The past few years have been a great time to be an investor. Federal Reserve Chairman Ben Bernanke’s zero interest rate policy has fueled large gains in just about every market sector since 2009. There’s little question that his policies are bullish in the short term, but what happens when the Fed’s easy money stops?#-ad_banner-#​ For an answer to this, we can take a page out of baseball history. In 1998, Mark McGwire hit a record 70 home runs during the season, while Sammy Sosa hit 66. The previous record of 61 home runs had been… Read More

The past few years have been a great time to be an investor. Federal Reserve Chairman Ben Bernanke’s zero interest rate policy has fueled large gains in just about every market sector since 2009. There’s little question that his policies are bullish in the short term, but what happens when the Fed’s easy money stops?#-ad_banner-#​ For an answer to this, we can take a page out of baseball history. In 1998, Mark McGwire hit a record 70 home runs during the season, while Sammy Sosa hit 66. The previous record of 61 home runs had been set in 1961 by Roger Maris. In 2001, Barry Bonds broke McGwire’s record by hitting 73 home runs. At the time, baseball was an exciting sport to watch as home run records captured headlines. Later, fans learned that the hitters were abusing steroids. Home run outputs returned to normal after leaguewide steroid testing became the norm in 2003. Fed policy is acting like a performance-enhancing drug for the market. When it stops easing, I believe the markets will be unable to continue climbing at the frantic pace seen during the past year. Returns will be below average for some time,… Read More

As company executives sit down to establish their 2014 strategies, they’re faced with a sobering prospect: The U.S. economy is likely headed for yet another year of subpar growth. It’s a theme I discussed a few weeks ago and the prospects of deeper government cutbacks, as a result of the current “sequester” policy, could even lead to even more anemic growth. #-ad_banner-#Indeed, more than half of the companies in the S&P 500 are expected to boost 2014 sales by less than 5%. Still, there are nearly two-dozen firms capable of defying economic gravity. Each of these firms… Read More

As company executives sit down to establish their 2014 strategies, they’re faced with a sobering prospect: The U.S. economy is likely headed for yet another year of subpar growth. It’s a theme I discussed a few weeks ago and the prospects of deeper government cutbacks, as a result of the current “sequester” policy, could even lead to even more anemic growth. #-ad_banner-#Indeed, more than half of the companies in the S&P 500 are expected to boost 2014 sales by less than 5%. Still, there are nearly two-dozen firms capable of defying economic gravity. Each of these firms is expected to boost sales at least 20% in the year ahead. To be sure, some of these companies are resorting to acquisitions to boost sales. These include: • InterContinental Exchange (NYSE: ICE), which is expected to more than double in size thanks to a merger with the NYSE. • Tenet Healthcare (NYSE: THC), which is expected to see a 46% jump in revenue thanks to a recently-completed acquisition of Vanguard Health Services. • NRG Energy’s (NYSE: NRG) recent move to acquire assets from the bankrupt Edison Mission Energy will also lead to a sizable 29% spike… Read More

As the Thanksgiving weekend wound to a close Sunday night, I happened to watch the “60 Minutes” interview with Jeff Bezos, the billionaire CEO of Amazon.com (Nasdaq: AMZN).#-ad_banner-#​ At the end of the interview Bezos unveiled a “surprise” for correspondent Charlie Rose and his TV viewers, revealing that Amazon is working on building flying drones that can deliver packages directly to customers. I thought that was maybe a bit far-fetched, but certainly interesting. However, the media grabbed onto the drone story and ran with it. All day Monday, every news channel I watched — financial and… Read More

As the Thanksgiving weekend wound to a close Sunday night, I happened to watch the “60 Minutes” interview with Jeff Bezos, the billionaire CEO of Amazon.com (Nasdaq: AMZN).#-ad_banner-#​ At the end of the interview Bezos unveiled a “surprise” for correspondent Charlie Rose and his TV viewers, revealing that Amazon is working on building flying drones that can deliver packages directly to customers. I thought that was maybe a bit far-fetched, but certainly interesting. However, the media grabbed onto the drone story and ran with it. All day Monday, every news channel I watched — financial and otherwise — was talking about Bezos, Amazon and drones. Bezos certainly knows how to create a buzz. What has yet to be seen is whether he can generate profits for Amazon shareholders. The Buzz Is Great — How About Some Profits? Amazon is a fantastic and innovative company. I don’t dispute that for a minute — I think that’s an inarguable fact. But another fact that I think investors should be aware of is that this company does not generate significant profits or free cash flow. It is a bit hard to believe considering that the company is well… Read More

I received this message in my inbox recently. It brings up a good point and captures what I imagine a lot of my readers have in their minds… “We own gobs of stocks in High-Yield Investing. Instead of having more and more new additions, would you consider adding to an existing holding?” – Lloyd F. #-ad_banner-#When you cover several exciting new investment ideas month after month, it doesn’t take very long to build a large collection of stocks and bonds. The current High-Yield Investing portfolio is diverse, but manageable. I keep close daily tabs on all of our holdings. Still,… Read More

I received this message in my inbox recently. It brings up a good point and captures what I imagine a lot of my readers have in their minds… “We own gobs of stocks in High-Yield Investing. Instead of having more and more new additions, would you consider adding to an existing holding?” – Lloyd F. #-ad_banner-#When you cover several exciting new investment ideas month after month, it doesn’t take very long to build a large collection of stocks and bonds. The current High-Yield Investing portfolio is diverse, but manageable. I keep close daily tabs on all of our holdings. Still, I wanted to accommodate Lloyd’s request in today’s essay — not because there is a shortage of new candidates, but because this is an opportune time to revisit an old favorite. And it remains a stellar dividend payer to this day…  As they say, sometimes your best new investment idea is a stock you already own. And subscribers who have joined within the past couple of years might be unfamiliar with this particular story. This company’s progress in recent years has been nothing short of amazing. I could tell you all about it, but I’d rather show you. The chart… Read More

Dividend yield or dividend growth? Investors are often asked to choose between one of these two types of yield plays. But it’s not the right question to ask. Instead, you want to find stocks with fast-growing dividends that will eventually sport high yields. But let’s face it, so many companies in the S&P 500 were content to aggressively boost their dividends a few years back, and now seem to simply nudge the payout just a bit higher each year. Here are some examples: Indeed, the outlook for dividend growth in the S&P 500 is… Read More

Dividend yield or dividend growth? Investors are often asked to choose between one of these two types of yield plays. But it’s not the right question to ask. Instead, you want to find stocks with fast-growing dividends that will eventually sport high yields. But let’s face it, so many companies in the S&P 500 were content to aggressively boost their dividends a few years back, and now seem to simply nudge the payout just a bit higher each year. Here are some examples: Indeed, the outlook for dividend growth in the S&P 500 is likely to be much more muted in coming years, with earnings per share (EPS) growth — not rapidly rising payout ratios — becoming the prime determinant. But as with any rule, there are clear exceptions. Some companies appear poised for robust dividend growth in coming years, thanks to still-low payout ratios, and by the time the process is done, dividend yields (based on today’s prices) are likely to be stellar. Here are three companies poised for great dividend growth. 1. Boeing (NYSE: BA ) Roughly a decade ago, when demand for airplanes began to surge, this aircraft maker decided to… Read More

Real estate is in my blood. My first job, when I was 8 years old, was working for my grandfather rehabbing single-family homes and small apartment buildings for his one-man investment company. I remember being paid a dollar an hour and thinking how rich I would be on payday.#-ad_banner-#​ What I didn’t understand at the time was that the work wasn’t about the trivial jobs I learned to hate. It was more about the start of a learning process. He was teaching me the value of hard work and the ability to find opportunities in the most distressed situations. The… Read More

Real estate is in my blood. My first job, when I was 8 years old, was working for my grandfather rehabbing single-family homes and small apartment buildings for his one-man investment company. I remember being paid a dollar an hour and thinking how rich I would be on payday.#-ad_banner-#​ What I didn’t understand at the time was that the work wasn’t about the trivial jobs I learned to hate. It was more about the start of a learning process. He was teaching me the value of hard work and the ability to find opportunities in the most distressed situations. The most important thing I learned is that there are dozens of creative ways to earn profits with real estate. From the 1960s until about 2007, real estate was truly the golden goose for many Americans, commonly believed to be a can’t-lose investment. Prices seemed to always be climbing higher, and even after short pullbacks, the uptrend resumed quickly.  Then, in 2007, the bottom fell out of the market. Many investors were forced into bankruptcy as their overleveraged properties plunged in value, and many homeowners lost their homes in the perfect storm of extended leverage meeting plummeting prices. This situation forced… Read More

My 62-year-old aunt called me in a panic a couple of months ago. “I’m worried about the market crashing because of the government shutdown.”#-ad_banner-#​ Sensing she was just looking for a little reassurance, I proceeded to tell her that I viewed any short-term weakness as a great chance to buy. I explained that not only is the trend still higher in the short run but that in the long run, stocks spend a lot more time going up than down. She conceded that made a lot of sense. But she still wanted to proceed with… Read More

My 62-year-old aunt called me in a panic a couple of months ago. “I’m worried about the market crashing because of the government shutdown.”#-ad_banner-#​ Sensing she was just looking for a little reassurance, I proceeded to tell her that I viewed any short-term weakness as a great chance to buy. I explained that not only is the trend still higher in the short run but that in the long run, stocks spend a lot more time going up than down. She conceded that made a lot of sense. But she still wanted to proceed with caution, adding that the only stock she wanted to buy was leading domestic drugstore company CVS Caremark (NYSE: CVS). Although she didn’t realize it, my aunt was making a big statement about blue chips. They make investors feel safe. They’re less volatile than smaller companies. And with the S&P 500 Index trading at an all-time high, blue chips are in demand from investors looking to curb equity risk. That’s why I want to share one of my favorite blue chips. Walgreen Co. (NYSE: WAG) is a virtual blueprint of what to look for in a great blue chip. So far,… Read More

This is a great time to be running a public company.#-ad_banner-#​ The surging stock market has created billions in wealth for the leading officers and directors, as previously granted stock options are now deep in the money. Of course, companies don’t like to publicize the fact that executives are reaping huge gains while leading the share count to bloat. Add all of their shares into the current base of stock, and investors would really be up in arms. That’s why many companies offset these lush stock options programs with share buybacks. As long as they are able to keep the… Read More

This is a great time to be running a public company.#-ad_banner-#​ The surging stock market has created billions in wealth for the leading officers and directors, as previously granted stock options are now deep in the money. Of course, companies don’t like to publicize the fact that executives are reaping huge gains while leading the share count to bloat. Add all of their shares into the current base of stock, and investors would really be up in arms. That’s why many companies offset these lush stock options programs with share buybacks. As long as they are able to keep the share count flat, investors are unlikely to grumble too loudly. But it also means that you should be skeptical when you hear about buyback announcements. Case in point: Regional bank KeyCorp (NYSE: KEY), which conducted a pair of buyback plans over the past two years totaling nearly $800 million. That equated to nearly 5% of shares outstanding. But in a study conducted by Deutsch Bank, KeyCorp actually shrank its share count by just 1%. In effect, most of that $800 million went toward enriching executives, not shareholders. That’s why it’s crucial to track companies to see if they are really… Read More

Newport, R.I., is the small seaside town where the titans of industry such as John Rockefeller, J.P. Morgan and Andrew Carnegie used their great wealth to build castlelike vacation homes during the Gilded Age of American capitalism. Although sometimes derided as robber barons, these industrial leaders helped build America into the bastion of free enterprise it is today.#-ad_banner-#​ Between 1860 and 1900, the U.S. economy expanded 400%, fueled by vastly improved technology, hands-off government policy and the growth of monopolies. Along with the industrial moguls, many regular investors who held shares in the monopolies also became wealthy. Just imagine being… Read More

Newport, R.I., is the small seaside town where the titans of industry such as John Rockefeller, J.P. Morgan and Andrew Carnegie used their great wealth to build castlelike vacation homes during the Gilded Age of American capitalism. Although sometimes derided as robber barons, these industrial leaders helped build America into the bastion of free enterprise it is today.#-ad_banner-#​ Between 1860 and 1900, the U.S. economy expanded 400%, fueled by vastly improved technology, hands-off government policy and the growth of monopolies. Along with the industrial moguls, many regular investors who held shares in the monopolies also became wealthy. Just imagine being a investor during the Gilded Age, knowing that you owned shares in a company that basically ruled its industry.   Most U.S.-based monopolies have long since been regulated out of existence in name of fair competition. However, there are a few near-monopolies that are still creating vast wealth for investors. These natural monopolies and duopolies were in the right place at the right time to gain significant market share. Although there is competition, some of these companies are so far advanced compared with their competition that it would take governmental intervention to knock them off their perches.   StreetAuthority co-founder… Read More