Income Insights

Not every buy and hold investor has the savvy and steady temperament to be as successful as Warren Buffett. Similarly, not every short seller is insightful and nimble enough to match Jim Chanos’ storied success.

Last November, I advised income investors to favor AT&T (NYSE: T) a traditional dividend paying stock, over shares of its iPhone partner Apple Inc (NSDQ: AAPL).

This week, FirstEnergy Corp (NYSE: FE) announced the first electric utility dividend cut for 2014. Fortunately, it’s likely to be the last as well.

Count me a “distech” skeptic. So-called disruptive technologies never fail to grab headlines. Those who bet on them, however, usually wind up with empty wallets.

Wall Street’s January ritual is to roll out “new” investment strategies. This year, fund manager Bill Gross has proclaimed the end of a 30-year bull market for bonds. So it’s no great surprise income advisors further down the food chain are pushing investors to adjust portfolios for higher interest rates.

By any measure, 2013 was a great year to own stocks. It was also an exceptionally bad time to bet against the United States of America. And that remains the case as we open the page on 2014.

Ready to lock up money for 54 years at just 3.4 percent annual interest? More than a few investors did this week when their funds bought Enterprise Products Partners’ (NYSE: EPD) 7.034 percent bonds maturing January 15, 2068, a barely investment grade BBB- credit.

Will the Federal Reserve really “taper” off its easy money policy? The stock market has already reacted, with dividend-paying stocks leading the selling: The Dow Jones Utility Average is now flat for the fourth quarter, after being up better than 5 percent through mid-November.

Our favorite Canadian midstream companies–names that own pipelines and processing capacity–generate the majority of their cash flow from fee-based services, a business model that provides a degree of protection against volatile oil and gas prices.

No group of dividend-paying stocks has been more profitably shorted the past few years than high yield telecoms. Short sellers make their money when stock prices fall. And sector companies have not only cut dividends eight times since 2009, but we’ve seen a pair of bankruptcies as well.