Verizon Communications Inc. (NYSE:VZ) is a popular high-yield stock, but investors should be cautious. While the company has raised its dividend for 17 consecutive years, this streak comes at a cost. Verizon is backed into a corner and cannot cut or fail to raise the dividend without the stock crashing. This limits the company's ability to invest in growth and innovation. Additionally, Verizon's sales growth is stagnant, its balance sheet is burdened with increasing debt, and it operates in a capital-intensive industry. Investors may be better off considering dividend growth stocks like Texas Instruments (TXN) that have a track record of increasing dividends and strong cash management.
The normalization of interest rates presents a rare opportunity for retirement-minded investors to build meaningful income-producing portfolios. The prolonged period of declining interest rates is now reversing, creating compelling income investment opportunities that have not been attainable for decades. The article suggests reallocating from a traditional 60/40 stock-bond allocation strategy to a shorter duration, more inflation-tolerant portfolio allocation of 25% cash, 25% commodities, 25% stocks, and 25% bonds. It also highlights five high-yielding investments, including Antero Midstream Corporation, Energy Transfer LP, Kayne Anderson, GAMCO Global Gold, Natural Resources & Income Trust, and Templeton Emerging Markets Income Fund. The author argues that the overvaluation of the S&P 500 and the inverted yield curve make the traditional 60/40 strategy appear overly aggressive in today's market.
