Displaying items by tag: dividends

(New York)

If there were ever a time to be worried about rate risk it is now. The US economy is red hot and the Fed continues to look hawkish. Two rate hikes by the end of the year look like a certainty. So how can one protect their portfolio? One answer is floating rate bonds, and especially floating rate investment grade bonds with a range of durations. One ETF that does just that is the X-trackers Investment Grade Bond – Interest Rate Hedged ETF (IGIH). The ETF sports a yield of over 3%, and very importantly, it has a duration of almost zero, meaning it should be almost completely unaffected by any movement in rates.

FINSUM: a 3% yield with no rate risk sounds like a very good investment in the current environment.

(New York)

Safe dividend stocks are absolutely prized by America’s retirees. No group relies on dividends more than retirees, and most seek safe and reliable dividends with underlying businesses that can provide some price appreciation too. With that in mind, three stocks to look at are McDonalds, Corning, and Starbucks. All three companies have strong and growing businesses and seem committed to rewarding shareholders. They also have the formidable capital position to be able to invest in continuing robust growth even in changing times.

FINSUM: We don’t know much about Corning, but McDonalds seems like a good bet to us. The company has responded well to the shifts in consumer tastes and it has been innovative in adapting its menu and model to the new environment.

(New York)

Retail clients, and some advisors, are adopting an increasingly defensive outlook on the market as the economy roars and rate hikes look more and more certain (not to mention soaring valuations). So what are the best defensive ETFs to protect a portfolio? The range of defensive strategies is broad—from dividend-focused, to shorting, to multi-factor. Some of the most popular include the AdvisorShares Dorsey Wright Short ETF, the Fidelity Dividend ETF for Rising Rates, or the Principal Mega-Cap Multi-Factor Index ETF.

FINSUM: It seems a smart choice to have defense ETFs be a decent portion of one’s portfolio right now. That said, we would be anxious to make shorting-focused ETFs a substantial holding.

(New York)

Here is a proposition. What if you could have stocks in your portfolio that help you earn income, combat rising rates, and support you during a recession. Look no further than this group of rising dividends stocks that should perform very well in a recession. All three are medical device makers with wide moats and long growth runways that shouldn’t be thrown off path by an economic downturn. The three are Johnson & Johnson, Medtronic, and LeMaitre Vascular. The first two companies are aristocrats and have increased their dividends steadily for over 40 years.

FINSUM: These are interesting choices. Medical device makers do some like good recession-time bets because healthcare demand should hold up nicely in any downturn.

(New York)

The Fed looks set for another hike in September, and likely another before the end of the year. That means that fixed income is a very tricky market, as many bonds will likely see losses. So how can one protect their portfolio but still earn reliable income? One option is to buy floating rate bonds. Luckily, there are several funds that can help investors own floating rate bonds. Some of them include the Fidelity Floating Rate High Income (4.36% yield), the iShares Floating Rate Bond ETF, the BlackRock Floating Rate Income Strategies Fund, or the Eaton Vance Floating Rate Income Fund.

FINSUM: We think floating rate bonds seem like a good strategy for the current environment. Just be careful of high credit risk in some of these funds.