5-8% Yields: The More They Drop, The More I Buy

seekingalpha02-06

Growing concerns about the Federal Reserve keeping interest rates higher for longer have caused a sell-off in high yield stocks.However, we see an excellent opportunity emerging to buy high quality, ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2409406420?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1289941019/image_1289941019.jpg","is_english":true,"pubTime":"2024-02-06 21:15","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2409406420","market":"us","top_or_hot":-1,"title":"5-8% Yields: The More They Drop, The More I Buy","media":"seekingalpha","content":"<div>\n<p>Growing concerns about the Federal Reserve keeping interest rates higher for longer have caused a sell-off in high yield stocks.However, we see an excellent opportunity emerging to buy high quality, ...</p>\n\n<a href=\"https://seekingalpha.com/article/4667747-5-8-percent-yields-the-more-they-drop-the-more-i-buy\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>5-8% Yields: The More They Drop, The More I Buy</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n5-8% Yields: The More They Drop, The More I Buy\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-02-06 21:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4667747-5-8-percent-yields-the-more-they-drop-the-more-i-buy><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Growing concerns about the Federal Reserve keeping interest rates higher for longer have caused a sell-off in high yield stocks.However, we see an excellent opportunity emerging to buy high quality, ...</p>\n\n<a href=\"https://seekingalpha.com/article/4667747-5-8-percent-yields-the-more-they-drop-the-more-i-buy\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"KRE","symbol_name":"区域银行指数ETF-SPDR KBW","start_time":0,"source_url":"https://seekingalpha.com/article/4667747-5-8-percent-yields-the-more-they-drop-the-more-i-buy","article_id":"2409406420","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1289941019/image_1289941019.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2409406420","pubTimestamp":1707225300,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Growing concerns about the Federal Reserve keeping interest rates higher for longer have caused a sell-off in high yield stocks.However, we see an excellent opportunity emerging to buy high quality, h","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"KRE":"区域银行指数ETF-SPDR KBW","XLU":"公共事业指数ETF-SPDR","SLV":"白银ETF(iShares)","AMLP":"Alerian MLP ETF","GLD":"SPDR黄金ETF","AEM":"伊格尔矿业","NYCB":"纽约社区银行","BIP":"布鲁克菲尔德公共建设","GDX":"黄金矿业ETF-VanEck","LU1223083913.SGD":"Schroder ISF Global Gold A Acc SGD-H","LU1223082196.USD":"施罗德环球黄金A Acc","BEP":"Brookfield Renewable Partners LP","LU1169590202.USD":"ALLSPRING (LUX)  U.S. SELECT EQUITY \"I\" (USD) ACC","EPD":"Enterprise Products Partners L.P","LU1169589451.USD":"ALLSPRING (LUX)  U.S. SELECT EQUITY \"A\" (USD) ACC","LU0496367417.USD":"富兰克林黄金和贵金属A（acc）","IE00BMG7P819.SGD":"Legg Mason ClearBridge - Global Infrastructure Income A Mdis SGD-H Plus","VNQ":"不动产信托指数ETF-Vanguard","WPC":"W. P. Carey Inc","NEM":"纽曼矿业","SGOV":"iShares 0-3 Month Treasury Bond ETF","BIPC":"Brookfield Infrastructure Corp","LU0266512127.USD":"摩根大通环球自然资源 A(acc)","NEP":"Nextera Energy Partners","GOLD":"巴里克黄金"},"translate_title":"5-8%的收益率：下跌越多，我买得越多","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AMLP":1,"XLU":1,"WPC":1,"VNQ":1,"SLV":1,"SGOV":1,"NYCB":1,"NEP":1,"NEM":1,"KRE":1,"AEM":1,"BEP":1,"BIP":1,"GOLD":1,"GLD":1,"GDX":1,"EPD":1,"BIPC":1,"US12M.BOND":0.9,"US7Y.BOND":0.9,"US6M.BOND":0.9,"US5Y.BOND":0.9,"US3Y.BOND":0.9,"US30Y.BOND":0.9,"US2Y.BOND":0.9,"US10Y.BOND":0.9,"US912796CX52.BOND":0.6,"US912797HE00.BOND":0.6,"US912797HG57.BOND":0.6,"US912797HH31.BOND":0.6,"US912797GX99.BOND":0.6,"US912797GW17.BOND":0.6,"US912797GQ49.BOND":0.6,"US912797GP65.BOND":0.6,"US912797GN18.BOND":0.6,"US912797GM35.BOND":0.6,"US912797GL51.BOND":0.6,"US912797GK78.BOND":0.6,"US912797GE19.BOND":0.6,"US912797GB79.BOND":0.6,"US912797FS14.BOND":0.6,"US912797FH58.BOND":0.6,"US912796Z285.BOND":0.6},"content_text":"Growing concerns about the Federal Reserve keeping interest rates higher for longer have caused a sell-off in high yield stocks.However, we see an excellent opportunity emerging to buy high quality, high yield stocks on sale.We share some of our top picks of the moment.   z1bThe high yield space has been crashing lately on growing concerns that the Federal Reserve will keep interest rates higher for longer. While we do not necessarily expect the Federal Reserve to begin cutting rates in March - as the market previously hoped it would - we do think that the Fed will begin to cut rates meaningfully this year well ahead of the election this Fall and continue to cut in 2025. As a result, we think that the current sell-off in quality high yield stocks is overblown, providing investors with a great opportunity to load up on shares right now. Explaining the Sell-Off In High Yield Stocks Yesterday a 60 Minutes interview with Jerome Powell was released in which he stated: The labor market is strong -- 3.7% unemployment --- with the economy strong like that, we feel like we can approach the question of when to begin to reduce interest rates carefully. This sent the interest-rate sensitive corners of the market into a frenzy today, with REITs (VNQ), Utilities (XLU), midstream (AMLP) regional banks (KRE), precious metals (SLV)(GLD)(GDX), and renewable infrastructure stocks like NextEra Energy Partners (NEP) and Brookfield Renewable (BEP) all dropping sharply. This is because Powell's sentiments confirm a fear that has been rising over the past month: that the U.S. economy is remaining surprisingly resilient in the face of the rapid rise in interest rates and other headwinds that have been thrown at it over the past two years. As a result, the Federal Reserve can afford to continue to keep interest rates at an elevated level for a longer period of time to ensure that inflation is brought firmly within its target range of 2% before proceeding with interest rate cuts. This hurts capital intensive, bond-substitutes like REITs, utilities, and renewable infrastructure because it raises their cost of capital and makes their yields look less attractive in comparison to short-term risk-free treasury interest rates (SGOV). Moreover, the reduced expectation of a recession means that their defensively-positioned business models are less appealing to investors compared to businesses whose profits are highly leveraged to economic growth. Moreover, precious metals and their miners are hurt by this outlook because gold and silver - as safe havens and stores of wealth - tend to benefit from lower interest rates since the opportunity cost of holding metals instead of treasuries is lower when returns on treasuries drop. Finally, regional banks (which are falling in part due to New York Community Bancorp's (NYCB) surprise dividend cut and massive writedowns last week) are also facing headwinds from the higher for longer outlook as commercial real estate (which regional banks generally have substantial exposure to) is suffering from higher interest expense on maturing and/or floating rate debt while valuations in the sector are also declining quite sharply. That being said, where others see headwinds and challenges, we see opportunity. As contrarian investors, we love to zig when the market is zagging. We bought the dip heavily last October when the market was panic-selling these same securities and then profited heavily during the Santa Claus rally that led into Christmas. For example, we bought Brookfield Infrastructure (BIP)(BIPC) on October 26th in the wake of market jitters about rising interest rates and unwarranted short attacks on the stock. Then, in just a little over two months, we made a ~50% total return and locked in those gains: Data by YChartsWe think the market is likely to have a similarly strong rally in the coming months for the following reasons: By Powell's own admission: \"Inflation has come down sharply in the past six months.\" As we can see in the Fed's preferred inflation metric (Core PCE), the year-over-year metric has steadily dropped over the past six months to where it is now under 3% and closing rapidly in on the Fed's target 2% level. Meanwhile, on an annualized basis, the past six months has Core PCE at a sub 2% level, indicating that the Fed may actually have already achieved its objective and could feel the freedom to cut rates in the near future if the current disinflationary trend continues for a few more months, even if the economy remains on sound footing. Data by YCharts It is a U.S. Presidential election year. Without delving into politics too much here, suffice it to say that in such a strongly dividend political environment with so much at stake, it is hard to imagine that not exerting at least a little bit of pressure on the Fed this year as they make decisions. Leading recession indicators are flashing red, with the Yield Curve Model indicating that there is a very high risk of a recession hitting the U.S. economy soon and the State Coincidence Index Model indicating that there is a high risk of a recession. China - which has an undeniably large impact on the state of the global economy, including the U.S. - is facing enormous economic challenges right now, which could very possibly weigh on U.S. economic growth as well. A recession would make defensive stocks more attractive on a relative basis and would likely force the Fed to slash rates aggressively. Simmering geopolitical tensions and concerns about the macroeconomic situation are also setting up a bullish environment for gold and silver and could also make defensive plays like utilities and certain defensive REITs and infrastructure businesses attractive as well.  5-8% Yields To Buy On The Dip As a result of our view that the outlook for yield investments is attractive right now following the recent sell-off, here are some 5-10% yields to buy on the dip:  Newmont Corporation (NEM) has seen its dividend yield reach nearly 5% on the latest sell-off, despite having a stellar balance sheet and a high quality portfolio of gold and copper mines that make it larger than the next two gold miners - Barrick Gold (GOLD) and Agnico Eagle Mines (AEM) - combined. This stock is cheap and provides attractive leverage to a potential rise in gold prices in the near future. W. P. Carey (WPC) is a highly defensive triple net lease REIT that recently shed its office assets and cut its dividend in the process. However, the remaining company now has a very high quality real estate portfolio that mostly consists of industrial and warehouse real estate with lengthy lease terms, a BBB+ credit rating, and a still attractive 5.6% dividend yield with the potential to grow it at a faster pace moving forward. The latest pullback in the stock price makes it an opportune time to buy one of the lowest risk real estate stocks in the market today. Last, but not least, Enterprise Products Partners (EPD) - the bluest of the blue chips in the midstream sector - is now yielding around 8% after pulling back in response to concerns about interest rates being higher for longer. With its continued emphasis on heavy capital expenditures in an environment where many of its peers are slashing CapEx in favor of accelerated buybacks and distribution growth, EPD's unit price has lagged behind. Nevertheless, its distribution remains as safe as ever and continues to grow at a mid-single digits CAGR while the balance sheet is in exceptional shape and the long-term growth potential remains solid. Now is a great time to load up on this one in response to the latest pullback.  Investor Takeaway  It is when the market gets the most emotional that investors who remain calm and collected make their most money. We believe that now is one of those times and are grabbing discounted quality high yield stocks on the dip with both hands.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2409406420"}