Despite all the talk about rising interest rates, owning the best dividend stocks is still the best way to add income to your portfolio for the foreseeable future.
While we hear talk on a daily basis about inflation and higher interest rates, we have seen only a slight move up on the rates on 10-year treasury bonds. While the move from 0.50% to the current 1.58% yield roiled markets, it's not going to put much more cash in the pockets of income investors.
The sparkling 2.2% on the 30-year bond does not do much for those needed to earn a decent rate of their retirement cash.
On the other hand, the dividend stocks we're going to show you yields over 7%. That's more than triple the rate you'll get from even the best government bonds.
The combination of low starting rates and the real possibility of inflation and higher rates on the horizon is a new problem. Income investors will have to deal with something they have not faced in well over a decade. The last time we saw a significant move higher in rates was back in 1998, when rates moved from 4.6% on the 10-year to almost 7% in early 2000.
The possibility of losing principal due to interest rate risk is something no income investor has dealt with in over 20 years.
We haven't seen inflation rates of 4% since 1990.
It is a whole new ball game for income investors, and most have never played this version of the game. That's why we're going to walk you through it and show you some of the best dividend stocks to buy now.
Dividend stocks are simply the best way to add income to your portfolio in this low interest rate, growing inflation environment.
And we'll do even better than give you high-yield dividend stocks. We're looking at a specific group of dividend-payers called business development companies (BDCs).
You may recall that BDCs are investment funds that lend money to companies from expansions, financing merger and acquisitions transactions, and other corporate uses. Most BDCs lend in the middle market of corporate America, where most companies have not yet gone public.
If interest rates go up, businesses that are borrowers of a BDC will see the rate on their loan go up.
Since business development companies pass through the interest payments, we should see our dividends go up as well.
That will protect us from interest rate risk.
Here are our top dividend stocks right now…
Bain Capital Specialty Finance Inc. (NYSE: BCSF) is an excellent example of a BDC that offers a nice combination of yield and rate protection. Over 97% of the loans made by Bain Capital Specialty are floating rate. At the current rate, Bain Capital Specialty shares are yielding 8.53%.
This BDC is affiliated with Bain Capital, a leading global alternative asset manager with over $130 billion in assets under management. The managers of the BDC can draw on the lending expertise of Bain Capital Credit, which manages $48.4 billion in assets in credit-related products.
Bain Capital Specialty is also joining up with another alternative asset manager, Pantheon Group, to expand into the direct lending markets in Australia and Europe.
Bain Capital Specialty Finance shares are currently selling at a 4% discount from the net asset value of the loans in the portfolio. You can buy high yields, interest rate protection, expert credit managers, and a measure of international diversification at a discount to the value of the current portfolio.
Oaktree Specialty Lending Corp. (NASDAQ: OCSL) is another BDC that can offer investors the combination of an above-average yield and protection from rising interest rates. Oaktree shares are yielding 7.72% right now, and almost 90% of the portfolio loans have floating rate provisions.
Oaktree Specialty Lending is managed by an affiliate of Oaktree Capital Management, a credit manager with over $253 billion in assets. Oaktree is best known for its work in distressed debt and high yield markets, so it knows a thing or two about evaluating loans and measuring credit risk.
Oaktree's philosophy of investing in credit markets was developed by one of its founders, the legendary debt investor Howard Marks, who suggests that the BDC should place the highest priority on preventing losses rather than merely searching for prospective profits.
Oaktree Capital is known as a go-to company for many middle-market borrowers, which often creates first look opportunities at potential loan deals of Oaktree Specialty Lending.
Shares of Oaktree Strategic Lending are currently trading at about a 5% discount to the portfolio's value. This creates another opportunity to get world-class management, high yields, and protection against rising rates at a sale price.
Dividend stocks have remained one of the most reliable ways to collect steady income from the stock market. Many companies pay out dividends quarterly, which makes it an attractive income source, but there are also companies that pay monthly or annual dividends.
The best dividend paying stocks increase their dividend payouts as the company grows and profits increase. Investing in high-dividend stocks can be a consistent form of passive income that can prepare you for a comfortable future.
Ready to take advantage of the unique investment opportunity that dividend stocks present? Keep reading to learn how they work and how to maximize your profits, then check out our collection of articles and resources below to learn about the latest in dividend stocks.
A publicly-traded company pays out dividends to shareholders after its board of directors meets to decide whether the company has made enough profit to warrant payment. The amount of total dividend payments compared to the company’s net income is known as the payment ratio.
Companies that pay out dividends can do so in two ways:
• Cash dividends are regular cash payments to shareholders. The company agrees to pay a percentage of profits in cash to investors. How much each shareholder receives is based on the number of shares they own. For example, if you own 100 shares in Company X and they pay $8 per share, you’ll receive $800 in addition to whatever profits you’ve made off of rising share prices.
• Stock dividends are similar to cash dividends, but they pay shareholders in additional shares in the company. For example, if Company X chooses to pay an 8% stock dividend and you own 100 shares in the company, you will have 108 shares after the payout.
As stated above, dividend payments vary by company. Whether a company chooses to pay cash or stock dividends, payouts are still done monthly, quarterly, or annually, depending on what the board of directors chooses.
Although not all companies pay dividends, some of the biggest and most profitable companies in the world do offer dividends—providing a bonus for investing in certain blue-chip stocks. In fact, some of the best high dividend stocks are household names such as Qualcomm Inc. (NASDAQ: QCOM), International Business Machines Corporation (NYSE; IBM) and Target (NYSE; TGT).
Dividend investing can be an excellent way of generating passive income. The more shares of dividend stocks you own, the more money can be made.
To successfully earn an income with dividend stocks, there are a few indicators to look for when deciding which company to invest in:
• Growth of the company’s income, which could be an indicator of increasing dividends.
• The dividend yield or payment ratio a company offers at the time of stock purchase.
• The company’s balance sheet which indicates whether the company is profitable or has a lot of debt to overcome.
If you’re looking to make a profit investing in dividend stocks, there are two ways to do it:
• Long-term Dividend Investing
Investing in companies that pay dividends and holding them for many years allows investors to continue to share in the company’s profits as it grows. Holding on to shares means that the shareholder receives a steady source of income as long as he or she maintains ownership. Reinvesting cash dividends or keeping stock dividends gives the investor greater ownership of the company.
• Short-term dividend investing
Some investors choose to buy a stock to receive dividends and sell shortly after payout. However, when stocks are held for less than a year, they are classified as short-term and can be subject to different taxation than long-term investments.
The amount of tax paid on dividend stocks depends on whether the investment is long-term or short-term. This goes for any stock you buy and sell, not just dividend stocks.
Short-term capital gains (earnings on shares held less than one year) are taxed as regular income.
On the other hand, long-term capital gains (earnings on shares held longer than one year) are only taxed based on net capital gains over the year. Net capital gains are determined by subtracting annual capital losses from annual capital gains.
Depending on your net capital gains, you could owe between 0% and 20% in federal income tax.
Dividend stocks could be your solution to making steady, passive income that sets you up for a comfortable, secure future.
Don’t forget to check out Money Morning’s resources to help you successfully invest in income stocks and keep checking back to the most important investing advice from our experts.
More than 2.25 million Americans became millionaires in 2020, thanks to powerful bull runs in stocks, real estate, crypto, and other assets.
All that new money needs to go somewhere, and Shah Gilani’s picked what he thinks will be the best stock to play that trend.
But that’s only one of the reasons the stock pays a 9.6% dividend… .
More than 2.25 million Americans became millionaires in 2020, thanks to powerful bull runs in stocks, real estate, crypto, and other assets.
All that new money needs to go somewhere, and Shah Gilani’s picked what he thinks will be the best stock to play that trend.
But that’s only one of the reasons the stock pays a 9.6% dividend… .
On Monday night, telecom giant Verizon confirmed that it’s selling its Yahoo! and AOL media holdings to private equity firm Apollo Global Management.
Verizon’s willingness to sell while taking a $4 billion-plus hit shows its eagerness to get out of the media and digital advertising space and re-focus on where the growth really is: 5G.
Here’s what you need to know… .
Lots of investors love to own "dividend stocks" like TLT and PTTRX for the seemingly high yield; they're hugely popular.
But, if you look closer, you'll see that yield comes at the cost of share price performance.
That "high yield" can drag your whole portfolio down.
Chris Johnson's used his screener to find 15 of the safest dividend performers out there, plus one you must own.
High-yield dividend stocks offer investors refuge in volatile markets like this one.
Stocks are near record highs, while inflation fears and a sputtering economy threaten to wipe out these gains.
Adding a dividend paying stock to your portfolio can help minimize the risk.
The trouble is, they’re harder than ever to find.
At Money Morning we’ve done the in-depth research to find dividend stocks paying healthy yields.
And the strategy we've uncovered is the perfect solution for any income-seeking investor...
There are two essential ways to make life-changing wealth from a stock.
You can profit in the long term as the company grows its bottom line and the stock price goes up.
Or you can get that profit delivered right to your hand in the form of a quarterly check.
These are the best versions of growth and dividend investing.
Many people think you have to choose whether to invest in growth or dividend stocks.
But that's a common "all-or-nothing" fallacy...
The search for income will not be any easier in 2021 than it was for most of 2020.
The U.S.
Federal Reserve has vowed to keep rates low to support the economy as we deal with the pandemic's economic fallout.
We can tell this from the Fed's projection at its August meeting.
It doesn't look like we will see meaningful action towards higher interest rates until 2024 at the earliest.
But the best dividend stocks are still paying more than 7%. We're sharing them with you today.
Stocks just do not seem to have an off switch as we approach the end of the year.
The anticipation of a vaccine is continuing to give investors the confidence to pour money into stocks.
Bonds have drifted back a little, but not enough go for yields be meaningful enough.
This particular combination can make life difficult for income-seeking investors.
The pool of high dividend stocks has been shrinking, and traditional fixed-income investments have paltry yields at best.
Investors with new money to put to work in income producing ideas face a real dilemma right now.
Fortunately, there are alternatives to traditional stock and bonds that can provide the high yields needed to fulfill your income needs... Here's what I mean, including the best dividend stocks to buy now...
The almost-continuous stream of good news about a COVID-19 vaccine finally revived community and regional bank stocks in November.
The SPDR S&P Regional Banking ETF (NYSE Arca: KRE) bounced back more than 25% in November after being down more than 50% at its lowest point.
The index is still down 15% year to date, but it has been an impressive recovery.
It may continue to go in that direction, which will fuel some of the best bank stocks we’re covering today.
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It was already hard to find income-producing investments.
Now, thanks to the recent vaccine-inspired rally in stocks, it is harder than ever.
The best high dividend stocks for 2021 have been called.
This is an opportunity to collect yields higher than 10%.
Dividend stocks in 2020 faced slashing interest rates, a global pandemic, a noisy presidential election, market crash and recovery.
But if we look at the sectors that were the most battered by the pandemic and will benefit the most from a vaccine, we can expose some key income opportunities for the next year.
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Fears of a renewed spread of the coronavirus and the lack of progress on a second stimulus package have kept a lid on stocks.
Value investors are finding few deals worth pursuing while growth investors see no momentum higher.
But the best high dividend stocks offer a bit of both worlds thanks to their steady income streams and chronic underpricing.
We're specifically targeting a special class of dividend stocks too.
These aren't just stocks with high yields, their business models are designed to pay shareholders.
Low interest rates have propelled stocks to soaring heights despite the recession caused by the coronavirus.
That means it’s both hard to find growth opportunity and yields in this market.
Hard, but not impossible.
I’ve scoured the markets to find the best high-yield dividend stocks that can add income to your portfolio right away.
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Investing for income is difficult today and probably going to get a lot tougher over the next three years... Wall Street will throw all kinds of crazy ideas at you that will allegedly raise your income level.
These products will raise someone's income level, but I suspect it will not be yours.
Millions of Americans will be looking for income as rates stay lower longer than anyone had thought possible.
In a recent press conference Federal Reserve Chairman, Jerome Powell, has said that rates will remain low until at least 2023, if not longer.
Inevitably, income-producing assets will be become bid up to excessive valuations.
Income investing will be difficult and frustrating beyond belief for most investors.
But there is hope if you follow the simple rules I'm going to outline for you today...
Now that football is back, I'm reminded that defense wins championships.
When we see broad market selloffs, the best strategy is typically to take a look at tried-and-true dividend investing.
Today, I'll show you some of the best dividend stocks to buy.
One of them has an 8% yield.
The tech sell-off dragged down all major stock indices over the last week.
The Nasdaq dipped into correction territory on Tuesday.That came as a sudden reminder that we are not out of the economic crisis caused by the coronavirus and the runup since March has happened in spite of the negative news.
Investors might be tempted to buy the dip, but the risks are far from over.
That's why adding high dividend stocks to your portfolio right now can give you some much needed stability and income as volatility rises through the fall.
