Well, I haven’t been very thoughtful about investing during the past week. I’m still weighing weather to buy on the recent dip in some of my stocks or wait until we see just how aggressive the Fed is going to be about raising short term interest rates.

So I’ll offer a link to an Investorplace.com story by Will Healy recommending several retirement income stocks. I’m on board with his choices, and own three of them (ABBV, SNH and T) either directly or through business accounts.

 

Well, once again I find myself holding back on stock purchases. I’m sort of betting that rising interest rates will continue to pressure the valuations of attractive dividend payers.

And my recent picks have been, from a price standpoint, fair to middling. As I mentioned in a previous post, I made the mistake of chasing GE down (and down, and down). Now, with the latest executive shake up and write down, the company’s remaining dividend payout is vulnerable. In fact, the handwriting seems to be on the wall. (Here’s the Wall Street Journal’s warning on the dividend.)

The performance of GE’s stock continues to defy my expectations. On the day when the company unexpectedly severs ties with a CEO who’s been on the job for just a year, and announces a $23 billion write down, the stock surges to a double digit gain. I guess the market is placing a lot of confidence in the surprise CEO Larry Culp.

I continue to think that the sum of the parts is worth more than the whole, and at around $12 a share GE is a buy. But for investors looking for dividend yield? There isn’t much visibility into whether GE, or its spinoffs, will continue paying a dividend in the near term. So in light of the company’s latest surprises, I’d tend to say there are better choices out there for income oriented investors.

 

Psst…I think I just discovered a new company, paying a substantial dividend yield, that will make you feel good as an ecologically, socially and governance oriented investor.

While I sometimes think socially conscious investments involve more of a sales pitch than an investment philosophy, it does feel good to own shares of companies that prioritize environmental conservation, employee satisfaction and good corporate governance. (I give kudos to corporations that make substantial charitable contributions as well.)

Clearway Energy, formerly a part of energy conglomerate NRG, recently changed names after NRG essentially sold a majority stake in the company to Global Infrastructure Partners, which is privately held.

Clearway said its operating footprint, including assets owned by an affiliate, includes wind, solar and thermal energy assets. All told, the company says it has the energy infrastructure to power 2.7 million homes.

And it has been paying a dividend yield of more than 6% under its previous ownership arrangement with NRG. In a webcast to unveil the new Clearway Energy, company officials said they have a dividend payout target ratio of 80-85% going forward. They also anticipate growing the dividend payout by 5% to 8% annually starting in 2019.

Most of the company’s assets are wind and solar renewable energy projects, including an 8.9 gigawatt pipeline of renewable energy projects that provide ample room for growth in the future. 

Because GIP has a controlling interest in Clearway, shareholders may be concerned about how well their interests are aligned with the majority owner. So far, nothing I can see raises any red flags about the arrangement. More about Clearway’s governance and financial condition will be known when the company releases its first earnings report, scheduled for November 1. In the meantime, as I often do with new investments, I’ve added a small stake in Clearway’s common shares to my retirement IRA, with the intention of perhaps adding to my stake once I learn more from the company’s financials. 

According to the recent webcast by GIP and Clearway, GIP will hold 45.2% economic stake in Clearway Group and control 55% of the voting rights. Class C and A shareholders will own 54.8% of Clearway.

The company’s headquarters are in San Francisco.

With most dividend paying stocks taking a dip on Friday, you might expect me to find something that I’d like to add to my portfolio. Or something where I think now is the time to add to may stake.

Today, I’m sitting on the sidelines instead, partly because I’m worried that concern about rising interest rates will continue to pressure dividend stocks.

I have been eyeing a retail stock, but lost some of my enthusiasm after reading an analyst report on the company.

I was reminded of something Jim Cramer said on CNBC this week. Asked if he’d recommend buying LB (parent of Victoria’s Secret) for it’s roughly 9% dividend, and Cramer quickly dismissed the idea, saying he’d never recommend buying shares in a troubled company just because of a high dividend yield.

I think that’s sound advice. (Take it from me – I was buying shares of GE at $25 thinking it can’t go any lower than this.) Once in a while you see a company that’s restructuring or rebuilding, but you want some insight into how well a turnaround plan is faring before you buy. With that in mind, I’ll keep an eye on my retail favorite and let you know if I want it in my portfolio at some point in the future.

Having endorsed Cramer’s viewpoint, I do recall one stock I bought just for yield that turned out, over the long haul, to be a good move. Quite a few years ago, World Wrestling Entertainment – yes, the pro wrestling company – was paying a yield of over 6%, but share prices were dropping because analysts questioned whether or not the company had enough cash flow to continue that payout rate. I bought shares in the low to mid-teen price range, thinking a possible dividend cut was already priced into the stock. Low and behold, the company did slash its payout rate and the stock fell even further.

Luckily, I hung in there. Today, WWE is trading at about $88 a share. While the company’s half a percent dividend yield won’t attract income seeking investors today, it turned out to be quite a growth opportunity. The company’s shares are up nearly three fold from the start of the year, bolstered by a new broadcasting deal that pleased investors. Admittedly, I think the shares may be overpriced at this level, and I’ve been trimming my holdings in recent months.

Now if only WWE execs could counsel GE on its turnaround strategy.