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

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

Posted On September 17, 2021 3:16 am

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.

This mREIT 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 consensus return potential.

This other yield trap 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.

While analysts are highly bullish about its growth in the future, historically 50% margins of error and negative growth for over 20 years, make it a potential value/yield trap to avoid.

In contrast, these two blue-chips represent high-yield aristocrats trading at attractive or even anti-bubble valuations.

This 4.8% yielding dividend aristocrat is trading at 8.9x 2023 patent cliff trough earnings, and the other 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.

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About author

Dividend Sensei

I'm an Army veteran and former energy dividend writer for The Motley Fool. I'm a proud co-founder of Wide Moat Research, Dividend Kings, and the Intelligent Dividend Investor. My work can be found on Seeking Alpha, Dividend Kings, iREIT, and the Intelligent Dividend Investor. My goal is to help all people learn how to harness the awesome power of dividend growth investing to achieve their financial dreams and enrich their lives. With 24 years of investing experience, I've learned what works and more importantly, what doesn't, when it comes to building long-term wealth and income streams and achieving long-term financial goals.

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