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Forbes: 5 'Recession-Proof' Dividend Stocks

Forbes: 5 'Recession-Proof' Dividend Stocks

(Dollar Photo Club)

By    |   Thursday, 04 August 2016 07:57 AM

If the uncertain and volatile economic and investing climate has you worried, Forbes’ Brett Owens is offering a sedative to help you sleep easier at night. He has selected five “recession proof” dividend stocks.

“There are plenty of things to worry about in today’s financial world. Income inequality is high, restaurant sales are plummeting, and few people seem confident in America’s increasingly contentious political quagmire," he explained for Forbes.com.

Then of course there’s the slowdown in China, growing political unrest around the world, exploding student loan debt in America and rising subprime defaults in the auto loan sector. This was all reflected in Friday’s disappointing GDP results for the second quarter,” he continued.

“Could we be sliding into a recession? If we are, it’s time to protect your portfolio. Fortunately there is a class of assets that is both recession proof and high yielding. You can buy these stocks today, collect 5% dividends and insulate yourself from a downturn,” he said.

This portfolio of five REITs will pay you an average yield above 5%:

  • Name, Symbol, Dividend Yield
  • Ventas (VTR) 3.9%
  • Public Storage (PSA) 3.o%
  • Camden Property Trust (CPT) 3.5%
  • CorEnergy (CORR) 10.3%
  • InfraREIT (HIFR) 5.7%

He also offered some common sense explanations with his picks.

“Whenever there is a major market downturn, cash is king. Liquidity becomes crucial, and dividends become more important than ever,” he said. “But you can’t just sit in cash for years on end – otherwise your portfolio will get chipped away by inflation and you’ll never generate any income from your capital,” he said.

“As long as a company is able to consistently grow its payout through booms and busts, its stock price will follow. So it’s no surprise that the best types of companies to invest in through all economic cycles are dividend growth stocks,” he said.

“That’s the beauty of this approach – you can secure high income streams for tomorrow at a discount today.”

However, while dividend yields appear to bolster the case for buying stocks now, but other metrics tell a different story, The Wall Street Journal has warned.

“Investors who expect bond yields to stay low and dividends to stay (relatively) high are buying stocks not because they are a bargain, but because they look better than bonds. The dividend bolsters the case that there is no alternative to shares,” WSJ.com’s James Mackintosh explains.

Low bond yields are sending mixed messages to investors.”First, that the outlook for the world economy is grim, meaning they should expect lower returns on all assets in the future. Second, that government bonds are unappealing, so they should invest in riskier assets instead,” he explains.

"The low returns on the longest-dated bonds are extraordinary: 0.3% on Japan’s 40-year government bond, 0.9% on Germany’s 30-year bund, 2.1% on Britain’s 50-year gilt and 2.6% on the 30-year U.S. Treasury bond," WSJ.com reported.

“If these provide an accurate outlook for growth and inflation, we won’t be having much of either for the next couple of generations. Dividends look more and more attractive,” he said.

(Newsmax wire services contributed to this report).

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If the uncertain and volatile economic and investing climate has you worried, Forbes' Brett Owens is offering a sedative to help you sleep easier at night. He has selected five "recession proof" dividend stocks.
recession, dividend, stocks, forbes
Thursday, 04 August 2016 07:57 AM
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