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When High Dividend Stocks Melt Down

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Title: When High Dividend Stocks Melt Down


1
Dividend Stocks Research
When High Dividend Stocks Melt Down
2
Welcome to Dividend Stocks Research Your premier
site for Rankings and Reviews of the best
dividends stocks around. For more info on
dividend stocks please visit our website
DividendStocksResearch.com
3
  • Get Your Free Report On What You MUST Do to Never
    Run Out of MONEY in Retirement!
  • Well tell you about this
  • Special Offer
  • at the end of the video!

4
  • Hi, My name is Aaron and Im with Dividend Stocks
    Research, today were reviewing our recently
    published article

5
  • When High Dividend Stocks Melt Down

6
  • Years ago a friend of mine leased a gray Lincoln
    Town Car. That was back when a Lincoln was the
    size of a small studio apartment. A few months
    into the deal, he stopped making payments and I
    couldnt figure out why.

7
  • He had a good job. Money didnt seem to be an
    issue. He was smart and perfectly aware of the
    inevitable consequences. Before long, curiosity
    got the better of me and I asked him why.

8
  • I want to see how long I can get away with it,
    he said. He loved dodging repo men,
    outmaneuvering menacing tow trucks, and
    sidestepping phone calls. He managed to get away
    with it for quite awhile, maybe 7 or 8 months.

9
  • But eventually the caper was up. Thanks to the
    diligence of Ford Motor Credits henchmen, the
    big gray Lincoln Town Car vanished in the night.
    The same thing happens when you chase a high
    yield dividend stock.

10
  • All youre doing is delaying the inevitable. High
    dividend stocks have an annoying habit of turning
    into low dividend stocks, and vanishing like my
    friends Lincoln Town Car.

11
  • How To Avoid The Meltdown Of High Dividend Stocks

12
  • When you chase after high yield, and high yield
    is your 1 consideration, youve set yourself for
    a rendezvous with heartbreak. My associate
    Michael Jennings says high yield stocks are home
    wreckers.

13
  • I couldnt agree more. Whats the alternative to
    chasing high yield? Do you really have to settle
    for a yield thats low? Not when you focus on
    finding dividend stocks where theres dividend
    growth.

14
  • And dividend growth happens when earnings per
    share are growing.

15
  • The Road Ahead For Dividend Stocks

16
  • We should always take market forecasts with a
    grain of salt. But it sure was interesting a few
    months ago when Goldman Sachs released a forecast
    that predicted over the next decade, 46 of

17
  • the markets overall returns will come from
    dividends. Thats not exactly a huge historic
    shift. Since 1926, dividends have delivered 40
    of the stock market's annualized total return.

18
  • But the report from Goldman Sachs is a great
    reminder of the impact of dividends and the
    importance of dividend growth.

19
  • The Best Dividend Stocks To Own

20
  • The way to find the best dividend stocks to own
    is to focus on growth. Go beyond thinking in
    terms of pure growth stocks, where the share
    price soars, but where the dividend itself grows.

21
  • You can measure this by looking at the dividends
    paid year-to-year. See how they grow. Find
    solid track records that are likely to continue.
    Whats a good growth rate?

22
  • For stocks on the SP 500, the current dividend
    growth rate is 11.67. Thats high... more than
    twice as high as the long-term average.

23
  • This double-digit growth is a pretty good
    indication that we could soon see a slowdown.
    This kind of growth is hard to sustain over the
    long haul.

24
  • The dividend stocks that can weather this storm
    and continue to grow are stocks where revenues
    will grow. Were looking for companies where
    there will be higher earnings per share, not just
    growth in income.

25
  • What kind of companies?
  • The ones that gut it out in good times and bad.
    You can find many of them on the lineup of the
    SP 500 Dividend Aristocrats.

26
  • And the high yield stocks to avoid? Here are 3
    stocks ready for the dividend repo man to come
    around. Dont count on the yield you see today
    being there for you a year from now.

27
  • Navios Maritime Partners LP NMM pays a yield of
    20.87. The stock has taken a brutal hit over
    the past year because of problems in China.
    Navios is in the business of shipping, its used
    to

28
  • shipping a lot of Chinese steel, and theres
    simply not much steel to ship these days. So the
    revenue problem with Navios probably wont be
    fixed anytime soon.

29
  • Even though the dividend has been growing for 7
    years, the dividend payout ratio is downright
    scary... 295. (One thing youve got to love
    about Navios is its address. The firm is
    headquartered in Monaco.)

30
  • Orchid Island Capital Inc. ORC pays a yield of
    18.50. It also pays its dividends monthly. But
    the dividend payout ratio is dangerously high,
    152.

31
  • Orchid Island invests in residential
    mortgage-backed securities, mostly single-family
    residential mortgage loans. The yield is high
    because the stock price has been beaten down.

32
  • And the stock has been beaten down for a good
    reason... the company is losing money at an
    accelerating and alarming rate. Losses in 2014
    were almost 10 times what they were in 2012.

33
  • At this rate, how safe is the dividend? How long
    until its cut, and how severe will the cut be?
    Things dont look good. The Carlyle Group L.P.
    CGpays a yield of 17.49

34
  • The private equity firm calls itself a global
    alternative asset manager. Carlyle has been a
    publicly traded company since 2012. The Bin Laden
    family invested 2 million into a Carlyle fund in
    1995.

35
  • Weeks after the attack on New York Citys World
    Trade Center, the Bin Ladens and Carlyle went
    their separate ways. It runs more than 100 funds,
    many for public pensions, and controls close to
    200 billion in assets.

36
  • But things at the Carlyle Group arent going
    well. The stock has lost almost a third of its
    value in the past year. Income is trending down.

37
  • And the warning signals for dividend investors
    couldnt be louder... the dividend payout ratio
    is a dangerous 143. Thats a clear indication
    the Carlyle Group is living beyond its means when
    it comes to paying dividends.

38
  • Things just cant keep going this way. Its only
    a matter of time until the dividend is cut and
    the high yield goes away.

39
(No Transcript)
40
  • How To Be Prepared For High Dividend Stocks To
    Tank

41
  • These 3 stocks are poster children for high
    dividend stocks about to get in trouble. The
    risks are extreme. The warning signals are
    clear. And the future, for one reason or
    another, is grim.

42
  • Thats usually the case when you take a closer
    look at high yield dividend stocks. Theres
    usually at least one good reason why the yield is
    high, and at least one reason why smart dividend
    investors stay away.

43
  • Just like the repo man eventually took off with
    my friends Lincoln, somebodys going to take
    your high yield dividend off the table. The good
    news...
  • You can usually see it coming.

44
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45
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46
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