You are receiving this email because you signed up to receive our free e-letter the Wealth Whisperer The 'Safe' Stocks Emptying Your Retirement Account 10/05/2023 Have you noticed your retirement account bleeding money lately? Sure, the market is down⦠but something seems off. It feels like youâre losing money faster than the market is dropping. Guess what? Youâre not just imagining things. Many Americans invested in typically âsafeâ plays are seeing their accounts do FAR WORSE than the stock market. No matter what they try, the problem just keeps getting worse. But they canât sit by and do nothing. We analyzed this problem front to back. It turns out the culprits behind your portfolio collapse are those safe âpayerâ stocks and bonds youâve been told to hold. But thereâs one sector thatâs performed far worse than any other. And if you donât purge it from your portfolio soon, you may never recover. Weâll tell you which one is holding you back, why you need to kick it to the curb and what you can replace it with to keep those regular dividend payouts coming. SPONSORED CONTENT [The Perfect Portfolio: No Losses, 14X Gains]( I want to share with you something very important⦠and very simple. Iâm talking about a 3-stock strategy thatâs been immune to market losses over the past two decades⦠while outperforming the S&P 500 by 1,461% during that same time. Thatâs no losing years plus 14X gains. I call it the âPerfect Portfolio.â [Click here now for all the details.]( [Click Here to Read More...]( The Unseen Pitfalls of the ____Sector The stock market can be a fickle beast. And this year, it's biting back hard, particularly in the utilities sector, which faces three interrelated problems. Known as âsafetyâ stocks, these companies were once the shining stars in the investment universe due to their high dividend payments. But now? Not so much. Why is that? Donât people need to use electricity no matter what? Yes and no. There is a base level of demand that never goes away. However, the excess tied to industry waxes and wanes with the economy. And we all know the Fed wants to drive us into a recession. So, investors are betting this will take a bite out of utility revenues. But thatâs one problem facing the utility sector. The second deals directly with U.S. Treasuries. Treasuries are fixed-income instruments that pay regular interest until maturity (unless you get zero-interest bonds). Since the U.S. government backs this debt, itâs considered risk-free, or as close to risk-free as you can get. Lately, U.S. Treasury bonds have been losing value⦠a lot of value. While theyâre still paying that cash, the principals have fallen faster than Bud Lightâs sales. Just look at the TLT ETF, which invests in 20+ year maturing debt. Source: TradingView
Itâs down more than 50% from its highs in 2020⦠and is probably heading lower. Utility dividend yields price themselves relative to U.S. Treasuries. If a 10-year Treasury pays 5%, a utility would likely pay 5% + 3% for company risk = 8%. Thatâs why when Treasuries fall, utilities arenât usually far behind. The third problem is a bit more subtle but far more damaging. Utility companies fund their operations and dividends with heavy amounts of debt. The cost to service that debt goes up when the price of Treasuries falls. That means on top of everything else, these utility companies earn less because their interest payments go up. This is why weâve seen the XLU ETF drop almost nonstop for the past year. Source: TradingView
We think thereâs further to fall, given that XLU pays a dividend yield of 3.77% and Treasuries pay 5% or more. If a recession is around the bend, then the smart move is to kick these stocks from your portfolio before they kick you. [The most important online financial education event of 2023]( You are personally invited to join DayTradeSPY for the most important online financial education event of the fall. Of course, itâs the Wealth365 Summit, which begins October 9th, runs through October 14th. Youâll hear from over 60 world-class traders and investors, including us! Weâll share ideas, insights, tools, and technology that aim to be up-to-date and instantly actionable for protecting your retirement and building your wealth, regardless of overall market conditions. [Click Here Now To Reserve Your Complimentary Seat.]( [Click Here to Read More...]( Do This Instead Two high-paying dividend stocks we like are Altria Group (MO) and Verizon (VZ), which are paying a 9.5% and 8.4% dividend, respectively. Generally speaking, high yields signal potential problems. But we looked into the financials for each company. Both admittedly donât have sales growth. Altria made a bad investment in July, and Verizon has seen sales flatline. In Altriaâs case, it may never see sales recover unless it finds its way into cannabis, should it become legal nationwide. Verizon, on the other hand, grows with the economy. Both companies generate enormous amounts of cash from their respective businesses. In Verizonâs case, thatâs $37.5 billion a year, with capital expenditures of $23 billion per year. That leaves more than enough capital to cover the $10 billion dividend payouts and even pay down its debt, most of which doesnât come due until 2064 (and it pays 3.5% on it in total). Altria generates $8.8 billion in cash from operations, with hardly any capital expenditures. This means it can easily pay down debt, cover its $6.7 billion annual dividend and even have some leftover to buy back more than $1 billion in stock every year. Would we keep these as the only two stocks in a portfolio? Definitely not. Can they replace utility stocks you own? Absolutely. [The Convergence of A.I. and A Recession?]( Why wait for the future, when forecasting trends with up to 87.4% proven accuracy is at your fingertips right now? [See the A.I. in Action [Free] Right Here >>]( [Click Here to Read More...]( How to Protect Yourself We canât rely on the âtypicalâ strategies and ideas we learned in Econ 101. The markets have changed. We spent 15 years with interest rates close to zero. Now, itâs time to get used to a normalized rate environment, which will feelâ¦abnormal. Some of you might not know what that looks like or how to navigate these new market dynamics. This article has shown you how a little bit of homework and common sense can yield better results than your 401(k) fund. But maybe you want to take things a step further. Maybe youâre interested in ensuring your retirement can withstand the new economy. For that, thereâs no one better than Bob Carlson. As the editor of [Retirement Watch]( Bobâs helped folks build and protect their retirement accounts, adapting to markets as they change. Bobâs been trusted by thousands of investors, including the Fairfax County Employees Retirement System and the Virginia Retirement System Board of Trustees, where he helped safeguard the pensions for countless individuals. All this is to say that when Bob speaks, we listen. And itâs his latest insights about the current market that really piqued our interest. These profound ideas could very well reshape the way you look at retirement. But donât take our word for it. [Click Here to See for Yourself!]( To Your Wealth,
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