Top 3 Risks for Income Investors Today

Posted by D4L | Wednesday, August 27, 2014 | | 0 comments »

As part of any investment acumen, anything outside of cash money markets, CDs and T-bills involves some element of risk. In the current market, there are what I would deem economic risks, geopolitical risks, natural disaster risks and pandemic risks. Let’s identify which factors yield-seeking investors need to be consciously aware of, and why they’re so dangerous.

The Specter of Rising Inflation - At present, inflation is running at an annual rate of roughly 2%, a number the Fed and the markets can comfortably live with. Any rate above 3% and Fed policy will likely tighten, sending bond prices lower and bond-equivalent asset classes lower, as well. Trouble Abroad, Or At Home - Natural disasters happen all the time all over the world. The extent of their impact and the particular regions they affect will determine the level of risk to one’s high-yield portfolio. Fears of Mass Disease Outbreaks - Lastly, there is pandemic risk in the form of a disease that spreads out of control. As of last week, the World Health Organization issued a emergency warning about the possible spread of the Ebola virus that is morphing into an epidemic in Africa.

Source: InveestorPlace

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More mergers and acquisition (M&A) news Monday morning kept the passion burning for many market participants. Kinder Morgan (KMI) is rolling up all of its publicly traded partnerships into shares of KMI to consolidate its operations at a 23% premium to Friday’s closing prices. The deal is certain to provide a boost to the energy MLP sector. At the same time, however, the month of August is historically the toughest period for the stock market to trade higher. Trading volume is light, which naturally invites a higher level of volatility that can spell trouble.

If it plays out that way,investors in high-yield dividends will have an excellent buying opportunity to catch some great prices as the market sets up for a post-Labor Day rally into year-end. At this point, the U.S. economy is on very good footing, which bodes well for persistently low interest rates and higher prices for high-yield dividend stocks — such as the three energy plays I’m recommending today: Memorial Production Partners LP (MEMP), Linn Energy (LINE) and LinnCo (LNCO).

Source: InvestorPlace

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ConocoPhillips Co. is one of the largest independent oil and gas exploration and production (E&P) companies in the world, COP spun off its downstream assets in May 2012. On July 31st, COP reported second quarter 2014 adjusted earnings of $1.61 per share, up 14.2% from the year-earlier profit of $1.41. The year-over-year growth was mainly attributable to higher realized prices and volumes, partially offset by higher depreciation and operating costs.

COP has made significant acquisitions over the past few years to increase its reserves and production capacity. The company expects to deliver 3%-5% production growth in 2014, and expects to replace reserves and sustain production growth over the long term with its stated capital program of $16 billion per year ($16.7 billion in 2014). About 60% of these capital expenditures are slated for North America liquids-rich properties. For now, I will...

Source: Seeking Alpha

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I personally do not believe that any advice on stock investing is credible unless it is backed by a bona-fide illustrative real-time portfolio. It is remarkable how much investment advice is churned out that leaves the reader or viewer wondering, "Well, how did it turn out?" Magazines print articles about stocks to invest in, but there are few follow-up articles or only sketchy anecdotal ones. Investment web sites do the same thing, investment newsletters do it, books do it, and TV and radio do it. As a result, the individual investor is left in the dark on what the advice actually would have accomplished, in real dollars and in real time.

I have no opinion on when a correction is coming, because I am not a short-term trader. Truth be told, I don't much care. For a dividend growth investor investing for the long term, the only impact of a correction on his or her strategy may be that a correction will provide better valuations and higher yields at which to make purchases. If one is primarily interested in building the income stream from a portfolio of high quality dividend growth companies, impending market corrections don't make much difference. One will be looking primarily at the growing cash stream from the dividends of individual stocks, not at "the market" and its price fluctuations.

Source: Seeking Alpha

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7 Stocks Delivering Higher Dividends

Posted by D4L | Monday, August 25, 2014 | | 0 comments »

If you closely follow the daily financial news as presented by the mainstream media, it is easy become jaded and start believing that there isn’t any good news out there. Don’t be confused by the noise. There are still many great companies committed to generating superior returns and rewarding their shareholder by increasing cash dividends.

Selecting stocks with increasing dividends is critical for an income growth strategy. Below are several companies delivering good news to their shareholders with recently increased cash dividends...

Source: Seeking Alpha

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