The coronavirus continues to wreak havoc across financial markets.
Fearing for their wealth, investors are desperately seeking protection in haven assets such as gold and U.S. Treasuries.
And while I fully support investing in precious metals, even at these levels, bonds are becoming less and less attractive.
The latest rush has pushed yields on the U.S. 10-Year below 1% for the first time in history… making them practically useless to everyday investors.
Which begs the question—if you’re looking for yield, where can you turn right now?
The 2020 Hunt For Yield
Real estate is one option, but not everyone is willing or able to spend that kind of money. Not to mention, properties often require work in terms of marketing and maintenance.
I think a better alternative for most investors is stocks, though I’m afraid that option could soon be exhausted, as well.
Take a look at this statistic…
Seventy-one percent of stocks in the S&P 500 now offer a higher yield than the U.S. 10-Year Treasury.
Let me remind you, this is the S&P 500 we are talking about. It features mostly cyclical stocks not known for their high dividend payouts.
Considering that every investor in the world is manically looking for yield, statistics like this won’t stay unnoticed for long… and neither will the rare few S&P 500 companies offering decent payouts.
Which is why I wanted to bring this dividend stock to your attention, while it’s still trading at a fair price.
Investing In Maturing Business Models Sometimes Makes Sense
Speaking of the difficulties of investing in real estate…
A simple way around it is to invest in a real estate investment trust (REIT).
That way, you get to reap all the benefits without having to worry about management.
Sure, that means giving away some of the profits. But because of the 90% rule, you still keep 90% of the income.
One REIT that has caught my attention recently is Kimco Realty (NYSE: KIM), with its 6.27% dividend yield.
Kimco Realty is one of the oldest REITs in the United States, with interest in over 400 shopping centers, representing about 60 million square feet of real estate.
I know… shopping centers are a thing of the past. Why would anyone want to invest in them?
While shopping centers are becoming less popular, they’re not going away. This business model has reached maturity… but it’s not dead. Revenues will continue to grow slowly… but they won’t stop.
Kimco Realty’s performance supports this reality. While revenues have slowed compared with historic revenues, they’re still growing at an average of 3.45% annually over the last five years.
The Price Is Right
Short of a full-blown financial crisis, I see no reason for the dividends to fall.
Best of all, because of the recent sell-off, the stock is now trading at an attractive valuation. Its PE ratio is 22.34, closer to its long-term average of 20.99. Just three months prior, Kimco Realty’s PE was trading as high as 28.88.
I think it won’t be long before yield-hungry investors start loading up on this stock.