Tag: ProShares S&P 500 Dividend Aristocrats ETF (NOBL)

The Downside of High-Reward, High-Risk Investing

Posted on by Matt Thalman

Over the past number of years, the best investments nearly all came out of the technology sector. We had terms like the FANNG stocks coined, we were told value-investing was dead, and year after year, the stable dividend-paying stocks just slowly trailed behind high-flying technology companies.

But, towards the end of November 2021, things began to change.

In November of 2021, the Nasdaq was up 130% on a five-year chart but is now up just 61%. The same chart shows the Dow was up 55% when the NASDAQ hit its peak but is now up just 37% over the last five years. On a year-to-date chart, the NASDAQ is down 31%, while the Dow is off just 11%.

If you look at individual technology stocks, it can get even worse. For example, Tesla is down 44% year-to-date, while Meta is off more than 70% since the start of the year.

But, something like boring old Coke-Cola, is flat on the year. And I should mention Coke is yielding a 2.96% dividend, which, if calculated into the year-to-date return, would put your investment ahead for 2022. Not very many big-name NASDAQ technology stocks can say that.

Every investor wants a big return. Seeing a stock climb 10, 20, 30 percent, or more in a single year. And it certainly beats seeing a stock climb a measly 4 to 6 percent.

However, the more important thing investors need to remember is that when stocks rise by double digits or more, they probably carry a lot more risk than a stock that hardly looks alive.

The Dow Jones Industrial average is full of stocks that creep along. They don't seem like suitable investments if you look at them on one-year charts. But, over decades, these stocks have been outstanding performers, especially if you add dividends, when considering their total returns.

Furthermore, the slow growth comes with low, or at the very least, much lower risk than the higher return stocks. That low risk could be what keeps you from making a rash decision with your portfolio.

When a holding in your account is down 40 or 50 percent in a year, it is easy to simply say you are cutting your losses and selling the stock.

However, history has proven the best method of investing is a long-term buy and hold. And that means holding stocks when they are down or lost massive amounts of value. Continue reading "The Downside of High-Reward, High-Risk Investing" →

9 ETFs To Consider As Coronavirus Takes Hold

Posted on by Matt Thalman

In this three-part series, I first discussed why the Coronavirus is important to investors and what the Health Care officials who have been tasked with working on controlling the situation have said in terms of where we are and how people should not panic, but be prepared.

With that thought in mind, I recently wrote about the types of stocks and ETFs investors should consider avoiding if this virus outbreak does get worse and turns into a real pandemic. Now I would like to discuss the types of stocks and Exchange Traded Funds that investors should consider owning if the virus continues to spread uncontrollably and the situation worsens. (Again, though, fear and panic don't help anything, so most of the stocks and ETFs I will be discussing are good options to own regardless of what happens with the Coronavirus outbreak.)

When the major markets turn negative and investors pull out of 'growth' stocks, the first 'safe haven' they run to are bonds. However, we have already seen bond prices jump and interest rates plummet as this trade has become very crowded. One reason they do this is that they are looking to 'protect' their investable capital but also still wanting some sort of yield, even if it's minimal. Even a 1.2% Treasury yield is better than a savings account or, worse, losing 5% in stocks.

So, once the bond trade gets warn out, investors then move into dividend-paying stocks. Ideally, dividend-paying stocks that have a proven track record of paying their dividends even when economic times get tough. This elite group of stocks is called the Dividend Aristocrats and they have not only been paying a dividend for long periods of time but they have consistently increased their dividend amount each and every year for a very long time, at least 25 years to be exact. These stocks are such companies as AT&T, Exxon Mobile, Walgreens, and Coca-Cola, to name a few of the currently 64 companies that hold that title. Continue reading "9 ETFs To Consider As Coronavirus Takes Hold" →

Best January In 32 Years! Is It A Sign Of How 2019 Plays Out?

Posted on by Matt Thalman

After having the worst December in more than 87 years, the markets bounced back in January, gaining 7.9% in the month and the best January the market has experienced since 1987. This follows last January when the S&P 500 increased by 5.6%, which at the time was the best January the index had seen since 1997.

Historically when the market finishes January in the black, the market finishes higher for the year. Since 1928 when the market is up in January, it has finished the year higher 71% of the time. On a smaller timeframe say since 1950, when the market ends January higher, it has ended the year higher 85% of the time or 58 out of 68 times.

Now maybe your thinking to yourself that in 2018 the market was higher in January but ended the year in the red, down 6.2%. Well since 1980, we have not seen consecutive years in which the market end January higher, but finished the year in the red. Continue reading "Best January In 32 Years! Is It A Sign Of How 2019 Plays Out?" →

GE's Recent Dividend Cut Highlights The Problem With Dividend Investing

Posted on by Matt Thalman

General Electric (GE) has been paying a dividend to shareholders for 119 consecutive years. But if you look at the history of GE’s dividend, it regularly has been cut. Most recently, just at the end of October, the company lowered its $0.12 per share quarterly dividend down to $0.01 per share quarterly dividend. It should also be noted that its dividend was only at $0.12 per share after the company cut it from $0.24 per share per quarter in November of 2017.

GE’s move to slash its dividend down to the mere bone is just another reminder of the massive downside risks associated with investing in dividend-paying stocks. You see because when GE cut its dividend from $0.24 per share per quarter down to $0.12 per share per quarter, the stock dropped more than 7% from where it was the previous day. The same decline occurred this past October when the dividend was cut from $0.12 down to $0.01; the stock fell 8.7%. Furthermore, since the day prior to the announcement of the first dividend cut, GE stock is down an astonishing 63%.

But just because GE cut its dividend and its stock price has fallen off a cliff doesn’t necessarily mean all dividend-paying stocks are extremely risky. Or more so, that there is no way to lessen the risk associated with dividend-paying stocks. Continue reading "GE's Recent Dividend Cut Highlights The Problem With Dividend Investing" →