Media & Press Releases
Utilities: A When and Not an If
Kelley Wright explains why he is currently not a fan of utilities because he thinks it is only a matter of time before a big utility cuts its dividend.
Bear Market or Garden Variety Correction?
While many investors are giving up on the market because of volatility, Kelley Wright points out that there are still lots of opportunities.
MarketWatch Presents: Stocks and Funds for Those Worried
This exclusive panel assembles a select subset of top advisors for consistent performance over the long-term, according to The Hulbert Financial Digest. Moderated by Mark Hulbert, the panelists will discuss their investment outlooks for 2016, identifying not only the steps investors ought to be taking from what these advisors foresee, but also–and perhaps more importantly–the biggest mistakes to avoid.
Opinion: A Good Trick to Picking the Best Dividend Stocks
Published April 12, 2016
CHAPEL HILL, N.C. (MarketWatch) — The Dogs of the Dow are barking again, but watch out for their bite.
I’m referring to the strategy that, each January, invests in the 10 Dow Jones Industrial Average stocks with the highest dividend yields. The Dogs of the Dow performed well in the first quarter after several years of underperformance.
But the strategy’s long-term record is spotty, at best. The Hulbert Financial Digest’s performance monitoring shows that there are much better ways of picking dividend-paying stocks.
Over the past 20 calendar years, for example, the Dogs of the Dow strategy has beaten the Dow itself in just seven of them — or 35% of the time. Nor did those seven winning years make up for the 13 losers: Cumulatively over those two decades, according to data from www.DogsoftheDow.com, the strategy has lagged behind the Dow by an annualized margin of 4.2% to 6.3%.
Stocks Are Undervalued: 10 Dividend Payers to Buy
A longstanding but little-known dividend yield model with a great track record says stocks offer value.
Investors long ago stopped looking to dividend yields for guidance about the stock market’s valuation. Since the early 1990s the Standard & Poor’s 500’s yield has been at or below what used to be considered a bear market sell signal.
But perhaps we’ve been looking at dividend yields in the wrong way. A longstanding but little-known dividend yield model has an impressive track record, not only over the longer term but in recent decades as well. Better yet for the bulls, this model shows the market currently to be not just fairly valued, but possibly moderately undervalued.
This alternate way of interpreting dividend yield comes from Investment Quality Trends, an advisory service that for the last 15 years has been edited by Kelley Wright. The service was created in the 1960s by Geraldine Weiss. Its model portfolio is in first place for risk-adjusted performance over the last 25 years among those monitored by the Hulbert Financial Digest.
Hulbert on Markets: Best Bear Market Strategy: Remain Invested In Stocks
Crazy as it sounds, history shows it’s better to stay in the market rather than sell and try to time your return.
The best bear market strategy may very well be to stay 100% invested in equities. I know this sounds totally crazy. Can it really make more sense to stick with the market as it heads over a cliff?
Yes, according to the top long-term performers among Hulbert Financial Digest-monitored advisors. They in effect predict that your next-decade returns will be mediocre at best if you decide to go to cash right now — even if a major bear market has already started. I defined my select group of top performers by focusing on those with the best real-world records from the market peaks preceding the last two bear markets: the major declines that began in October 2007, before the Great Recession, and in March 2000, just as the Internet bubble was bursting.
If you were devising a performance test to showcase the virtues of getting out of stocks during bear markets, you would be hard-pressed to come up with better time periods than these. The SPDR S&P 500 exchange-traded fund (ticker: SPY ) during the 2000-2002 bear market fell by almost 50%, and by 57% during the 2007-2009 bear market. The net effect of those two declines is that, even with intervening bull markets, the Standard & Poor’s 500’s annualized total return since March 2000 is just 4.1% — well less than half its historical average.
4 Dividend Stocks That Will Make Your Portfolio Blossom
Investors who are looking for consistent income should look at JNJ, VZ, MO and PG stock.
The Federal Reserve appears on the verge of finally raising short-term interest rates for the first time since the bank dropped it to zero during the 2008 global financial crisis. The shift toward a higher interest rate environment will be positive for retirees, who often rely on interest rate returns for an income stream.
Don't get too excited, though. The Fed is expected to hike interest rates at a slow and measured pace to maintain financial market equilibrium and avoid shocking the economy and overall growth. This means income-oriented investors still need to look for other sources of income beyond traditional certificates of deposit and other bank interest-bearing accounts.
Dividend investing, or choosing stocks with a reliable cash payout, is a proven strategy. “In the stock market, there are two paths to return on investment: capital appreciation and dividends. Of the two paths, the only one with any reliability is the cash dividend,” says Kelley Wright, chief investment officer of IQ Trends Private Client Asset Management, a Carlsbad, California-based registered investment advisory company.
Investors seeking a reliable rate of return can look to blue-chip dividend-paying stocks with confidence. “The cash dividend is a company policy. It must be voted on, declared and authorized by the board of directors, who arguably know the current condition of the company better than anyone else, as well as the prospects for the future. The cash dividend has a record date, an ex-date and a pay date,” Wright says.
IQ Trends: Valuation Matters
Our raison d'être is value identification, which is to say we identify the repetitive areas of high and low dividend yield, explains Kelley Wright, editor of Investment Quality Trends.
This approach lets us establish the buying area with the least downside risk and the selling area that captures the lion's share of price appreciation, dividends, and dividend increases. I was recently interviewed, and asked, “What does IQ Trends do now that for all intents and purposes value identification is no longer necessary because the Fed has taken all of the risk out of owning stocks.”
Huh? Are you kidding me? No, seriously, he really asked me this question with a straight face. As you might guess the balance of the conversation was me explaining why this was absurd. Yes, investors have become complacent because we haven't seen as much as a 10% correction since, oh, 2011. But complacency is the result of near-time bias; the belief that the most recent will last ad infinitum. Past events fade away in the memory until they are forgotten or dismissed.
The fact of the matter is that the Fed's Zero Interest Rate Policy (ZIRP) will not last forever. At some point, interest rates will start to rise again.