Tag: KO

Unveiling Warren Buffett’s Time-Tested High-Yield Stocks

by Fred Fuld III

Warren Buffett, renowned as the Oracle of Omaha, is celebrated for his long-term investment strategy, which often centers around high-quality, dividend-paying stocks in the Berkshire Hathaway (BRK-A) (BRK-B) portfolio. While Buffett’s portfolio encompasses a diverse array of investments, several high-yield stocks have consistently stood out. Listed below are three of his highest yielding stocks in his portfolio. 

Kraft Heinz Company (KHC)

The dividend yield for The Kraft Heinz Company (KHC) stands at 4.59%. With a payout ratio of 68.83%, close to 69% of KHC’s earnings are disbursed to shareholders through dividends. KHC’s annual dividend payout amounts to $1.60 per share. The Price to Book ratio is an excellent 0.86, and the Price to Sales ratio is right in the mid range at 1.71, but the Price to Earnings Growth ratio (PEG ratio) is on the high side at 3.55. The stock makes up 3.47% of Berkshire’s total portfolio.

The ex-dividend date for The Kraft Heinz Company (KHC) is March 7, 2024. Investors purchasing shares on or after this date will not qualify for the upcoming dividend payment. The company follows a quarterly dividend payment schedule, with the next distribution planned for March 29, 2024. 

CLICK HERE FOR DIVIDEND HISTORY

Coca-Cola Company (KO)

The dividend yield for The Coca-Cola Company (KO) currently stands at 3.26%. With a payout ratio of 74.22%, approximately three-quarters of KO’s earnings are allocated to shareholders in the form of dividends. Coke’s annual dividend payout amounts to $1.94 per share. The Price to Book ratio is on the very high side at 9.88. The Price to Sales ratio is also very high at 5.56, along with the Price to Earnings Growth ratio (PEG ratio) at 3.88. The stock currently makes up 6.79% of Warren Buffett’s total portfolio.

The ex-dividend date for The Coca-Cola Company (KO) is March 14, 2024. Investors purchasing shares on or after this date will not qualify for the forthcoming dividend payment. The company follows a quarterly dividend payment schedule, with the next distribution scheduled for April 1, 2024. 

CLICK HERE FOR DIVIDEND HISTORY

Chevron Corporation (CVX)

The dividend yield for Chevron Corporation (CVX) currently sits at 4.35%. CVX has a payout ratio of 53.05%. Slightly more than half of CVX’s earnings are allocated to shareholders in the form of dividends The annual dividend payout amounts to a whopping $6.52 per share. The Price to Book ratio is a reasonable 1.74. The Price to Sales ratio is right in the mid range at 1.41, but the Price to Earnings Growth ratio (PEG ratio) is on the low side at an excellent 0.81. The company represents 5.41% of Berkshire Hathaway’s total portfolio.

The ex-dividend date for Chevron Corporation (CVX) is February 15, 2024. Investors purchasing shares on or after this date will not qualify for the upcoming dividend payment. The company follows a quarterly dividend payment schedule, with the next distribution planned for March 11, 2024. 

CLICK HERE FOR DIVIDEND HISTORY

Overall, high-yield stocks play a crucial role in income generation, portfolio diversification, and long-term wealth accumulation strategies, making them important considerations for investors with varying financial goals and risk tolerances.

Remember, as a rule of thumb, if the P/B ratio, the P/S ratio, and the PEG ratio, is below one, that is good, if it is between one and two is considered average, and above two, it may be on the high side. Some of these ratios may be irrelevant for high growth stocks.

Stay ahead of the game and subscribe to our newsletter now to unlock the hottest investment opportunities!

Subscribe Here 

Taylor Swift Stock Index: A Great Performer

by Fred Fuld III

Taylor Swift, the name synonymous with chart-topping hits and captivating performances, has also quietly built herself into a savvy business mogul. Her journey extends far beyond the recording studio, encompassing strategic branding, fan engagement mastery, and a fierce fight for artistic ownership.

Taylor Swift’s success goes beyond just being a talented musician. Here are some of her notable business decisions that have contributed to her empire:

1. Reclaiming her music: Swift’s decision to re-record her first six albums was a bold move. While motivated by a desire to own her masters, it also proved to be a successful business strategy. The re-recordings, titled “Taylor’s Versions,” topped charts and reminded fans of her music, leading to increased sales and streaming.

2. Strategic partnerships: Swift has partnered with various brands like Diet Coke and Apple Music, creating mutually beneficial campaigns. These partnerships not only generate revenue but also expand her reach and connect her with new audiences.

3. Building a strong brand: From her signature songwriting style to her nostalgic album themes, Swift has built a strong and consistent brand identity. This allows her to connect deeply with her fans (affectionately called “Swifties”) and fosters a sense of community around her music.

4. Mastering fan engagement: Swift’s social media presence and interaction with fans are legendary. Through online interactions, surprise appearances, and Easter eggs in her music and videos, she fosters a loyal and engaged fanbase, which translates into success in ventures like tours and merchandise sales.

5. Utilizing technology: Swift’s embrace of technology has been crucial. She understands the evolving music landscape and leverages streaming platforms, online exclusives, and digital marketing strategies effectively.

6. Advocating for artists’ rights: Swift has been a vocal advocate for artists’ ownership of their work, influencing industry conversations and inspiring other musicians to fight for their rights. This not only benefits her personally but also contributes to a fairer music industry for all creators.

These are just a few examples of Taylor Swift’s successful business decisions. Her combination of artistic talent, business acumen, and dedication to her fans has made her a true force to be reckoned with in the music industry and beyond.

Six months ago, I wrote about how the Taylor Swift stock index as outperformed the S&P 500. Her index is made up of the publicly traded companies that Swift is a spokesperson for, such as Coca-Cola (KO) and Apple (AAPL).

Her index is up over 319% during the last ten years, versus 261% for the S&P 500, based on the SPDR S&P 500 ETF (SPY).

Swift’s boyfriend, Travis Kelce, has done a ton of celebrity sponsorships. It will be interesting to see how well his index does. Subscribe to our newsletter so you will be notified when it is available.

Disclosure: Author owns AAPL and has a short SPY position.

Stocks Going Ex Dividend in March 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.

H&R Block, Inc. (HRB)3/4/20240.322.61%
The Kraft Heinz Company (KHC)3/7/20240.404.45%
UnitedHealth Group Incorporated (UNH)3/8/20241.881.43%
Coca-Cola Company (KO)3/14/20240.4853.20%
Mercer International Inc. (MERC)3/26/20240.0753.53%
Pacific Gas & Electric Co. (PCG)3/27/20240.010.12%
State Street Corporation (STT)3/28/20240.693.79%

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 did not own any of the above at the time the article was written.

Stocks Going Ex Dividend in November 2023

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.

Costco Wholesale Corporation (COST)11/2/20231.020.74%
Citigroup, Inc. (C)11/3/20230.535.34%
Las Vegas Sands Corp. (LVS)11/6/20230.200.84%
Starbucks Corporation (SBUX)11/9/20230.572.41%
Charles Schwab Corporation (SCHW)11/9/20230.252.01%
Paychex, Inc. (PAYX)11/13/20230.893.04%
Johnson & Johnson (JNJ)11/20/20231.193.15%
Discover Financial Services (DFS)11/21/20230.703.33%
Applied Materials, Inc. (AMAT)11/22/20230.320.95%
Goldman Sachs Group, Inc. (GS)11/29/20232.753.68%
Coca-Cola Company (KO)11/30/20230.463.40%

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 did not own any of the above at the time the article was written.

Taylor Swift is Still Outperforming the Stock Market

by Fred Fuld III

A few months ago, I wrote an article called Taylor Swift Stock Index outperforms the S&P 500. In spite of the market dropping, Taylor Swift related stocks are still outperforming the stock market.

Her Stock Index is up more than 315% over the last ten years versus 20% for the S&P 500.

Taylor Swift is not only beautiful and a great singer, songwriter, and actress, she is also very intelligent, especially in the area of finance.

Did you know that she almost became a celebrity spokesperson for FTX, the cryptocurrency company that was involved in a scandal that involved the arrest of the founder for fraud charges.

Taylor Swift was reportedly offered a $100 million sponsorship deal with the FTX cryptocurrency exchange. However, she ultimately declined the deal after asking FTX representatives a simple question: “Can you tell me that these are not unregistered securities?”

This question was significant because it raised the issue of whether FTX was selling unregistered securities. Unregistered securities are a type of investment that is not registered with the Securities and Exchange Commission. This means that investors in unregistered securities do not have the same level of protection as investors in registered securities.

Swift’s question about unregistered securities appears to have been a dealbreaker for FTX.

In addition to asking about unregistered securities, Swift reportedly also did her own research on FTX before deciding to decline the sponsorship deal. She reportedly read the company’s white paper and spoke to other celebrities who had been involved with FTX.

Unfortunately for those other celebrities, which included Tom Brady, Gisele Bündchen, Steph Curry, Naomi Osaka, David Ortiz, Shaquille O’Neal, Kevin O’Leary, and Larry David, they got caught up in the scandal.

These celebrities appeared in paid advertising campaigns for FTX and promoted the exchange on social media.

In December 2022, a class-action lawsuit was filed against FTX and its celebrity endorsers. The lawsuit alleges that the celebrities engaged in deceptive practices to sell FTX yield-bearing digital currency accounts.

Taylor Swift, as a prominent figure in the entertainment industry, has been sought after by various brands for celebrity endorsements. Three notable endorsements in her career include Coca-Cola’s (KO) Diet Coke, Apple (AAPL), and Coty (COTY).

Swift signed a multi-year partnership with Diet Coke in 2013. She became the face of their brand and appeared in commercials and print advertisements. The collaboration aimed to promote the brand’s message of positivity and refreshment. Swift’s bubbly personality and wide fan base made her an ideal ambassador for Diet Coke, and her endorsement helped raise brand awareness and reach a younger demographic.

In 2015, Swift teamed up with Apple for an exclusive endorsement deal. It started with a public disagreement when Swift criticized Apple Music’s initial policy of not compensating artists during the service’s three-month free trial period. After Apple changed its policy, Swift became an advocate for the platform and released her album “1989” exclusively on Apple Music. She also appeared in commercials and promotional materials for the streaming service, showcasing her influence in the music industry and helping Apple Music gain popularity among her dedicated fanbase.

Coty, a major beauty and fragrance company for the CoverGirl cosmetics brand, partnered with Taylor Swift in 2010 to launch to launch NatureLuxe makeup. The partnership with Coty allowed Swift to expand her brand beyond music into the lucrative world of celebrity fragrances.

These endorsements showcase Taylor Swift’s ability to align herself with influential brands and effectively promote their products. Her partnerships have not only enhanced her public image but have also allowed her to diversify her portfolio and extend her brand beyond the music industry.

I have developed stock indices for many celebrities, such as Gisele Bündchen, which I originally created back in 2007.

Because of Swift’s astute review of endorsements, I thought it would be interesting to see how the stocks of the major companies that she endorsed have done over time, compared to the S&P 500, as measured by the SPY ETF.

She was in the Got Milk? campaign, but obviously, the California Milk Processor Board is not a publicly traded stock. She also promoted L.E.I. Jeans, a brand owned by Nine West Holdings, a privately held company.

So I stuck with the three major companies that she was connected with, Coca-Cola, Apple, and Coty.

What are the results?

I ran the analysis over a ten year period, from July 1, 2013 to July of this year. Over that period of time, the Taylor Swift Stock Index outperformed the S&P 500 by a very substantial amount.

Taylor Swift was up 362.95% versus the SPY, which was up only 221.04%. Just look at the chart to see the difference.

Data Source: Yahoo! Finance: Historical Prices

Maybe one of these stocks is singing your song.

Prices are beginning of month first trading day close, adjusted for splits, dividends, and capital gains distributions. The Taylor Swift Index is a price-weighted index, similar to the Dow Jones Industrial Average.

Disclosure: Author owns AAPL.

Taylor Swift Stock Index Outperforms the S&P 500

by Fred Fuld III

Taylor Swift is not only beautiful and a great singer, songwriter, and actress, she is also very intelligent, especially in the area of finance.

Did you know that she almost became a celebrity spokesperson for FTX, the cryptocurrency company that was involved in a scandal that involved the arrest of the founder for fraud charges.

Taylor Swift was reportedly offered a $100 million sponsorship deal with the FTX cryptocurrency exchange. However, she ultimately declined the deal after asking FTX representatives a simple question: “Can you tell me that these are not unregistered securities?”

This question was significant because it raised the issue of whether FTX was selling unregistered securities. Unregistered securities are a type of investment that is not registered with the Securities and Exchange Commission. This means that investors in unregistered securities do not have the same level of protection as investors in registered securities.

Swift’s question about unregistered securities appears to have been a dealbreaker for FTX.

In addition to asking about unregistered securities, Swift reportedly also did her own research on FTX before deciding to decline the sponsorship deal. She reportedly read the company’s white paper and spoke to other celebrities who had been involved with FTX.

Unfortunately for those other celebrities, which included Tom Brady, Gisele Bündchen, Steph Curry, Naomi Osaka, David Ortiz, Shaquille O’Neal, Kevin O’Leary, and Larry David, they got caught up in the scandal.

These celebrities appeared in paid advertising campaigns for FTX and promoted the exchange on social media.

In December 2022, a class-action lawsuit was filed against FTX and its celebrity endorsers. The lawsuit alleges that the celebrities engaged in deceptive practices to sell FTX yield-bearing digital currency accounts.

Taylor Swift, as a prominent figure in the entertainment industry, has been sought after by various brands for celebrity endorsements. Three notable endorsements in her career include Coca-Cola’s (KO) Diet Coke, Apple (AAPL), and Coty (COTY).

Swift signed a multi-year partnership with Diet Coke in 2013. She became the face of their brand and appeared in commercials and print advertisements. The collaboration aimed to promote the brand’s message of positivity and refreshment. Swift’s bubbly personality and wide fan base made her an ideal ambassador for Diet Coke, and her endorsement helped raise brand awareness and reach a younger demographic.

In 2015, Swift teamed up with Apple for an exclusive endorsement deal. It started with a public disagreement when Swift criticized Apple Music’s initial policy of not compensating artists during the service’s three-month free trial period. After Apple changed its policy, Swift became an advocate for the platform and released her album “1989” exclusively on Apple Music. She also appeared in commercials and promotional materials for the streaming service, showcasing her influence in the music industry and helping Apple Music gain popularity among her dedicated fanbase.

Coty, a major beauty and fragrance company for the CoverGirl cosmetics brand, partnered with Taylor Swift in 2010 to launch to launch NatureLuxe makeup. The partnership with Coty allowed Swift to expand her brand beyond music into the lucrative world of celebrity fragrances.

These endorsements showcase Taylor Swift’s ability to align herself with influential brands and effectively promote their products. Her partnerships have not only enhanced her public image but have also allowed her to diversify her portfolio and extend her brand beyond the music industry.

I have developed stock indices for many celebrities, such as Gisele Bündchen, which I originally created back in 2007.

Because of Swift’s astute review of endorsements, I thought it would be interesting to see how the stocks of the major companies that she endorsed have done over time, compared to the S&P 500, as measured by the SPY ETF.

She was in the Got Milk? campaign, but obviously, the California Milk Processor Board is not a publicly traded stock. She also promoted L.E.I. Jeans, a brand owned by Nine West Holdings, a privately held company.

So I stuck with the three major companies that she was connected with, Coca-Cola, Apple, and Coty.

What are the results?

I ran the analysis over a ten year period, from July 1, 2013 to July of this year. Over that period of time, the Taylor Swift Stock Index outperformed the S&P 500 by a very substantial amount.

Taylor Swift was up 362.95% versus the SPY, which was up only 221.04%. Just look at the chart to see the difference.

Data Source: Yahoo! Finance: Historical Prices

Maybe one of these stocks is singing your song.

Prices are beginning of month first trading day close, adjusted for splits, dividends, and capital gains distributions. The Taylor Swift Index is a price-weighted index, similar to the Dow Jones Industrial Average.

Disclosure: Author owns AAPL.

Top Yielding Dividend Aristocrats

by Fred Fuld III

Dividend Aristocrats are a group of 65 S&P 500 stocks that have increased their dividends annually for at least 25 consecutive years. They are considered to be some of the most reliable dividend-paying stocks on the market.

The Dividend Aristocrats index is maintained by S&P Dow Jones Indices. To qualify for the index, a stock must meet the following criteria:

  • It must be a member of the S&P 500 index.
  • It must have increased its dividend for at least 25 consecutive years.
  • It must have a market capitalization of at least $3 billion.

The Dividend Aristocrats index is a popular investment among investors who are looking for income and growth. The stocks in the index have a long track record of dividend growth, and they are typically well-established companies with strong financials.

Here are some of the top Dividend Aristocrats in 2023, ranked by their forward dividend yield:

  • Realty Income (O): 5.0%
  • IBM (IBM): 5.0%
  • AbbVie (ABBV): 4.4%
  • Coca-Cola (KO): 3.0%
  • Johnson & Johnson (JNJ): 3.0%
  • Procter & Gamble (PG): 2.5%
  • Pepsico (PEP): 2.7%

These stocks are all paying a high dividend yield, and they have a long track record of dividend growth. They are a good option for investors who are looking for income and growth.

Here are some of the benefits of investing in Dividend Aristocrats:

  • Income: Dividend Aristocrats are a good source of income for investors. They typically pay a high dividend yield, and they have a long track record of dividend growth.
  • Growth: Dividend Aristocrats can also provide growth potential for investors. Many of the companies in the index are well-established and have strong financials. This means that they are likely to continue to grow their businesses and their dividends over time.
  • Safety: Dividend Aristocrats are considered to be relatively safe investments. They are typically large, well-established companies with a long track record of profitability. This means that they are less likely to go bankrupt or cut their dividends than smaller, more volatile companies.

If you are looking for an investment that can provide you with income and growth, then Dividend Aristocrats may be a good option for you. They are a relatively safe investment that has the potential to provide you with a steady stream of income over the long term.

Disclosure: Author owns PEP.

Stocks Going Ex Dividend in March 2023

The following is a short list of some of the many stocks going ex dividend during the next month.

Many traders and investors use the stock trading technique called ‘Buying Dividends,’ also commonly referred to as ‘Dividend Capture.’ This is the strategy of buying stocks before the ex dividend date and selling the stock shortly after the ex date at about the same price, yet still being entitled to the dividend.

This technique generally works in bull markets and flat or choppy markets, but during bear markets, you may want to consider avoiding this strategy. In order to be entitled to the dividend, you have to buy the stock before the ex-dividend date, and you can’t sell the stock until on or after the ex date.

The actual dividend may not be paid for another few weeks.

WallStreetNewsNetwork.com has compiled a downloadable list of the stocks going ex dividend in the near future. The list contains many dividend paying companies, lots with market caps over $500 million. Some of the stocks have yields over 2%. Here are a few examples showing the stock symbol, the ex-dividend date, the periodic dividend amount, and the annual yield.

Goldman Sachs Group, Inc. (GS)3/1/20232.502.75%
Nike, Inc. (NKE)3/3/20230.341.15%
Southwest Airlines Company (LUV)3/7/20230.182.14%
Waste Management, Inc. (WM)3/9/20230.701.85%
Merck & Company, Inc. (MRK)3/14/20230.732.66%
Coca-Cola Company (KO)3/16/20230.463.06%
DTE Energy Company (DTE)3/17/20230.9523.37%
Portland General Electric Co. (POR)3/24/20230.4523.73%
ConocoPhillips (COP)3/28/20230.602.20%
Xerox Holdings Corporation (XRX)3/30/20230.256.15%
Wolverine World Wide, Inc. (WWW)3/31/20230.102.37%

The entire list of over 100 ex-dividend stocks will be emailed to all subscribers next week. If you are not a subscriber, you can sign up at the signup box below. Don’t miss out. Remember, it’s free!

Dividend Definitions

Declaration date: the day that the company declares that there is going to be an upcoming dividend.

Ex-dividend date: the day on which if you buy the stock, you would not be entitled to that particular dividend; or the first day on which a shareholder can sell the shares and still be entitled to the dividend.

Record date: the day when you must be on the company’s books as a shareholder to receive the dividend. The ex-dividend date is normally set for stocks at two business days before the record date.

Payment date: the day on which the dividend payment is actually made, which can be as long at two months after the ex date.

Don’t forget to reconfirm the ex-dividend date with the company before implementing this technique.

Disclosure: Author did not own any of the above at the time the article was written; affiliate links are on this page.

Why I Will Never Invest in a Bond Fund

I think that bond funds and bond ETFs are a terrible idea for long term income investors.

by Fred Fuld III

Investors who are looking for income have several investment options, including money market funds, savings accounts, certificates of deposit, dividend-paying stocks, bonds, bond funds, bond ETFs, REITs, royalty trusts, and more.

However, I think that bond funds and bond ETFs are a terrible idea for long term income investors.

I think that all bond funds are terrible investments, even short term ones, and even government bond funds, especially during times of rising interest rates. The problem with bond funds is that there is no yield-to-maturity.

Remember, if you own a bond directly, and the bond drops in value, you will eventually get your money back at maturity.

When interest rates rise, bonds drop in value, and the net asset value drops. Many investors have a tendency to bail out when their investment drops, and when that happens, the fund managers need to sell bonds at a loss in order to handle redemptions, thereby locking in a loss on those bonds. The remaining bonds will eventually be paid off at maturity but that gain won’t cover the established losses.

Just one example of a short term government bond fund is the Vanguard Short-Term Treasury Fund Investor Shares (VFISX). The fund is down 5.4% during the last year, more than offsetting the yield on the fund, which is currently only 1.72%.. 

If yields drop or remain the same for a long period of time (I personally think that rates will continue higher), then in that case, the principal investment in the fund would be maintained. 

However, if you know that interest rates are going to drop, then you should probably be doing some interest rate speculation.

Does anyone really know what the Federal Reserve Board is going to do? Does the Fed even know what the Fed is going to do?

Interest rates have been very low for a long time, and we may see much higher rates in the future.

Are Interest Rates Due for a Rise Again?

So what is an investor to do?

There are bond unit investment trusts, also called fixed income UITs, which contain a fixed portfolio of bonds. The trust pays out income monthly. As the bonds mature, the principal is paid back to the investors. Most brokerage firms offer these investment vehicles.

Another alternative is to buy bonds directly. This way, even if interest rates keep rising, the bond will eventually be paid off at par, generally $1000 per bond.

Here is one example. An AT&T 2.45% bond maturing on March 15, 2035 is selling at 84.36. This means that the bond is selling at 84.36% of face value, or for a $1000 bond, it would be selling for $843.60. This gives a rough yield to maturity of 4.13%.

So if interest rates rise, the bond may drop in value, but you will eventually receive $1000 per bond in a dozen years.

Another option includes Series I bonds; however, they don’t pay out interest.

Stocks that pay high dividends may be an alternative, but an investor should consider the market risk and fluctuation over the years.

Here are a few stocks with a strong rising dividend history:

SymbolCompanyYield
XOMExxon Mobil Corporation3.21%
JNJJohnson & Johnson2.69%
KOThe Coca-Cola Company2.93%
MCDMcDonald’s Corporation2.26%
Yields as of 1/24/2023

Maybe some of these ideas will help you increase your investment income.

Disclosure: Author owns KO and MCD.

Top Stocks Going Ex Dividend in September 2022

The following is a short list of some of the many stocks going ex dividend during the next month.

The following is a short list of some of the many stocks going ex dividend during the next month.

Many traders and investors use the stock trading technique called ‘Buying Dividends,’ also commonly referred to as ‘Dividend Capture.’ This is the strategy of buying stocks before the ex dividend date and selling the stock shortly after the ex date at about the same price, yet still being entitled to the dividend.

This technique generally works in bull markets and flat or choppy markets, but during bear markets, you may want to consider avoiding this strategy. In order to be entitled to the dividend, you have to buy the stock before the ex-dividend date, and you can’t sell the stock until on or after the ex date.

The actual dividend may not be paid for another few weeks. WallStreetNewsNetwork.com has compiled a downloadable list of the stocks going ex dividend in the near future. The list contains many dividend paying companies, lots with market caps over $500 million. Some of the stocks have yields over 2%. Here are a few examples showing the stock symbol, the ex-dividend date, the periodic dividend amount, and the annual yield.

Dominion Energy, Inc. (D)9/1/20220.6683.12%
Nike, Inc. (NKE)9/2/20220.3051.08%
H&R Block, Inc. (HRB)9/7/20220.292.43%
Kimberly-Clark Corporation (KMB)9/8/20221.163.39%
HP Inc. (HPQ)9/13/20220.252.92%
Coca-Cola Company (KO)9/15/20220.442.70%
Restaurant Brands International (QSR)9/20/20220.543.65%
ConocoPhillips (COP)9/29/20221.401.83%
Republic Services, Inc. (RSG)9/30/20220.4951.35%

The entire list of over 200 ex-dividend stocks will be emailed to all subscribers early next week, on Tuesday, August 25, 2022. If you are not a subscriber, you can sign up at the signup box below. Don’t miss out. Remember, it’s free!

Dividend Definitions

Declaration date: the day that the company declares that there is going to be an upcoming dividend.

Ex-dividend date: the day on which if you buy the stock, you would not be entitled to that particular dividend; or the first day on which a shareholder can sell the shares and still be entitled to the dividend.

Record date: the day when you must be on the company’s books as a shareholder to receive the dividend. The ex-dividend date is normally set for stocks at two business days before the record date.

Payment date: the day on which the dividend payment is actually made, which can be as long at two months after the ex date.

Don’t forget to reconfirm the ex-dividend date with the company before implementing this technique.

Disclosure: Author did not own any of the above at the time the article was written; affiliate links are on this page.