Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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Published: October 21, 2004
Rising dividend yields and falling bond yields make dividend
stocks winning investments.
The broader market continued to tread water while dividend stocks moved
higher during the first few weeks of October. The benchmark S&P 500
Index lost half a percentage point so far this month, and the index is
now flat since the start of the year. Dividend stocks largely followed
the broader market in early October, with the Dow Jones Select Dividend
Index gaining just +0.4% during the first few weeks of the month.
However, the Dividend Index has still maintained its lead with a +10%
gain in the year-to-date period. The Dow Jones REIT Index made the
biggest gains, moving ahead nearly +4% for the first half of the month
and enjoying a whopping +14% gain this year.
Dividend payers continue to outpace the broader market.
In the near-term, the market is likely to continue moving sideways as
mixed economic data, high oil prices and pre-election uncertainty weigh
on investors. Also dragging down the market is a slowdown in earnings
growth expected in the next few quarters.
Third-quarter profits, now being reported, are expected to grow at a
slower clip than the prior quarter, breaking a pattern of six straight
quarters of higher profits. Looking ahead, research firm Standard and
Poor's forecasts 2005 earnings growth of just +9%, down from an
estimated +22% average earnings growth in 2004.
Although the broader market is struggling, investors are being well
served by dividend-paying stocks. Dividend payers are delivering
market-beating returns and are likely to continue to do so in the months
ahead as investors search for safe-haven plays in a volatile market.
Yields on dividend-paying stocks in the S&P 500 climbed from an
average 1.78% in January to an average 1.97% in September and now stand
above the 2% mark, according to Reuters. Typically, yields rise when
prices fall. In this market, however, investors are enjoying the best of
both worlds -- rising yields and higher share prices. That's because
yields are rising in response to favorable tax reforms and higher
dividend payouts -- not lower share prices.
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While dividend yields are rising, yields on low-risk bonds such as
Treasury notes or investment-grade bonds are falling. It's not supposed
to happen this way, but as the Federal Reserve has been pushing interest
rates up, bond yields have been dragged down. The yield on the key
10-year Treasury fell below 4% in May and has barely held above that
mark since then. The yield closed at 4.05% on Friday, October 15th.
Meanwhile, the average yield on corporate bonds is now at its lowest
level in more than two decades, according to credit rating firm Moody's.
While fixed-income yields have fallen in recent months, dividend yields
have risen. As a result, dividend-paying stocks now look much more
attractive than they have at any time in recent memory. In the coming
weeks and months we will take this opportunity to invest in a number of
high-quality income stocks with above-average dividend payments.
Dividend yields are rising as bond yields are falling.
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Please Note: The above article was merely a
small excerpt from an issue of our premium income newsletter -- High-Yield
Investing. In each issue Carla Pasternak presents
a wealth of information and timely investment ideas to help you earn a
steady income stream from your investments. To receive a
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