{"id":23048,"date":"2011-08-10T11:27:13","date_gmt":"2011-08-10T15:27:13","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=23048"},"modified":"2011-08-10T11:27:13","modified_gmt":"2011-08-10T15:27:13","slug":"my-high-yield-advice-for-this-market","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/08\/10\/my-high-yield-advice-for-this-market\/","title":{"rendered":"My High-Yield Advice For This Market"},"content":{"rendered":"

By DividendOpportunities.com<\/a><\/strong><\/span><\/p>\n

Amid the drumbeat of weak U.S. economic data and continuing European debt worries, global stock markets sold off last week. Then came the U.S. credit downgrade from Standard & Poor’s.<\/span><\/p>\n

The U.S. markets dropped between 4-5% last Thursday alone. This week they continued their drop, before bouncing back dramatically on Tuesday.<\/p>\n

Following Thursday’s fall, I told subscribers of my premium High-Yield Investing<\/a><\/strong><\/em> advisory that “in all likelihood, the worst is not over yet. I could see the S&P 500 retreating perhaps another 70 to 100 points from here to the 1150 or 1120 level.”<\/span><\/p>\n

That’s where we hit on Monday’s sell-off. And with today’s rebound, that level may end up being the bottom; it is too early to say for sure. \u00a0But even while the market is bottoming out, at the very least we’re going to continue to see volatile — and sometimes frustrating — trading.<\/span><\/p>\n

That’s the bad news.<\/p>\n

The good news is that I believe dividend-paying stocks are one of the best places to shop in a downturn. Don’t get me wrong. Dividend payers aren’t immune to downturns. And they aren’t as stable as cash in a savings account.<\/p>\n

But the last time I looked, cash won’t pay you 6%… 8%… even 10% or more per year.<\/p>\n

During times like these, high-yielding income payers with solid fundamentals and positive long-term outlooks become even more attractive. As the saying goes, you’ll see investors “throw the baby out with the bathwater.” As the price of these securities falls, yields rise, making them appealing to bargain-hunters.<\/p>\n

In fact, in the downturn of 2008-09, you were able to pick up some unbelievable high-yield bargains. Wells Fargo Capital XIV<\/strong>, 8.625% Trust Preferred Shares <\/strong> (NYSE: WCO<\/a>)<\/strong> <\/strong> \u00a0traded as low as $14.18 at the height of the crisis, despite having a face value of $25 per note. If you bought at that level, you locked in a yield of 15.2%<\/span> on your money, and today the shares trade above their $25 face value.<\/p>\n

In my seven years at the helm of\u00a0High-Yield Investing<\/a><\/em><\/strong>, I have witnessed a similar pattern numerous times. After the market bottoms, many dividend stocks in my portfolio rebound with a vengeance. If history is any gauge, the pattern will likely repeat itself.<\/p>\n

Now, I am waiting for confirmation of a bottom in the overall market before I commit too much capital… but I’m seeing yields rise across the board.<\/p>\n

And as for those securities I already hold?<\/p>\n

I am a buy-and-hold investor. Unless there is clear evidence that fundamentals have changed and the dividend is endangered, I see no reason at this time to succumb to negative market sentiment.\u00a0That has certainly proved to be good advice in light of Tuesday’s rally.
\n
\nGood Investing!<\/span><\/p>\n

\"\"
\nCarla Pasternak’s Dividend Opportunities<\/em><\/p>\n

P.S. — Don’t miss a single issue! Add our address, Research@DividendOpportunities.com<\/a>, to your Address Book or Safe List. For instructions, go here<\/a>.<\/p>\n

Disclosure:<\/strong> <\/span> Carla Pasternak owns shares of WCO as part of High-Yield Investing’s<\/em> model portfolio.<\/span><\/span><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

During times like these, high-yielding income payers with solid fundamentals and positive long-term outlooks become even more attractive. As the saying goes, you’ll see investors “throw the baby out with the bathwater.” As the price of these securities falls, yields rise, making them appealing to bargain-hunters.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-23048","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/23048","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=23048"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/23048\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=23048"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=23048"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=23048"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}