The Impact of Brexit on U.S. Dividends

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

The European Union (EU) is the only economic block larger than the United States, but it is not as stable, based on Thursday’s vote by the British people to leave the EU. With the eventual pull out of a key contributor to the EU such as the United Kingdom, it evokes thoughts of whether there is any major impact on the well-being of one’s income portfolio on this side of the pond.

Advertisement.

I’ve been staying on point for the entire year about maintaining a primary weighting in U.S. dividend-paying assets that are sensitive to a strong U.S. dollar. With the “Brexit” vote now a done deal, it opens the door to other exit movements by other disgruntled EU member nations that harbor similar feelings.

Markets hate uncertainty and last week’s “leave” vote unleashed a number of possible and probable headwinds regarding trade, currency, tariffs and regulation. When the resignation of Prime Minister David Cameron is considered, it leaves open the question of who is going to lead Britain in a post-EU world.

Japan’s Nikkei cratered by 7.92% and spot gold climbed to $1,319/oz. in a flight to safe-haven assets. The yield on the U.S. 10-year Treasury Note tumbled to 1.47%, hitting a new 150-year low before stabilizing back above 1.50%. The U.S. major stock averages traded down by 3.0% in the initial sell-off.

Advertisement.

The oasis within the whirlwind of global equity market upheaval is none other than American dividend-paying stocks that reside in the utility, telecom, specialty REIT and consumer staples. While the Dow was trading down almost 500 points at mid-session on Friday, shares of Duke Energy (DUK), Southern Company (SO), AT&T (T), LTC Properties (LTC), Realty Income (O), Crown Castle International (CCI), Annaly Capital (NLY), Reynolds America (RAI), Clorox (CLX), General Mills (GIS) and WalMart Stores (WMT) all were trading up on the day.

Exclusive  In the Name of the Best Within Us

Money has to go somewhere when fear enters the investment mindset. Aside from cash and bonds, which are natural havens in the short term that offer little to no yield or income, the clear winner during dramatic sector rotation is the domestic non-cyclical space where essential and basic goods and services are rewarded with massive capital inflows seeking 3-5% or higher yields through periods of uncertainty that provide a low risk of losing principle. The old saying of “money goes where it is best served” is central to today’s market landscape and has been a focus of large institutional fund activity for most of 2016.

While the Brits might have voted to “leave” the EU, investors that are long in the all-weather sectors listed above have chosen to “remain” in these sectors, now that roiling global equity markets have all but put to rest the notion of a Fed rate hike in July or maybe even September or the rest of 2016. If a U.K. political referendum caused the shedding of almost 9.0% off the Euro Stoxx 50 Index that seeks to provide a blue-chip representation of super-sector leaders in the euro zone, then an untimely rate-hike by the Fed could unglue U.S. markets in similar fashion when recent data, such as a May Durable Goods falling 2.2% versus an expected drop of 0.6%, suggest a rate hike.

This week, I’m going to take the opportunity to beat the covered-call drum again for my Quick Income Trader service. When the June options expired earlier this month, no less than three positions had been called away for an average one-month gain of 5.5%. While the rest of the market is still dealing with the sell-off from the “Brexit” vote, I remain firmly convinced that collecting call option premium against great growth stocks is still one of the best strategies investors can employ. Do yourself a favor in these uncertain times and check out my high-powered covered-call service by clicking here.

Advertisement.

We went right back into these same names on pullbacks and now have orders placed to sell the July call options against these positions. It is a scenario we keep playing over and over, month after month, and the best part, subscribers never get tired of doing the same thing time and time again when it’s making consistent money for them. I find the right stocks trading under $60 to trade, the right call options to sell for immediate cash and spell it all out every Wednesday in explicit trading instructions that an investor with an eighth-grade education could manage with ease.

Exclusive  Gold’s Break Out to a New All-Time High Is Legit

The market is stuck in a range. With the Brexit vote, the market will remain stuck for some time to come. But that’s no reason not to keep your money working overtime for you with Quick Income Trader. There is always a system to put in place in difficult markets, but it has to be the right system that is proving itself on a steady basis. A covered-call strategy that targets the highest quality U.S. growth stocks is an excellent one-two punch for any investor to consider at a time when buy-and-hold growth investing on a broad basis through exchange-traded funds and mutual funds is underperforming diligent covered-call strategy by a country mile.

P.S. For a while now, I’ve been researching a new way to generate income that I’m willing to bet you have never heard of before. I invite you to take a few minutes of your time and watch a free video on this exciting new investment theme, which will be the focus of a new trading service that I am launching soon.

In case you missed it, I encourage you to read my e-letter column from last week about how the market came to accept the possibility of a June rate hike to begin with. I also invite you to comment in the space below.

Advertisement.
share on:

Like This Article?
Now Get Bryan's FREE Special Report:
Top Monthly Dividend Payers

Get paid every single month by some of the world’s biggest companies.

Get Access to the Report, 100% FREE


img
share on:

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader
LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income PRO (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader
LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener
LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program
LEARN MORE HERE

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader
LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor
LEARN MORE HERE

George Gilder

George Gilder is the most knowledgeable man in America when it comes to the future of technology and its impact on our lives.  He’s an established investor, bestselling author, and economist with an uncanny ability to foresee how new breakthroughs will play out, years in advance.

Product Details

  • Technology Report
  • Technology Report PRO
  • Moonshots
  • Private Reserve
  • Millionaire Circle
LEARN MORE HERE

DayTradeSPY

DayTradeSPY was founded by head trader Hugh Grossman, a retired internal auditor for a Fortune 500 company. After years of first-hand experience trying out one trading strategy after another, Hugh instead developed his own trading system centered around day trading SPY options. That’s it... Nothing else.

Product Details

  • Trading Room
  • Pick of the Day
  • Inner Circle
  • Online Workshops
LEARN MORE HERE