Market Caution, Value and Quality Dividends

08/25/2017 2:52 am EST

Focus: DIVIDEND

Kelley Wright

Managing Editor, Investment Quality Trends

I have no interest in hot money. Hot money has no patience or discipline, has no appreciation for cycles, and no understanding that value is expressed over time, explains Kelley Wright, editor of Investment Quality Trends.


Get Top Pros' Top Picks, MoneyShow’s free investing newsletter »


The gain is determined on the buy, not the sell. If you buy right the gain will take care of itself over time. I know, it is difficult to watch the market make new highs while you are sitting on cash.

The natural human inclination is to feel you are missing out on something. I and no one else knows when there will be a correction, but when there is the one thing you can take to the bank is the stocks that will drop first and drop the most will be the high flyers.

At some point, there will be a pause in the selling and many will jump back into the high flyers because they won’t want to miss the move back up.

Having seen that movie many times over the course of my career my suspicion is they will rue the day. The healthiest thing that could happen to this market is a garden variety correction, say somewhere between five and ten percent.

That would give value investors the opportunity to pick up some really good companies at good value, which will reward them with a consistent and growing dividend stream.

Until that time you don’t have to sit out entirely though. If a high-quality company that offers good value and fills a hole in your portfolio becomes available then buy it.

Whether you are looking to build a portfolio from scratch, are partially invested and looking to add new positions, or are fully invested and merely in need of some affirmation and hand holding, "The Timely Ten" represents our top ten recommendations from the Undervalued category as of each issue.

Sure, it may dip a little on a correction, but that will result in an even higher dividend yield that knowledgeable investors will be unable to pass up, and price will recover fairly quickly.

Texas Instruments (TXN)
Wal-Mart Stores (WMT)
W.W. Grainger (GWW)
IBM (IBM)
CVS Health (CVS)
The TJX Companies (TJX)
The Gap, Inc (GPS)
Omnicom Group (OMC)
Lowe’s Companies, Inc. (LOW)
Cracker Barrel OC Store (CBRL)

Subscribe to Kelley Wright's Investment Quality Trends here…

Related Articles on DIVIDEND