There is no question that December has been the most lucrative month for short-term traders in years. The volatility and liquidity are superb for those who thrive on big price swings.
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At the same time, fearful investors and chaotic trading action have combined to create a massive opportunity for those with long-term perspectives. I'll go so far as to say that the recent stock market opportunity is the best I have witnessed in years.
I have identified five income-focused stocks that make sense to consider for 2019 and beyond.
1. UBS E-TRACS Wells Fargo Business Development Company ETN (BDCS)
I love business development companies as income-producing stocks! Business development companies, or BDCs, provide a service to rapidly growing companies by offering loans often not available via banks. When a company exhausts its traditional credit lines from banks and other institutional lenders, they are often forced to seek funding from BDCs at higher interest rates.
BDCs raise capital to allocate by borrowing funds at low rates and offering equity. These funds are then loaned out at higher rates with the BDC capturing the spread as profit. When a company exhausts its traditional credit lines from banks and other institutional lenders, they are often forced to seek funding from BDCs at higher interest rates.
BDCs are often the highest income-paying stocks because they are required to distribute 90% of net income to shareholders.
This ETN eliminates single company BDC risk by following the Wells Fargo Business Development Company Index due April 26, 2041. The index consists of approximately 40 BDCs with KKR Capital Corp weighing the heaviest at just under 13%.
As interest rates increase, it should be an overall positive for BDCs. However, it is critical to note that higher rates can also result in greater defaults by individual borrowers from the BDC.
BDCS is currently yielding about 10% but is trading lower by 17% this year. It is my favorite income stock for 2019.
2. Welltower (NYSE: WELL)
I love REITs, and I love healthcare as long-term holds for 2019 and beyond. REITs are structured as dividend-producing machines since most of their profit must be distributed to the stockholders. The healthcare sector is about as recession-proof as one can find. Add in the aging population, and a compelling, long-term case can be made for healthcare REITs like Welltower.
A classic non-cyclical play, the company, is yielding just under 4% and will make an excellent addition to your retirement portfolio.
3. 3M (NYSE: MMM)
I was reacquainted to this classic dividend play after it triggered a technical buy signal. Plunging over 22% in 2018, 3M's shares are sitting directly on the 200-week simple moving average setting up a fantastic buying opportunity for this leading stock.
The company is well known as an ultra-long-term dividend payer. Its just under 3% yield and the current beat down share price spells opportunity for 2019.
|The Top 10 'Must-Own' Stocks For 2019
Your Definitive Guide To Beating This Market (Stock Names and Ticker Symbols Revealed). Stock #1 has doubled its dividend over the past 6 years... dishing out more than $8.9 Billion to shareholders in 2018. It has one of the widest moats you'll ever see, and continues to grow in virtually every market around the world. Details here.
4. AT&T (NYSE: T)
This telecommunication giant is yielding over 7%, and its share price is rooted in the value zone after a massive plunge in 2018.
AT&T has been beaten down due to competition and possible pending regulatory issues. However, strong brand recognition, being second only to Verizon in the wireless space, and advantages from the Time Warner merger have created a compelling case for the behemoth.
I like the stock right now for 2019 and beyond as a long-term hold.
5. IBM (NYSE: IBM)
The Godfather of the high tech sector, IBM has paid a dividend for nearly 117 years and has increased its payout for the last 23 years. The stock is a must hold for every income-producing portfolio.
Over 20 years of sales declines and other struggles have cast a dark cloud over this dividend-paying dynamo.
Shares are lower by nearly 30% this year creating a technical buy opportunity in the $107.00 per share zone.
However, a myriad of initiatives both on and off the cloud has a great chance of turning the ship around. I forecast many sunny years ahead for IBM!
Risks To Consider: Remember dividend yield and share price are inversely correlated, meaning that yield increases as share price decreases and vice versa. It is the "Catch-22" of dividend investing. Always be sure to have a compelling investment case, beyond just dividend yield, before buying any income-producing stock.
Action To Take: Consider adding one or more of the above dividend-paying stocks to your long-term portfolio for 2019 and beyond.