Dividends, those seemingly tiny cash payouts to company shareholders, have been the lifeblood of stock market returns over the past 80 years. #-ad_banner-#In today’s age of ultra-low Treasury yields, nearly nonexistent fixed-income payouts and near-zero interest rates, the yield provided by dividend-paying stocks has become even more critical for investors seeking above-market returns. A look at the historical picture between 1930 and 2010 shows that dividends accounted for 44% of the market’s returns in that time. In the lackluster stock markets of the 1970s, dividends provided 71% of returns. That’s an astounding number, no matter how it is… Read More

Dividends, those seemingly tiny cash payouts to company shareholders, have been the lifeblood of stock market returns over the past 80 years. #-ad_banner-#In today’s age of ultra-low Treasury yields, nearly nonexistent fixed-income payouts and near-zero interest rates, the yield provided by dividend-paying stocks has become even more critical for investors seeking above-market returns. A look at the historical picture between 1930 and 2010 shows that dividends accounted for 44% of the market’s returns in that time. In the lackluster stock markets of the 1970s, dividends provided 71% of returns. That’s an astounding number, no matter how it is crunched.  As you can see in this chart, dividend-paying companies have outperformed the overall market by 155% between 1972 and 2012:  Source: Dreyfus Corp. While 2013 was a banner year for dividends, the positive trend is slated to continue throughout 2014. Research firm Markit forecasts that S&P 500 dividends are expected to increase by 8.9%, to $352 billion. Regular readers of Amy Calistri’s Daily Paycheck advisory understand the importance of dividends, know which stocks the smart money is buying — and even understand the occasional dangers of high-yielding stocks. Let me explain.  High dividends do not… Read More

Nearly 20 years ago, I took a class taught by legendary investor John Griffin and guest speaker Julian Robertson. The class was held at my alma mater — the McIntire School of Commerce at the University of Virginia. I had no way of knowing it at the time, but a talented classmate of mine would go on to write several bestselling financial books, including The Ivy Portfolio and Shareholder Yield. His name? Mebane Faber. His friends call him “Meb.” But when it comes to the stock market… experts around the world are calling him a genius… #-ad_banner-#​“Of the many books… Read More

Nearly 20 years ago, I took a class taught by legendary investor John Griffin and guest speaker Julian Robertson. The class was held at my alma mater — the McIntire School of Commerce at the University of Virginia. I had no way of knowing it at the time, but a talented classmate of mine would go on to write several bestselling financial books, including The Ivy Portfolio and Shareholder Yield. His name? Mebane Faber. His friends call him “Meb.” But when it comes to the stock market… experts around the world are calling him a genius… #-ad_banner-#​“Of the many books I’ve read on investment strategies over the past decade, I put [the Ivy Portfolio] at the top of the class.” — Doug Short, Advisor Perspectives “The most useful book could be [the Ivy Portfolio] by money manager Mebane Faber. He offers a simplified model that regular people can adopt.” — BusinessWeek “If he keeps up what he’s doing, he’s going to be famous someday… He simply has too many good ideas.” — Stansberry Research.  Put simply, Mebane Faber is an up-and-coming star in the financial world. And for good reason.  Thanks to a groundbreaking academic study he published last year,… Read More

“One man’s trash is another man’s treasure.” That’s an appropriate saying for an investor looking for bargains in the stock market. I spend a lot of time looking through beaten-down stocks trying to find an overlooked jewel. I believe I found one recently in Penn West Petroleum (NYSE: PWE), which many investors have been throwing into the trash bin. #-ad_banner-#Shares of Penn West would need to triple to get back to where they were just two years ago — but I think that triple is possible.   I’m not suggesting it will happen overnight, but with… Read More

“One man’s trash is another man’s treasure.” That’s an appropriate saying for an investor looking for bargains in the stock market. I spend a lot of time looking through beaten-down stocks trying to find an overlooked jewel. I believe I found one recently in Penn West Petroleum (NYSE: PWE), which many investors have been throwing into the trash bin. #-ad_banner-#Shares of Penn West would need to triple to get back to where they were just two years ago — but I think that triple is possible.   I’m not suggesting it will happen overnight, but with the plan that Penn West has in place, it can happen. The nice part about Penn West is that as an investor buying today, you can lock in a 7% dividend yield. That means you get paid nicely while you wait for the plan to be executed and the shares to go up. What Caused PWE To Collapse? I’m bullish on Penn West going forward, but I don’t dispute for a minute that the share price drop over the past two years was warranted. This is a company that has struggled mightily. Shareholders are right to feel… Read More

Even after the push for renewable energy and the natural gas renaissance in recent years, oil is still the lifeblood of the global economy.  #-ad_banner-#According to the Energy Information Administration (EIA), world crude consumption grew by an average of 1.1 million barrels a day last year to a record 90.3 million barrels a day. The EIA is forecasting growth of 1.2 million barrels a day for 2014 and expects oil prices to remain in the $90 to $100 range for the short term.  Last year, offshore drillers lagged behind the market a bit — the SPDR S&P Oil… Read More

Even after the push for renewable energy and the natural gas renaissance in recent years, oil is still the lifeblood of the global economy.  #-ad_banner-#According to the Energy Information Administration (EIA), world crude consumption grew by an average of 1.1 million barrels a day last year to a record 90.3 million barrels a day. The EIA is forecasting growth of 1.2 million barrels a day for 2014 and expects oil prices to remain in the $90 to $100 range for the short term.  Last year, offshore drillers lagged behind the market a bit — the SPDR S&P Oil & Gas Equipment & Services ETF (NYSE: XES) logged a gain of 23.9% for the year, compared with the S&P 500 Index’s 26.4% — but 2014 is shaping up as a turnaround year for the sector.  The Gulf of Mexico in particular could be a potential “black gold” mine for drillers this year. A report by the U.S. Department of the Interior estimates that there is still around 48 billion barrels of oil that remain undiscovered, but the biggest catalyst could come from our southern neighbor — Mexico. Constitutional reform has gripped Mexico’s oil industry and broken up a long-running… Read More

Activist investors have the ability to influence significant changes in companies that they take an interest in, often leading to greater profits and investor confidence and ultimately driving stock prices higher. #-ad_banner-#In practice, an activist typically buys a large block of shares and then uses this ownership as leverage to influence the company’s direction. Many times, an activist investor will require a seat (or several) on the board and may push for replacing executives if it appears the current leaders are not adequately managing the company. Activists may take the form of institutional investors (such as mutual funds,… Read More

Activist investors have the ability to influence significant changes in companies that they take an interest in, often leading to greater profits and investor confidence and ultimately driving stock prices higher. #-ad_banner-#In practice, an activist typically buys a large block of shares and then uses this ownership as leverage to influence the company’s direction. Many times, an activist investor will require a seat (or several) on the board and may push for replacing executives if it appears the current leaders are not adequately managing the company. Activists may take the form of institutional investors (such as mutual funds, hedge funds or endowments), or they may simply be one or more wealthy individuals. Whatever form they take, activist investors can be very motivated toward driving change in a company and unlocking shareholder value. For this reason, it makes sense to keep track of the actions of successful activist investors, and to trade alongside these opportunists when possible. Today, I want to take a look at an income trade that does just that. Darden Restaurants Pressured To Break Up Our target today is Darden Restaurants (NYSE: DRI), owns and operates full-service restaurants chains such as the well-known Olive Garden… Read More

Hedge fund managers, along with many financial writers on the Internet, have no qualm focusing their attention on sharply overvalued stocks.#-ad_banner-# To these folks, any stock that has entered into a bubble needs to be called to task. But Wall Street analysts rarely take a negative view on stocks. Even when they do dislike a stock (or its valuation), they’ll simply rate it a “hold” or “neutral.” In very rare instances, you’ll see an “underperform” or “sell” rating, but even then, these analysts typically have target prices close to the current trading price. Yet in recent days, I’ve noticed some… Read More

Hedge fund managers, along with many financial writers on the Internet, have no qualm focusing their attention on sharply overvalued stocks.#-ad_banner-# To these folks, any stock that has entered into a bubble needs to be called to task. But Wall Street analysts rarely take a negative view on stocks. Even when they do dislike a stock (or its valuation), they’ll simply rate it a “hold” or “neutral.” In very rare instances, you’ll see an “underperform” or “sell” rating, but even then, these analysts typically have target prices close to the current trading price. Yet in recent days, I’ve noticed some unusually gutsy calls from the “it’s always sunny” Wall Street analysts. They’ve been singling out certain stocks, citing severe levels of overvaluation. Even if you are long these stocks, it pays to listen to what these analysts have to say. And if you are looking for short sale ideas, then these stocks are a fine place to start. 1. Twitter (NYSE: TWTR ) It’s easy to see why some may think this stock is overvalued: The company is valued at 34 times projected 2014 sales. I can’t recall ever seeing a figure that high before. Indeed, short sellers are now… Read More

U.S. stocks became oversold after a sharp sell-off, while emerging markets entered bear market territory.#-ad_banner-# Stocks Oversold After Three-Day Sell-off SPDR S&P 500 (NYSE: SPY) fell 2.13% on Friday and was down 2.59% for the week. Friday’s sell-off left the major market averages deeply oversold. The chart below includes Bollinger BandsR along with prices. The Bands are placed three standard deviations from the 20-day moving average instead of the standard setting of two standard deviations. Two standard deviations should contain 95.45% of the price action, while 99.73% of the price action should occur within the… Read More

U.S. stocks became oversold after a sharp sell-off, while emerging markets entered bear market territory.#-ad_banner-# Stocks Oversold After Three-Day Sell-off SPDR S&P 500 (NYSE: SPY) fell 2.13% on Friday and was down 2.59% for the week. Friday’s sell-off left the major market averages deeply oversold. The chart below includes Bollinger BandsR along with prices. The Bands are placed three standard deviations from the 20-day moving average instead of the standard setting of two standard deviations. Two standard deviations should contain 95.45% of the price action, while 99.73% of the price action should occur within the Bands when they are set at three standard deviations. Friday’s close, more than three standard deviations below the average, is expected to happen 0.27% of the time, or once every 370 trading days (about 18 months). Prices drop below the lower Bollinger Band a little more often than expected. This has happened 17 times since SPY began trading in 1993, or about once every 15 months, on average. Buying after prices fall this much would have been profitable in the short term. One week later, prices were up an average of 1.73%, and 67% of the trades would… Read More

Today, I’m going to let you in on one of the market’s best-kept secrets… It turns out investors are willing to pay you to sell stocks you already own at a profit.  You read that right. And you want to know the funny thing? Oftentimes, you don’t even have to end up selling. You simply take their money. And rest assured, it’s all perfectly legal. I can’t believe investors are missing out on these payments…  #-ad_banner-#For those who are unfamiliar with this simple technique, it may sound strange. But savvy investors are using it to generate thousands of dollars in… Read More

Today, I’m going to let you in on one of the market’s best-kept secrets… It turns out investors are willing to pay you to sell stocks you already own at a profit.  You read that right. And you want to know the funny thing? Oftentimes, you don’t even have to end up selling. You simply take their money. And rest assured, it’s all perfectly legal. I can’t believe investors are missing out on these payments…  #-ad_banner-#For those who are unfamiliar with this simple technique, it may sound strange. But savvy investors are using it to generate thousands of dollars in extra income every year. It’s one of the easiest and safest ways to generate 20%-plus returns on a regular basis. Once you’ve mastered the technique, I wouldn’t be surprised if you stopped trading stocks or buying and holding investments.  That’s how powerful this strategy is: it can drastically improve the way you make money in the markets. That goes for conservative income investors and aggressive traders alike.  The technique involves selling options — specifically covered calls. A call option gives the buyer the right — but not the obligation — to buy a stock from the call seller if it’s… Read More

It’s no secret that Americans are pretty voracious consumers of health care. #-ad_banner-#Health care accounts for more than 17% of GDP, and the sector is projected to grow to 20% of the U.S. economy within eight years. A good chunk of the sector is diagnostic laboratory testing, now about a $60 billion industry in the U.S. Currently, hospitals and health care networks do most lab tests, ranging from routine blood and urine screens to more time-consuming, complex cancer and genetic tests. However, health care providers are now much more likely to outsource lab tests, particularly the more complicated ones, because… Read More

It’s no secret that Americans are pretty voracious consumers of health care. #-ad_banner-#Health care accounts for more than 17% of GDP, and the sector is projected to grow to 20% of the U.S. economy within eight years. A good chunk of the sector is diagnostic laboratory testing, now about a $60 billion industry in the U.S. Currently, hospitals and health care networks do most lab tests, ranging from routine blood and urine screens to more time-consuming, complex cancer and genetic tests. However, health care providers are now much more likely to outsource lab tests, particularly the more complicated ones, because it’s often cheaper and more efficient. Typically, health care providers want a large, reputable lab with many accessible locations. They certainly prefer a lab that can handle volume that is likely to grow substantially, thanks to the Affordable Care Act (aka Obamacare). Obamacare, which emphasizes preventive testing, is expected to bring an estimated 25 million new patients into the health care system during the next 10 years. What’s more, the enormous baby boom population will likely need all sorts of diagnostic tests as they age. (My colleague Joseph Hogue explored this trend in his “Graying of America” series last summer.)… Read More

Now that the busy holiday shopping season is behind us, it’s time to look at which department store retailers are set up for the long haul.#-ad_banner-# Investing for the long run involves sticking with a retailer known for consistency in terms of product offerings, management and price. For investors, what makes a great retail investment is a nice dividend, strong balance sheet and robust returns on equity. These days, most department store retailers lack these qualities, especially J.C. Penney (NYSE: JCP) and Sears (NYSE: SHLD). The one department store retailer that shoppers and investors alike can count on is Macy’s… Read More

Now that the busy holiday shopping season is behind us, it’s time to look at which department store retailers are set up for the long haul.#-ad_banner-# Investing for the long run involves sticking with a retailer known for consistency in terms of product offerings, management and price. For investors, what makes a great retail investment is a nice dividend, strong balance sheet and robust returns on equity. These days, most department store retailers lack these qualities, especially J.C. Penney (NYSE: JCP) and Sears (NYSE: SHLD). The one department store retailer that shoppers and investors alike can count on is Macy’s (NYSE: M). Macy’s possesses all the necessary qualities based on value and growth. Going forward, Macy’s has a number of initiatives to drive both its top and bottom lines. The retailer performed well during the holiday season, executing on its Black Friday platform and various strategies. The department store retailer recently announced November and December (holiday season) sales, which revealed that comparable-store sales were up 3.6% year over year. If you include sales from licensed departments within Macy’s, comparable-store sales rose 4.3%. Several Growth Measures In Place Macy’s primary focus is its My Macy’s program, which is focused on… Read More