Starving for Income? Safe Money Stocks Can Feed that Need

Wednesday, November 13, 2019

Investors who are still working or in retirement need income ... yield ... something, anything to keep cash coming in and the bills paid.

And no wonder! We’re living in a world where everyone is being squeezed by rock-bottom interest rates.

That’s true here in the U.S., where the Federal Reserve has cut rates by 75 basis points (0.75 percentage points) since late July. And it’s certainly true overseas, where bonds in many countries are STILL trading with negative yields — even after a bounce over the last several weeks.

It’s not just individuals feeling the pressure. Big-money institutions are in the same boat. A day rarely goes by without another story hitting the tape about firms doing foolish, high-risk stunts in a desperate hunt for yield.

Last week, the Wall Street Journal ran an article with the headline: “Pensions Venture Into Risky Corners of the Market in Hunt for Returns.”

The piece chronicled how funds are pouring money into riskier private markets … 100-year Argentinean bonds … produce-growing greenhouses … garbage collection and disposal projects … toll roads … and a motley assortment of other dodgier ventures.

Will it all just work out in the end? I think a lot of people — even some smart ones who should know better — are betting on that.

But, as we've seen in the last few weeks, some of the world’s riskiest debt securities are starting to lose value.

This hasn’t pulled the rug out from under the stock market. But it does raise concerns about what’s coming down the pike.

As for the here and now, it also raises an important question: In a world fraught with risk, what CAN you buy for market-beating yields AND reasonable levels of safety?

The good news is that stocks like that DO exist. But you can’t just throw darts. You have to be systematic about your approach. That’s what I do in my Safe Money Report.

If you're hungry for yield, simply gobbling up any stock that pays a dividend could easily leave you starved for capital appreciation. So rather than just recommend any old stock that pays a dividend, I follow a five-step process in our core model portfolio. It’s designed to identify ONLY stocks that ...

  1. Earn either a “Hold” or “Buy” grade from our Weiss Ratings model, and that pass two screens designed to ensure adequate liquidity ...
  1. Sport a dividend that’s at least equal to the S&P 500, and up to four times as much. The research my team and I have conducted shows those are in the “sweet spot” when it comes to balancing yield and risk ...
  1. Feature a multi-year stretch of double-digit dividend growth ...
  1. Pass stringent dividend coverage and payout tests designed to weed out companies that may not be able to keep funding their dividends over time ...
  1. Score highly on two technical tests designed to confirm that they remain in a bullish trend, regardless of what the broader averages are doing.

Now, you may have a different methodology. That’s fine. But this approach has paid off nicely in many instances for subscribers. We’re currently tracking open gains of 12.2% ... 17.8% ... and 20.5%. These underscore the fact that there are still winning investments to be found ... even in a more-challenging market.

If you want to learn more and subscribe, simply click here.

Or if you’re not ready to take that step yet, just know that defensive sectors like utilities and Real Estate Investment Trusts (REITs) are still scoring well in my screening process. A new pharmaceutical name also made the core portfolio cut this month.

Consider sectors like those if you’re looking to solve your own income challenges in this low-yield world.

Until next time,

Mike Larson

Sign Up to Receive Free Investment Tips

Sign up to receive a complementary subscription to the Weiss Ratings newsletter, plus insights, analysis, and special offers sent straight to your inbox

Thank you! You should receive your first issue shortly

Top Articles


Follow Us On Twitter