Author: Andrew Packer

Income investing

Dividend Growth Investor: Ten Dividend Growth Stocks Rewarding Shareholders with Raises

Posted on by Andrew Packer

Markets rise over time thanks to rising corporate earnings. As a company’s profits rise, it can continue to reinvest in its business, or it can reward shareholders. The two largest ways are with share buybacks or dividends.

While dividends are less tax-efficient, investors like having the cash flow from them. And great companies can pay increasing dividends to reward investors over time. While dividend stocks are less exciting than pure growth, the prospect of lower interest rates make them attractive now.

Several companies have a long track record of raising their payouts. Those who pay a growing dividend for at least ten years are worthy of an investor’s attention.

For instance, Duke Energy Corporation (DUK) raised its quarterly dividends by 2%. The utility has raised its payout for 20 consecutive years now. Shares currently pay a 3.9% dividend. That’s more than double the average offered from the average stock.

They’re not alone. Railroad Union Pacific Corporation (UNP) also raised its quarterly payout. They raised the dividend by 3.1%. And they’ve done so for the 18th consecutive year. Shares pay a current yield of 2.2%.

While most dividends aren’t massive, investing in dividend growth stocks can lead to compounding returns over time. Today’s 2% or 3% yield can turn far higher with patience. And these stocks will become more attractive compared to bonds as interest rates decline.

 

To see the full list of companies raising their dividend payouts now, click here.

 

Stock market

Rosenberg Research: What, Me Worry?

Posted on by Andrew Packer

Markets remain near all-time highs, and will likely hit new all-time highs again before the year is out. The past few weeks have seen a rotation from big-cap tech stocks into smaller-cap stocks. Typically, bull markets start off with smaller-cap stocks trending higher. This market rally has been different.

Plus, with earnings on big-tech stocks soaring thanks to demand for AI, market valuations don’t look stretched. We’re nowhere near the levels of overvaluation seen during the dotcom boom.

However, the past year’s stock surge has been partly earnings growth. But the largest bulk of the move is simply earnings expansion. In other words, investors are simply willing to pay more for stocks on average.

Meanwhile, individual households now have about 70% of their balance sheet in equities. That’s a far cry beyond the 60/40 model. The 60/40 split balances the long-term growth in stocks with the stability of bonds.

While markets can continue higher, the easiest money in the rally has likely been made. And seeing further massive gains from here looks unlikely.

Investors taking a strategic approach may want to trim tech positions on a rally. The profits can sit in cash earning high interest right now. Or it can go into long-term bonds, which should rally as interest rates decline later in the year.

For now, market valuations aren’t a red flag. But they’re a yellow one. Even if small caps are finally rallying too.

 

To view the full analysis, click here.

Economy

A Wealth of Common Sense: Waiting for the Coast to Clear on Inflation

Posted on by Andrew Packer

Over the past few years, traders and investors have had to exercise patience with the Federal Reserve. As the central bank started to raise interest rates, expectations for how high rates would go kept rising.

Once rates peaked, predictions for how long rates would stay high also kept getting pushed out. Now, we’re on the cusp of seeing the first interest rate cuts in over four years. That could occur as early as September.

The reason for the potential rate cut is that inflation data continues to decline. It’s not quite at the Fed’s target rate level. But if the bank waited for that target to hit, it would likely overshoot and risk deflation.

That’s because monetary policy has a lag period. It can take as long as 18 months for a change to fully ripple throughout the economy.

Meanwhile, there remain comparisons to the 1970s. The 1970’s saw a burst of inflation, which then declined, only to be followed by a second burst of inflation.

Conditions aren’t likely to create a second burst right now. But a recession or pandemic, followed up with massive amounts of money-printing, could cause a resurgence.

Given that bear markets end while the data is still ugly, the bull market should be no surprise. Those waiting to see if a second round of inflation will hit will likely miss out on substantial gains in the stock market.

 

To read the full analysis, click here.

Economy

Excess Returns: The Case for a Continued Rally

Posted on by Andrew Packer

While markets have pulled back slightly over the past few weeks, that’s a normal summer trend. The market tends to pause over the summer, decline into the fall, then rally into the end of the year.

That will likely be the case this year, although there may be some additional volatility around the election. Other trends also suggest that investors aren’t ready for a major market decline this year.

One sign of market strength is in market sentiment. Traders are generally bullish, but not as bullish as they were at the end of 2022 before the last market top.

When investors are overly bullish, they’re “all in” on stocks. And when all the money in goes in, there’s nowhere for markets to go but down.

Data on shorting volume also indicates that investors aren’t too fazed by the market’s recent pullback. Further gains are expected in the second half of the year.

On the macro front, declining inflation looks bullish for stocks, even if it is choppy on a monthly basis. Plus, with the Federal Reserve looking to cut interest rates later in the year, stocks may have more upside. They’ll look more attractive relative to bonds as yields decline.

Meanwhile, corporate earnings are holding up strong. Some companies are already reporting productivity gains from incorporating AI tools. That’s a trend that likely has far more to deliver in the years ahead.

 

To review the full case for a further market rally this year, click here.

Stock market

FX Evolution: Stock Markets Do This Before the Sell-Off Is Over

Posted on by Andrew Packer

Markets tend to rise over time. But they often face pullbacks along the way. Many market pullbacks occur at seasonal periods. There’s usually one in the spring, then one in late summer.

This year, we had a modest pullback in late April. And the past two weeks have seen markets start to pull back. But there is one key sign that will need to trigger before the selloff reaches its peak.

The sign? It relates to the market volatility index, or VIX.

Over the past several years, when markets get fearful, the VIX rises from its usual level in the teens to 20. Once it hits that level, market fear tends to be near a peak.

In a bigger crisis, the VIX may rise even further. But for garden-variety market pullbacks, 20 is a reasonable sign.

The market pullback of the past few weeks has pushed the VIX to the 16 level. That’s still within the market’s average range. Until the VIX tops 20, it’s likely that investors will see some further weakness in the market ahead.

Once the VIX does top 20, investors can start buying into beaten-down stocks ahead of a likely relief rally. That would likely most benefit tech stocks, which tend to sell off the most in a market pullback.

A VIX over 20 also means traders can buy call options cheaply, and stack the odds of big returns in their favor.

 

To watch the full analysis, click here.

Cryptocurrencies

Bitcoin Magazine: Bitcoin Price Breaks $63,000 Following Assassination Attempt on Trump

Posted on by Andrew Packer

Last week’s attempted assassination of Donald Trump saw a massive reaction in the cryptocurrency market. Bitcoin prices surged nearly 10% on the news, from under $58,000 to over $63,000 before other financial markets could open.

The move suggests several things. First, following the attempt on Trump’s life, his odds of winning the Presidency again surged on betting sites. Trump has come out in favor of American innovation in all things cryptocurrencies. He would likely be a stronger candidate for pro-crypto voters.

Meanwhile, bitcoin prices could be reaching a point where they start to react to political events.

Generally, bitcoin has been a bit more responsive to inflation data, but has also continued to follow its own four-year cycle.

Buying data on exchanges indicate that there was a frenzy to buy bitcoin following the news. Buying bitcoin rather than selling it to raise dollars may indicate bitcoin’s utility as a form of cash.

Given Trump’s increasingly pro-bitcoin views, as well as the rise of bitcoin ETFs, a further rally in the months ahead looks likely. Bitcoin investors generally expect a rally in the months ahead, given bitcoin’s prior halving.

A new rally for bitcoin could take the price over $100,000 by the end of the year, or about 50% higher than current prices.  That move will likely lead to surging prices for bitcoin-related stocks.

 

To read the full article, click here.

Economy

BiggerPockets: Seeing Greene: Investing with High DTI, When to Refi, & Getting Out of Debt

Posted on by Andrew Packer

The real estate market has been largely “stuck” for nearly two years now. High mortgage rates have made homebuying challenging for first-time buyers. For existing homeowners, it’s psychologically difficult to get out of a historically low mortgage rate.

That’s kept existing homes largely off the market as well. However, while financing is more difficult than it has been in recent years, it’s not impossible. And buyers and investors alike have options.

For those getting started in real estate investing, one can buy a home with as little as 3% down. And after a few years, the first time homebuyer program can be used again.

Theoretically, a home could be bought with  low down payment, lived in for a few years, and then rented out.

Also, while today’s mortgage rates are high, they’re not that high relative to other forms of debt. Those looking to escape double-digit interest rates on credit card debt may want to consider refinancing.

While refinancing has some costs to it, a 7% mortgage is better than having to pay as much as 20% annualized on a credit card balance.

Similarly, a home equity line of credit can be created and tapped as needed to acquire capital for paying down higher cost debt, or taking advantage of opportunities in the real estate market.

 

To listen to the full opportunities for investing in real estate now, click here.

Stock market strategies

FX Evolution: This Rare Signal Has Flashed Again for Stocks…

Posted on by Andrew Packer

Some rare market signals are kicking off as stocks continue to break to new all-time highs. Market breadth is improving as well. That means it’s more than just tech stocks fueling the latest rally.

However, one of those signals suggest a potential recession could be ahead. With the first half of July over, one of the market’s most consistently bullish periods has ended. And from here, stocks could be in line to weaken.

Investor flows tend to slow down in late July and into August. Markets respond with a slowdown. It may not mean a full correction.

Part of the slowdown could be related to a market rotation. As other sectors take off and tech stocks trade relatively more slowly, stocks could be under pressure.

However, an increasing amount of market participation across a number of sectors remains a strong sign.

Financials, materials, and precious metals are showing the strongest returns right now. Those sectors could continue to lead in the second half of the year.

Over the next 250 days, however, it’s likely that markets will face at least some small pullback. Given that the current market rally has been going strong since November, a pullback from here would be healthy. And it could set up for markets to continue their gains over time.

 

To view the full signals being flashed now, click here.

Commodities

Sprott: Fourth Industrial Revolution Fuels Global Competition for Critical Minerals

Posted on by Andrew Packer

The rise of artificial intelligence, robotics, the Internet of Things (IoT), and other tools are remarkable. What’s more, by coming together all at once, they create a sort of fourth industrial revolution. As with previous revolutions, it can mean big changes.

The biggest change will likely be in the demand for the resources needed to fuel the revolution. That means the elements and metals critical to building AI components. And that’s on top of the energy and people needed to bring it together.

The growth of this new revolution in technology will use many of the same materials as in the past. That’s good for commodities as a whole. It’s particularly good for metals such as copper and lithium, which are key for electric cars.

It’s also critical for uranium. New nuclear reactor designs are getting approved. They’re safer and burn more cleanly than older designs. That will help provide the power needed to fuel AI data centers and other tools.

Plus, the rise of green technologies can make local grids more resilient. And less dependent on global supply chains.

But ultimately, it will come down to a massive boom in commodities to fuel this future. And commodity stocks will stand to benefit. That includes global major giants today, as well as smaller players that can bring new finds online in the years ahead.

 

To read the full analysis, click here.

Stock market strategies

Elliott Wave Options: Elliott Wave Targets for S&P 500 Melt-Up!

Posted on by Andrew Packer

Stocks haven’t just been trending higher in recent weeks. The S&P 500 had a hard time breaking through 5,500. Once that happened, however, the index managed to jump to over 5,600 in short order. That’s leading some to see signs of a market melt-up.

While fearful investors may worry about the eventual pullback, conditions right now are bullish for stocks to keep trending higher. And when the trend does change, it will start gradually. That’s why it’s important to know the key levels.

Markets have been trending higher even as inflation remains sticky. And as the latest labor data suggests that the labor market continues to slow.

It’s becoming clear that higher prices are getting harder to pass onto consumers. However, that may not fully materialize until the next quarterly earnings season.

It’s likely that markets will continue moving higher in anticipation of interest rate cuts. That will likely happen in September, giving investors a few more bullish weeks for markets.

With the markets trending higher, market leaders will likely continue to lead. That includes big tech names.

However, the market’s steep rally in recent months does warrant some caution. Now is not the time for aggressively bullish trading. Markets could consolidate in the past few weeks of July before trending higher again in August.

 

To view the full analysis, click here.