Now that the Friday session has ended, I think I can safely say that this was one of the ugliest weeks in the stock market that we have seen for several years. While the S&P 500 is down about 5% from its recent highs, many smaller cap and energy stocks have dropped by 10% to 20%. To help us all get through the weekend, I am sending out this message with some of my thoughts.
A market like this one does not discriminate between the good and the bad. Sellers sell everything with a certain theme – in this case, energy – without thinking about individual company results. Smart investors hang on to their shares and ride out the drop. Share prices will recover as long as individual company prospects do not change.
The Dividend Hunter portfolio recommendations are driven by stable, high-yield investment choices. The dividend streams are secure for all of the companies in the portfolio. Right now the yields on the entry prices average just over 7%. On the current share prices the yields average 7.8%. To earn this level of yield, you have to stay invested and be ready to ride out the periods when the market turns against your holdings.
For newer subscribers, most of The Dividend Hunter recommendations are at value prices compared to when they were initially added to the newsletter portfolio. Go back and read some of the write-ups and think about getting into some of the stocks you do not yet own.
Ship Finance (SFL), Legacy Reserves (LGCY), and Memorial Production Partners (MEMP) are among the higher yielding recommendations and have dropped the most by percentage of share price. All three now yield about 11%, a rate of return that may end up looking very good in a few months and next year. I plan to add to my positions in one or more of these next week.
So if you are worrying about the values of your high yield investments, stop! (At least if they were recommended here.) The dividends are secure and earnings season will start in a few weeks, allowing me to check and verify on all of The Dividend Hunter stocks.