By Sammy Pollack:Warren Buffett, one of the most successful investors ever, has said "it's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." In this article, I will discuss three companies which I believe are wonderful companies selling at a fair price. I will also mention three companies which appear to be quality companies selling at cheap valuations that I would avoid.
Companies that pay high-yielding dividends can be good investments, as they provide you with an income stream while still allowing you to take advantage of growth in the stock price. This can be extremely useful if you are able to re-invest the dividends in the stock, as it allows you to dollar cost average your investment and access the power of compounding. Over time, this will allow you to maximize the returns on your investment.
By Tom Lydon:
High-yield bond exchange traded funds have been popular options with income-starved investors in 2011, but the ETFs have been under pressure in recent weeks after a fierce rally from the October low. “Junk” bonds bounced last month on hopes the economy would avoid a recession and as the yield spread between Treasuries and high-yield bonds narrowed.
By Tom Lydon:
High-yield corporate bonds are one of the biggest stories in 2012 for the ETF business.First, investors scratching for yield have been piling into ETFs that invest in non-investment-grade or "junk" bonds.
EUROPEAN companies have issued €38 billion of high-yield bonds so far this year, already approaching 2010’s record issuance of €51 billion. High-yield issuers do not have investment grade ratings, but their bonds pay a high rate of interest to compensate for the risk.
By Douglas Denhartog:I am always on the hunt for attractive, undervalued investment opportunities like the ones I introduced in The 7 Best Electric Utilities Americans Can Own, while continually trying to avoid purchasing overvalued companies like those in 5 Dividend Aristocrats To Avoid Buying Right Now.
Dividend investing is an extraordinarily popular topic now as more retirees pursue income. The Wall Street Journal published an article this weekend titled 'Five Really Dumb Money Moves You've Got to Avoid' and the number one mistake was reaching for yield. With savings rates near zero, investors are pursuing high-yield opportunities without fully understanding the risks.
As we have been highlighting for a few weeks, something is rotten in high-yield credit markets. This week, the mainstream media is starting to catch on as major divergences in performance (high-yield bond spreads are 30-40bps off their cycle tights from just prior to MH17 even as stocks rally to new record highs) and technicals weaken. However, as BofA warns, flows follow returns and this week saw the biggest outflows from high-yield funds in more than a year.