March 2011 income investor dashboard

Here is this month’s income investor dashboard update. Prices are as of the close of trading on Feb 28, 2011, the last day of the month.

Almost everything got a little more expensive last month, with yields coming down across the board. In general, stocks did better than bonds. In stocks, developed markets performed better than emerging markets and investors are continuing to take money out of emerging markets and put money into developed markets. In bonds, long term treasuries and muni bonds had a decent month showing gains, a nice reversal.

As far as relative value, foreign stocks look to be a better value than US stocks at this point whether it be the overall indexes (EFA vs SPY) or even in the dividend sectors (IDV vs DVY). However, the higher yielding US stock sectors look to be even better relative value, in particular mortgage REITs (REM) and MLPs (AMZ). In bonds, muni bonds, leveraged (BFK) or not (MUB) appear to be the best relative value. For contrarians out there, fund flows show investors continue to take money out of muni bond funds and pour it into taxable bonds funds. Usually, it pays to do the opposite of what the heard is doing. Below is a chart that shows investment grade and high yield bond spreads.

Investment grade bonds are trading below their long term average yields but still not as expensive as they have been pre crisis. High yield bonds are definitely pricey and are trading at the high end of their historical valuations. As history shows, they can stay at these levels for long periods of time but their is not much upside left.

Any other insights into the income investor landscape this month?

Full Disclaimer - Nothing on this site should ever be considered advice, research or the invitation to buy or sell securities. These are my personal opinions only.


About paul.novell@gmail.com

7 thoughts on “March 2011 income investor dashboard

  1. Although I don’t like the market in general at these levels for new money I do like SYY and MCD around here.

    That is an awesome spreadsheet. Does it calc the %’s for you?

    Thanks as always for the great blog. Your common sense approach is much appreciated.

    1. Thanks Doug. Yes, it calculates the %s for me.

      I agree with you on the market in general (stocks that is). I’m about 30% cash right now. Besides continuing to reinvest dividends, the only new money I’ve put to work recently has been in muni bonds. There’s always some decent values out there, like SYY and MCD. The question at these market levels is can you get them even cheaper when a general market correction happens? Tough question.


  2. Paul,
    Although not specifically related to this article the subject of CEFs is gaining more attention. Although funds are flowing out of these now I believe that this will change as more people learn they can nearly double the current yield from dividend paying etfs, and funds. In case you did not know, Morningstar has just started a specific CEF department and there is an investor forum there where some experienced CEF investors post. Just fyi…



    1. Thanks Doug. I saw the new Morningstar CEF department. I’m glad they started it. CEFs are an under utilized investment stucture by most investors.

  3. Paul,
    I’ve searched far and wide for a spreadsheet that will calculate the individual and total dividend return of my portfolio. I don’t have the skill to create an excel spreadsheet that will weight the holdings and calculate the %’s for me.

    Any assistance you could provide here would be much appreciated!


    1. Doug, a quick approximate way to do it is; take the dividend yield when you bought the stock and add to it the change in stock price during the year. This won’t be totally accurate if you re-invest dividends but it will be close. Another way to do it is use total dollars – take the total current dollars in a stock and calculate the change from the initial dollars you had in the stock, divided by the initial dollars.

      For the portfolio, you can just apply a percentage, calculate the percentages using the dollars invested in each stock, to the above numbers you calculated on the individual stocks and then add the numbers up.

      Hope that helps.


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