: MSFT) and Alibaba (NYSE: BABA).

China Tech Giants and AI

Yes, the Chinese e-commerce giant is rapidly becoming a powerhouse in artificial intelligence.

The evidence can even be seen in its latest Singles Day event, the world’s biggest shopping day. Alibaba used AI to generate 400 million customized banner advertisements in the month leading up to the shopping day. It also used chatbots, to answer 3.5 million simple questions a day over the pre-sale period, such as “Where’s my package?”

And on its Taobao e-commerce platform, users can search by image using deep learning, a technique designed to emulate the way a human brain works, to find a matching or similar item. This enables shoppers, for example, to find a dress worn by a celebrity to order it… an ability that does not exist on Amazon today.
Fellow Chinese tech titans

Baidu (Nasdaq: BIDU) and Tencent (OTC: TCEHY) are also making a big push into AI. Baidu is working on developing autonomous vehicles and unveiled its Apollo 2.0 autonomous driving platform at the recent CES trade show in Las Vegas.

Examples of what Tencent is doing include using AI to detect diseases like lung cancer an early stage and having its FineArt AI program easily defeat China’s human Go (a board game). But the Chinese push into AI is broader than these three companies.

One key reason behind China’s rapid growth in AI is sheer numbers. You see, the machine-learning techniques behind the current AI boom are extremely data hungry. To recognize human faces, translate languages, make medical diagnoses, pilot autonomous vehicles, and numerous other tasks requires huge quantities of “training data”, which is the fuel for machine learning algorithms that we generate every time we go online or use our smartphones.

With a population larger than the U.S. and Europe combined (and limited privacy laws), Chinese companies like Alibaba, Tencent and Baidu have a huge advantage over U.S. firms in terms of access to all sorts of data.

China Closing Fast

If you want to get an idea of how fast China is closing the AI gap with the U.S. just look at the recent annual meeting for the Association for the Advancement of AI. The first meeting in 1980 was an all-U.S. affair. But at the February 2018 meeting, China submitted about a quarter more papers than the U.S. (1242 to 934). And more importantly, it lagged the U.S. in papers accepted by just three.

There are a few reasons behind this rise to prominence in AI by China. The first is backing from the central government, which has a specific target for becoming an AI leader within a decade.

The second reason is that China is overtaking the U.S. in terms of AI start-up funding. Technology research firm CB Insights says that in 2017, 48% of the record global investment ($15.2 billion) into AI start-ups went to China. That is a huge jump from just 11.3% in 2016.

And forget about the old thought about China just being copycats… that hasn’t applied in decades. China has beaten the U.S. in AI-related intellectual property as well. Chinese patent publications with the terms “artificial intelligence” or “deep learning” in the title or abstract surged from 549 in 2016 to 1,293 in 2017. This compares with just 135 and 231, respectively, in the U.S., according to CB Insights.

It’s not a straightforward victory for China though. In terms of the volume of individual deals, the country still accounts for only 9% of the total, while the U.S. leads still in both the total number of AI startups and total funding overall. The bottom line is that China is ahead when it comes to the dollar value of AI startup funding, which CB Insights says shows the country is “aggressively executing a thoroughly-designed vision for AI.”

Investment Implications

China has a vision because it realizes how important AI will be in the future. The former chief scientist for Baidu, Andrew NG, said in 2017 that AI is the “new electricity”, and that “just as electricity transformed many industries roughly 100 years ago, AI will also now change nearly every major industry”. I totally agree. Now the question remains whether the U.S. or China will be the main ‘generator’ of an AI future.

A good way for you to ‘hedge’ on that outcome is to first own the well-known AI leaders in the U.S. – the aforementioned Microsoft as well as other companies that have been snapping up AI start-ups, Apple (Nasdaq: AAPL) and Alphabet (Nasdaq: GOOG). Since 2012, Google has bought 14 AI start-ups while Apple has acquired 13 AI start-ups.

But then you must also own the leaders in China as well. While many AI companies trade only in mainland China, the so-called BAT stocks (Baidu, Alibaba, Tencent) are easily available to you here in U.S. markets.

 

 

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Technology

5 High-Growth Tech Stocks Poised to Benefit from Megatrends

Source: Shutterstock

It’s no secret. Technology is booming right now — and so are tech stocks. At this point, the technological advances are happening almost too quickly to keep up with. Investors are looking for the next high-growth tech stocks, and there are almost too many possibilities.

Right now technology is poised to change our lives more now than any time since widespread use of the Internet first began. A number of tech sectors are about to explode. But how do you know which ones?

Here are some sectors to start with. Solar energy, artificial intelligence, robots , cloud computing, autonomous driving and e-commerce are among the tech megatrends that are set to intensify by leaps and bounds going forward.

And investors can profit tremendously from these megatrends.

I’ve selected 5 high-growth tech stocks from these tech sectors to get you started.

High-Growth Tech Stocks Poised to Benefit from Megatrends: SolarEdge (SEDG)

Source: Shutterstock

As the world decreases its reliance on fossil fuels, solar energy companies are set to profit.

SolarEdge Technologies Inc (NASDAQ:SEDG) develops “solar energy optimization and monitoring systems.” Thus far, SEDG has seen its profits jump as the use of solar energy becomes more widespread. In the fourth quarter of last year, the company’s operating income surged 128%, while its revenues jumped 70% year-over-year to $34.6 million.

SolarEdge says that its “inverter system maximizes power generation at the individual PV module-level while lowering the cost of energy produced by the solar PV system.” These great results indicate that its products are indeed far superior to those of the competition.

Solar Edge’s partnerships with major Japanese company OMRON and Korean giant LG Electronics also validate the potency of its technology. Moreover, the company has a significant presence in India,indicating that it can benefit from the tremendous growth of solar energy in that nation. Although Solar Edge stock has nearly quadrupled in the last year, the shares can rally much further, given the strength of its technology and the growth of solar energy.

High-Growth Tech Stocks Poised to Benefit from Megatrends: First Solar (FSLR)

Source: Russ Ferriday via Flickr (Modified)

First Solar, Inc. (NASDAQ: FSLR) is another high-growth tech stock in the solar sector.

Right now First Solar appears to be benefiting from the strong growth of solar in many countries,including Japan and Australia. In recognition of these positive trends, First Solar stock has jumped 150% over the last year.

By early next quarter, the company plans to begin manufacturing Series 6 PV modules, which will “provide more watts per lift than comparable crystalline silicon solar panels.”

Meanwhile, a UBS analyst last week recommended  both First Solar stock and Solar Edge stock, saying that the companies have “differentiated products and zero debt,” according to Barron’s.

High-Growth Tech Stocks Poised to Benefit from Megatrends:  Alibaba Group (BABA)

What to Expect From BABA Stock Earnings

Source: Shutterstock

Let’s not kid ourselves. Most investors — especially in the tech sector — are looking for the next Amazon.com, Inc. (NASDAQ:AMZN).

So why not Alibaba Group Holding Limited (NYSE: BABA)? This Chinese company is an e-commerce giant that’s also rapidly expanding into other tech sectors.

E-commerce in China continues to grow rapidly, as shown by the 56% jump in Alibaba’s revenuelast quarter. China’s economy also continues to expand quickly, which should provide additional tailwinds for Alibaba. The giant also has a strong foothold in India, another rapidly growing economy.

Finally, the giant is also leveraged to another tech growth engine, cloud computing. Its cloud computing business is expanding at breakneck speed, posting a 104% year-over-year revenue surge last quarter.

Given the rapid growth of e-commerce in China and India, and the ever accelerating proliferation of cloud computing, Alibaba stock is a great name for growth investors to own.

High-Growth Tech Stocks Poised to Benefit from Megatrends: iRobot (IRBT)

iRobot Corporation (NASDAQ:IRBT)

Source: Shutterstock

The robots have arrived. And it’s great for investors.

As artificial intelligence improves, robots will be able to handle more and more tasks. For example, robots are delivering items in a Las Vegas hotel. Soon robots will be able to detect and report dead wi-fi zones.

As robots are able to take on more and more tasks, they will become increasingly popular, greatly benefiting robot makers, including iRobot Corporation (NASDAQ: IRBT).

Additionally, as labor becomes more expensive, the company’s cleaning robots will become more attractive, boosting First Robot’s profits and lighting a rocket under iRobot stock.

The company is already benefiting tremendously from these positive trends,  as its revenue jumped 54% year-over-year last quarter, and it expects its top line to rise 19%-22% in 2018. Shares did fall following IRBT’s last earnings report — but that just gives potential investors a discount.

High-Growth Tech Stocks Poised to Benefit from Megatrends: Baidu (BIDU)

Smart Home Could Be a Major Long-Term Catalyst for BIDU Stock

Source: Simone.Brunozzi Via Flickr

Baidu, Inc (NASDAQ: BIDU), driven by its high R&D investments, has become one of the leaders in the artificial intelligence and driverless car spaces. And a number of factors show that the company will remain on top.

Baidu has unveiled products, powered by AI, that can “support multi-party video calls,” provide multiple types of lighting and use emotional intelligence to serve people.

More than 90 partners, including Microsoft, Intel, and Nvidia, have signed onto Baidu’s self-driving car technology, indicating that the technology is state-of-the-art and poised to proliferate. Providing self-driving car technology will enable Baidu to profit by selling consumer data, advertising, and ancillary services such as tracking systems.

As a result, Baidu stock is poised to rally over the longer term.

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Source: Investor Place

Dividends

4 Dividends That Pay Monthly (Up to 12% Per Year)

If you’re planning to retire (or are currently retired), I urge you to become intimately familiar with monthly dividend stocks. They offer the ultimate consideration: income payments that actually line up with your monthly bills.

Today, I’m going to help get you started by introducing you to four monthly dividend payers that yield up to 12%. But first: What’s so great about this type of stock?

When you pay your bills – be it the mortgage, the electricity, the TV – you don’t sit down at the kitchen table to do that every quarter. You do it every single month. But most dividend stocks don’t keep the same kind of schedule. American stocks typically pay shareholders once every three months.

Monthly dividend stocks, however, help you to tackle regular expenses without worrying about fluctuations in payouts depending on timing. And these every-30-day payers also have a couple of additional benefits, too:

  • It’s a sign of stability: Promising a dividend check every single month is a bold promise that a company wouldn’t make if it wasn’t serious about keeping (and even raising) the payout.
  • Faster gains. Even if you have 20 or 30 years left to retirement, a monthly payout can be put back to work more quickly than a quarterly one. A monthly payer, in fact, can generate thousands of dollars more in additional returns via reinvested dividends over the course of a couple decades than a quarterly payer with the same yield.

Are all monthly dividend stocks perfect? Far from it. Today, I’m going to show you four payers yielding between 4% and 12%. Two should make your wish list, while two are proof that even monthly dividends aren’t always perfect.

LTC Properties (LTC)
Dividend Yield: 5.8%

LTC Properties (LTC) is one of the more interesting plays in the real estate investment trust space, combining health care and retirement properties in a way that’s tailor-made to capture the potential of the aging Baby Boomers.

Specifically, LTC Properties has a total of 208 properties across 29 states that includes 105 assisted living facilities and 96 skilled nursing facilities, with the remaining seven properties classified as simply “other.”

The company’s fourth-quarter and full-year earnings report didn’t exactly include screamingly positive results. Q4 funds from operations declined by a penny per share from the year-ago period to 77 cents per share, though for the whole year, FFO improved from $3.06 per share in 2016 too $3.10 per share in 2017.

Still, shares have hemorrhaged more than 25% since July of last year, with some of that coming amid the malaise of the broader REIT space. That has LTC selling at less than 13 times FFO, and yielding nearly 6%.

That should give investors plenty to think about, especially when you consider that LTC’s properties naturally benefit immensely from the aging of America’s Boomers, and have the added bonus of being located in areas that have high demand for senior health care services. Also appealing is a low debt burden of around 30% of its market capitalization, as well as a dividend that represents less than 75% of FFO.

Wall Street sometimes lets momentum get the best of it, and that appears to be the case in LTC Properties. This REIT is positioned for growth yet value-priced – and a substantial monthly dividend only makes it look that much better.

Global Net Lease (GNL)
Dividend Yield: 12.6%

At first blush, Global Net Lease (GNL) looks like a prime opportunity.

You can’t ask for more diversification than what GNL offers. This real estate investment trust boasts 321 single-tenant properties it leases out to 100 tenants across 41 industries in eight countries, including the U.S., the U.K., Germany and Finland. The industry diversification is outstanding, with financial services the largest slice of the pie at just 14%; but its properties span everything from aerospace to healthcare to utilities. Moreover, its tenants include stable companies such as FedEx (FDX), Family Dollar and ING Groep (ING), but no one of them makes up more than 5% of straight-line rent.

Moreover, the stock has been battered to the tune of about 30% in a year, driving its yield to well over 12%.

But …

Global Net Lease (GNL) Keeps Flooding the Market With Shares

While Global Net Lease does continue to post growth, its share count is expanding, too, diluting the value of its business. Moreover, the company also pays out fees to external management that drag on operations, and in fact, that healthy dividend isn’t perfectly covered. Last year, the company paid out $2.13 per share in dividends but only collected $2.03 per share in core funds from operation.

The dividend is a real concern here. The payout hasn’t budged in years, and now GNL is overstretching to keep its promises. While a 12% yield is tempting, it may not be a 12% yield for long.

Stag Industrial (STAG)
Dividend Yield: 5.9%

I have written about STAG Industrial (STAG) before, and in the context of monthly dividend stocks, it’s worth mentioning it again.

STAG Industrial is a REIT that specializes in warehouses, boasting 70.2 million square feet across 365 buildings in 37 states. I realize the warehouse business doesn’t exactly stir one’s spirits, but this word might:

E-commerce.

Three of STAG’s top 10 tenants are XPO Logistics (XPO), FedEx (FDX) and DHL – companies that have plenty to gain as more people have their goods delivered rather than make their way to the store. And as more retailers move to this model, they too will need the kinds of facilities that Stag provides.

The fundamental story here still looks great. STAG grew funds from operations by 7% to $1.69 per share in 2017, and occupancy sits at 95.3%. Moreover, the company increased its dividend again – the third hike in 12 months – to 11.83 cents per share. That means STAG’s monthly check is well covered, with a roughly 84% FFO payout ratio, and at 14 times FFO, I would consider this attractive REIT fairly priced.

Shaw Communications (SJR)
Dividend Yield: 4.9%

Shaw Communications (SJR) is a Canadian telecom with a hefty yield at the moment. The question investors want to ask themselves is, are they getting a still-stable payout such as those from AT&T (T) or a Verizon (VZ), or are they getting an eventual dividend cut a la Frontier Communications (FTR) or Windstream (WIN)?

The answer is somewhere in between – and that’s not a good thing.

Shaw, which offers internet, television, telephone and other services across several provinces, is in the midst of a self-proclaimed “total business transformation” that includes a heavy renewed push in its wireless business to help offset continued declines in wireline operations. The company will be taking a $450 million charge related to this restructuring, including accepting 3,300 employee buyouts. All told, the company is reducing its workforce by roughly a quarter.

The market has been punishing SJR shares, which are off more than 17% since Jan. 1. That has helped plump the yield up on this monthly dividend payer to nearly 5%. However, SJR remains more expensive against future earnings estimates than rivals such as Telus (TU) and Rogers Communications (RCI), and its path to normalcy is far from clear. Among other things, it still will have to find funds to make itself competitive in the upcoming push to transition from 4G to the newer 5G technology, which includes buying spectrum and upgrading its network.

While 5% is nice if you can get it for AT&T or Verizon, which enjoy an effective duopoloy in the U.S., it still doesn’t seem quite enough to justify a purchase in Shaw, which faces a much less sure path ahead – especially in the short-term.

Your Best Plays Today: Monthly Payouts and 8% Yields 

Monthly payers deserve a place in your portfolio, period. If you’re retired, they keep your cash flow as smooth as silk. And if you’re not retired, you can reinvest your dividends faster—giving your nest egg a nice extra boost.

If that’s not a win-win, I don’t know what is!

That’s why I’ve dropped four monthly dividend stocks into the “6 pack” of steady investments that make up my .

Quality monthly dividend stocks are a rare breed, but with the right picks, you can use the power of faster compounding to achieve a fully paid-for retirement for around $500,000 – more than a quarter of a million dollars less than the suits at Merrill Lynch say you need to retire well!

And then once you hit retirement, you can collect a smooth, steady stream of monthly dividend checks to use against your monthly bills.

That’s as win-win as it gets!

My “8% Monthly Payer Portfolio” can hand you a rock-solid $40,000 per year in regular income. That translates into a steady drip of more than $3,300 per month that won’t vary – other than the occasional payout increases granted by these dividend dynamos, that is!

This strategy isn’t capped at $500,000 – if you’ve saved up even more, you could be looking at monthly income of $6,349 or even $12,698 per month. That pummels the kinds of payouts you would see from a basket of quarterly-paying Dividend Aristocrats.

One last bonus: Several of these picks are more than just slow-and-steady dividend drippers – they also possess several catalysts for growth, meaning they can deliver income while growing your nest egg! That’s a vital part of retirement that many people overlook, convinced that their only strategy after age 65 is to watch their portfolio wither as they start to take withdrawals. That’s just not true!

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Source: Contrarian Outlook

Options

Here’s How to Generate 425% Returns on Higher Interest Rates

This week, we get the next installment of the FOMC meeting – the big Fed meeting where they decide what to do with interest rates.  The meetings are a bit more interesting these days since rates are going up and some sort of definitive actions tends to take place.

Keep in mind, we had several years where the only thing investors were concerned about is what the Fed was doing with QE (Quantitative Easing).  Interest rates weren’t even in the picture at that point.  These days, we’re back to some level of normalcy, with rates slowly heading higher.

The market is expecting the Fed to raise rates by a quarter point.  According to the CME’s Fed Fund Futures, there’s about a 90% probability of it happening. That part isn’t really what investors will be focused on.

Instead, it’s what the Fed says about the economy and inflation that will really be the primary focus of the market.  Of course, inflation concerns are a big part of why we had the early February selloff.  It’s not entirely out the question that the Fed says something which will subsequently send stocks much lower (or much higher).

What the central bank sees in the economic data, especially in regard to inflation statistics, should go a long way towards defining their rate increase strategy this year.  In other words, it could very much be an important FOMC meeting.  It could also be a complete snooze fest.

Regardless, plenty of traders will be positioning themselves in various assets in preparation of the announcement.  One popular instrument for trading the Fed meeting is iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT).  Bond prices are based almost entirely off of interest rates and interest rate expectations, so action in TLT makes sense ahead of the FOMC meeting.

While a quarter point increase is already built in to the market, further increases may or may not be accounted for.  If investors believe interest rates could go higher faster than originally anticipated, bond prices could take a dive.

At least one trader in TLT is betting on treasury bonds having pretty decent downside potential over the next month.

Here’s the trade…

With TLT at $120, the April 20th 115-118 put spread (buying the 118 put, selling the 115 put) traded for $0.48.  The vertical spread, as this sort of trade is called, was executed 500 times.  That means the max loss is just the premium paid, or $24,000, if TLT remains above $118 over the next month or so.

Breakeven for the trade is $117.52 and max gain is at $115 or below by April expiration.  Max gain is $126,000, so the trader has the potential to generate 425% returns on the trade.

This is exactly the type of trade I’m a big fan of.  It has minimal risk with very strong return potential.  It’s the kind of trade I frequently make in my options trading service. The timing suggests it’s related to expectations of higher interest rates post-FOMC meeting, which makes perfect sense.  In fact, there’s nothing wrong with doing an exact copy of this trade in your own trading account.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.


Source: Investors Alley 

Cryptocurrency

Are We Underestimating the Blockchain?

Dear Early Investor,

Cryptocurrencies can offer investors dazzling returns.

That’s a nice conversation starter.

But cryptocurrencies can do so much more.

Adam and I have talked a lot about the gains that have been made (and the gains likely to come).

We’ve also talked about how nice it is to finally have a viable alternative to fiat money (aka traditional currency).

Cryptocurrency prices rose so quickly in 2017 (more than 10X) that progress made in the equally exciting blockchain technology has been drowned out.

The profits are real… and happening now. It’s definitely created a buzz.

But what about the technology itself?

Well, it’s developing about as well as can be expected. Every day, new advances are announced.

A bipartisan bill in Colorado proposes using blockchain tech to protect state data.

Developers of TrueBit, a smart contract that scales transaction computations through interactive verification, were able to move Doge coins to the Ethereum network and back again. Once the technology is fully developed, it could allow a degree of scalability currently out of Ethereum’s reach.

American Express has applied for a patent to use blockchain tech to boost transaction speed.

None of this is surprising.

There are thousands of developers around the world working on new blockchain technologies. The companies that employ them announce their breakthroughs with as much fanfare as possible, in hopes of attracting both funding and top-caliber engineers to their projects.

Yet it seems that cryptocurrency is garnering as many detractors as enthusiasts and eager investors. Here are three rules to explain why this is happening.

Rule No. 1: The more transformative a technology, the more skepticism it engenders in its early days. Breakthrough technology is hard for most people to understand and accept. What’s more, it doesn’t come fresh out of the lab fully developed. New products are greeted with disbelief or bemusement, as if they’re toys. (See my article here for more of my thoughts on this.) Past examples include Skype, mobile phones, iPads and desktop computers.

It’s why bitcoin wasn’t taken as seriously as it should have been when it first appeared on the scene. And it’s still the case today!

Rule No. 2: It takes time for external technological forces to catch up. An ecosystem needs to mature around any breakthrough technology. Thomas Edison invented the lightbulb in 1879. Two years later, he patented a system for electricity distribution. A year after that, the first few thousand houses in New York City were electrified. And efficient scaling was still years away.

Because prices and fees fall, network effects kick in and accessibility improves. Basically, technology adoption is sluggish at first, but it gains speed over time.

But that is neither a smooth nor a linear process. I’m a big believer in an adage known as Amara’s law…

We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.

Roy Amara was a co-founder of the Institute for the Future in Palo Alto. He describes a typical pattern with new technologies as “a big promise upfront, disappointment and then slowly growing confidence in results that exceed the original expectations.”

This is true, he says, of computation, genome sequencing, solar power, wind power and even home grocery delivery.

Let me add blockchain technology to his list.

Rule No. 3: Unproven technology is where the biggest investment gains (and risks) are made. I think very few people would dispute this. Yet this same rule makes early and unproven technology an easy target.

A typical comment I hear: “Lots of people invest in it, few use it.”

Of course, I can say the same thing about crowdfunded startups that have thousands of investors but little or no sales to speak of.

That doesn’t mean a thing to early investors. It comes with the territory. But we do expect the technology to work… and eventually make a profit.

We have legitimate “proof of concept” claims from blockchain technology companies, but we’re so early in the life of this technology that we don’t know for sure if it will be put to work on a massive scale… or even if it will work at all.

It goes to show just how nascent the technology in this current period is.

We’re basically in the experimental, pre-commercial phase of blockchain technology. Lots of things are being tried and tested in controlled trials, but very little is being trotted out for actual use. Mass consumption is still years away.

Late, Early or Just Right?

Most of you probably wonder if you’re too late. Ha! You should be concerned whether you’re too early.

The good news: You’re neither. I’m very bullish on the long-term outlook for blockchain and cryptocurrency investments. We’re at the very beginning of a multidecade phenomenon.

I’m convinced that dozens of industries will be reinvented by distributed ledger technologies and decentralized digital-asset-backed protocols. The change will be massive and global… and will develop into a multitrillion-dollar space. In terms of scale and impact, it will be similar to the internet, which transformed EVERYTHING.

The extraordinary returns come very early in the cycle. Your timing couldn’t be better.

Of course, it all has to play out. And maybe it will never amount to anything (though I doubt that very much).

My advice? Invest a small percentage of your savings – enough to make a difference in your life if the cryptocurrency/blockchain space overcomes current skepticism and gains broad acceptance, as we expect it to.

Remember, needle-moving technologies have always experienced tremendous challenges early on.

Good investing,

Andy Gordon
Co-Founder, Early Investing

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Source: Early Investing 

Dividends

7 High-Quality Dividends for 2018 and Beyond

Source: Shutterstock

Are you ready to find the holy grail of dividend investing? The ideal dividends are stocks in strong companies which pay out a high dividend yield. Savvy investors can reinvest payments and, over time, create a veritable treasure trove of double-digit annual gains.

Furthermore dividend stocks from financially healthy companies offer a savvy way to hedge risk against more volatile stocks. “While equity markets have been volatile recently, dividend payments are reflective of corporate health and economic conditions and we expect them to be much more stable” Ben Lofthouse, a director at Janus Henderson, told CNBC recently.

To pinpoint these elusive stocks, I set the TipRanks’ stock screener to filter for stocks with a “positive, high or very high” dividend yield and a “strong buy” analyst consensus rating. This is based on only ratings from the last three months. The result: we can be confident that these are premium stock picks with the biggest Street support right now. Plus looking at the average analyst price target is a handy indicator of the dividends’ upside potential in terms of share price.

So with that in mind, let’s take a closer look right now:


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High-Quality Dividends: Broadcom (AVGO)

High-Quality Dividends: Broadcom (AVGO)

Source: Chris Hsia via Flickr

Dividend Yield: 2.9%

Semiconductor giant Broadcom Ltd (NASDAQ:AVGO) has just paid a dividend of $1.75, up from $1.02 the previous quarter. Indeed, with a dividend yield of 2.9%, AVGO has an impressive dividend growth record of eight years and counting.

Even without Qualcomm, Inc. (NASDAQ:QCOM), analysts still see AVGO as one of the best investments out there. The stock has 99% Street support with 20 buy ratings and just 1 hold rating in the last three months. These analysts see AVGO spiking 32% to hit $324 in the next year. Top Oppenheimer analyst Rick Schafer says “Now past the QCOM saga, we expect AVGO to return to its playbook finding and executing “bitesized” accretive deals. We remain long-term buyers with a $315 target.”

He adds: “We believe AVGO has one of the most strategically and financially attractive business models in semiconductors.” Going forward, the company enjoys multiple catalysts, including a sustained competitive advantage in high-end filters and a “sticky” non-mobile business. Plus, management has the ability to drive enviable growth/profitability in a host of business environments.

President Donald Trump blocked Singapore-based Broadcom’s $117 billion hostile takeover of Qualcomm on March 12. He attributed the unusual decision to national security concerns.


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High-Quality Dividends: Air Products and Chemicals (APD)

High-Quality Dividends: Air Products and Chemicals (APD)

Dividend Yield: 2.6%

If you haven’t heard of Air Products and Chemicals, Inc. (NYSE:APD), listen closely. This is a comparatively high-quality Dividend Aristocrat — one of only 50 companies that has raised its dividend payout for over 25 consecutive years. Pennsylvania-based APD is the largest supplier of hydrogen and helium gas in the world.

It also pays a lucrative dividend and has just further hiked its payout by 15.8% to $1.10 a share per quarter. This is on a 2.6% yield — just slightly higher than the sector average.

The best part is that the company’s strong outlook is likely to lead to further dividend increases. TipRanks reveals that this stock has 100% support from the Street right now. Over the last three months, eight analysts have published buy ratings on Air Products — no hold or sell ratings here. These analysts are predicting over 13% upside potential from the current share price.

Five-star Key Banc analyst Michael Sison has just ramped his price target $9 to $184. He is becoming increasingly bullish on APD due to its: 1) first-quarter EPS beat; 2) lower tax rate; and 3) higher confidence in the company’s volume projections. All this leads him to conclude that the company is on track to produce impressive earnings growth of 16% year over year.

High-Quality Dividends: Medtronic (MDT)

High-Quality Dividends: Medtronic (MDT)

Source: U.S. Embassy Kyiv Ukraine via Flickr (Modified)

Dividend Yield: 2.3%

I highly recommend Irish-based Medtronic PLC (NYSE:MDT), one of the world’s largest medical equipment development companies. Medtronic has a whopping 40 consecutive years of rising dividend payments under its belt. Currently, MDT pays a 46-cent quarterly dividend on a 2.3% current yield with a low payout ratio under 50%.

On top of being a Dividend Aristocrat, Medtronic also boasts a steadily rising share price over the last five years. And the word on the Street is that 2018 will be a stellar year for this “strong buy” stock. The company has launched its own robot-assisted surgery device with Mazor Robotics (NASDAQ:MZOR) — and the partnership is starting to bear fruit. According to CEO Omar Ishrak, we will start to see the revenue from this “pull through” in coming quarters.

In the last three months, Medtronic has received seven buy ratings vs just one hold ratings. These analysts are projecting a 14% spike for the company from its current share price. Take Needham’s Michael Matson, who reiterated his buy rating and bullish $95 price target on Feb. 21. “We are encouraged by the stronger revenue growth and expect it to eventually translate into stronger EPS growth as currency headwinds ease” explains Matson.

High-Quality Dividends: McDonald’s (MCD)

Dividend Yield: 2.5%

McDonald’s Corporation (NYSE:MCD) a.k.a. the “Golden Arches,” boasts a lucrative dividend payout. Back in September, the board of directors approved a sizable payout increase of 7%. This counts as McDonald’s 41st straight dividend increase. As a result, McDonald’s paid shareholders a $1.01 quarterly dividend in December with a 2.5% yield.

And this isn’t all. The Street is rallying around McDonald’s right now. In the last month the stock has received no less than seven back-to-back buy ratings. With an eye on the new value menu, Jefferies’ Andy Barish reiterated his buy rating and $200 price target (26% upside potential) on March 16. The $1 $2 $3 menu means a roughly 15% price cut for consumers.

He attributes recent share weakness to general market fluctuations and overly high expectations. Crucially Barish still has faith in his 3% gains in U.S. same-store-sales estimate for Q1. So does BMO Capital’s Andrew Strelzik. He sees MCD recording 3% same store sales growth beyond just the first quarter due to its “solid playbook of internal initiatives.”

“As MCD’s comp softness proves temporary, investor focus likely will revert to its free cash flow potential in a normalized capex environment” wrote Strelzik on March 12. According to BMO’s calculations, MCD should generate roughly $7 billion of run-rate free cash flow by early 2020.

High-Quality Dividends: Chevron (CVX)

CVX Stock vs XOM Stock: Who’s Got the Better Dividend?

Source: swong95765 via Flickr (Modified)

Dividend Yield: 3.9%

Oil and gas giant Chevron Corporation(NYSE:CVX) is a premium dividend stock for the long-term. Chevron’s dividend yield is a lucrative 3.9% thanks to an annual payout of $4.48. Note that the yield is far above the basic materials sector average of 2.4%. Most impressively, Chevron has a strong record of steady dividend increases over the last 32 years. Yes that’s right, we are looking at a Dividend Aristocrat here.

Shares have pulled back recently over $130 in January to under $114. But don’t be alarmed! This is a buying opportunity. From a Street perspective, Chevron is still a top pick. This is a “strong buy” stock with 100% support from top analysts over the last three months. Even better, with a $142 average price target, these seven top analysts see 25% upside potential from the current share price.

The most bullish analyst of the pack is Cowen & Co’s Sam Margolin. He has a very confident price target on CVX of $160 (39% upside potential from the current share price). Margolin blames concerns over Australian LNG free cash flow and growth in the Permian basin as responsible for the slipping prices. But he reassures investors that both these investment pillars are still fundamentally intact.

Bear in mind Margolin is one of the Top 200 analysts on TipRanks for his precise stock picking ability. In the basic materials sector specifically, his ranking shoots up to top 10. And on CVX specifically he scores an 86% success rate and 9.2% average return.

High-Quality Dividends: Philip Morris (PM)

Source: Taber Andrew Bain Via Flickr

Dividend Yield: 4.3%

I highly recommend checking out Marlboro-maker Philip Morris International Inc. (NYSE:PM). Not only does PM pay a high dividend yield over 4%, it also boasts a 10-year dividend growth streak. The company is about to begin trading ex-dividend in advance of a $1.07 quarterly payout in April. So, the million-dollar question — should you invest now?

Looking forward, all cigarette companies face a huge industry disruption. Global smoking habits are set for inevitable long-term decline. Luckily PM has a get-out plan. The company recently announced that it wants to build its future “on smoke-free products that are a much better choice than cigarette smoking.” The result: a strong push towards reduced-risk vapes and e-cigarettes that contain nicotine but don’t burn tobacco.

And it looks like the Street approves of this dramatic decision. In the last three months, PM has received only buy ratings. The five analysts covering the stock have an average price target on PM of $123.40. This suggests big upside potential of over 25%.

Indeed, Citigroup’s Adam Speilman has just upgraded PM from “hold” to “buy.” We are facing a “new world of tobacco” says Spielman as vapes and heated tobacco record strong uptake. He believes PM is moving as fast as possible into this new world and – as a result- margins will start increasing again in the next 12 months.

High-Quality Dividends: Cedar Fair (FUN)

Cedar Fair, L.P. (NYSE:FUN)

Dividend Yield: 5.4%

Theme park giant Cedar Fair, L.P. (NYSE:FUN) is a key dividend stock that often gets overlooked by investors. Not only does FUN pay out a relatively high yield of over 5%, it has raised its dividend every year for the last five years.

Indeed, on average Cedar Fair has increased its dividend payment by 6.6% annually over the last three years. Shareholders have just received a quarterly dividend payout of $0.89 on March 19.

Top B.Riley FBR analyst Barton Crockett continues to see Cedar Fair as an appealing combination of growth and yield. He blames brutally cold weather for “flattening”‘ 2017 but does not let this dent his long-term optimism. FUN has a prime position in the theme park industry with “little, if any, construction of meaningful new theme parks.”

“A return to past trends of 4% EBITDA growth looks quite reasonable and appealing for a stock indicating a yield of nearly 5.5% and operating as a leader in theme park industry that is secularly well positioned” concludes Crockett. Now he projects a 20% share price increase in the coming months.

Despite a tough 2017, our data shows that Cedar has received four consecutive buy ratings from analysts in the last three months. These analysts are predicting 16% upside potential from the current share price.

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Source: Investor Place 

Energy

Sell These 3 Utility Stocks Being Squeezed at Both Ends

It strikes me, at times, how little humankind has changed over the centuries. The ancient Greeks waited for answers to the most pertinent questions of their day from the Oracle at Delphi – a high priestess that supposedly spoke to the god Apollo.

Today, Wall Street also waits for word from on high as to the future course of markets from the Federal Reserve. The new Chairman (or is it Oracle) Jay Powell will explain to the public why the Fed deemed it is necessary to raise the federal funds interest rates by a quarter percentage point again, to the range of 1.50% to 1.75%.

Market pundits will attempt to interpret exactly what the Fed’s future plans are by looking at the so-called dot plots to see if three or four interest rate hikes (including this one in March) are in Wall Street’s future. That ‘analysis’ will lead to classic, almost Pavlovian, response by some market participants to immediately sell some sectors in response to future higher rates.

One type of stock that will be sold is the so-called dividend aristocrats. The reasoning is straightforward… in the three years through 2017, the average yield on the dividend aristocrats index was 0.4% higher than 10-year Treasury yields, according to Bloomberg data. Now, the average dividend aristocrat offers a yield of 2.3% versus the more than 2.8% yield on the 10-year Treasury.

Utilities: Bond Proxies

One sector that has consistently paid higher dividends has been utilities. These companies make much of their income from regulated assets which means that their earnings and dividend payments are steadier and more reliable. That makes their shares behave more like bonds. In other words, they are bond proxies.

But now that ability to attract investors with higher dividends  is under pressure thanks to the Fed raising rates, making government bonds more competitive among income-seeking investors. In a Pavlovian-type response, JPMorgan in February came out with a list of 50 bond proxies that they put on an avoid list for investors. More than half of the list consisted of utility firms.

However, the current harsh reality is that U.S. utilities’ finances are under pressure from both higher rates and the effects of the recently-passed tax law. The sub-sector most under pressure is the power sector. Let me explain…

Power Sector Punishment

First of all, these companies are in a no-growth environment. U.S. demand for electricity is stagnating: total power consumption was slightly lower last year than in 2010, according to the Energy Information Administration. There has also been a major shift in utilities’ fuel mix. Since 2010, the proportion of U.S. electricity generated by coal-fired plants has dropped from 45% to 30%, while the proportion from natural gas rose from 24% to 32% and the proportion from renewables rose from 4% to 10%.

But the U.S. power sector has been doing fine because two of its crucial inputs were dirt cheap: natural gas and money (thanks to near zero interest rates). The utilities need money to constantly upkeep and upgrade their power infrastructure. But now the Fed’s policy change is changing that dynamic and raising their costs.

Rising rates aren’t good news for the utilities sector because many of the companies are heavily indebted. The utilities in the S&P 500 have debt with an average maturity of 14.5 years, according to JPMorgan. And while only 19% of their debt matures by 2020, over time, rising interest rates will put upward pressure on their costs. In their regulated businesses, the utilities should be able to recover much of their increased costs from their customers. But the more companies try to raise rates, the higher the risk that they will get push back from various states’ regulators.

The power companies’ problems are being compounded by the recent changes in the tax laws. As you can imagine, the changes are very complex and will affect different companies in different ways.

However, one common effect is that it will squeeze utilities’ cash flows. The corporate tax rate has been cut from 35% to 21%. But it is believed that states’ regulators will insist that customers benefit from that reduction with lower bills. Eventually, the power companies may be able to recoup the lost income. But in the short run this loss of revenue means that cash flows will be squeezed. This may even result in some utilities’ credit ratings being cut.

Some Companies Will Cope

Management at some utility firms are already taking action in order to alleviate this expected loss in their cash flow. They have decided to issue more stock (diluting existing shareholders) and cut back on capital expenditures.

One of the largest utilities, Duke Energy (NYSE: DUK), announced in February that it planned to raise $2 billion from selling shares this year and would also cut its five-year capital spending plan by $1 billion. Its CEO, Lynn Good, said the share sale was needed “to maintain the strength of our balance sheet”.

Another large utility, First Energy (NYSE: FE), announced in January a $2.5 billion investment in common and convertible preferred shares (again diluting existing investors), from a number of institutional investors including Elliott Management and GIC. The funds would be used to pay off debt, contribute to its pension fund, and to “strengthen the company’s investment-grade balance sheet”.

These type of actions should help secure these companies’ future. But it will hold back their stock performance over the short- to intermediate-term, as well as the performance of a broad utilities’ ETF such as the Utilities Select Sector SPDR Fund (NYSE: XLU), which is down 4.62% year-to-date.

For now, I would avoid the entire utility sector. But if you have a high risk tolerance, you may want to consider the ProShares Ultra Short Utilities ETF (NYSE: SDP). This ETF seeks a return that is double the inverse of the return on the Dow Jones U.S. Utilities Index. This ETF is up more than 7% year-to-date.

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Source: Investors Alley 

CEFs

This “Billionaire’s Secret” Lets You Buy Stocks for 19% Off

One of the greatest things about closed-end funds (CEFs) is that they often cost less than they’re really worth.

And no, I’m not basing that on some obscure metric—I’m literally talking about the difference between the market price of the assets the fund owns and the market price of the fund itself.

It works like this: a CEF can trade for, say, $9.90, even though all the assets the fund holds (known as the net asset value, or NAV) are worth $10. Believe it or not, this happens a lot—it’s exactly how billionaire investors make big money in CEFs.

Take, for instance, Boaz Weinstein of Saba Capital Management. He’s a pretty big name on Wall Street for one reason: he was the guy who took down the so-called “London Whale,” a reckless trader with JPMorgan Chase & Co. (JPM) who racked up $6 billion in losses on phenomenally dumb bets.

Weinstein was the guy on the other side of those bets.

And now Weinstein has another lopsided Wall Street mistake in his crosshairs, and it has everything to do with closed-end funds.

As I told you last year, Weinstein stated that he was betting big on CEFs, spotting an opportunity to buy these funds, which were heavily discounted at the time, and waiting for the market to clue in to the big profits they offered.

Here’s how our CEF Insider equity indexes have done since Weinstein’s big bet:

A Steady Profit

Source: CEF Insider

Even after the recent volatility, these funds are up around 15% from a year ago. The best news is that there are still a lot of discounted CEFs floating around, despite this gain, so if you want to get in on the action, you’re not too late.

Which brings me to the 2 CEFs I’ll show you now.

2 CEFs Selling for Up to 19% Off

Let’s start with the Eagle Growth & Income Opportunities Fund (EGIF), which is a tiny, $111.5-million fund trading at a huge 16.8% discount to NAV. If you think this is because EGIF is holding dangerous stuff, think again; many holdings are value stocks with strong cash flows, like AT&T (T), Phillip Morris (PM) and Cisco Systems (CSCO).

Buy these stocks on the open market or hold them through a value-stock mutual fund or ETF and you’ll get $100 worth of stocks for every $100 you put in.

But with EGIF, you’ll get $100 of stocks for $83.20, thanks to that absurd discount to NAV.

Why else should you consider EGIF now?

Simply put, its discount has gotten a lot bigger thanks to the recent market volatility:

Cheap Fund Gets Cheaper

So if you were to buy now and wait for the fund to trade at par, you’d be looking at a 20% return. Or if you’re more impatient, just wait for this CEF to go back to where it was less than a year ago. You’ll still get a nice 5.6% return. And while you wait, you can enjoy EGIF’s 5.6% dividend stream.

A second fund to consider is the GDL Fund (GDL), run by famed value investor Mario Gabelli. Mario is a seasoned Wall Street billionaire not unlike Warren Buffet; using time-tested value-investing principles, his team looks for discounted stocks around the world and bets big on them.

But despite all that expertise, GDL trades at a ridiculous 18.6% discount to NAV!

GDL’s Absurd Markdown

The bottom line?

With $81.40 you’ll get $100 worth of stocks in high-quality global companies like Time Warner (TWX), which is likely to pop soon when it merges with AT&T, as well as Parmalat (PLT), the Italian dairy producer, which has a large share of the EU market, and Advanced Accelerator Applications (AAAP), which drug-making giant Novartis (NVS) is seeking to acquire.

Obviously, Gabelli’s team knows their stuff.

Buying now would get you this value portfolio at a huge discount. Wait for its discount to revert to where it was a few months ago, and you’ve got 8.1% upside. Keep holding on and collecting the 4.2% dividend stream and you’ll likely rack up even more gains, thanks to GDL’s strong and under-appreciated portfolio.

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Source: Contrarian Outlook 

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