Can a quarter of a percent rate cut, or any amount of rate cuts for that matter, address or even alleviate the market's concerns? asks Kelley Wright, dividend expert and editor of Investment Quality Trends.
For now, we will wait until the next Fed meeting. Will they? Won’t they? At least the financial media will have something to focus on, unless of course something blows up around the globe.
More from Kelley Wright: Top Picks 2019: International Business Machines (IBM)
No, seriously, given the state of geopolitical conditions something could literally blow up. So, what has changed today for the enlightened investor? In truth, nothing.
For the dividend-centric value investor all the above should be nothing more than a side show. What is important is to not let the side show become a distraction. Our job is to focus on the one thing we can control, which is to identify quality and good value.
I know, it isn’t exciting, but you know what? There are so many other areas of life to find excitement and entertainment. Investing is a job. A job is where you make money. You make money in the stock market by realizing a return on investment. Return on investment comes in two forms: capital appreciation and dividends.
Of the two the only one with a degree of certainty is the cash dividend, which is a company policy and announced on a quarterly basis. Capital appreciation is the result of good analysis.
When you identify a high-quality company that offers good value, meaning a repetitive area of high dividend yield, and the company has a long-term history of dividend increases, the probabilities are that capital appreciation will follow.
When added to the dividends and dividend increases collected along the way the result is real total return, which is the only logical reason to invest in common stocks.
At this point all I can add is to enjoy the show but don’t get caught up in it. It takes discipline and patience to be a value investor, and if you aren’t careful it is easy to get sucked in by the emotions of the herd.
The track record of the herd over the long-term isn’t conducive to building long-term wealth and income, which should be your only objective.
Meanwhile, whether you are looking to build a portfolio from scratch, are partially invested and looking to add new positions, or are fully invested and merely in need of some affirmation and hand holding, The Timely Ten represents our top ten recommendations.
Our current Timely Ten are:
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Cummins (CMI) — yielding 3.17%
Eaton Vance (EV) — yielding 3.11%
Harley Davidson (HOG)— yielding 4.26%
Omnicom Group (OMC)— yielding 3.21%
International Business Machines (IBM)— yielding 4.33%
Eastman Chemical (EMN)— yielding 3.23%
General Mills (GIS)— yielding 3.65%
KeyCorp (KEY)— yielding 3.99%
Wells Fargo & Company (WFC)— yielding 4.20%
Cracker Barrel OCS (CBRL)— yielding 2.97%
Traditionally the criterion for these investment considerations are an S&P Dividends and Earnings Quality Ranking of A- or better; outstanding long-term annual dividend growth of 10% over the last twelve years; a price/earnings ratio of 15 or less; a payout ratio and a debt level of 50% or less.
Historically, investors that have relied solely on these criterions in their stock selection process have been handsomely rewarded over time.
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