Opinion

John Wasik

Column: Three reasons why the golden age of dividends is dawning

May 24, 2013 12:51 UTC

CHICAGO (Reuters) – The golden days of summer might also brighten the portfolios of dividend lovers.

With most large corporations swimming in cash as the economy and earnings improve, adopting a dividend-centric strategy looks even more promising for moderate-risk investors.

Dividends, the portion of earnings that corporations pass along to shareholders in the form of quarterly payments, are becoming more generous. Not only do they reward long-term shareholders with higher total return, they are proven inflation hedges.

At the end of last year, the number of companies paying a dividend hit a new, 13-year high, FactSet reports. And while dividend payout ratios are close to their median level, they are at their highest level since the recession hit in 2007.

The current yield of S&P 500 stocks is around 2 percent, which beats most insured savings accounts. Unless a slowdown triggers earnings declines, the dividend surge is expected to continue.

Three reasons why the golden age of dividends is dawning

May 24, 2013 11:59 UTC

By John Wasik

CHICAGO, May 24(Reuters) – The golden days of summer might
also brighten the portfolios of dividend lovers.

With most large corporations swimming in cash as the economy
and earnings improve, adopting a dividend-centric strategy looks
even more promising for moderate-risk investors.

Dividends, the portion of earnings that corporations pass
along to shareholders in the form of quarterly payments, are
becoming more generous. Not only do they reward long-term
shareholders with higher total return, they are proven inflation
hedges.

Column: Two ways to pick your summer stock retreat

May 20, 2013 20:00 UTC

CHICAGO (Reuters) – It used to be easy to abide by the old Wall Street nugget that you should pull out of the market in spring and come back in the fall.

But research shows that it doesn’t make sense to completely abandon the stock market during the summer months, particularly when it comes to individual sectors. Not all of them will decline.

There are several ways to seize gains if you want to make some portfolio adjustments. Here are two approaches.

Two ways to pick your summer stock retreat

May 20, 2013 19:55 UTC

CHICAGO, May 20 (Reuters) – It used to be easy to abide by
the old Wall Street nugget that you should pull out of the
market in spring and come back in the fall.

But research shows that it doesn’t make sense to completely
abandon the stock market during the summer months, particularly
when it comes to individual sectors. Not all of them will
decline.

There are several ways to seize gains if you want to make
some portfolio adjustments. Here are two approaches.

Column: Business Development Companies – High yield, high risk

May 17, 2013 12:07 UTC

CHICAGO (Reuters) – In a frantic search for yields, investors often turn toward relatively unknown products. Business Development Companies (BDCs) are one of latest vehicles to grab investor attention – and money.

BDCs are companies that lend to young, thinly traded and often distressed companies that have credit ratings in the “junk” status. They are as close to a private equity enterprise as you’re going to get in a public company. Yet their high yields come at a price in terms of elevated risk that should not be underestimated, and investors must proceed with caution.

Like Real Estate Investment Trusts (REITs), BDCs must pass through at least 90 percent of their profit to shareholders. Most of their borrowers carry the lowest-possible credit ratings such as BBB-, or are not rated at all. They hold a variety of companies in their portfolios, so some are more diversified than others.

Business Development Companies: High yield, high risk

May 17, 2013 11:59 UTC

CHICAGO, May 17 (Reuters) – In a frantic search for yields,
investors often turn toward relatively unknown products.
Business Development Companies (BDCs) are one of latest vehicles
to grab investor attention – and money.

BDCs are companies that lend to young, thinly traded and
often distressed companies that have credit ratings in the
“junk” status. They are as close to a private equity enterprise
as you’re going to get in a public company. Yet their high
yields come at a price in terms of elevated risk that should not
be underestimated, and investors must proceed with caution.

Like Real Estate Investment Trusts (REITs), BDCs must pass
through at least 90 percent of their profit to shareholders.
Most of their borrowers carry the lowest-possible credit ratings
such as BBB-, or are not rated at all. They hold a variety of
companies in their portfolios, so some are more diversified than
others.

Column: Four ways to avoid bad decisions during a bull run

May 15, 2013 12:54 UTC

CHICAGO (Reuters) – Is the Dow’s movement above 15,000 or the record close of the S&P 500 Index last week a buy signal? They may not mean anything, but most market watchers believe the rise is talismanic.

Despite the lure of recent market gains, there’s often no pattern to investment results. To avoid seeing patterns where there may be none – and acting irrationally – we often need to short-circuit our instincts and think counter-intuitively.

A go-slow approach that avoids trading on market timing can often avert losses. Here are some behavioral biases and ways to prevent bad decisions:

Four ways to avoid bad decisions during a bull run

May 15, 2013 11:59 UTC

CHICAGO, May 15 (Reuters) – Is the Dow’s movement above
15,000 or the record close of the S&P 500 Index last week a buy
signal? They may not mean anything, but most market watchers
believe the rise is talismanic.

Despite the lure of recent market gains, there’s often no
pattern to investment results. To avoid seeing patterns where
there may be none – and acting irrationally – we often need to
short-circuit our instincts and think counter-intuitively.

A go-slow approach that avoids trading on market timing can
often avert losses. Here are some behavioral biases and ways to
prevent bad decisions:

Column: Going to alternatives for yield

May 10, 2013 12:25 UTC

CHICAGO (Reuters) – If you’re willing to take on more risk, it’s a good time to move beyond corporate and government bonds in the incredibly challenging search for yield.

While attention has been on the record-setting stock market – the Dow Jones Industrial Average closed above the symbolic 15,000 on Tuesday and kept climbing – bond yields have been heading south. The benchmark 10-year U.S. Treasury is yielding around 1.8 percent after hitting 2 percent in early March.

An “in-between” portfolio that focuses on yield from non-traditional sources while owning dividend-rich stocks is one approach to find income. This strategy is based on the reality that bond yields probably won’t rise much in the next year or so. You’ll have to venture into alternative investments if you want to boost your income stream.

Going to alternatives for yield

May 10, 2013 12:24 UTC

CHICAGO, May 10 (Reuters) – If you’re willing to take on
more risk, it’s a good time to move beyond corporate and
government bonds in the incredibly challenging search for yield.

While attention has been on the record-setting stock market
- the Dow Jones Industrial Average closed above the symbolic
15,000 on Tuesday and kept climbing – bond yields have been
heading south. The benchmark 10-year U.S. Treasury is yielding
around 1.8 percent after hitting 2 percent in early March.

An “in-between” portfolio that focuses on yield from
non-traditional sources while owning dividend-rich stocks is one
approach to find income. This strategy is based on the reality
that bond yields probably won’t rise much in the next year or
so. You’ll have to venture into alternative investments if you
want to boost your income stream.

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