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A Dozen Ways to Survive a Bear Market

by Fred Fuld III

It looks like we may be at the beginning of a bear market. If you want to profit from falling markets stock prices, there are several ways to do so.

Many strategies are available to profit from a bear market and a stock market crash, some of which are speculative, and some that don’t have much risk. It doesn’t matter what your account size is, there are ways to protect yourself, and even profit on the downside. Here are some of those techniques.

1. Sell a Vertical Call Option Spread

This strategy is a little complicated, but I listed it first, because it is one of the least risky, since your losses are limited, unlike many of the other techniques listed here. In addition, I listed it at the beginning, because I use this trading technique all the time.

If you are familiar with options, then selling a vertical call spread is a great way to make money when a stock drops while protecting yourself if the stock goes up. (This happens to be my favorite strategy.)

This involves shorting an out of the money call option and buying a further out of the money call option at the same time. If the stock drops or stays the same, you make money from the short call which exceeds the loss on the long call. If the stock goes up to the strike price of the short call, you still make a profit. It is only when the stock rises above the strike price of the short call that you begin losing money.

To make it simple, here is an example:

Stock is at 50

Sell (short) one call with a strike price of 51 for 3 (an option that is trading at 3 means $300)

Buy one call with a strike price of 52 for 1 ($100)

If the stock drops to 45, the 51 call drops to $0 and you make $300 because you shorted it, and the 52 call drops to $0 losing $100 because you own or were long it, netting you a profit of $200.

If the stock rises from 50 to 100, you lose $4900 on the 51 call that you shorted, but you make $4800 on the one that you bought, so you only lose $100.

Generally, you want to use options that expire in 40 to 60 days, and close out your position in 15 to 25 days.

Disadvantages of the selling a vertical call spread

Your profit is limited
You need approval from your broker to do option spreads
Both legs of the spread need to be placed simultaneously (easy to do with most trading platforms)
May need to wait 25 or 30 days to see a profit

2. Shorting Stocks

This is one of the most speculative ways of making money in a bear market. In simple terms, you make money when the stock goes down and you lose money when the stock goes up. What technically happens is that you borrow the shares and immediately sell them (this all is done electronically through your brokerage firm) and since you owe those shares, you eventually have to buy them back at some price, hopefully a lower price, in order to return those shares. The difference between your sale price and eventual purchase price is your profit (or loss, if you buy back at a higher price).

Can you make a lot of money shorting stocks in a bear market? Yes. Is it speculative? Very. Can you lose a lot? Most definitely. This is why it is so risky. When you short a stock, the lowest point it can drop to is zero. Whereas, if the stock goes up, the amount it can rise is unlimited. Let’s say you short 100 shares of a stock at $20 a share. If you put up funds equal to 100% of the value of the shorted amount, and the stock drops to zero, you’ve made a 100% return. However, suppose the stock goes from 20 to 100, you end up losing 400% of your money with lots of margin calls along the way. This is called a short squeeze. But even on a short term basis, an investor can lose money very fast.

Unfortunately for those who do their trading in retirement accounts, such as IRAs, shorting stocks is not allowed.

So in summery, do I think you should short stocks? Absolutely not, unless you are a professional trader. The risk is almost infinite. If you understand options real well, hedged short selling might be OK (see the next strategy), as long as you are an advanced trader, and know what you’re doing.

3. Hedged Short Selling

Hedged short selling is a strategy whereby you short a stock and at the same time, you buy a close-to-the-money call option. That way, if the stock shoots up, you are protected with the call option. If the stock drops, you will lose what you paid for the option, but you will make money on your short stock position.

Example: you short 100 shares of a stock that is currently trading at 50 (so you short $5000 in stock), and you buy a call option with a strike price of 52 for 1 ($100).

The stock goes to 40. You make $1000 from the stock dropping from 50 to 40, and you lose the $100 you paid for the call option, with a net profit of $900.

The stock stays the same at 50. You don’t make any money on the short sale fo the stock and you lose $100 on the call option for a net loss of $100.

The stock goes up to 60. You lose $1000 on the short stock, but the value of the call option will increase from 1 to 10 ($100 to $1000), netting $900 on the difference, for an overall loss of $100.

In other words, in the example above, you can only lose $100, if the stock stays the same or goes up, but if the stock drops, the profit can be substantial.

Actually, to be more accurate, if the stock goes to 51 and stays there, you will lose $100 on the short stock sale and $100 on the call option, for a total maximum loss of $200. Even still, it may be worth the small loss in case you are wrong about a bear market.

Disadvantages of the hedged short selling

You need approval from your broker to short stock and buy options
Both positions should be placed simultaneously (easy to do with most trading platforms)

4. Short (Bearish) ETFs

The Exchange Traded Fund known as the Bearish ETF or Short ETF is another option. What these ETFs do is provide a return opposite to the return of the index, sector, or industry that it is tracking.

For example, the Short Dow30 ProShares (DOG) provides a return that is the inverse of the Dow Jones Industrial Average. If the Dow goes down 2%, the DOG is expected to up 2%. The Short QQQ ProShares (PSQ) ETF gives a return that is the inverse of the NASDAQ 100 Index.

The nice thing about these short ETFs is that your losses are limited. Also, if you are long individual stocks that you don’t want to sell, these can be good for protecting your overall portfolio on the downside.

5. Leveraged Bearish ETFs

If you like volatility, you will love the leveraged bearish ETFs. What these ETFs do is provide double, and in some cases triple the inverse return of indices.Some examples include the UltraShort Consumer Services ProShares (SCC) and the ProShares UltraShort S&P S&P 500 (SDS).

In addition there are several triple leveraged bearish ETFs. Direxion Daily MCSI Real Estate Bear 3X Shares (DRV), Direxion Daily Energy Bear 2X Shares (ERY), and ProShares UltraPro Short Russell 2000 (SRTY) are just a few of the many leveraged bearish ETFs.

The volatility of these ETFs is substantial, and so are the wide bid and asked spreads that I’ve seen occasionally.

The advantage of these trading vehicles is that they are a way of shorting on margin, with a limit on the downside. The disadvantage is that the losses can be quick and large, especially with the triple leverage short ETFs.

6. Bear Funds

It may be hard to believe, but there are actually a large number of bearish mutual funds for the long term bearish investors. These include the Grizzly Short Fund (GRZZX), the PIMCO StocksPlus TR Short Strategy Institutional Fund (PSTIX), and the ProFunds Bear Investors Fund (BRPIX). These funds have minimum investments ranging from $1,000 to $5,000,000.

7. Puts

First, a little about option pricing. Puts and calls are priced on a per share basis, so a put at $1 would cost $100 for a 100 share option, or a call at $3.50 would cost $350.

A put is the option to put your stock to someone at a particular price within a certain period of time. In other words, if you own a stock that is trading at 22 and you buy a put at a dollar which gives you the right to put your stock to someone at $20 per share within three months, there are a couple of things that could happen. The stock could tank to $14 a share and you could put your stock at 20, or just resell the put for 6 (the difference between 14 and 20) and collecting the profit. You would be far better off than just doing nothing. And if the stock goes up or stays about the same, you are just out your $100 for the option. Puts can be useful for experienced traders.

8. Cash

There is another way to make money in a bear market. Sell everything, and keep your money in cash, with the safest way being a T-bill money market fund, that only owns T-bills. (Money market funds that invest in repos are supposed to be just as safe, but I consider them slightly more risky than T-bills.) The advantages are that you can’t lose money and you can receive an income from the investment.

The alternative cash investment is putting your money in a bank certificate of deposit or savings account. Your money is safe up to the FDIC limits, but the interest rate will be very low.

9. Anti ETFs (Bearish ETF of Popular Bullish ETFs)

The Anti-ETF is a new investment vehicle that has cropped up recently. The goal of these ETFs is to provide the reverse return of another popular actively managed exchange traded fund, as opposed to the bearish ETF which attempt to track the inverse of an index, like the ProShares Short S&P500 ETF (SH).

The most popular is the Tuttle Capital Short Innovation ETF (SARK), which has a goal of achieving the inverse of the return of the popular ARK Innovation ETF (ARKK) managed by Cathie Wood.

10. Anti Stocks (Bearish Single Stock ETFs)

Maybe there is a stock you want to short, but you don’t qualify for an account that allows shorting. Or maybe you want to short a stock in a retirement plan, such as an IRA. If you want to short a particular stock, such as Tesla, Nvidia, Paypal, Pfizer, or Nike (the AXS 2X NKE Bull Daily ETF (NKEL) would have been a good one today as it was down 12% today 9/30/22), there are ETFs which have a goal of returning the opposite return of a particular stock.

11. Series I Bonds

If you think the bear market will last for a year or more, Series I bonds are the way to go. These bonds never drop in value and currently pay 9.62%. Plus, they are backed by the U.S. Government. For more information on these bonds, check out the article Series I Bonds Now Paying over 9%.

12. Selling Calls Against the Stocks You Want to Hold

You may have stocks in your portfolio that you want to keep fr one reason or another, such as not wanted to take a huge capital gain. In that case, you might want to consider writing calls against those stocks.

As you can see , you have plenty of options (no pun intended) for making money and preserving your capital in a bear market. There are obviously additional risks involved with shorting stock and options, which you need to delve into with your broker before utilizing those strategies. If we are in a bear market, hopefully you can protect your portfolio and make some money on the downside.

Author does not own any of the above mentioned securities.

Stocks Going Ex Dividend in September 2024

The following is a short list of some of the many stocks going ex-dividend during the next month, which can be helpful for traders and investors interested in the stock trading technique known as “Buying Dividends” or “Dividend Capture.” This strategy involves purchasing stocks before the ex dividend date and selling them shortly after the ex-date at a similar price, while still being eligible to receive the dividend payment.

Although this technique generally proves effective in bull markets and flat or choppy markets, it is advisable to exercise caution and consider avoiding this strategy during bear markets. To qualify for the dividend, it is necessary to buy the stock before the ex-dividend date and refrain from selling it until on or after the ex-date.

However, it is important to note that the actual dividend may not be paid for several weeks, as the payment date can be delayed by up to two months after the ex-date.

For investors seeking a comprehensive list of stocks going ex-dividend in the near future, WallStreetNewsNetwork.com has compiled a downloadable list containing numerous dividend-paying companies. Here are a few examples showcasing the stock symbol, ex-dividend date, periodic dividend amount, and annual yield.

Nike, Inc. (NKE)	9/3/2024	0.37	1.78%
Bank of America Corporation (BAC)	9/6/2024	0.26	2.59%
Fidelity National Information Services, Inc. (FIS)	9/10/2024	0.36	1.97%
Macy’s Inc (M)	9/13/2024	0.1737	4.46%
Horizon Technology Finance Corporation (HRZN)	9/16/2024	0.11	11.99%
Royal Caribbean Cruises Ltd. (RCL)	9/20/2024	0.40	0.96%
Mercer International Inc. (MERC)	9/25/2024	0.075	5.03%
Humana Inc. (HUM)	9/30/2024	0.885	1.01%

To access the entire list of over 100 ex-dividend stocks, subscribers will receive an email in the next couple days with the full list. If you are not already a subscriber, you can sign up using the provided signup box below. Don’t miss out on this valuable information, and the best part is that it’s free!

Dividend Definitions

To better understand the dividend-related terms, let’s define them:

Declaration date: This refers to the day when a company announces its intention to distribute a dividend in the future.
Ex-dividend date: On this day, if you purchase the stock, you would not be eligible to receive the upcoming dividend. It is also the first day on which a shareholder can sell their shares and still receive the dividend.
Record date: This marks the day when you must be recorded on the company’s books as a shareholder to qualify for the dividend. Typically, the ex-dividend date is set two business days prior to the record date.
Payment date: This is the day on which the dividend payment is actually made to the eligible shareholders. It’s important to note that the payment date can be as long as two months after the ex-date.

Before implementing the “Buying Dividends” technique, it is crucial to reconfirm the ex-dividend date with the respective company to ensure accuracy and avoid any unexpected changes.

In conclusion, being aware of the stocks going ex-dividend can be advantageous for traders and investors employing the “Buying Dividends” strategy. WallStreetNewsNetwork.com provides a convenient resource to access a comprehensive list of such stocks, allowing individuals to plan their investment decisions effectively. Remember to stay informed and consider market conditions before employing any investment strategy.

Disclosure: Author owns BAC.

Sky’s the Limit: Investing in the Hottest Stocks Fueling the Space Race

by Fred Fuld III

4 minute read time

The field of space exploration has seen remarkable advances in recent years, driven by a combination of technological innovation, private investment, and renewed interest from governments around the world. From reusable rockets to the development of space-based communication networks, the industry is rapidly evolving, opening up new possibilities for scientific discovery, commercial ventures, and even human settlement beyond Earth.

The rise in space exploration activities has also sparked interest in space-related stocks, offering investors a chance to participate in what many consider the next frontier of human achievement. In this article, we’ll examine some top space exploration stocks—AST SpaceMobile (ASTS), Momentus (MNTS), Rocket Lab USA (RKLB), and Virgin Galactic Holdings (SPCE)—each playing a unique role in the burgeoning space economy.

AST SpaceMobile (ASTS)

AST SpaceMobile, headquartered in Midland, Texas, is at the forefront of developing space-based communication networks. The company’s mission is to build the first space-based cellular broadband network, capable of connecting directly to standard mobile phones without the need for ground-based infrastructure. This groundbreaking technology has the potential to bring high-speed internet access to remote and underserved areas across the globe.

The stock has a $4.7 billion market cap, but generating negative earnings, and falling revenues.

AST SpaceMobile’s BlueWalker 3 test satellite, launched in 2022, represents a significant milestone in the company’s journey to revolutionize global communications. As demand for ubiquitous connectivity continues to grow, AST SpaceMobile is positioned to play a crucial role in expanding internet access worldwide.

Momentus (MNTS)

Momentus, headquartered in San Jose, California, is a space infrastructure company focused on providing in-space transportation and logistics services. The company’s Vigoride spacecraft is designed to transport satellites to their intended orbits after being deployed from a launch vehicle, as well as perform other in-space operations such as satellite repositioning and deorbiting.

Although quarterly revenue growth year-over-year is 752%, the company isn’t generating earnings at this time. However, annual sales growth is up an incredible 933%. The stock has an extremely low market cap of $10 million, and should be considered very speculative.

Momentus aims to address the growing need for flexible and cost-effective space transportation solutions as more small satellites and constellations are launched into orbit. With its innovative technology and strategic partnerships, Momentus is well-positioned to capitalize on the increasing demand for in-space logistics in the new space economy.

Rocket Lab USA (RKLB)

Rocket Lab USA, based in Long Beach, California, is a leader in small satellite launch services, providing reliable and cost-effective access to space for a wide range of customers, including commercial companies, government agencies, and research institutions. The company’s Electron rocket is designed specifically for launching small payloads into low Earth orbit (LEO), and it has successfully completed numerous missions since its first launch in 2017.

Although quarterly revenue growth year-over-year is 71%, the company isn’t generating earnings at this time. The stock has a market cap of $3.26 billion.

Rocket Lab’s advancements in reusable rocket technology and its development of the larger Neutron rocket, which is set to debut in the coming years, demonstrate its commitment to pushing the boundaries of space transportation. Rocket Lab’s ability to deliver rapid and responsive launch services has made it a key player in the growing small satellite market.

Virgin Galactic Holdings (SPCE)

Virgin Galactic Holdings, based in Las Cruces, New Mexico, is a pioneer in the emerging space tourism industry. Founded by Sir Richard Branson, Virgin Galactic aims to make space travel accessible to the public through suborbital flights that offer passengers a few minutes of weightlessness and a breathtaking view of Earth from space. The company’s SpaceShipTwo vehicle has already conducted several successful test flights, and commercial operations are expected to commence in the near future.

The stock is selling for 40% of book value and just 23% of cash. Sales growth year-over year was in excess of 175% and more than 125% quarter-over-quarter. However, the company currently isn’t generating earnings and has a high amount of debt. It has a very low market cap of $186 million.

While space tourism is still in its early stages, Virgin Galactic’s innovative approach and strong brand recognition position it as a leader in this exciting new market. As demand for space experiences grows, Virgin Galactic is poised to play a major role in shaping the future of commercial space travel.

Summary

The companies highlighted in this article—AST SpaceMobile, Momentus, Rocket Lab USA, and Virgin Galactic Holdings—represent some of the most innovative and promising players in the space exploration industry. Each company is uniquely positioned to capitalize on the growing interest in space, whether through propulsion technology, space-based communications, satellite services, in-space logistics, launch capabilities, or space tourism.

These top space stocks offer investors an opportunity to participate in the next great leap forward in human achievement. As advancements in technology continue to drive progress in space exploration, these companies are well-positioned to benefit from the expanding space economy.

Disclosure: Author didn’t own any of the above at the time the article was written.

A Stock That Will Pay You in Real Physical Gold

by Fred Fuld III

4 minute read time

VanEck, a well-known investment management firm, was founded in 1955 by John C. van Eck in New York City. From its inception, the firm focused on offering innovative investment strategies that centered around international markets and commodities, which were not commonly available to U.S. investors at the time. One of the firm’s early milestones came in 1968 when VanEck launched the first international mutual fund in the United States, known as the VanEck International Investors Gold Fund (INIVX). This fund provided exposure to gold-mining companies, anticipating the growing demand for gold investments as a hedge against inflation and economic uncertainty.

In the following decades, VanEck continued to expand and innovate. In 1985, the firm introduced one of the first emerging markets funds in the U.S., recognizing the growth potential in developing economies. This move further established VanEck’s reputation as a pioneer in offering investment opportunities in less conventional markets. By 1994, the firm had also expanded its offerings to include fixed income with the launch of its first bond mutual fund, broadening its appeal to a wider range of investors.

A significant milestone in VanEck’s history occurred in 2006 when the firm entered the rapidly growing ETF market with the launch of the Market Vectors ETF Trust. These ETFs quickly became some of the most popular in the industry, particularly for their targeted exposure to specific sectors, commodities, and emerging markets. VanEck’s ETFs were recognized for providing investors with access to niche markets that were otherwise difficult to reach, solidifying the firm’s leadership in the ETF space.

By 2011, the Market Vectors Gold Miners ETF (GDX) had become one of the most traded ETFs globally, underscoring VanEck’s expertise and influence in sector-focused ETFs. In 2016, VanEck rebranded its Market Vectors ETFs under the VanEck name, reflecting the firm’s strong identity and reputation in the investment industry.

In recent years, VanEck has been at the forefront of the cryptocurrency and digital assets space, launching cryptocurrency-focused ETFs and mutual funds. The firm has also been active in advocating for the approval of the first Bitcoin ETF in the U.S., although this endeavor has faced regulatory challenges.

Today, VanEck is recognized as a leading global investment management firm, offering a diverse range of investment products, including mutual funds, ETFs, and institutional accounts. The firm remains privately owned, with Jan van Eck, the son of the founder, serving as the current CEO. VanEck’s commitment to innovation and its global reach, with offices in the U.S., Europe, Asia, and Australia, continue to make it a significant player in the investment industry, particularly in areas like commodities, emerging markets, natural resources, gold, and alternative investment strategies.

VanEck has a unique ETF, the VanEck Merk Gold Trust (OUNZ), which allows you to exchange your shares for physical gold.

The stock, founded on May 16 of 2014, is up 18.81% year-to-date and has total net assets of $1.04 billion. The expense ratio is 0.25%. It even has options traded on it.

The official description of the fund is “VanEck Merk^®Gold Trust seeks to provide investors with a convenient and cost-efficient way to buy and hold gold through an exchange traded product with the option to take physical delivery of gold.”

This gold trust has three major advantages:

Exchange for Bullion

The VanEck Merk Gold Trust holds its gold bullion in the form of allocated London Bars, offering a unique feature that allows investors to take physical delivery of the gold bullion in exchange for their shares.

Choice of Gold Coins or Bars

To facilitate this delivery, Merk has developed a proprietary process that converts London Bars into gold coins and bars in denominations that meet investors’ preferences.

Non-Taxable Event

Importantly, taking delivery of this gold is not considered a taxable event, as investors are simply taking possession of the gold they already own.

So for investors looking for a way of investing in gold, maybe not ready to take physical possession yet but may in the future, this may be an option worth looking at.

Disclosure: Author didn’t own any of the above at the time the article was written.

Golden Streams: Top Gold Royalty Stocks to Cash In on Precious Metal Gains

by Fred Fuld III

Gold and silver royalty and streaming companies offer a unique way to invest in precious metals. Unlike traditional mining companies, royalty companies provide upfront capital to miners in exchange for a percentage of the revenue or the metal produced from a mine. Streaming companies, on the other hand, provide financing to mining operations in exchange for the right to purchase a percentage of the mine’s production at a predetermined price. These business models allow royalty and streaming companies to benefit from rising metal prices without the operational risks associated with mining, such as production costs and environmental challenges.

The price of gold has been on an upward trend due to several factors, including economic uncertainty, inflation concerns, and geopolitical tensions. Gold is often seen as a safe-haven asset during times of crisis, and with central banks around the world adopting loose monetary policies, the appeal of gold and silver as a hedge against inflation has increased. Additionally, declining real interest rates have made non-yielding assets like gold more attractive to investors. As these factors persist, the price of gold may continue to rise, benefiting companies in the royalty and streaming sectors. In this article, we’ll explore five top gold and silver royalty and streaming stocks—Osisko Gold Royalties (OR), Wheaton Precious Metals (WPM), Royal Gold (RGLD), Franco-Nevada (FNV), and Sandstorm Gold (SAND). Each of these companies has a market capitalization exceeding $1 billion and offers a dividend yield above 1%.

Osisko Gold Royalties (OR)

Osisko Gold Royalties, headquartered in Montreal, Canada, is a leading royalty company focused on precious metals. The company’s flagship asset is its 5% net smelter return royalty on the Canadian Malartic mine, one of the largest gold mines in Canada. Osisko has a diversified portfolio of over 160 royalties and streams, providing it with exposure to a wide range of precious metal projects across North and South America. The company’s strategic focus on low-cost, long-life assets has positioned it well to benefit from rising gold prices.

The stock, which has a low amount of long term debt, trades at 30 times forward earnings. With a market capitalization of over $2 billion and a dividend yield of approximately 1.5%, Osisko Gold Royalties is an attractive option for investors seeking exposure to the gold market.

Wheaton Precious Metals (WPM)

Wheaton Precious Metals, based in Vancouver, Canada, is one of the largest precious metals streaming companies in the world. The company has a diversified portfolio of streams on gold, silver, and palladium mines located in the Americas and Europe. Wheaton’s business model allows it to acquire metals at a fixed cost, providing significant upside potential in a rising price environment. The company’s high-quality assets and strong financial position have made it a leader in the streaming industry.

The company is debt free, has a price to earnings ratio of 46, and a forward P/E of 35. A market capitalization of over $20 billion and a dividend yield of around 1.2%, Wheaton Precious Metals offers a compelling investment opportunity for those looking to benefit from higher precious metal prices.

Royal Gold (RGLD)

Royal Gold, headquartered in Denver, Colorado, is a premier gold royalty and streaming company with a portfolio of over 180 properties across the globe. The company’s portfolio includes some of the most prolific gold mines in the world, including the Mount Milligan mine in Canada and the Peñasquito mine in Mexico. Royal Gold’s focus on high-quality, low-cost assets has allowed it to generate strong cash flows and consistently pay dividends to shareholders.

This company, with no long term debt, has a price to earnings ratio of 36, and a forward P/E of 22. The company’s market capitalization exceeds $8 billion, and it offers a dividend yield of approximately 1.2%. Royal Gold’s diversified portfolio and solid financials make it a top pick in the royalty and streaming space.

Franco-Nevada (FNV)

Franco-Nevada, based in Toronto, Canada, is the largest gold-focused royalty and streaming company in the world. The company has a diverse portfolio of over 400 assets, including gold, silver, and other precious metals, as well as oil and gas interests. Franco-Nevada’s business model is centered around low-risk, high-margin investments that provide long-term cash flow stability. The company’s strong balance sheet and disciplined approach to capital allocation have made it a favorite among investors.

The company is debt free and has a forward P/E of 31. With a market capitalization of over $30 billion and a dividend yield of about 1%, Franco-Nevada is a cornerstone investment for those seeking exposure to gold and silver.

Sandstorm Gold (SAND)

Sandstorm Gold, headquartered in Vancouver, Canada, is a growing gold streaming and royalty company with a portfolio of over 200 assets across the globe. The company has focused on acquiring streams and royalties on early-stage projects with significant exploration potential, providing it with exposure to future growth. Sandstorm’s management team has a strong track record of identifying and investing in high-quality assets, positioning the company for long-term success.

The stock’s trailing P/E is fairly high at 54, but the forward P/E is 34. Sporting a market capitalization of over $1 billion and a dividend yield of approximately 1%, Sandstorm Gold is an emerging player in the royalty and streaming sector.

Summary

As a group, these top gold and silver royalty and streaming stocks—Osisko Gold Royalties, Wheaton Precious Metals, Royal Gold, Franco-Nevada, and Sandstorm Gold—offer investors a unique and low-risk way to gain exposure to the rising prices of precious metals.

With market capitalizations exceeding $1 billion and dividend yields above 1%, these companies provide a combination of stability, income, and growth potential.

Their business models, which focus on acquiring royalties and streams from high-quality assets, position them well to benefit from ongoing economic uncertainty and the continued rise in gold prices. For investors looking to capitalize on the strength of the gold market, these stocks are worth serious consideration.

Disclosure: Author didn’t own any of the above at the time the article was written.

Liquid Assets: The Best Water Utility Stocks to Quench Your Portfolio’s Thirst

by Fred Fuld III

4 Minutes Read Time

The water utility industry is an essential sector within the broader utilities industry, providing one of the most vital resources—clean water—to millions of people across the country. Water utilities, much like their electric counterparts, are known for their stability and reliable dividend payouts, making them an attractive option for income-seeking investors.

In a low-interest-rate environment, dividend-paying utilities become even more appealing as their yields offer a better return compared to bonds and other fixed-income investments. In this article, we’ll focus on four top water utility stocks—American Water Works Co. Inc. (AWK), American States Water Co. (AWR), California Water Service Group (CWT), and Essential Utilities Inc. (WTRG). Each of these stocks has a market capitalization exceeding $3 billion and offers a dividend yield of over 2%.

American Water Works Co. Inc. (AWK)

American Water Works Co. Inc., headquartered in Camden, New Jersey, is the largest publicly traded water and wastewater utility in the United States. Serving more than 14 million people in 24 states, American Water Works has a vast and diversified customer base. The company’s focus on operational efficiency, infrastructure investment, and regulatory compliance has helped it achieve steady growth over the years.

With a market capitalization exceeding $27 billion, American Water Works is a leader in the industry. The company’s strong financial performance is complemented by a dividend yield of around 2%, making it a reliable choice for income-focused investors.

The stock has a trailing price to earnings ratio of 29 and a forward P/E of 25.

American States Water Co. (AWR)

American States Water Co., based in San Dimas, California, provides water and electricity services to customers in California and through its subsidiary, Golden State Water Company. With a history dating back to 1929, American States Water has a long track record of stability and consistent dividend payments. The company’s regulated water utility operations are its primary revenue driver, serving approximately 260,000 customers across the state.

American States Water has a market capitalization of over $3 billion and offers a dividend yield of over 2.2%. The company’s commitment to sustainable water management and infrastructure development positions it well for long-term growth.

The stock has a trailing price to earnings ratio of 28 and a forward P/E of 24.

California Water Service Group (CWT)

California Water Service Group, headquartered in San Jose, California, is the third-largest publicly traded water utility in the United States. The company provides water utility services to approximately 2 million people across California, Washington, New Mexico, and Hawaii. California Water Service Group is known for its customer-centric approach and dedication to maintaining high water quality standards.

The company’s market capitalization is over $3.5 billion, and it offers a dividend yield of more than 2.1%. California Water Service Group’s ongoing investments in infrastructure and water conservation efforts underscore its commitment to long-term sustainability and growth.

The stock has a trailing price to earnings ratio of 17 and a forward P/E of 22.

Essential Utilities Inc. (WTRG)

Essential Utilities Inc., formerly known as Aqua America, is a water and natural gas utility company based in Bryn Mawr, Pennsylvania. Essential Utilities serves more than 5 million customers across 10 states, making it one of the largest water utilities in the country. The company’s strategic acquisitions and investments in infrastructure have driven its growth and expansion.

Essential Utilities has a market capitalization exceeding $11 billion and offers a dividend yield of over 3%. The company’s diversified utility operations, coupled with its focus on environmental stewardship, make it a strong contender in the water utility sector.

The stock has a trailing price to earnings ratio of 19 and a forward P/E of 18.

Summary

As a group, these top water utility stocks—American Water Works, American States Water, California Water Service Group, and Essential Utilities—offer a compelling combination of stability, income, and growth potential. With moderately favorable earnings ratios, market caps over $3 billion, and dividend yields above 2%, they are well-positioned to provide reliable returns in a low-interest-rate environment. These companies’ focus on infrastructure investment, sustainability, and regulatory compliance ensures their long-term viability and growth. For investors seeking to add high-quality water utility stocks to their portfolios, these four companies are worth serious consideration.

Disclosure: Author owns CWT.

Get a Charge Out of Electric Utility Stocks

by Fred Fuld III

The electric utility industry is a cornerstone of the global economy, providing essential services that power homes, businesses, and industries. These companies are typically characterized by their stability and consistent dividend payments, making them a popular choice among income-seeking investors. In particular, dividend-paying utilities tend to benefit from lower interest rates, as their relatively high yields become more attractive compared to bonds and other fixed-income investments. In this article, we’ll examine five top electric utility stocks—Avangrid Inc. (AGR), Evergy Inc. (EVRG), Exelon Corp. (EXC), NorthWestern Energy Group Inc. (NWE), and Portland General Electric Co. (POR). Each of these stocks boasts a price-to-earnings (P/E) ratio of less than 20, a forward P/E ratio of under 15, and a dividend yield of over 3%.

Avangrid Inc. (AGR)

Avangrid Inc. is a diversified energy and utility company headquartered in Orange, Connecticut. It operates through two primary business segments: Networks and Renewables. The Networks segment provides electric and gas distribution services to customers in New York and New England, while the Renewables segment is a leader in wind and solar energy generation in the United States. Avangrid’s commitment to renewable energy positions it well for growth, especially as the world shifts towards cleaner energy sources. The company’s P/E ratio and forward P/E ratio indicate it is attractively valued, and with a dividend yield exceeding 4%, it provides a solid income stream for investors. Quarterly revenue growth year-over-year increased by over 19% while earnings per share skyrocketed by more than 98%.

Evergy Inc. (EVRG)

Evergy Inc., based in Kansas City, Missouri, serves approximately 1.6 million customers in Kansas and Missouri. The company was formed through the merger of Westar Energy and Great Plains Energy in 2018, creating a significant regional utility player. Evergy is focused on modernizing its grid infrastructure and increasing its investment in renewable energy. The company’s stable cash flows and commitment to returning capital to shareholders are reflected in its strong dividend yield of over 3.5%. With a forward P/E ratio below 15, Evergy offers both value and income potential. Quarterly sales grew by 3% but earnings tanked by over 13%, but are expected to grow by 6.4% next year.

Exelon Corp. (EXC)

Exelon Corp., headquartered in Chicago, Illinois, is one of the largest utility holding companies in the United States. It operates through several subsidiaries, providing electricity to millions of customers across Illinois, Pennsylvania, Maryland, and other states. Exelon’s diverse energy mix includes nuclear, natural gas, wind, and solar power, making it a leader in low-carbon electricity generation. The company has a strong track record of operational excellence and financial stability, with a P/E ratio under 20 and a forward P/E ratio under 15, indicating its shares are reasonably priced. Exelon’s dividend yield, hovering around 3.5%, adds to its appeal for income-focused investors. Quarterly revenue growth year-over-year went up by over 11% while earnings per share jumped about 30%.

NorthWestern Energy Group Inc. (NWE)

NorthWestern Energy Group Inc. provides electricity and natural gas to customers in Montana, South Dakota, and Nebraska. The company, headquartered in Sioux Falls, South Dakota, has a strong regional presence and a focus on serving rural communities. NorthWestern Energy is known for its consistent performance and steady dividend payouts, which currently yield over 4%. The company’s P/E and forward P/E ratios suggest it is undervalued relative to its earnings potential, making it an attractive option for investors seeking both growth and income.

Portland General Electric Co. (POR)

Portland General Electric Co., based in Portland, Oregon, is an integrated electric utility that serves residential, commercial, and industrial customers in the Portland metropolitan area. The company has been a leader in transitioning to renewable energy, with a significant portion of its electricity generated from hydroelectric, wind, and solar sources. Portland General Electric’s strategic focus on sustainability and innovation has positioned it well for future growth. The company offers a dividend yield of over 3.5% and trades at a forward P/E ratio below 15, making it a compelling choice for value-oriented investors.

Summary

As a group, these top electric utility stocks—Avangrid, Evergy, Exelon, NorthWestern Energy, and Portland General Electric—offer a combination of value, income, and growth potential. With solid ratios and yields, they present attractive opportunities for investors seeking stability and reliable income in a low-interest-rate environment. Moreover, their focus on renewable energy and infrastructure modernization positions them well for long-term growth as the world transitions towards cleaner energy solutions. For those looking to add high-quality utility stocks to their portfolios, these five companies are worth considering.

Disclosure: Author didn’t own any of the above at the time the article was written.

Stocks Going Ex Dividend in August 2024

However, it is important to note that the actual dividend may not be paid for several weeks, as the payment date can be delayed by up to two months after the ex-date.

Ally Financial Inc. (ALLY)	8/1/2024	0.30	2.73%
Citigroup, Inc. (C)	8/5/2024	0.56	3.30%
Wells Fargo & Company (WFC)	8/9/2024	0.40	2.65%
Microsoft Corporation (MSFT)	8/15/2024	0.75	0.71%
Walmart Inc. (WMT)	8/16/2024	0.2075	1.19%
Target Corporation (TGT)	8/21/2024	1.12	3.01%
Johnson & Johnson (JNJ)	8/27/2024	1.24	3.09%
T-Mobile US, Inc. (TMUS)	8/30/2024	0.65	1.48%

Dividend Definitions

To better understand the dividend-related terms, let’s define them:

Before implementing the “Buying Dividends” technique, it is crucial to reconfirm the ex-dividend date with the respective company to ensure accuracy and avoid any unexpected changes.

Disclosure: Author owns MSFT.

How About Investing in Old Computers?

by Fred Fuld III

Step into a captivating journey through time at Christie’s auction “Pushing Boundaries: Ingenuity from the Paul G. Allen Collection,” where nearly 40 remarkable documents and objects narrate the evolution of technology from pre-history to the present day. This extraordinary collection, primarily composed of 20th-century artifacts, mirrors Mr. Allen’s deep-seated passions and stands as a testament to the dizzying pace of technological advancement within our lifetimes.

If you are interested in technology and investing, you might want to place a bid on an Apple I personal computer, made in 1976, which formally rested on Steve Job’s desk. This item is has an estimated hammer price range of $500,000 to $800,000.

The auction’s crown jewel is Einstein’s pivotal letter to President Roosevelt, a document that catapulted the United States into the nuclear age and underscores the profound impact of technology on society. The collection also celebrates humanity’s relentless pursuit of exploration, featuring treasures like a 16th-century portolan chart, Jacques Cousteau’s visionary pitch-book, and key artifacts from the Space Race, including Ed White’s spacesuit cover layer, the pilot’s logbook from Apollo 8, flown items from Apollo 11, and the checklist from the first American spacewalk in June 1965.

Select highlights from this extraordinary sale will be on display at Christie’s New York through July 19. Don’t miss this unique opportunity to witness the milestones of human ingenuity and discovery.

Picture courtesy of Christie’s.

Pouring Profits: Why Investing in Liquor Stocks is a Smart Choice

by Fred Fuld III

The history of liquor stocks is mixed with the development of the alcoholic beverage industry, which has evolved significantly over the centuries. The commercial production and sale of alcohol can be traced back to ancient civilizations, but it was during the 18th and 19th centuries that the industry began to take on its modern form, with the establishment of well-known distilleries and breweries.

The Prohibition era in the United States (1920-1933) posed a significant challenge, leading to a temporary collapse of the industry. However, the repeal of Prohibition saw a resurgence, with companies rapidly recovering and expanding. The mid-20th century marked the consolidation of the industry, as many smaller firms merged to form large, multinational corporations.

Today, liquor stocks represent a major sector of the global market, characterized by stable demand, strong brand loyalty, and high profit margins. Companies like Diageo, Pernod Ricard, and Anheuser-Busch InBev dominate the industry, offering a wide range of products that cater to diverse consumer preferences. The continued innovation and expansion into emerging markets have solidified the status of liquor stocks as a compelling investment choice.

Why Liquor Stocks Are a Good Investment

Stable Demand and Market Resilience:

Liquor stocks are often considered a reliable investment due to the consistent demand for alcoholic beverages. Unlike many other consumer goods, the demand for liquor tends to remain stable even during economic downturns. This resilience makes liquor companies less vulnerable to economic fluctuations, providing a steady revenue stream that can translate into stable stock performance. Additionally, established brands with strong customer loyalty can maintain their market share and profitability, further solidifying the attractiveness of liquor stocks.

High Profit Margins:

The liquor industry is known for its high profit margins, which can be attributed to the strong pricing power of established brands and the relatively low production costs. Premium and craft liquors, in particular, command higher prices and generate significant profits. These high margins can lead to robust financial health for liquor companies, making their stocks appealing to investors seeking both growth and income. The ability to pass on costs to consumers without significantly affecting demand helps these companies maintain their profitability even in inflationary environments.

Global Growth Opportunities:

The liquor market is expanding globally, driven by increasing disposable incomes, urbanization, and changing social norms in emerging markets. Regions such as Asia-Pacific and Latin America are experiencing a growing demand for premium and imported liquors. This global expansion provides liquor companies with new growth opportunities, allowing them to tap into previously underserved markets. Investors can benefit from this international diversification, as companies with a strong global presence are better positioned to capitalize on these growth trends.

Innovation and Diversification:

The liquor industry is continuously evolving, with companies investing in innovation and diversification to cater to changing consumer preferences. Trends such as craft spirits, ready-to-drink cocktails, and low-alcohol or alcohol-free beverages are gaining popularity. By diversifying their product portfolios and embracing new trends, liquor companies can attract a broader customer base and drive sales growth. This adaptability enhances their long-term growth prospects and makes their stocks attractive to investors looking for dynamic and forward-thinking companies.

Listed below are the top four liquor stocks:

Constellation Brands, Inc. (NYSE: STZ) is a leading international producer and marketer of beer, wine, and spirits, known for popular brands like Corona, Modelo, and Svedka Vodka. STZ stands out as a solid investment due to its strong portfolio of high-demand products, consistent revenue growth, and strategic acquisitions that enhance its market presence. The company also has investments in the burgeoning cannabis industry through Canopy Growth.

Diageo plc (NYSE: DEO) is a global leader in the alcoholic beverages industry, having a diverse portfolio of iconic brands such as Johnnie Walker, Guinness, Smirnoff, and Tanqueray. DEO is considered a strong investment due to its extensive market reach, strong brand equity, and consistent financial performance. The company’s strategic focus includes its expansion into non-alcoholic beverages and ready-to-drink cocktails.

Brown-Forman Corporation (NYSE: BF-B) is one of the largest American-owned spirits and wine companies, renowned for its premium brands such as Jack Daniel’s, Woodford Reserve, and Old Forester. BF-B is an attractive investment due to its strong brand portfolio, which commands significant market share and consumer loyalty globally. Brown-Forman’s includes regular dividend payments make it a reliable choice for income-focused investors.

The Duckhorn Portfolio, Inc. (NYSE: NAPA) is a prominent producer of luxury wines, known for its premium brands such as Duckhorn Vineyards, Decoy, and Goldeneye. NAPA stands out as a compelling investment due to its strong market position in the high-end wine segment. The company’s focus on quality and brand reputation has cultivated a loyal customer base and allowed it to maintain strong pricing power.

Company	Company Symbol	Price to Book	PEG	PE	Price to Sales	Forward PE	Yield
Constellation Brands Inc	STZ	4.62	1.71	19.32	4.68	17.1	1.42%
Diageo plc ADR	DEO	7.52	14.29	18.58	3.57	17.31	3.08%
Brown-Forman Corp.	BF-B	5.94	NA	20.58	5.01	22.63	2.05%
Duckhorn Portfolio Inc	NAPA	0.84	4.15	13.29	2.66	11.53	NA

Liquor stocks are a good investment due to the stable demand and market resilience of alcoholic beverages, which maintain steady revenue even during economic downturns. The industry is known for high profit margins, driven by strong brand pricing power and relatively low production costs, ensuring robust financial health. Global growth opportunities are abundant, particularly in emerging markets like Asia-Pacific and Latin America, offering companies new avenues for expansion. Additionally, continuous innovation and diversification, such as the rise of craft spirits and ready-to-drink cocktails, help liquor companies attract a broader customer base and sustain long-term growth.

Disclosure: Author had no positions in any of the above at the time the article was written.

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