Fixed-income super-guru Bill Gross of PIMCO said a few weeks ago what many of us have seen coming for some time. But with this pronouncement on social-media site Twitter, he made it official:
“The secular 30-year bull market in bonds likely ended April 29, 2013.”
His words were likely meant to be more of a warning than a death knell. But it didn’t take long for the bond markets to prove him right. That’s because the PIMCO Total Return ETF (BOND) saw its first monthly outflows in May.
Personally, I’ve spent more than 20 years closely watching and even trading the bond market. So, the only thing that surprised me about his statement is how long it took for him to make it!
Six weeks after Gross’ Tweet rocked the bond markets, it’s official that the three-decade run of price appreciation on fixed-income investments is now history.
Going forward, we can expect the flow of investment assets that’s drifting from bonds to income-oriented equities to accelerate.
I’ve been telling my subscribers for quite some time now, “If you want to invest for higher yields, dividend stocks are the way to go … not bonds.”
Especially now, after the markets spent the bulk of this week in correction mode, dividends are more important than ever in paying you to wait out the turbulence.
So today, I want to look at five global “bond-beaters” that can help you take the cash you may have stagnating in the bond markets and put it into motion again.
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Put Your ‘Parked in Neutral’ Portfolio
Into Assets Ready to Go Into Overdrive
If you’ve become gun-shy since the stock-market crash of 2007-’09, you’re not alone. Since then, many investors have piled into fixed-income vehicles like bonds instead.
And, thanks to the questionable largess of “Helicopter” Ben Bernanke and the Federal Open Market Committee, fixed-income investors’ portfolio valuations have remained steady or perhaps showed some razor-thin returns.
But who can retire comfortably on that, especially if your withdrawals surpass what your investments are earning?
And now, as brokerage statements arrive with diminished bond-portfolio valuations, many investors have been cautiously and somewhat reluctantly returning to equities.
If you’re returning to equities … or simply looking to get repositioned in the right stocks … there are plenty of names that offer competitive dividend yields.
However, you don’t just want to go searching for the highest dividend-payers and load up on them. Yields are fantastic, but they are even-better with stock appreciation.
Plus, remember that folks who gravitated to bonds over the years did so in search of safe income. In the stock markets, unfortunately nothing is considered safe. But you can certainly reduce a tremendous amount of risk if you pick solid growers that happen to pay a nice yield.
5 Easy Ways You Can Beat the Bond Blues
Quality U.S. high-yielding equities keep powering higher in price. But some of the biggest dividend-payers are international players.
Here are five that are gaining a ton of momentum from a stock and a dividend perspective …
5 International Bond-Beating Stocks
If you’re a bond-market refugee, here are some reasons why you might find these stocks an appealing destination for your “parked in neutral” cash:
- Dividend yields of at least 3%
- Market caps of more than $10 billion
- Revenue of more than $10 billion
- Expectations of long-term annual earnings-per-share growth of at least 5%.
Earnings growth usually translates into future dividend-payment increases, a distinct advantage to the ever-unchanging interest payments of bonds.
With an international financial firm, a building materials provider, a pharmaceutical giant, an energy firm serving the earth’s most-populous nation and a telecom firm geared for the data age, the above list is widely diversified in sectors and industries.
Plus, with representatives from Asia, Latin America, Spain, Ireland and Switzerland, the list also offers wide geographic diversification.
These are all names my Global Trend Trader subscribers are familiar with. In GTT, we have consistently been adding higher-yielding equities that have big exposure to the population and spending growth in the global marketplace.
Three of these stocks are currently components of the GTT model portfolio: Banco Santander (SAN), international building-materials supplier CRH Plc (CRH); and Swiss pharma giant Novartis (NVS).
Trading hands at less than 12 times earnings, integrated energy firm PetroChina (PTR) should expand its bottom line by at more than 13% annually, according to many analysts.
On top of that, assuming its dividend payouts grow at a comparable pace, PTR investors should enjoy a return over time that far outdistances the likely (paltry) rewards from U.S. corporate bonds.
Although analysts widely expect Telefonica Brasil (VIV) to grow its bottom line by a respectable but more-subdued 6.6% annually, its current yield of 5% still handily exceeds the return on typical U.S. investment-grade corporate bonds.
The outflow of money from the bond markets to income-oriented stocks is a trend we can expect to gain momentum for many months to come. These are the kinds of trends my Global Trend Trader subscribers are used to playing for profits.
But frustrated bond investors are only the tip of the iceberg when it comes to fresh opportunities to grab rising stocks and, in many cases, rising dividends. To learn more about my service and some other trends I’m watching right now, click here.