It’s been a bloodbath on Wall Street this year. The S&P 500 and Dow Jones Industrial Average corrected, and the NASDAQ Composite officially entered a bear market earlier this morning. The reality is there’s a significant amount of uncertainty hanging over Wall Street. And if it’s one thing we know for certain, it’s that Wall Street does not like uncertainty.
Overseas, we have the Russia-Ukraine crisis. Russia appears to have drawn a line in the sand and is refusing to back down from the war.
In response to Russia’s war on Ukraine, the U.S., as well as Australia, Canada, Japan and the U.K., has imposed sanctions on Russia. In fact, just today, President Biden announced that the U.S. is placing a ban on Russian oil and imports. Crude oil prices surged in response, jumping above $128 per barrel.
The fact of the matter is higher crude oil prices are bad for the U.S. economy, as it will result in higher gas prices (which are also standing at levels not seen since 2008) and further stoke the flames of inflation. So, if you thought inflation was bad before, just wait. Thursday’s Consumer Price Index (CPI) report for February will likely be even worse.
As a result, more and more people are turning to dividend-paying stocks as good hedges against inflation.
Case in point: The Kroger Co. (NYSE:KR), Lockheed Martin Corporation (NYSE:LMT) and Marathon Oil Corporation (NYSE:MRO) soared to new 52-week highs on Monday. The S&P 500, Dow and NASDAQ, on the other hand, fell 3%, 2.4% and 5.2%, respectively, yesterday.
The strength isn’t surprising, given these companies’ superior fundamentals. They all crushed analysts’ expectations on the top and bottom lines for their most recent quarters and climbed higher in the wake of their strong results – KR rallied 11.6%, LMT jumped 3.7% and MRO popped 2.6%.
They have also significantly outperformed the S&P 500, Dow and NASDAQ. Year-to-date, KR, LMT and MRO are up 27%, 29% and 43%, respectively, while the S&P 500, Dow and NASDAQ are down 11%, 9% and 17%, respectively.
I should add they’re highly rated in Portfolio Grader. Every company earns an A-rating, which means they’re solid growth stocks, too. In Dividend Grader, KR, LMT and MRO hold an overall A-rating, B-rating and C-rating, respectively.
Not All Dividend Stocks Are Created Equal
Now, before you jump into any dividend-paying stock, I should warn you that not all dividend stocks are created equal. But before I explain why, let’s take a step back and talk about what exactly a dividend is.
A dividend is a distribution from a company’s earnings paid directly to a class of its shareholders. It is up to the company as to when (or even if) it is paid. The dividends tend to be paid out on a quarterly basis, but some companies will pay a semi-annual or annual dividend. Company management will always announce when it will be paid – including your deadline to buy the stock in order to receive this payout – and what the dividend will be per share.
Now, the dividend yield varies depending on the company’s actual dividend and where the stock price is at the time. In some cases, you may be looking at a double-digit dividend yield. But as attractive as a double-digit dividend yield may sound, I recommend you pump the brakes before investing. Chasing dividend yields alone can be downright dangerous.
Stocks are not like Treasury bonds or a savings account: There’s no guarantee that you will get your money back. There’s also no guarantee that company will continue paying a dividend. If you choose poorly, you could lose your capital as the stock price falls. Or, that nice juicy dividend could be slashed.
In most cases, dividend yields are tantalizingly high for a reason (the stocks are cheap and rightly so) – and are simply not supported by the fundamental earnings power of the business.
This is why my Dividend Grader is so important. Just like my Portfolio Grader, it uses my proprietary formula to put each stock through a rigorous test, crunching reams of data against a set of criteria I’ve created.
Now, I don’t want to scare you away from dividends – far from it. I just want you to be aware of the potential risks. Investing in dividend stocks can also be very lucrative. As you can see with KR, LMT and MRO, if you get it right, you can make a fortune. Fundamentally strong dividend stocks pack a one-two punch of share price appreciation and a steady stream of income… with payouts that can be twice or five times what you get from a Treasury bond or a bank.
My Growth Investor service features the crème de la crème of dividend growth stocks. A stock only makes it to my Elite Dividend Payers Buy List if it receives an AA-rating, which means it must have an A-rating in both Dividend Grader and Portfolio Grader. In fact, I recently recommended a brand-new coveted AAA-rated stock in my latest Growth Investor Monthly Issue. The AAA-rating indicates an A-rating in Dividend Grader, an A-rating in Portfolio Grader and an A-rating for its Quantitative Grade. In other words, it offers the perfect blend of income, growth and persistent institutional buying pressure.
It has a solid dividend yield, great long-term potential and is still trading below my recommended buy limit. You won’t want to miss out on this exciting opportunity, so make sure to sign up here so I can reveal its name to you.
Once you do, you’ll have full access to my Elite Dividend Payers Buy List – chock-full of fundamentally superior dividend-paying companies – and my High-Growth Stocks Buy List, which continues to steadily appreciate it.
For full details on how to become a new member and receive my latest recommendations, please click here.
P.S. There is a great divide opening up in America – and investing in my Growth Investor stocks will help get you on the right side of it. On one side is a new aristocracy that’s amassing more wealth more quickly than any other group in American history. For people like me, the one percent, life has never been better, more prosperous.
On the other side, the opposite is happening. Wealth is flowing out of the pockets of ordinary Americans at an unprecedented rate.
What’s happening is only going to gather in strength over the coming decades. It certainly won’t weaken.
Few Americans even know that any of this is going on. I’ve never seen anyone from my side of the chasm step forward to explain any of these things.
It’s why I put together this video. In it, I’ll lay out exactly what is happening, including several key steps every American should take right now.
It doesn’t matter if you have $500 in savings or $5 million. You can benefit from the information in this video.
It’s free to watch, and by doing so, I know you’ll be ahead of everyone else struggling to understand what is really going on.
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below: