Author: Andrew Packer

Income investing

Dividend Growth Investor: Four Dividend Growth Stocks Increasing Dividends Last Week

Posted on by Andrew Packer

While the market continues to grind higher, investors aren’t taking any big swings right now. Stocks often climb what’s called the “wall of worry.” Record home equity and cash on the sidelines suggest that investors don’t want to get burned by stocks.

Fortunately, there’s more to the market than big growth names. And investing in companies with a history of raising their dividend payouts can provide great returns. That’s thanks to the combination of increasing cash payouts, as well as a rising share price.

Recently, several stocks have raised their dividend payouts. While starting yields may be low, investing in these companies over the long haul can create strong results that are less volatile than the overall markets.

For instance, home improvement retailer Lowe’s (LOW) just raised its dividend. The company increased its annual payout by 4.5%.

Shares now yield 2.1%. This is the 62nd consecutive year that Lowe’s has increased its dividend.

Royal Bank of Canada (RY) also just increased its payout. The banking giant pays a 3.8% dividend.

Plus, Royal Bank of Canada just increased their dividend for the 14th consecutive year, with a 2.9% increase. Canadian banks also tend to hold up better than U.S. banks during a financial crisis.

While starting yields may be low, slow and steady increases over time can lead to a big stream of income.

 

To view the full list of companies recently raising their dividends, click here.

Stock Picks

Let’s Talk Money: 5 Stocks to Buy Now BEFORE Nvidia Buys Them

Posted on by Andrew Packer

Corporate America is focused on growth. That could mean producing new goods and services. For some companies, it may make more sense to buy that growth. That usually means buying a small company outright.

The “growth-through-acquisition” strategy is popular in the drug manufacturing and technology space. That’s because small players with one breakthrough idea suddenly become attractive to the players with big wallets. With the AI boom underway, it’s no surprise that many tech giants are looking for such plays.

For example, chipmaker Nvidia (NVDA) has been the runaway leader in the AI chip space. But they do that partially through their own production, and partially from acquiring other companies or partnering with them.

Currently, Nvidia owns over 1,960,784 shares of ARM Holdings (ARM). Valued at over $147 million, or 0.19% shares. ARM designs microprocessor architecture. That’s essentially the “brains” of any chip or device.

That’s a key component that stacks in well with Nvidia’s core business. Having this ownership stake allows Nvidia to keep up with any developments ARM comes up with.

Plus, the stake also makes it easier for Nvidia to potentially grab any new ARM chip ahead of other players. That could even mean locking smaller players out of the market. That would allow Nvidia to maintain its dominance.

 

To view the other stocks Nvidia has a stake in, click here.

Personal finance

The Lead-Lag Report: Gareth Soloway on Market Psychology, Risk Management, and Economic Forecasts

Posted on by Andrew Packer

Markets are dynamic. Today’s leaders can be tomorrow’s laggards, and vice versa. What drives a stock’s price higher is supply and demand. But understanding how changes in supply and demand interact can make a huge difference in returns.

If investors clamor for a stock, that soaring demand for shares will move the price fast. If a stock has little demand, but continues to reduce supply with a share buyback, the gains will prove slower.

Currently, investors love all things AI. In that space, the chipmakers are the most attractive of all. They’re the key component for AI programs to use.

However, ramped-up production and increased global competition could mean a supply saturation. In time, that could compress the wildly-growing earnings of semiconductor stocks.

Once that slowdown starts, investor demand for semiconductor stocks could shift overnight. And that could lead to big losses. Especially for investors who buy at the top.

Meanwhile, global investing has taken a backseat to the AI space. That’s creating an opportunity for investors to get significant value from a number of emerging market countries. That includes China and Brazil.

Investors tend to have a love/hate relationship with international investing. Right now, feelings are cool. If that changes, money could pour into emerging markets, leading to a massive rally for those stocks.

 

To watch the full discussion, click here.

Economy

A Wealth of Common Sense: America’s Piggie Banks Are Full

Posted on by Andrew Packer

While markets hit new all-time highs, investors remain flush with cash. Besides holding cash on the sidelines, homeowners are sitting on record equity. Since the end of 2019, households have added over $12 trillion in equity.

Today, households now have nearly $32 trillion in equity, compared to about $6 trillion during the housing crash. While the days of treating a home as an ATM are well in the past, it’s a sign that households are playing it safe today.

The downside to all this wealth? It’s trapped. Homeowners who want to take out a new mortgage don’t want to pay 7%.

Especially when they refinanced just a few years ago at 3%. Home equity lines of credit, or HELOCs, have even worse rates, over 8%.

Should interest rates finally start to head lower, that could change. Homeowners would be able to cash out at more reasonable rate.

Meanwhile, money market funds now hold over $6 trillion today. That’s a record high, and nearly twice the $3.5 trillion since before the pandemic. With today’s high interest rates, those funds offer a good yield.

Once rates start to decline, that’s a lot of cash on the sidelines that could head elsewhere, such as the stock market.

Given the high levels of home equity and money sitting around earning interest, stocks could take off once rates decline.

 

To see the full amount of cash on the sidelines, click here.

Stock market

FX Evolution: This Doesn’t Happen Everyday

Posted on by Andrew Packer

Year-to-date, the stock market is up over 10%. That’s above average, given its historic average annual return of 8.8%. Typically, in years when the market is up more than 10% by the end of May, it will continue to rally further.

That suggests that investors may not want to get too cautious. The market slowdown over the past few weeks may not be the sign of a big turn in the market. Rather, it could be a pause before a move higher.

About 70% of the time, markets performing this way will rise in June. And they have about an 85% chance of being higher for the rest of the year. Those are good odds for investors to follow.

In the meantime, market volatility is low. That’s usually a sign that the market doesn’t see any potential big dangers on the horizon. And that markets should generally drift higher.

Many big rallies over the past 40 years have occurred under similar conditions.

Investors in this market could do best by looking for sectors that are starting to trend higher. And avoid market sectors that have run strong, but are now starting to underperform.

This market rotation could create some market-beating opportunities as stocks remain likely to trend higher in the months ahead.

 

To view the full analysis, click here.

Cryptocurrencies

Bitcoin Magazine: The Conundrum of Central Planning

Posted on by Andrew Packer

The global financial system is centrally planned. A big part of that planning comes from central banks. They decide how much of a currency is in circulation. And they have tools such as interest rates that can be manipulated at whim. That’s why fiat money is called what it is – it’s decided by order, or fiat.

This monetary policy can move quickly. That’s a powerful feature in a crisis. But the flaw is that it’s monetary policy that often leads to a crisis.

In contrast, the rise of bitcoin stands outside this process. It’s a piece of code that can be run by anyone. It’s already planned out. More features can be added to the bitcoin network. But it then has to be approved by a majority, not by fiat.

As a result, bitcoin has significantly depreciated against the U.S. dollar. And the dollar remains under inflationary pressure. Politicians have been able to spend more than they would otherwise, thanks to helpful central bankers.

While inflation’s growth has come down, prices continue to increase in dollar terms. That’s a structural part of the fiat system. It means that inflation is unlikely to ever go away. And that central planners will have to continue to deal with another crisis.

As this process continues, the case for owning bitcoin continues to grow.

 

To read the full interview, click here.

Commodities

Kitco: Gold Has New Momentum as its Utility Grows in Global Trade

Posted on by Andrew Packer

Investors have many reasons to make gold a core portfolio holding. Over time, gold tends to hold its purchasing power against inflation. Investors who buy gold at the low of a price cycle can fare even better.

However, there is another trend at play right now that could allow gold to continue to lead higher. Central banks are increasingly buying gold as a holding for their portfolios. That trend has continued strong.

Gold remains a monetary asset. While not used in daily trading, it could be accepted the world over.

And since gold doesn’t have the inflationary potential of fiat currencies, it’s attractive. Governments looking to diversify their currency holdings like gold.

Because central banks buy in scale, they can be the biggest driver of demand. Governments are looking to diversify because the U.S. dollar isn’t as attractive anymore.

The U.S. can cut countries out of dollar payment systems, as they did with Russia. And the high level of government spending in the U.S. could create a dollar crisis down the line.

Gold could even become used for settling global trade, particularly in exchange for other commodities such as oil. That could reduce other countries printing so much money, and lower their inflation.

While this doesn’t mean the end of the dollar as the world’s reserve currency, it’s a sign that it will trend lower. And gold, and gold-related investments, are likely to move higher.

 

To read the full analysis, click here.

Economy

Heresy Financial: Why Does the US Borrow and Tax When It Can Print Money?

Posted on by Andrew Packer

During the pandemic, the U.S. government printed trillions of dollars. Much of that money went to keep companies operating. Some of it went out in the form of stimulus payments. Along the way, the government continued to accrue new debt.

The moves have led to an interesting policy question. Why is the government borrowing money for its needs when it can just print it? And why tax your citizens to raise money for government spending?

The answer to that can be seen in the massive jump in inflation over the past few years. More money chasing the same amount of goods will lead to higher prices.

In this way, one could view borrowing money as inflationary, but with a twist. Because that money has to be repaid with interest, it should only be used for worthwhile goals. Especially when those goals could lead to further economic growth.

Taxes can also fund the government. But they also reduce the amount of potential inflation. That’s because money that’s taxed is money that’s not going into the consumer economy.

In short, governments have a variety of ways to obtain and spend money. How they do that could lead to inflationary effects.

Investors who see their governments printing money or greatly increasing their debts may want to move to inflation-resistant investments. That includes dividend growth stocks, commodities, and cryptocurrencies.

Real Estate

Bigger Pockets: High Interest Rates Are Forcing Big-Time Investors to Cut Their Losses – Is a Bust Coming?

Posted on by Andrew Packer

Interest rates went from historic lows to their highest level in 15 years in the span of 18 months. Meanwhile, hybrid and work-from-home trends changed how much office space companies need.

As companies downside, commercial vacancies are on the rise. And some office buildings are selling at steep discounts to their last sale. That could be a sign of further stress ahead for commercial real estate. And investors may want to pick and choose carefully in the space.

Rising interest rates are a bigger deal for commercial properties than for homeowners. While homeowners can lock in a rate for 30 years, commercial properties tend to be shorter.

As a result, the payments behind many financed properties has soared. Combined with rising vacancies, and it’s likely there’s more downside ahead.

Vacancy rates for commercial properties is now at 17%, higher than after the housing crash in 2008. A smaller business footprint also means lower revenues for cities, which means less services.

Even worse, local and regional banks tend to hold a large amount of debt related to commercial properties. These companies could continue to struggle, and may see some steep drops in their share price.

Further bank failures or shotgun mergers with stronger companies could be likely. And office-space-related investments such as REITS will also remain out of favor with the market for some time.

 

To view the full analysis, click here.

Stock market strategies

Game of Trades: The Only Time THIS Happened Was in 1987

Posted on by Andrew Packer

Investors and traders alike rely on market signals. While no signal is perfect when trading, rarely-occurring signals with a high level of accuracy are worth watching.

One of the most followed signals is the yield curve. It is currently inverted. Typically, that’s a sign of economic stress. When the yield curve comes out its inversion, it has historically been a sign that a recession underway.

Today, a similar market warning signal has come out. It’s based on the Maclellan Oscillator. It’s recently soared to a reading of 50, last seen in April 2023 and October 2022.

The positive sign on the oscillator indicates that the market breadth continues to rise. In other words, more and more stocks are going along with the current rally.

Market sentiment indicates that investors have gone from being overly pessimistic to overly optimistic. That’s a sign markets will continue higher for the next 60 days.

However, several times this signal has indicated a short-term rally before a big drop lower. That includes the one-day market drop in 1987.

If this signal holds, stocks have a strong chance of rallying as much as 10% in the next 60 days. After that, there could be a sharp, sudden pullback. For now, this signal remains bullish.

 

To see the full analysis, click here.