Ask an Advisor: At 70+ With $3.5 Million in Stocks, Should We Rebalance to a 60/40 Portfolio?
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I am 73 and my wife is 70 with one son. We have $235,000 in a savings account and we each have $250,000 in Roth IRAs. We also have $1.675 million in a brokerage account and $1.55 million in a 401(k). Everything other than the two Roths are invested solely in stocks and the two Roths are 60% stocks and 40% bonds. With Social Security and pensions, our monthly income is $11,000 and we save about $3,800 monthly. Should we change our brokerage and 401(k) accounts to a 60/40 mix and move some of our savings to money market accounts or bonds?
– Randy
Great question, Randy. It may make sense in your case to base this decision on what you want your money to do for you. Adjusting your asset allocation from 100% in stocks to 60% stocks and 40% bonds is a pretty standard move for typical retirees but I don’t think it’s necessary in your situation. Depending on your goals, your current asset allocation could have room for improvement, though. (And if you need additional help managing and investing your retirement savings, consider working with a financial advisor.)
The primary reason for holding a 60/40 portfolio in retirement is its balance between growth and stability. Ideally, the stock allocation powers the long-term growth of your portfolio so you don’t run out of money while the bond portion produces income for withdrawals.
This asset allocation may make sense for a lot of retirees who are taking regular withdrawals from their investments to cover retirement expenses. However, you don’t seem to be in that position.
If I read your question correctly, you have a guaranteed income of $11,000 per month and save almost $4,000 from that money. It sounds like you aren’t taking regular withdrawals from your savings and don’t need to. If you have $235,000 in a savings account and a total of $500,000 in Roth IRAs already in a 60/40 allocation, that adds up to $735,000 of relatively stable money. That’s a pretty substantial balance of readily accessible money, especially if you aren’t relying on it for regular cash flow. (And if you want an expert to evaluate your asset allocation or to manage your portfolio, this free matching tool can connect you with up to three financial advisors.)
You have several good options for the remaining money in your 401(k) and brokerage account. Depending on what you want to do with the money and the purpose it serves, I think you can either leave it invested aggressively or switch to a more conservative allocation such as 60/40 split.
How Much Will Nvidia Pay Out in Dividends in 2025?
Investing in dividend-paying stocks is one of the easiest ways to start raking in passive income. The tricky part? Deciding which stocks to invest in and how long it’ll take to see some solid cash roll into your account.
One strategy is to start researching companies you are already familiar with, like Nvidia (NASDAQ: NVDA). The iconic chipmaker has a market cap of over $3 trillion and a spot among the “Magnificent Seven” stocks. Plus, Nvidia rewards loyal investors with a dividend.
All told, the dividend yield probably won’t have income investors jumping for joy — it’s a paltry 0.02%. However, paying dividends says something about the company’s confidence. It’s a small sign that they believe in their financial stability, which means those cash flows could keep coming in.
Brace yourself: Nvidia’s quarterly dividend payout is a mere $0.01 per share, adding up to just $0.04 annually. And unless the company cranks up the payout, we could be looking at the same amount in 2025. Not exactly a jackpot for income investors, but here’s some perspective:
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Stock splits: Nvidia pulled off a 10-for-1 stock split back in June, which means each share got split into 10. Adjusted for this, that $0.01 per share is like getting $0.10 per share before the split. So, the payout appears smaller per share but is proportionate to the total value held.
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Dividend increases: Companies can boost their dividends at any time, which can increase your payout. For example, back in May, Nvidia raised its quarterly cash dividend by 150%, from $0.04 to $0.10 per share.
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Growth potential: Instead of paying out more in dividends, Nvidia funnels cash into research, development, and expansion in artificial intelligence and computing. If you can stomach the stock’s ups and downs, you might ride its long-term growth.
So, while Nvidia’s dividend is unimpressive, its growth story has investors drooling. If you’re hunting for a company focused on future gains rather than massive payouts today, Nvidia should definitely be on your watchlist.
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From Nvidia to nuclear power to extra spicy hot sauce
This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
The earnings avalanche has commenced.
And what does that mean?
You’ve probably missed a lot of other stories that could impact your portfolio. After all, there’s more to one’s investing life than modeling out 2050 profits for Nvidia (NVDA) and wondering whether Tesla (TSLA) will haul in $10 billion in sales from humanoid robots.
In the spirit of this, here are a couple of convos I had this week that may leave you thinking (hopefully).
AI meets extra spicy hot sauce: I was at a CEO dinner this week where an analyst specializing in AI proceeded to share the deep impact to businesses as AI proliferates. I tend to agree the way business is done will change profoundly, and it’ll include a good bit of job loss.
An example of AI’s impact is in Cholula hot sauce. Its parent, spice maker McCormick (MKC), held an investor day this week.
“We have used generative AI to really understand where all the commentary was going [for hot sauce], we learned there were some Cholula lovers out there that wanted a hotter version. So in January, we are launching an extra-hot version of Cholula,” McCormick CEO Brendan Foley told me on Yahoo Finance’s Market Domination Overtime.
McCormick reiterated its long-term sales growth guidance of 4% to 6% and earnings growth of 9% to 11%. Shares are up 16% year to date compared to the 22% gain for the S&P 500.
You can catch that full spicy segment here.
Building a 21st-century media company: The traditional media industry continues to be disrupted by everything from new streaming networks to creators posting on YouTube. Why else do you think Disney (DIS) said this week its CEO Bob Iger was sticking around until 2026 (he was rumored to be leaving in 2025)? He has to leave the business in a much better place than his last exit.
One of these disrupters in the past 15 years has been Dude Perfect. The company was started by five friends who went to Texas A&M and rose to fame for viral trick-shot videos posted on YouTube. The company now boasts 60.5 million subscribers and churns out a steady, broader array of content.
Armed with a new $100 million capital infusion from Highmount Capital, Dude Perfect is gearing up for more unique programming and the build-out of a headquarters in Frisco, Texas. In charge of bringing that vision to life? Dude Perfect’s first-ever CEO Andrew Yaffe, who took the job several weeks ago.
Super Micro Computer vs. Lumen Technologies: Wall Street Says to Sell One of These AI Stocks and Hold the Other
The excitement behind artificial intelligence has driven the market to all-time highs. Any company that can tie its business to the future of artificial intelligence has seemingly done well, promising huge demand for its products or services from a new and untapped market.
But as valuations have soared, the short sellers have moved in, trying to find stocks that can’t live up to the promise or hype. Short sellers have honed in on the computer server and cloud provider Super Micro Computer (NASDAQ: SMCI) and the telecommunications company Lumen Technologies (NYSE: LUMN). Wall Street analysts are telling investors to sell one and hold the other. Let’s take a look.
Lumen Technologies runs one of the largest interconnected fiber-optic cable companies, which powers high-speed internet, cable television, and phone services for consumers and businesses. Lumen’s stock has shot up about 250% this year, largely due to the belief that its fiber-optic network will serve as critical infrastructure in connecting data centers needed to power artificial intelligence. Lumen in August reported that demand for AI has led to $5 billion of new business.
However, short sellers like Kerrisdale Capital have started to doubt the company’s valuation and how much it can truly benefit from the AI boom. In late August, Kerrisdale, in a short report, suggested that buying into the AI hype around Lumen is premature and that the $5 billion of new business is “a desperate bid to raise cash amid deteriorating revenues and growing liquidity concerns.” Furthermore, Kerrisdale states that Lumen’s future sales opportunities do not include leading tech firms that are leveraging AI but are to older, more antiquated businesses still in discovery mode when it comes to AI.
Wall Street seems to agree with Kerrisdale. Of the eight analysts cited by TipRanks, zero are telling investors to buy the stock; there are five holds and three sell ratings. On Wall Street, this might as well be a sell rating. The average analyst price target is $4.09, which implies about 38% downside. I suspect some of these hold ratings are from firms that may have a business relationship with Lumen or want to keep the possibility open.
Lumen also has a high debt of close to $20 billion. While the company is trying to engineer a turnaround, given the stock’s big run and questions surrounding its role in AI, I would also avoid the stock until the company provides more evidence of sales related to AI.
The computer server and storage maker Super Micro Computer is the most shorted stock in the S&P 500 (as of Oct. 21), with more than 21% of the company’s outstanding float sold short. The company has also benefited tremendously from AI because investors believe its products can be used as key infrastructure to store data that powers AI and machine learning. The stock has ripped 68% this year.
Magnificent 7 shake-up: Why Wall Street is reassessing Tesla's position and looking toward Netflix
Tesla (TSLA) has work to do if it wants to remain among tech elites.
Despite a surprising earnings report that sent the EV maker’s stock surging — resulting in its biggest intraday jump in over a decade — Wall Street is once again reevaluating its inclusion in the Magnificent Seven.
The group’s members — Nvidia (NVDA), Apple (AAPL), Alphabet (GOOG, GOOGL), Amazon (AMZN), Meta (META), Microsoft (MSFT), and Tesla — dominated markets in 2023 and have returned as a potential key driver as third quarter earnings season gets underway. The group is expected to lead with 18.1% year-over-year earnings growth in Q3, and four of the stocks — Nvidia, Alphabet, Amazon, and Meta — are projected to be in the top 10 contributors to S&P 500 earnings growth, according to FactSet.
The debate over Tesla has returned as concerns linger despite its earnings resurgence. Tesla’s third quarter profits jumped 17%, a dramatic turnaround after two quarters of declines.
That’s not enough for Wall Street: Strategists tell me it’s still at risk of falling behind the rest of Big Tech due to overhyped fundamentals.
Freedom Capital Markets chief global strategist Jay Woods likened Tesla to bitcoin, suggesting the stock trades more on “hopes and dreams” than fundamentals.
“Tesla had its moment in the sun … to me, it’s more like a Cisco or an Intel during the dot-com bubble, and now we’re moving on to other things,” Woods warned on Yahoo Finance’s Morning Brief.
While CEO Elon Musk has often categorized Tesla as a tech company, the firm’s AI and robotics bets will likely take years to pay off. In the meantime, Tesla must rely on improving its core auto business — a stark contrast to its Magnificent Seven peers.
“I’ve been in the tech sector since 1990, and I remember the Four Horsemen … We didn’t add an auto stock with Cisco, Intel, Dell, and Microsoft,” longtime tech investor Dan Morgan told me.
Tesla’s recent underperformance and high valuation further strain its standing among its Mag Seven peers. At nearly 73 times forward earnings, its forward price-to-earnings multiple far exceeds others in the group.
As of Friday afternoon, just over 40% of analysts covering Tesla rated the stock a Buy, according to Bloomberg data, making Tesla the least favored Magnificent Seven stock among analysts.
As far as Tesla’s replacement, Netflix has emerged as a strong contender.
Wealth Enhancement Group’s Ayako Yoshioka noted to me that Netflix “makes the most sense,” as shares of the original FAANG member recently hit an all-time high, buoyed by strong earnings and solid guidance.
Why This Green Bitcoin Miner Could Be the Next Big AI Infrastructure Stock
The artificial intelligence (AI) revolution is driving unprecedented demand for energy-intensive data centers. The International Energy Agency projects that data centers may account for up to one-third of the anticipated increase in U.S. electricity demand through 2026.
Major tech companies, like Microsoft, Amazon, and Alphabet, are racing to secure clean energy power sources, such as nuclear energy, to meet their mounting energy needs. One under-the-radar company with established renewable infrastructure is uniquely positioned to capitalize on this accelerating trend.
TeraWulf (NASDAQ: WULF) operates Bitcoin (CRYPTO: BTC) mining facilities powered by approximately 95% zero-carbon energy sources, primarily hydroelectric power. The company’s revenue surged 130% year over year to $35.6 million in the second quarter of 2024, driven by an 80% increase in operational mining capacity and higher Bitcoin prices.
Moreover, TeraWulf has significantly strengthened its financial position by eliminating its debt ahead of schedule. This clean balance sheet positions TeraWulf to fund its ambitious expansion plans in both cryptocurrency mining and AI infrastructure.
TeraWulf is leveraging its existing clean energy infrastructure to enter the high-performance computing and AI market. The company has already completed a 2.5 megawatt (MW) proof-of-concept project designed for next-generation graphics processing unit (GPU) technology.
Additionally, construction is underway on a 20 MW colocation facility engineered to support AI workloads. The facility includes advanced features, like liquid cooling and redundant power systems typical of premium data centers. It is scheduled to kick off operations in Q1 2025, according to the company.
TeraWulf recently secured $425 million through a convertible note offering at a reasonable 2.75% interest rate, reflecting strong institutional investor confidence. The company plans to use these funds for strategic acquisitions and the expansion of data center infrastructure to support its AI computing initiatives.
Furthermore, TeraWulf’s board recently authorized a $200 million share repurchase program through December 2025, signaling management’s belief that the stock may be undervalued despite rising approximately 165% year to date.
TeraWulf’s clean energy resources give it a unique edge in the rapidly growing AI infrastructure market. Major tech companies are actively seeking sustainable power sources for their energy-intensive AI operations, making TeraWulf’s zero-carbon data centers particularly attractive.
This Billionaire Income Investor Prefers These Ultra-High-Yield Dividend Stocks Right Now
Bill Gross made a lot of money for his investors (and himself) at PIMCO, the investment management firm he co-founded. Forbes estimates his net worth at $1.7 billion. He made most of his money investing in bonds (he’s known as the “Bond King”).
Today, Gross favors a different type of income-generating investment: master limited partnerships (MLPs). Here’s a look at why he prefers them over other pipeline stocks for those seeking tax-advantaged income.
Bill Gross recently wrote about the benefits of investing in MLPs, like Enterprise Products Partners (NYSE: EPD) and Energy Transfer (NYSE: ET), over pipeline corporations, like Kinder Morgan (NYSE: KMI) and Williams (NYSE: WMB). For starters, the MLPs currently have much higher yields compared to their corporate peers:
All four energy midstream companies generate stable revenues backed by long-term contracts and government-regulated rate structures. Further, they all pay out around 50% of their predictable cash flow to investors in dividends (or distributions for the MLPs). The key difference between the two groups is their valuations.
Shares of Kinder Morgan and Williams have surged about 40% and 50%, respectively, this year, while units of the MLPs are up about 20%. Because of that, the pipeline companies now trade at about 20 times their earnings, while the MLPs sell for around 12 times their earnings.
In addition to earning a higher going-in income stream, MLPs offer a unique tax advantage. MLPs benefit from a tax-deferral feature on their distributions that can enable investors to defer taxes on a meaningful percentage of their distributions until they sell their units.
Gross did the math, writing: “The compounding deferral could add as much as 1% or so over a 5-10-year average holding period, turning the 8% average to a 9-10% dividend return on your portfolio.” That extra percentage point can add up over the long term.
Gross dove into the two main factors driving the disconnect between MLPs and pipeline stocks. He noted that many investors don’t like receiving the Schedule K-1 Federal Tax Forms MLPs send their investors each year (pipeline corporations send a 1099-DIV Form). Those K-1s can complicate and add to the expense of preparing individual taxes, so many investors avoid these entities.
Meanwhile, some pipeline companies have a competitive advantage in that they primarily transport natural gas (Kinder Morgan and Williams are leaders in gas infrastructure). That potentially positions them for more growth in the coming years as gas demand surges, fueled partly by the need to power data centers for artificial intelligence. That optimism over gas demand has driven up the valuations of Williams and Kinder Morgan this year.
Meet the Stock-Split Stock Warren Buffett Can't Stop Buying. And It Still Offers 58% Upside, According to 1 Wall Street Analyst.
Those looking to become successful investors could do worse than following in the footsteps of legendary Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) CEO Warren Buffett, arguably one of the greatest investors of all time. Since taking the helm of the company in 1965, Buffett has an unparalleled track record, as his stock picks have generated compounded annual gains of roughly 20% and collectively soared 4,384,748%.
Stock splits have enjoyed a resurgence in recent years, and it’s easy to see why. The practice is generally reserved for companies with consistently strong sales and profit growth, which fuels a surging stock price. In other cases, they can be used to further a corporate action.
Investors might be surprised to learn that despite selling large swaths of Berkshire’s equity portfolio in recent quarters, the so-called “Oracle of Omaha” has been buying up shares of one stock-split stock that he seemingly can’t get enough of — Sirius XM Holdings (NASDAQ: SIRI).
In a regulatory filing that dropped earlier this month, it came to light that Berkshire Hathaway increased its holdings in the satellite radio operator by more than 3.5 million shares, spending more than $86.7 million in the process. That brings Buffett’s total stake to 108.7 million shares, currently worth more than $2.9 billion (as of this writing). With about 339 million shares outstanding, that amounts to about 32% of the company’s outstanding shares.
Sirius XM has struggled in recent years, so why is Buffett buying the stock like it’s going out of style?
First, there’s the company’s industry dominance. When it comes to satellite radio, Sirius is without equal. It has 33 million paying subscribers on its rolls, but its audience climbs to 150 million listeners when you include Pandora, the company’s ad-supported streaming music service.
In the second quarter, revenue declined 3% year over year to $2.18 billion, while earnings per share (EPS) of $0.08 was flat. While that might not seem like much to write home about, a look at several other metrics provides insight into why Buffett finds this business so appealing.
During the quarter, Sirius XM generated free cash flow of $343 million. The company’s roughly 33 million subscribers generate a healthy amount of recurring revenue, as does the advertising on Pandora. The subsidiary reported 2.6 billion listener hours, which helps guarantee robust advertising rates. Buffett is a big fan of recurring cash flow, and Sirius has that in spades.
EW FRAUD ALERT: BFA Law Notifies Edwards Lifesciences Investors of Upcoming December 13 Court Deadline and Encourages You to Contact the Firm (NYSE:EW)
NEW YORK, Oct. 27, 2024 (GLOBE NEWSWIRE) — Leading securities law firm Bleichmar Fonti & Auld LLP announces that a lawsuit has been filed against Edwards Lifesciences Corporation EW and certain of the Company’s senior executives for potential violations of the federal securities laws.
If you invested in Edwards Lifesciences, you are encouraged to obtain additional information by visiting https://www.bfalaw.com/cases-investigations/edwards-lifesciences-corporation.
Investors have until December 13, 2024 to ask the Court to be appointed to lead the case. The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of investors in Edwards Lifesciences securities. The case is pending in the U.S. District Court for the Central District of California and is captioned Patel v. Edwards Lifesciences Corporation, et al., No. 24-cv-02221.
What is the Lawsuit About?
The Complaint alleges that Edwards is an international company that researches, develops, and provides products and technologies for heart valve repair and replacement therapies, as well as critical care monitoring solutions. Edwards categorizes its therapies and technologies into four categories: Transcatheter Aortic Valve Replacement (“TAVR”), Transcatheter Mitral and Tricuspid Therapies (“TMTT”), Surgical Structural Heart therapies, and Critical Care therapies.
As alleged, Edwards consistently touted the TAVR platform, the significant unmet demand for TAVR, and the Company’s ability to capitalize on that demand by scaling its various patient activation activities.
These statements were allegedly materially false and misleading. In truth, TAVR’s demand and growth had stalled as Defendants’ patient activation activities failed to reach the perceived low-treatment-rate population and healthcare organizations prioritized other treatments over TAVR.
On July 24, 2024, Edwards slashed guidance for TAVR for fiscal 2024 and announced disappointing financial results for TAVR for fiscal 2Q 24. This is allegedly because developments in new procedures, including Defendant’s own TMTT, put significant strain on hospital structural heart teams such that they were underutilizing TAVR, despite the Company’s continued claims of a significantly undertreated patient population.
The news disclosed on July 24, 2024 caused a significant 31% decline in the price of Edwards stock, from $86.95 per share on July 24, 2024 to $59.70 per share on July 25, 2024.
Click here if you suffered losses: https://www.bfalaw.com/cases-investigations/edwards-lifesciences-corporation.
What Can You Do?
If you invested in Edwards Lifesciences you may have legal options and are encouraged to submit your information to the firm.
All representation is on a contingency fee basis, there is no cost to you. Shareholders are not responsible for any court costs or expenses of litigation. The firm will seek court approval for any potential fees and expenses.
Submit your information by visiting:
https://www.bfalaw.com/cases-investigations/edwards-lifesciences-corporation
Or contact:
Ross Shikowitz
ross@bfalaw.com
212-789-3619
Why Bleichmar Fonti & Auld LLP?
Bleichmar Fonti & Auld LLP is a leading international law firm representing plaintiffs in securities class actions and shareholder litigation. It was named among the Top 5 plaintiff law firms by ISS SCAS in 2023 and its attorneys have been named Titans of the Plaintiffs’ Bar by Law360 and SuperLawyers by Thompson Reuters. Among its recent notable successes, BFA recovered over $900 million in value from Tesla, Inc.’s Board of Directors (pending court approval), as well as $420 million from Teva Pharmaceutical Ind. Ltd.
For more information about BFA and its attorneys, please visit https://www.bfalaw.com.
https://www.bfalaw.com/cases-investigations/edwards-lifesciences-corporation
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3 Magnificent S&P 500 Dividend Stocks Down 43%, 20%, and 53% to Buy and Hold Forever
Like bargains? Need dividends? No problem. Several of the S&P 500‘s stocks fit both bills at this time, with a bunch of them boasting the makings of a true “forever” holding. Here’s a rundown of three of these best bets right now.
There’s no denying that Pfizer (NYSE: PFE) isn’t quite the pharmaceutical powerhouse it used to be. The loss of patent protection on its blood thinner Lipitor in 2011 was a blow it never quite got over, but it would also be naïve to believe the company’s research and development (R&D) and acquisitions are as strong now as they were in the past. The drugmaking business has also seemingly become even more competitive in the meantime.
That’s why, after a burst of bullish brilliance during and because of the COVID-19 pandemic (Pfizer’s Paxlovid was an approved treatment), this stock’s peeled back 53% from its late 2021 peak.
The long-awaited winds of change are finally blowing, even if in a way that feels more disruptive than helpful. Activist investor Starboard Value is shaking the chains, so to speak, calling Pfizer out for its failures on the drug-development front and the acquisition front. Starboard specifically points out that 2023’s $43 billion acquisition of oncology company Seagen has yet to show meaningful benefit given its high cost, and adds that Pfizer’s failed to turn the 15 drugs it was touting as potential blockbusters in 2019 into those major moneymakers.
In CEO Albert Bourla’s defense, the coronavirus contagion slowed R&D for most pharmaceutical companies, if only by complicating the logistics of drug trials. Nevertheless, Starboard makes several fair points.
But what does this mean for current and prospective shareholders? While it’s typically better when any organization recognizes its own weaknesses and implements much-needed changes, Starboard Value’s involvement should still drive this overdue overhaul.
Nothing about this drama changes anything about Pfizer’s dividend, by the way. It’s not only paid one every quarter like clockwork for years now, it’s also raised its net annual payment for 15 years in a row. This streak isn’t in any real jeopardy, either.
Newcomers will be plugging into the stock while its forward-looking dividend yield stands at 5.8%.
There’s a decent chance you’ve never heard of Realty Income (NYSE: O). Don’t let its lack of notoriety fool you. This $55 billion S&P 500 constituent is here to stay, and thrive.
Realty Income is a landlord. It’s structured as a real estate investment trust, or REIT. REITs are investments that trade like stocks, but pass along the bulk of any rental profits generated by that REIT’s underlying real estate portfolio. It’s an easy way for investors to be in the rental real estate business without the usual hassle of buying, selling, finding tenants, and performing maintenance on a property.