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While there are undeniable question marks for Wall Street, there’s a much bigger concern for stocks that transcends Election Day.

Even with the possibility of a few states not having complete election data available on Nov. 5, America will know relatively soon thereafter whether Kamala Harris or Donald Trump will be the next president. Once this big question is answered, investors are going to, once again, turn their attention to Wall Street’s glaring problem: its historically high valuation.

There are a lot of metrics that help investors determine whether a stock is cheap or pricey, relative to its peers and the broader market. The most well known of these tools is the price-to-earnings (P/E) ratio, which divides a company’s share price into its trailing-12-month EPS.

While the traditional P/E ratio has its uses, there’s another valuation tool that provides a comprehensive look at broader-market valuations dating back more than 150 years. This metric is the S&P 500’s Shiller price-to-earnings ratio, which is also known as the cyclically adjusted price-to-earnings ratio (CAPE ratio).

The Shiller P/E is based on average inflation-adjusted EPS from the previous 10 years. Whereas the traditional P/E can be flummoxed by one-off events, such as lockdowns during the COVID-19 pandemic, the Shiller P/E does an excellent job of smoothing out these shock events to create apples-to-apples comparisons.

As of the closing bell on Oct. 30, the S&P 500’s Shiller P/E was 37.05, which is more than double its all-time average of 17.17, when back-tested to January 1871. This also represents the third-highest reading during a continuous bull market in history.

History has been extremely unkind to the Dow Jones, S&P 500, and Nasdaq Composite following the few prior occurrences when the Shiller P/E surpassed 30. Including the present, topping a reading of 30 during a bull market has only happened six times in 153 years. The five previous instances all resulted in losses ranging from 20% to 89% for Wall Street’s major stock indexes.

The caveat to the Shiller P/E is that it’s not a timing tool. Valuations can remain extended for a few weeks, as they did prior to the COVID-19 crash, or multiple years, as we witnessed prior to the dot-com bubble bursting. However, this metric clearly shows that premium valuations are unsustainable over long periods.

Thus, Election Day may represent an ominous turning point for Wall Street.

While select forecasting tools and valuation metrics suggest the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite are each headed for a meaningful correction, history also has something positive to offer patient investors.

Every year, the analysts at Crestmont Research update a published data set that calculates the rolling 20-year total returns, including dividends paid, of the broad-based S&P 500. Even though the S&P didn’t come into existence until 1923, researchers were able to track the performance of its components in other indexes dating back to 1900. Thus, Crestmont was able to gauge the total return performance of the S&P 500 over 105 separate rolling 20-year periods (1919-2023).

What Crestmont Research’s data set shows is that all 105 rolling 20-year periods produced a positive total return. In fact, more than 50 of these periods generated an annualized return of at least 9%. Put in another context, if you, hypothetically, purchased an S&P 500 tracking index at any point since 1900 and held it for 20 years, you would have made money every single time.

Regardless of who was elected president, which political party was in power, or how pricey or cheap Wall Street was perceived to be, patience has been consistently rewarded on Wall Street.

This isn’t the only data set that confirms how much of an ally time can be for investors, either.

In June 2023, the analysts at Bespoke Investment Group published a data set on X, the social media site formerly known as Twitter, which examined the calendar-day length of 27 separate bear and bull markets in the S&P 500 since the start of the Great Depression in September 1929.

According to Bespoke’s calculations, the average S&P 500 bear market has lasted 286 calendar days, while the typical bull market has endured for 1,011 calendar days. To boot, 14 out of 27 bull markets have stuck around longer than the lengthiest S&P 500 bear market on record.

Regardless of what predictive metrics suggest can happen over the short run, time and history continue to be in the corner of long-term-minded investors.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $20,993!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $42,736!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $407,720!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 28, 2024

Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.

Prediction: Election Day Will Represent an Ominous Turning Point for Wall Street was originally published by The Motley Fool

The midstream company will pay its distribution on Nov. 19. However, you must be a unit holder of record by the close of business on Nov. 8 to receive its next distribution payment.

That upcoming distribution payment is another reason investors might want to consider buying Energy Transfer sooner rather than later. If you buy after Nov. 8, you might pay a higher price for the MLP’s units and won’t receive your first distribution payment for another 90 days.

While there are compelling reasons to buy Energy Transfer before the market closes on Nov. 6, there are plenty of reasons why investors might want to be more patient.

Even if units of Energy Transfer spike after it reports earnings, investors would likely still lock in a very lucrative yield that is currently approaching 8%. That’s much higher than the current dividend yield on the S&P 500 (SNPINDEX: ^GSPC), which is less than 1.5%, due to the MLP’s bottom-of-the-barrel valuation. Meanwhile, as mentioned, the company plans to continue growing its distribution in the future, suggesting there will be plenty of income to come.

Another reason some investors might want to wait is to take the time to understand the ins and outs of investing in an MLP, which differs from traditional corporations. A big one is that they send their investors a Schedule K-1 federal tax form each year, which can complicate and add to the expense of filing your taxes. However, those tax complications can make investing in MLPs well worth the hassle, given their other tax advantages.

There are a couple of compelling reasons to buy Energy Transfer before Nov. 6. It reports earnings that day, while investors must own units by the 8th to collect the next distribution payment. So, if you want to ensure you own units before a potential price spike and collect the upcoming distribution, you should buy them soon.

That said, don’t feel like you need to rush out and purchase units if you still need to finish your research, since it trades at a low valuation and plenty more distribution payments are coming down the pipeline. It’s better to make a fully informed investment decision than to buy a stock before you know what you’re getting into.

Before you buy stock in Energy Transfer, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Energy Transfer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $813,567!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of October 28, 2024

Matt DiLallo has positions in Energy Transfer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Here’s Why Energy Transfer Stock Is a Buy Before Nov. 6 was originally published by The Motley Fool

Here’s a little information on each of these funds.

• iShares Preferred & Income Securities ETF: This is full of about 443 U.S. preferred stocks and hybrid securities. Note that preferred stocks generally don’t appreciate much in value, and their dividends aren’t usually big growers, either — but they do tend to deliver generous passive income.

• SPDR Portfolio S&P 500 High Dividend ETF: This ETF will have you invested in the 80 highest-yielding stocks within the S&P 500 index.

• SPDR S&P Dividend ETF: This ETF features about 133 stocks from within the S&P 1500 Composite Index that have increased their dividends for at least 20 consecutive years.

• Schwab U.S. Dividend Equity ETF: This ETF tracks the Dow Jones U.S. Dividend 100 Index, which is focused on 100 high-yielding U.S. stocks with solid fundamentals and consistent payments.

• Vanguard High Dividend Yield ETF: This ETF tracks the FTSE High Dividend Yield Index of high-yielding companies and recently encompassed around 550 of them.

• First Trust Rising Dividend Achievers ETF: This ETF is focused on the Nasdaq US Rising Dividend Achievers index of about 50 companies of various sizes that have been paying growing dividends and seem healthy enough to continue doing so.

• Vanguard Dividend Appreciation ETF: This ETF tracks the S&P U.S. Dividend Growers Index of about 340 large-cap stocks with a solid record of dividend increases.

• iShares Core Dividend Growth ETF: This ETF is another one focused on U.S. stocks, around 400 of them, that have been consistently paying — and increasing — dividends.

• Fidelity High Dividend ETF: This ETF features around 107 medium-sized and large companies that are poised to keep paying and increasing their dividends.

The list above might seem overwhelming, so here are some thoughts that can guide your decision-making:

• If your workplace 401(k) plan is administered by Fidelity, Schwab, or Vanguard, you might find one or more of the funds above among the investments you can choose from.

• There’s often a trade-off between growth and yield. So the preferred-stock ETF here features the highest recent yield, near 6%, but that yield isn’t going to grow much.

• The S&P 500 index fund at the bottom of the chart sports the lowest yield, but the highest average annual gains.

• You might split your dollars between one or a few funds with fatter yields and one or a few that are likely to appreciate in price rapidly. (Note that some ETFs have even bigger growth rates, though they tend to pay little in dividends.)

• Never forget the power of dividend growth. Don’t write off small dividends if they’ve been increasing rapidly — and, thus, don’t discount some of the smaller yields in the table above if the ETF is focused on dividends that are growing. For example, consider Automatic Data Processing, which recently sported a yield of 1.93%. But look into its dividend history, and you’ll see a recent annual dividend of $5.60 per share, up from $4.37 in 2022 and $3.28 in 2019. Buying ETFs with smallish but rapidly growing dividends can be a great long-term move.

If you want to look even further afield for ETFs that are cranking out lots of passive income, you might look into some that invest via junk bonds and options, or some that feature lower volatility.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $20,993!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $42,736!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $407,720!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 28, 2024

Selena Maranjian has positions in Schwab U.S. Dividend Equity ETF. The Motley Fool has positions in and recommends Vanguard Dividend Appreciation ETF, Vanguard S&P 500 ETF, and Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF. The Motley Fool has a disclosure policy.

9 High-Yield Dividend ETFs to Buy to Generate Passive Income was originally published by The Motley Fool

It’s not hard to imagine how this is affecting revenue and scale. Revenue increased 65% year over year in the second quarter, a typical increase, but the membership growth is only half of the story. The other half is that members continue to use more services on Nu’s platform, leading to higher revenue per user and higher overall revenue growth. This is a strong signal of consumer satisfaction and long-term potential. Average revenue per active user was up 30% year over year in the second quarter.

Nu was a riskier play when it went public, as many initial public offering (IPO) stocks are, because it wasn’t net profitable on a generally accepted accounting principles (GAAP) basis. But it has reported GAAP net income for six straight quarters, and it’s been growing phenomenally.

As an all-digital bank that skips costly real estate and relies on technology in place of human interaction, it has operating leverage. Its cost to serve has remained relatively stable despite its growth. Net interest income increased 77% year over year in the second quarter, with the margin widening from 18.3% to 19.8%.

As you might imagine, Nu stock is riding high, and it’s nearly doubled during the past year. At the current price, it trades at a forward, one-year price-to-earnings (P/E) ratio of less than 26, which looks cheap compared to other growth stocks. Amazon, the other stock these three money managers own, trades at a forward P/E of 32.

The billionaires who are scooping up Nu stock are onto something here, and although I often caution investors about following billionaire stock pickers into their institutional holdings, Nu looks like a clear winner for the growth-oriented investor.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $20,993!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $42,736!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $407,720!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 28, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jennifer Saibil has positions in Nu Holdings. The Motley Fool has positions in and recommends Amazon and Berkshire Hathaway. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.

Billionaire Israel Englander Just Tripled His Investment in This Stock That Warren Buffett and Cathie Wood Also Own was originally published by The Motley Fool