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June 2021, Vol JUNE 2021, VOL. 10, NO. 6 Investing forIncome Strategies to Boost Your Cash Yield Wall Street Has No Off-Season ummer is here with its ers and investors really once unexplained coincidence that abundance of financial did detach themselves from the the worst crashes (before 2020) Sfolklore, starting with real world in July and August. struck in October, including the yarn that you can relax So whenever the hoi polloi 1929 and 1987. Again, that because Wall Street kingpins, got the urge to sell, many rich, appears to be accidental: The other assorted moneybags and S&P 500 is more apt to gain all of Europe take extended than fall (let alone fall apart) vacations, and Congress is in in October. That is a prime blissful recess. Political and Which events shout month for quarterly earnings economic news supposedly for you to be wary? releases, and when the news slows, while business deals is positive—and more often wait until Labor Day—hence What should you mark than not, it is—market indexes, the doggerel “Sell in May funds and individual stocks and go away,” which sounds on your calendar? rally. In one of the most com- urgent but implies that you plete research papers on market can safely join the grandees seasonality, published in 2019, and veg out at the beach. ballast-providing buyers were Leuthold Group’s esteemed Well, stock averages did take absent, and thin trading volume strategist Jim Paulsen conclud- some blows this May, but the magnified the losses. That is no ed that all of this dogma and advice is questionable. From longer true now that we have mythology has been increasing- 1999 to 2018, the S&P 500 exchange-traded funds, 24/7 ly pointless since 1970. Paulsen index closed higher at the trading, virtual offices, smart- coined the rejoinder “Stay in end of May than at the begin- phones, laptops on airplanes May and be okay.” Barry Ban- ning of the month 63% of the and worldwide Wi-Fi. nister, the market commenta- time. Only in September have The second reason is the tor for Stifel, wrote last month one-calendar-month S&P 500 declines outnumbered gains in continued on next page ... this century, and by only 53% Inside This Issue... Unless otherwise noted, all prices and related data are as of May 14, 2021 to 47%. Yes, if you type “market The REIT Dream Team Still Has It 3 Ask Jeff 6 We exult over our Dreamers’ long-term and Buffett’s take on bonds; what’s up with seasonality” or some variation recent performance. Suburban Propane; and “solid citizen” medi- into a web browser, you’ll get cal REITS. The Essential Reading and Data Reference List 4 a bunch of results. Many of Looking for data and commentary? Check out What’s New in Cash 7 these reports are resolute that these free sites worth following. Closed-end-fund mergers; real estate buyers stocks fare much better from on the prowl; massive bank bond issues; Timely Tactic of the Month 4 AT&T’s latest. November to May than from Forget Dogecoin. Consider this pooch for May through October. But the growth and income. Flashback 7 two main reasons for that call Kiplinger’s 25 for Income 5 Model Portfolio: Going for the Max 8 deserve the umpire’s challenge. A tender offer draws our attention, but other- The global hunt for yield will not be short- The first is that influential trad- wise no disasters or scandals. circuited. Copyright 2021 • The Kiplinger Washington Editors, Inc. • 1100 13th Street NW • Washington, DC 20005-4051 • www.kiplingerincome.com 2 Kiplinger’s Investing for Income: Strategies to Boost Your Cash Yield June 2021 ... continued from previous page that “the lesson is not to sell in following, particularly if you The Federal Reserve’s com- May, but to curb your enthusi- own individual securities. ments. It seems as if every asm” until Halloween. investor is standing by with However, dogma and Earnings season and profit fingers on the keyboard when mythology are stubborn adver- announcements. If you own a the Fed’s Open Market Com- saries. And that brings us to stock or units of a partnership, mittee issues a statement, holds the point of this story: Which some of your fellow travelers a press conference or releases events do shout for you to be will get cold feet just before minutes of a past meeting. wary? What announcements the announcement, or they’ll Nobody wants to be caught should you mark on your calen- throw a fit that day or the next napping if the Fed departs from dar? The post-COVID pattern day by cherry-picking one cau- its expected script. For you of 2021 is unusual, and many tious CEO phrase, weak sales and me, though, the right move individual investments now in Brazil or something. Often, on Fed days is to do nothing appear unsustainably expen- there’s a pattern for issuers. much. Expect a downward sive—or at least they did until For example, shares of 3M bounce in the Dow Jones in- the May retreat. We are not and Starbucks are famous for dustrial average around 2 P.M. ready yet to prophesy whether falling before and on the earn- eastern time, when the bank the second half of 2021 will ings date—and then recovering posts its words—whatever they be better than, worse than or vigorously prior to the next write—usually followed by a similar to the first half. That is quarterly go-round. At times, bump-up the next day. our mission in July’s letter. But a sound company discloses in any event, always watch the legitimately negative news, but December and January. Mar- it is generally wiser to add to a kets used to dive in December EDITOR EMERITUS position after a pre- or post- from heavy selling to realize Knight A. Kiplinger announcement price dip than to tax losses, thus creating bar- CHIEF EXECUTIVE OFFICER: Denise Elliott gains for the new year. But the SENIOR VICE PRESIDENT, CONTENT: Sarah Stevens try to game it or finesse it. DENNIS PUBLISHING LTD NORTH AMERICAN spread of tax-deferred ac- CHIEF EXECUTIVE OFFICER: Randy Siegel Dividend decisions. Once it was counts, a durable bull market EDITOR: Jeffrey R. Kosnett COPY EDITOR: Frederic Fane Wolfer a given that if a company cut that makes losses scarce, and ART DIRECTOR: Natalie F. Kress dividends or merely failed to greater foreign ownership of SUBSCRIBER SERVICES U.S. assets mute these effects. TELEPHONE: 800-544-0155 raise them after a long string of E-MAIL: kiplingerinvestingforincome@emailcustomer boosts, the market would rebel. service.com And COVID fostered wide- What about bonds? There are EDITORIAL OFFICES 1100 13th St., NW, Suite 1000, Washington, DC 20005 spread panic that dividends some timing tales here. Spring- REPRINT SERVICE everywhere—not just from air- time is thought to be weakest PARS International Corp. for municipals, though the rea- TELEPHONE: 212-221-9595, ext. 322 lines and theme parks—would E-MAIL: [email protected] be crushed and not return. sons are murky. Jason Brady, TO ADD ONLINE ACCESS GO TO Instead, we learned that if a a bond-fund manager and www.kiplinger.com/go/getdigital dividend-trimming company head of Thornburg Investment Kiplinger’s Investing for Income (ISSN# 2167- 6240) Published monthly; $204.00 per year including first-class gives convincing reasons that a Management, says the first postage. cash crunch is temporary, or it calendar quarter is riskiest for Copyright © 2021 by The Kiplinger Washington Editors Inc., 1100 13th St., NW, Suite 1000, Washington, DC 20005. prefers to attack its debt, share- bonds in general because there holders will be accepting, and is often a bulge in new-bond Kiplinger’s Investing for Income is carefully you should stay put unless you issuance. But “it is not worth checked financial journalism; it is not personal- ized counsel on investing, taxes and law. We need every dime of income. getting exercised” about the ef- suggest that you consult with qualified profes- Utilities, real estate investment fects, which are small. We are sionals in those fields for advice tailored to your individual needs. trusts and energy pass-throughs not fans of market timing with are no longer compulsory sells stocks and certainly not with The Kiplinger Washington Editors, Inc., when a dividend is cut unless fixed income for individual is part of the Dennis Publishing Ltd Group. there is a bankruptcy filing. savers and investors. Copyright 2021 • The Kiplinger Washington Editors, Inc. • 1100 13th Street NW • Washington, DC 20005-4051 • www.kiplingerincome.com June 2021 Kiplinger’s Investing for Income: Strategies to Boost Your Cash Yield 3 The REIT Dream Team Still Has It he bulk of the 157 publicly traded, estate funds, active or passive, have performed property-owning real estate investment close to as well as our group has. Ttrusts are successful. The few clunkers So, then, who are these paragons? To are me-too outfits in untimely or overcrowded re-introduce everyone: segments. You can choose among 19 sometimes Alexandria Real Estate (ARE, $173.83, yield 2.5%, redundant REITs centered on supermarkets and five-year average return 15.2%). It owns biotech and strip malls, but alas there is only one REIT that other scientific real estate in academic hubs such owns and develops cold-storage food warehous- as greater Boston, San Diego and San Francisco. es and just two refurbish and lease single-family American Tower (AMT, $246.76, 2.0%, 20.1%) homes (both subsectors are performing well).
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