Entering text into the input field will update the search result below

Why We Are Bullish On Equities Despite The Big Run

Jun. 10, 2020 8:35 AM ETDOC, EPR, EPR.PR.C, EPR.PR.E, EPR.PR.G, FFC, HPI, NLY, NLY.PD, NLY.PR.F, NLY.PR.G, NLY.PR.I, O, WPC56 Comments


  • We share our views on equities and explain why we remain bullish despite the big run since May 2020.
  • High dividend stocks are the best place to be.
  • We also share our best dividend picks to buy today.
  • Looking for a portfolio of ideas like this one? Members of High Dividend Opportunities get exclusive access to our model portfolio. Get started today »

Co-produced with Beyond Saving

Market Update

With the markets moving on a definite positive tone, we thought we would give our readers and followers a quick update sharing our views on equities in general and high dividend stocks in particular.

The fact is that this huge rally we have seen from March 2020 lows has taken most retail investors and investment professionals by surprise. Pessimism was at its highest point, and unfortunately many retail investors gave up and sold positions at a big loss. In the past two weeks alone, the S&P 500 has rallied 8.1% and the Dow has climbed 10.8% higher.

Here at High Dividend Opportunities, we took an opposite view that the markets are set to rally, and we encouraged our members to remain invested. It was our opinion that we will see a sharp recovery. Basically our optimism was from a belief that any lockdown would be only temporary, and that the economy will be able to recover fairly quickly. Based on the jobs report, it was confirmed that the economy is well ahead of all expectations. The recovery began quite soon and in full force, driving the equities higher.

Another Strong Reason Behind the Big Market Rally

There's another reason for stocks to have seen this very strong rally. I have explained it in many of my previous market updates. Investors across the board are hoarding large amounts of cash and there's no other place to invest and get yield. While many retail and professional investors missed out on the rally, it has been institutional investors that have been massively buying equities. The reason is that bond yields are so low that institutions were forced to sell bonds and buy equities to enhance their returns. Basically, for these institutions, there was just no other alternatives to buying equities.

High Dividend Opportunities, #1 On Seeking Alpha

HDO is the largest and most exciting community of income investors and retirees with over +4300 members. Our Immediate Income Method generates strong returns, regardless of market volatility, making retirement investing less stressful, simple and straightforward.

Invest with the Best! Join us to get instant-access to our model portfolio targeting 9-10% yield, our preferred stock and Bond portfolio, and income tracking tools. Don't miss out on the Power of Dividends! Start your free two-week trial today!

This article was written by

Rida Morwa profile picture

Rida Morwa is a former investment and commercial Banker, with over 35 years of experience. He has been advising individual and institutional clients on high-yield investment strategies since 1991.

Rida Morwa leads the investing group High Dividend Opportunities where he teams up with some of Seeking Alpha's top income investing analysts. The service focuses on sustainable income through a variety of high yield investments with a targeted safe +9% yield. Features include: model portfolio with buy/sell alerts, preferred and baby bond portfolios for more conservative investors, vibrant and active chat with access to the service’s leaders, dividend and portfolio trackers, and regular market updates. The service philosophy focuses on community, education, and the belief that nobody should invest alone. Lean More.

Analyst’s Disclosure: I am/we are long HPI, FFC, EPR, O, NLY, WPC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (56)

Cathy Wood profile picture
Why is this on Seeking Alpha? Seems like Editors give everything a pass these days.
We have the biggest disconnect from the real economy since the Dotcom Bubble and still people are thinking everything will be ok. When do they get it.
If Asset prices only go up we would all be jumping in the markets like crazy and that's what is happening. But lets see how the FED Put and Government bailouts play out.
Maybe we have found the holy grail and will never experience a recession again and just dump money on everything as soon as things get dire.
Stocks like AAPL, MSFT and others just felt back to their October 2019 levels in one of the biggest and fastet crashes ever in March. I don't know but that seems a bit ridiculous to me.
I had expected see them pull back to at least their 2015 or 2016 prices.
Lets be honest the stock market tanked a bit but that was not a crash more like a minor correction.
PendragonY profile picture

Thanks for reading and sharing your views. That is what makes SA great. It is a place where many views can be presented and debated.

Apple, Microsoft, Google, Amazon, et al. didn't see big price drops because their business didn't see big negative impacts. Plenty of other securities saw huge, sometimes unwarranted drops. Just look at what happened to a lot of preferred share prices.

SPY dropped over 30% from its level in mid-February, which is hardly a minor correction. And much of the drop was mitigated by the likes of Apple, and Microsoft and other big tech companies not dropping much as all.
With Covid on the comeback, may be a good idea to sell EPR after the nice run up and look for lower re-entry point
Most seem to be de-levering and then cutting dividends judiciously. DX just went from $0.15 monthly to $0.13. Methinks that the days of double digit returns are over, yet mREITs and REITS in general pay much more than others.

@Rida Morwa, you seem to be wildly optimistic and in a "buy, buy, buy" mode about 150% of the time! Is there any point in the history of the universe where you suggest selling out? :)
PendragonY profile picture

We issue sell alerts to our members all the time when they are appropriate.
Phil in OKC profile picture
@MegaDivGuy Rida publishes sell alerts only to the HDO members, because some members choose to hold on to those positions. As the largest and still growing Seeking Alpha investment service, new members are coming in everyday and looking for the freshest and newest opportunities. That is why Rida has hired a large staff of researchers and writers to find those opportunities and develop the investing thesis articles. It is a daily grind for all involved, but very rewarding to his large membership and non-member followers.
smurf profile picture
"With the markets moving on a definite positive tone,..."

"NLY is very likely to maintain their generous dividend."

As usual, right.
Jeff Swan profile picture
@smurf They're always great for entertainment.
Maybe pendragony can tel us how safe this stock is again...I short most of HDO’s picks so I enjoy reading them...NYMT was a huge winner for me to short
Jeff Swan profile picture
@Kingstocktrader224 I wish that I had done the same. I'd been a lot better off shorting most of their recommendations instead of buying them. It seems that they have an uncanny knack for picking stocks right before the dividend gets cut and the price drops even more.
Jeff Swan profile picture
" NLY is very likely to maintain their generous dividend".

Your timing is once again impeccable for short selling traders. They just announced a dividend cut and the price dropped considerably.
Great timing lol
PendragonY profile picture
We have been expecting a bit of a pull back, but LONG TERM expect prices to keep going up.
Sure you have. If you expected anything you would have been buying the tech I kept telling you to buy and not high yield.

AMZN is about to go green again even today...Why keep missing out?
Jeff Swan profile picture
@Kingstocktrader224 They don't believe in making money from capital gains even if the stock price rises more than the 10% yield they try to achieve, even if the stocks are better quality and less risky.
Love this rticle, Rida. Thanks for sharing this valuable insight..................Jim
ijeff profile picture
WPC and DOC are two I like that don't cause me to lose sleep. Both were available recently at incredible prices. Not sure what average yield for DOC has been, but 4.9% today still sounds pretty good for what I consider a lower risk REIT.

EPR and NLY cause me more sleeping problems. I wouldn't and didn't touch EPR with a 10 foot pole, but at this time it looks like I was wrong. Still wouldn't touch it today after the big price run up. Perhaps the market has reacted irrationally in both extremes for EPR.

NLY just had a dividend cut which will make that impressive yield look less so. I typically don't like buying stocks or reits that are cutting their dividend. I'd look at it going forward if I thought the cut was a one-time event and future growth prospects looked better.
Thought I read NLY had a slight dividend cut.
11 Jun. 2020
@AlieGee @Rida Morwa From 0.25 to 0.22 - I believe.
Is NLY-G safe?
Safer than the common which is only down .09 while the market is
getting clobbered. G shares callable 3/31/2023. Will it happen? Wish I knew. Coupon is 6.50 and for some reason I think they have
higher coupons which they could call first @#4
Tim Ayles profile picture
Cash on the sidelines is a fallacy.

If I have $100 of cash and want 10 shares of your $10 stock, I buy it and now have 10 shares of stock while the stock seller now has $100 cash on the sidelines.
Cathy Wood profile picture
Very good explanation!
kamax1 profile picture
Added WPC back to my portfolio today, looks like they won't have any problems making the dividends or collecting rent before the pandemic is over!!!! Great Reit at a great yield!!!!!!!!
Rida Morwa profile picture
@kamax1 Thank you for reading and commenting, WPC is one that we didn't have before because the yield was too low. The market gave us a gift!
Ojemine profile picture
The recovery went much too fast for me.
There's something wrong, too much euphoria, not enough substance in the numbers.
Stay on the sidelines for now, but keep the watchlist ready.
Rida Morwa profile picture
@Ojemine It has been a very strong recovery, and we expect a bit of a pullback because of that. That is why we are focused on picks that are very cheap relative to their long-term histories.
How do i save articles on my SA account?
Rida Morwa profile picture
@idrovebus You can bookmark the page in your browser, you can also click the "follow" button above and receive notifications of all our articles.
i keep accumulating every week and feel like this is a once in a lifetime opportunity. I am only partly retired, as sad as Corona is, it is giving longterm investors a chance to turn the clock back 10-15 years. Feels like sitting in a time machine.
Rida Morwa profile picture
@Vanadas Exactly! Use the declines to your advantage and build positions!
jgrever621 profile picture
I agree on WPC and DOC; been adding both of these and DRIPing. Solid performers.

Not quite sure of many others at this time, though HASI looks good as well, and adding.

Still have a wait and see attitude about NLY, but beginning to consider adding this as well.

Plenty of good buys recently, though time now to wait for another pull back.
Rida Morwa profile picture
@jgrever621 Thank you for stopping by, there are still plenty of good long term deals floating around.
63C-Vette profile picture
Better to take dividends in cash, not DRIPing, and then deploy the cash when and where you want to, rather than letting the calendar decide for you.
As usual, great and timely article. One of the main current risks that I'd add is a political unrest though.
Rida Morwa profile picture
@MLian Thank you for reading and commenting, most of the time, the impact of political issues on trading is temporary.
dbkemp05 profile picture
What is your current opinion on GEO at this time?
Rida Morwa profile picture
@dbkemp05 We are still very bullish on GEO. There is a lot more upside to come!
Phil in OKC profile picture
@Rida Morwa and @Beyond Saving Does this article signal a change in your current emphasis on fixed income. In other words, has the equity horse left the barn in your opinion?
PendragonY profile picture
@Phil in OKC

No, this article is saying that there is still plenty of gains to be found in equity.
Rida Morwa profile picture
@Phil in OKC We are still maintaining the 45% fixed-income, though future recommendations will likely be more heavily skewed towards common equities unless we see another sell off in preferred which I do not expect.
bmpire profile picture
I’m constantly selling puts where I would want to buy lower and then using the premiums to buy shares at current prices.
Rida Morwa profile picture
@bmpire Thank you for reading and commenting, that sounds like a good strategy.
PendragonY profile picture
That sounds like a good strategy to me. In fact, while I wouldn't say I am constantly selling puts, I sell puts and use that money to buy more shares as well.
Selling puts has always had an appeal to me. It's kind of like getting into the
insurance business on the winning side. No less than the sage of Omaha has
always liked the insurance business.
Not A Bag Holder profile picture
Thanks for the read. I'm not gonna wait for any pull backs. I will continue to slowly add to my position (QQQ) on the way up. Good luck folks.
Rida Morwa profile picture
@Invest4Dividends It is very hard to predict short-term directions, adding slowly in small bites is often the best option to get a good price and still have some cash available to take advantage when there is a big dip.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.