When planning for retirement, most investors try to split their assets between stocks (higher risk, higher return) and federal U.S. government bonds (lower risk, and these days, much lower return). Problem is, stocks are enjoying an overextended winning streak. The S&P 500 is up over 7% year-to-date. That’s quite nice, especially after the 1.4% return that the same index had last year. But when we consider its performance in 2014 (13.5%), 2013 (32.2%), and 2012 (15.9%), investors are right to give pause. Has the market outperformed for too many years in a row? Perhaps. The S&P’s price-to-earnings ratio (P/E ratio) shows that the index is roughly twice as expensive now as it was 5 years ago.
This is the point where most new investors get terrified and simply run away. “The market’s too expensive,” they think, and instead put their money in bonds (low yields) or cash (no yields). Or they invest in real estate (which historically underperforms the stock market by a huge margin). Any of these options would be a big mistake. We can juice our income even more and diversify away from stocks by buying junk bonds. One way to do this is to get the iShares iBoxx High Yield Corporate Bond Fund (HYG). We can buy the iShares Barclays 20+ Year Treasury Bond ETF (TLT), which currently pays a 2.2% dividend. The Eaton Vance Tax-Managed Buy-Write Opportunities Fund (ETV), which has recovered nicely after the big market turmoil earlier this year.
Source: InvestorPlace
Related Articles:
- 6 Dividend Growth Stocks With Strong Capital Appreciation
- 6 Higher Yielding Basic Materials Stocks With Growing Dividends
- 7 Dividend Growth Stocks That Could Make You Wealthy
- A Roadmap To Build Wealth With Dividend Stocks
- High-Yield Managed Distribution Policy Funds
A Safe 3-Stock Portfolio That Pays 5.9%
Posted by D4L | Monday, October 17, 2016 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
Popular Posts Last 30 Days
-
Are you sick and tired of low interest rates? Certificates of deposit pay next to nothing. Bonds yield only three or four percent a year. Su...
-
Late last year, Wall Street had a bit of a panic attack when Fed chairman Jerome Powell suggested this tightening was on autopilot. While th...
-
If you’ve been following this column, you’d know that monthly dividend stocks tend to come from two main types of businesses: real estate an...
-
These three picks are all up more than 10% so far in 2019. The three themes are LNG, specialized healthcare, and small banks. The yields ran...
-
Showing resilience during a tough week was a group of stocks that has not been heard from much in the past two years. A group that has been ...
-
This company makes a compelling value proposition based on valuation, risk/reward, yield, and upside potential. I added this hotel REIT las...
-
This company makes a compelling value proposition on the dip for DGI investors. The REIT has strong portfolio stats and a conservative AFFO-...
-
If a company pays, say, 14%, you would only need to put up $71,429 to earn $10,000 in annual dividends. Of course, we know that double-digit...
-
Stocks with high dividend yields can be great, but if a stock has a high dividend yield and also has lots of long-term growth potential and ...
-
There are a lot of reasons to consider adding high-dividend stocks to your portfolio. They offer a steady income that can help ease the pain...

0 comments
Post a Comment
Post a Comment