2 Yield Traps To Avoid And 2 High-Yield Aristocrats That Will Make Retirees Overjoyed

Summary

• Our yield-starved world has created a minefield for income investors including dangerous yield traps like mREITs, BDCs, CEFs, ETNs, and low-quality dividend stocks.
• AGNC is a case study in why mREITs are not suitable for most retirees, including a rapidly crashing dividend, -4% CAGR growth consensus, and just 3% inflation-adjusted long-term return potential.
• TDS is one of the lowest quality dividend champions and has generated negative real returns over the last 29 years, despite a 47-year dividend growth streak.
• Analysts are highly bullish about TDS's growth in the future, but historically 50% margins of error and negative growth for over 20 years, make it a potential value/yield trap to avoid.
• In contrast, ABBV and ENB represent high-yield aristocrats trading at attractive or even anti-bubble valuations. 4.8% yielding AbbVie is trading at 8.9x 2023 patent cliff trough earnings; and Enbridge yields a very safe 6.6%, and management is guiding for 13+% CAGR long-term total returns, courtesy of a $10+ trillion long-term growth opportunity in green energy.
• This idea was discussed in more depth with members of my private investing community, The Dividend Kings. Learn More »

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Analyst’s Disclosure:I/we have a beneficial long position in the shares of ABBV, ENB either through stock ownership, options, or other derivatives. 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.

Dividend Kings own ABBV, and ENB in our portfolios.