Here are Barron’s top ideas for income investors in 2017
Barron’s ranks the best and worst places for income-focused investors in a rising-rate world. In order of appeal:
Depressed European stocks: “Valuations have gotten more reasonable and dividend yields are ample, especially relative to ultralow or even negative yields on European government bonds.”
U.S. electric utilities: “Their average yield of 3.6% is almost double that of the S&P 500. Utility dividends usually are secure, given regulated returns.”
U.S. dividend stocks: “Even after rallying in 2016, high dividend-paying stocks still look appealing.”
Junk bonds: “Junk yields still look good at an average of 6.3%. The interest-rate gap relative to Treasuries is still appealing at nearly 4.5%, but absolute yields are modest by historical standards.”
Munis: looking better after a disappointing 2016.
REITs: “REITs now are on the inexpensive side of a fair-value range.”
Preferreds: “REITs now are on the inexpensive side of a fair-value range.”
Treasurys: “If Trump’s fiscal and economic policies prove inflationary, Treasuries are apt to suffer.”
Telecom: There may be better value in other high-yielding parts of the market.
MLPs. Expects muted distribution growth.
Stocks and ETFs mentioned: FDD, VGK, VOD, RDS.A, UTG, DUK, SRE, XLU, NOBL, VYM, KO, BUD, PFE, OSTIX, HYT, VTA, JNK, NAD, BTT, VWIUX,PHMIX, SPG, BXP, EQR, VNQ, BAC, PFF, JPI, TIP, TLT, T, VZ, EPD, AMLP, BWP
See also Barron’s infographic: Yield plays for 2017