Actionable news
All posts from Actionable news

3 Safe Dividend Stocks Paying Double-Digit Yields

If you have an income stock keeping you up at night, replace it with any of these three safe-haven stocks paying hefty double-digit yields. With plenty of free cash flow to cover their payments, these three dividends are secure and will be great bargains if there is another market selloff again this summer.

There is an old stock market adage that says stock market players should “sell in May and go away.” The Wall Street Journal just published an article providing the reasons investors might want to sell their stock holdings and not come back into the market until after Labor Day. As an income stock focused investor, I plan to use the sentiment that drives this belief and take advantage of the reasons the saying exists.

There are several reasons why old stock market hands like to follow “sell in May and go away.” With many of the large institutional traders going on vacation during the summer months, trading volume drops significantly compared to the rest of the year. Lower volume can lead to higher volatility in share prices. There is also the perception that stocks tend to go down more in the summer than during the rest of the year. According to the WSJ, over the last 45 years, stocks had summer slumps in 15 of those years, with an 8% average decline for the S&P 500. In the other 30 years, the market gained from Memorial Day to Labor Day, with an average gain of 5.6%. For the entire period, both good and bad averaged together to generate a 1% average summer time return for the S&P 500. It seems that the sell in May and go away practice is more about avoiding the pain that can happen on average one year out of three.

As an income-focused investor, I understand that to earn dividends I need to own shares of dividend paying stocks. If I sell everything in May and buy it back in September, I would go four months without any investment income. That is not an acceptable outcome. As I talk to income-driven investors, I focus on discussing the need to work on building a stable, high-yield, and growing income stream. This different mindset for buying...