The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK ( The Fred Report) -- Lately, we have been traveling and giving seminars and one consistent question has been what sort of investments look the best to provide income this year. In this article, we will look at some of the income-oriented ETFs. Our belief is that the markets are moving away from "safety and income" as propounded by the bears, to "income with possibilities for growth."
First, we look at a weekly chart of TLT (Barclays 20 Year Treasury Bond iShare) -- the biggest US Treasury ETF which tracks the price of the 20-year treasury. We can see the yield is around 2.70% and that there may be a topping pattern being formed to its price. The only real positive here is that the stochastic has become oversold, so we will watch for a rally - but is there anything that looks more appealing?
Next, we show a weekly chart of LQD (Investment Grade Corporate Bond iShare) -- this IS more appealing than TLT. This is a much stronger pattern that has hit recent new highs, and has a higher yield of around 4%. Here at the FRED Report, we have been advocating switching money from TLT to LQD for some time. LQD could continue to advance, and the yield fall, as fear continues to come out of the marketplace. Last but not least, we look at Preferred Stock ETFs, represented here by PGX (Powershares® Preferred Portfolio ETF). The chart on PGX is attractive and the yield is over 6%. It looks as if fear is starting to come out of the marketplace, and if that is the case preferred stocks ought to do well. One of our concerns has been that rates could rise just a little - enough to hurt treasuries and utilities, but not other instruments. As fear comes out, some spreads will narrow. Should this occur, preferred stocks could do well.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV