Despite rising interest rates, income-oriented investors are continuing to find value in ETFs. Elsewhere in income-related news, U.S. investors brace for proposed tax cuts while across the globe the Chinese bond market is pushing for inclusion in the major indices.
Chinese Stocks Got Their Global Stamp of Approval, and Now Bonds May Be Next (CNBC, July 3)
MSCI Emerging Markets Index added 222 mainland Chinese stocks in its annual review in June. Last week China launched a “bond connect” program in an effort to include its bonds in the major indices and increase foreign access to its bond market. There may be some issues to resolve “if the yuan weakens or doesn’t strengthen much against the U.S. dollar, foreign investors may be less inclined to buy Chinese bonds.”
What Trump’s Tax Plan Means for Income Investments? (ETF Trends, June 19)
It remains unclear if a new tax plan will pass and when it would take effect, however, members of the administration outlined the “broad strokes of the proposed plan and called it the ‘biggest tax cut in history’.” The proposed lower personal and corporate taxes by the Trump plan “could be favorable to all taxable income-generating asset classes.”
Will These Ticking ‘Dividend Disasters’ Trash Your Retirement? (Forbes, June 29)
The author outlines a three-step “dividend disaster” test to run on stocks in your portfolio. Check the industry, the earnings and cash-flow trends, and finally check DIVCON (a free five-tier rating system). By following these steps you should be able to get a sense of your stock’s dividend health and avoid surprise cuts.
Dividend ETF Looks to Perk Up as 2017 Moves Along (ETF Trends, July 7)
The SPDR S&P Dividend ETF (NYSEArca:SDY) holds stocks that have a minimum dividend increase streak of 20 years and allocates a larger weight toward those with higher yields. “Dividend-paying stocks typically outperform those that do not pay over the long haul, with less volatility, due to the compounding effect of dividends on the investment’s overall return.”
Investors Are Sticking with Dividend ETFs Despite the Fed’s Moves (Investment News, Jun 22)
Despite Fed rate hikes, “it seems investors are bucking the conventional wisdom that rising rates mean it’s time to get rid of the dividend payers in their portfolios.” Exchange-traded funds (ETFs) offer value to investors especially for smaller investors. “Dividend funds also ‘hold up better’ than the broader market when stocks head south, though they will underperform in bull markets.”
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