Written by David Fabian, March 13th, 2017
Preferred stocks offer the distinction of being unique hybrid instruments with qualities of both stocks and bonds. In that manner, they offer healthy dividend yields alongside a favored position in the capital structure of many companies that issue these securities.
The reason company’s issue preferred shares are to raise capital from investors that are seeking an attractive yield without adding traditional debt (bonds) that carry strict maturity dates and covenants. Preferred stocks can also be “callable” from the issuer, who has the right to redeem them at a certain price or time at their discretion. Read more
Written by David Fabian, January 18th, 2017
ETF investors are likely measuring the resilience and relative performance of their portfolios during the latest 6-month jump in interest rates. Bond funds are the obvious areas of concern in terms of volatility. However, many stock and equity-income asset classes maintain a high sensitivity to Treasury yield fluctuations as well.
REITs certainly fall into this category and are one of the few sectors of the market currently trading well off their highs. As I wrote in September, inflection points in interest rates typically signal a change of trend for these assets. Read more
Written by David Fabian, December 16th, 2016
Retired investors are often looking for core exposure in funds that demonstrate low costs and steady income. These two attributes are key to maintaining a correlation with the market, while creating a passive stream of dependable dividends to offset living expenses. One fund company that offers several different options in this arena is the iShares suite of ETFs from BlackRock. Read more
Written by David Fabian, December 13th, 2016
Dividend growth is a theme with a committed following among income investors. Companies that have consistently raised their dividend on a year-over-year basis have generally done so because of solid business growth and a pledge to uphold shareholder returns. These stocks are also easy to screen and transform into a passively managed index for the benefit of diversified exchange-traded funds.
For example, the Vanguard Dividend Appreciation ETF (VIG) has $21.8 billion dedicated to a group of 185 large-cap stocks with a historical penchant for annual dividend increases. This type of investment vehicle can provide broad-based exposure to a certain segment of publicly-traded companies that all exhibit similar dividend characteristics.
But what if you want to participate in the trend of dividend growth in a broad basket of companies without actually owning the stocks themselves?
Written by David Fabian, October 07th, 2015
The search for income is always an interesting investment dynamic. Those that stray too far out into high yield or esoteric securities tend to find themselves experiencing above-average volatility or non-correlated returns. Conversely, if you stay too conservative in duration or credit quality, your total return is likely to be measured in pennies rather than percentage points. The nexus of those two extremes is ultimately the sweet spot that will produce dependable income and steady returns. Read more