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The Dangers Of High-Yield Investing

Published Thu, 02 Jul 2020 11:04:44 -0400 on Seeking Alpha

Seeking AlphaThe Dangers Of High-Yield InvestingJul. 2, 2020 11:04 AM ET|| Includes: CXW, GEO, HD, SBUXby: Louis StevensLouis Stevens Beating the MarketBuild a market beating portfolio with stocks that stand the test of timeSummaryI highlight some of the pitfalls in which one can find themselves when purchasing high-yield assets.
I'm creating this after successfully predicting yet another high-yield dividend implosion: CoreCivic's recent dividend suspension.
This is strictly for educational purposes; in that, I want to pull back the curtain on financial analysis and illuminate what a safe dividend truly looks like.
In the video, I discuss GEO, CXW, RDS, SBUX, and HD.

Source: www.americasaves.org
Introduction
In this video, I mentioned that I would include my Royal Dutch Shell (NYSE: RDS-A) (NYSE: RDS-B) video, which you can find here.
I want to be clear that this video is solely to educate investors as to how to invest in dividend growth stocks safely. Further, I would've never made it had a subscriber not come to me with a basket of stocks that were underwater, one of which was CoreCivic (CXW). Upon reviewing the financials of the company, I predicted that it would be forced to cut or suspend its dividend. A week later the full suspension materialized.
As you will learn in the video, one of the central issues with companies such as Geo Group, CoreCivic, and Royal Dutch Shell is that they're operating in industries that had their heyday in the 20th Century.
When drug laws in the United States were becoming most draconian around the late 80s and early 90s, private prisons excelled. Today, the societal zeitgeist around drug laws has swung pretty far in the other direction.
With respect to Royal Dutch Shell, well... don't say I didn't warn you. Now, I won't go into my "oil is now in a perpetual bubble theory" here, as I've written about it at length in the article linked above and here. I only included Royal Dutch Shell... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
GEO GROUP 18.35   14.1 1.30 1.92 10.56
CORECIVIC 18.06   12.0 1.51 1.76 9.83
HOME DEPOT 233.80   23.3 10.04 5.44 2.33
STARBUCKS 92.06   32.6 2.82 1.44 1.59

GEO GROUP - GEO
GEO GROUP - GEO  


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