Investing Topics: Income Insights

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.

Will Santa Claus visit utility stock investors this year? The sector was out of the gate quickly to start the fourth quarter of 2013. But concerns about the “tapering” off of Federal Reserve bond buying quickly slowed things down.

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.

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.

24.

That’s how many stocks we track at Energy & Income Advisor and Conrad’s Utility Investor that yield more than 10 percent.

Taper talk is rife again in the financial media. And the all-too-familiar consensus is still that the Federal Reserve will abandon cheap money in the near future, driving up interest rates and sending dividend-paying stocks plummeting.

We’ve yet to see third quarter results for most of the US communications industry. But it’s not too soon to ask what happened to the assertion the Big Two US Telecoms — AT&T (NYSE: T) and Verizon Communications (NYSE: VZ) — would be skewered by rivals’ cut rate pricing and a cheaper iPhone.

At its core, the stock market is about people. The numbers offer clues to the odds of company’s success. But as an analyst for nearly 30 years, I’ve found keeping tapped in to the market mood is no less essential.