Investable ideas... [TradeSmith Daily]( Whether Youâre Bullish or Bearish, Hereâs How to Ramp Up Income
With so much conflicting data and noise out there about whatâs next for the stock market, it can feel like a coin flip whether things will get more bullish or bearish from here. The bears will point to debt-ceiling gridlock, slowing corporate earnings, zooming consumer debt, an ugly banking sector, job cuts, and the odds of a Federal Reserve-induced recession… and will tell you that stocks are in for a thrashing. The bulls will point to falling inflation, a looming pause in Fed rate hikes, still-decent earnings, lots of investor cash on the sidelines, new advances in tech, and a bad-news-in-the-rearview-mirror end to uncertainty… and will tell you that a big stock-market rally is headed our way. But which scenario do you believe? And how should you invest? RECOMMENDED LINK [This color-coded âtrading stoplightâ keeps you in the right lane](
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According to Senior Analyst Mike Burnick, itâs not an either/or, all-or-nothing decision. Itâs a “stock picker's market” — and one where you can keep risk in check and still make money. All it takes is the right mindset, a readiness for whatever the market throws your way. Mike has been investing and managing money for more than 30 years. Heâs been through markets like this one — and markets that are far worse. Heâs been through the “dot-bomb” implosion, the Great Financial Crisis of 2008-09, the housing collapse, the crypto winter, the NFT and SPAC bubbles, and more. And heâs still here to tell the tale — and to use his decades of experience to point the way. And in the face of these buffeting market crosswinds, Mikeâs telling investors to focus on one thing: generating income (on their schedule) via high-quality, dividend-paying stocks. How can you tell which stocks qualify as “high-quality”? Here Mike sounds a lot like “Oracle of Omaha” investing icon Warren Buffett. Donât buy stocks. Buy businesses. Businesses that consumers love across the globe. Businesses that are inflation-resistant and recession-proof. And businesses that are generating money in the here and now and can pass that on to loyal shareholders in the form of income through dividend payouts… The type of dividend payouts that can help offset inflation that is still more than double the Fedâs target rate of 2% and that has eaten into so many retirement accounts over the last year and a half. And from what Mike is seeing now, it could be an opportune time to play a little more “defense.” Because in terms of the top-performing sectors, stocks have taken a decidedly defensive turn of late. Over the last month or so, the top performers are ALL defensive sectors.
As you can see for yourself in the chart above, Consumer Staples, Health Care, and Utilities stocks have been the clear leaders for S&P 500 performance recently. This rotation into defensive stocks may be temporary in nature. But it could also be a sign that investors are turning cautious ahead of a potential market pullback. Either way, this is something you need to watch — and this may be a good time to employ a defense yourself. To help you play a strong defense, Mike ran a screener the other day to find the healthiest and highest-quality stocks in these defensive sectors. Today Iâm sharing what he found. The finalists are a “Whoâs Who” list of some of Americaâs biggest — and best-known — blue chips. Most pay healthy dividends, but I want to focus on one particular stock from Mikeâs list. Defense Wins Championships
After running several screeners to find optimal investing opportunities, Mike boiled down his findings to 12 stocks:
For optimizing your income-generating potential, the company I want to zero in on is Kimberly-Clark Corp. (KMB). From Huggies diapers to Kleenex tissues to Cottonelle toilet paper, thereâs a good chance one of Kimberly-Clarkâs products are currently in your home or on your shopping list. When operating under the mindset of investing in a business instead of just buying a stock, you can start to see the value of investing in a company that makes products people canât go without. Because while budgets are tight and most people are scrutinizing each and every purchase they make… Babies will always need diapers. People will always need tissues to blow their nose. And youâre going to buy toilet paper your entire life. RECOMMENDED LINK [#1 MONEY MAKER FOR THIS INSANE MARKET](
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ð¡ Stat to Know: One in four people around the world use a Kimberly-Clark product every day.ð¡ Just to dive a little more into what our tools say about KMB… â
KMB is considered to be in a healthy, investable state in our Green Zone. â
The stock is considered low risk according to our Volatility Quotient. â
The stock is in an uptrend. â
It has a stellar [Business Quality Score]( of 93 out of 100. In addition, Kimberly-Clark has a history of what it calls âvalue creation prioritiesâ for its shareholders, returning over $22 billion in the form of buybacks and dividend payouts:
And speaking of dividend payouts, KMB pays a dividend of $4.72 as of this writing, which is a yield of 3.35%. Bottom line: Even though inflation is “cooling,” Mike predicted last May that it would remain stubbornly high. Heâs been spot on, which is why heâs been pounding the table for every investor to add more companies that pass along income to their shareholders in the form of dividends. To spread that message, Mike recently recorded an urgent broadcast about “The Profit Cycle,” or what he calls “cash-flow positive” investing. It pays out weekly cash income through Mikeâs trade recommendations, so you are never relying on unrealized paper gains to fund your life. [You can learn more here.]( Enjoy your Wednesday, [Keith Kaplan]Keith Kaplan
CEO, TradeSmith [Download now on the Apple Store](
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