Fidelity: A New Era For Dividend Stocks

Ted

FYI: Irecent years, historically low interest rates have led many investors to seek income from dividend-paying stocks. This penchant for yield led to strong demand for dividend-paying stocks in general, and dividend stocks with higher payout ratios—those paying a higher percentage of earnings as dividends—in particular.

The willingness investors have shown to pay a premium for high absolute yield may have boosted the income from their portfolio, but as valuations rose on high yield stocks, so too did the risk of price losses.

With a recent sharp rebound in bond yields, the investment outlook for dividend-paying stocks appears to be more unpredictable and uncertain. If rates begin to rise, some dividend stocks may be hurt, while others are much better positioned. So investors may want to reconsider the type of dividend stocks they own, and look at actively managed mutual funds and separately managed accounts to manage the risks and opportunities in this part of the market.
Regards,
Ted
https://www.fidelity.com/viewpoints/investing-ideas/dividend-stocks-rates-rise

Puddnhead

Hi guys!
On this theme, I just opened a small position in FDFAX in Fidelity. All I hear, nobody wants this, so I figure it's time to get a little.
God bless
the Pudd

kevindow

I continue to be a fan of low volatility investing, and the low volatility/high dividend ETF, SPHD, continues to work. This ETF has done reasonably well since the TLT peaked on 7/8/2016, and has outperformed the S&P 500 since its inception.

CHART

Kevin

Ted

@MFO Members; The Linkster believes that dividends are the mother's milk of investing. For what its worth here is a current list of my dividend portfolio, and current yields.
Regards,
Ted

Bonds:
Navistar 8.25% 11/21 Callable 2017

Preferred Stocks:
ALLY-A: 8.125%
ARI-A: 8.33%
CIM-A: 8.96%
DDT: 7.50%

MLP's:
BX: 6.13%
KKR: 3.98%

Common Stocks:
CSAL: 9.04%: (Tax free spin-off of WIN)
CTL: 8.98%
FTR: 12.28%
NLY: 11.65%
NI: 2.96%
PFE: 3.94%
T: 4.59%
VZ: 4.30%
WIN: 7.62%

bee

@Ted,

I am a subscriber of FTR. This was as a result of a service vacuum left when AT&T (U-verse) folded in CT.

I have taken an interest in following this stock when you first mentioned you bought it earlier this year. I have also watched this stock tumble over the last year. At what point, do you as an investor, worry about the dividend being impacted by the company share price? One would have to go back to the 1980's to find a comparative share price to today's $3.42. Also, the dividend trend since 2005 has decreased from .25/share to .10/share.

How do you, as an investor, deal with what I would call the "sour cream stage" of a stock like FTR? What I mean here is, how does an investor endure a 30% drop in share price (I believe you bought this first at about $5/share)? Seems more like a drying up of the mammary gland (mother's milk) to me.

Has the stock become an even more incredible buy than it was when you first bought it?

I will say collecting a dividend does help an investor be patient, but does an extended drop in share price curdle that milk?

Your thoughts?

Ted

@ bee: I paid $5.40 which gave me a yield of 8.1% at the time of purchase. A 11/22/16 Morgan Stanley research report believes that after acquiring VZ subscribers in the Florida the stock should stabilize and has has a price target of $4.20.
Regards,
Ted

ron

Where I normally would have bought bonds in my IRA's, I do have my largest position in PIMIX and some in preferred funds FFC and PDT and some EM in TGEIX but the rest in the funds for dividends, or balance funds.
SCHD
SCHH
DVY
SDY
NOBL

MikeW

Thanks so much for sharing Ted.. can I ask if you have equal weightings in each?

Ted said:

@MFO Members; The Linkster believes that dividends are the mother's milk of investing. For what its worth here is a current list of my dividend portfolio, and current yields.
Regards,
Ted

Bonds:
Navistar 8.25% 11/21 Callable 2017

Preferred Stocks:
ALLY-A: 8.125%
ARI-A: 8.33%
CIM-A: 8.96%
DDT: 7.50%

MLP's:
BX: 6.13%
KKR: 3.98%

Common Stocks:
CSAL: 9.04%: (Tax free spin-off of WIN)
CTL: 8.98%
FTR: 12.28%
NLY: 11.65%
NI: 2.96%
PFE: 3.94%
T: 4.59%
VZ: 4.30%
WIN: 7.62%

MikeW

By the way happy holidays everyone!!

Ted

@MikeW: "can I ask if you have equal weightings in each? " No, my largest positions are in PFE, T. NI, VZ.
Merry Christmas
Ted

MikeW

Thanks very much Ted... happy holidays...will do some research on these... I'm more of a mutual fund investor typically but looking for good equity income opportunities.

kevindow

I just found a nice research article on SPHD, which represents 13% of our portfolio:

SPHD Article

Kevin

JohnChisum

@kevindow,

Good write up on SPHD. Thanks.

sma3

@Ted

I have tried to pay much more attention recently to dividend safety and dividend growth, using ETFs like SDY and VIG, and am willing to sacrifice yield to avoid surprises.

There are several excellent websites to look at. Barron's profiled a couple I have found very useful

http://www.barrons.com/articles/the-best-websites-for-dividend-stock-ideas-1468037242

How concerned are you re FTR and CTL high payout ratios and leverage? NLY is always tempting but I have always shied away unless it is at a low price. The complexities of the impact of the spread between their mortgage returns and the borrowing costs add another dimension I can never figure out.