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While I tend to be very political on social media, investment research is different, as it simply doesn’t matter what our political views are. We have to play the cards we’re dealt, whether we like it or not. Having said all of this, in this article, I’ll present one of the biggest investment opportunities with political tailwinds I have seen in recent years. An idea that could fuel the returns of some of my favorite dividend (growth) stocks.
NBA legend Shaquille O’Neal (or Shaq) once eloquently spoke of the difference between is notion of ‘rich’ and ‘wealthy’. ‘Rich’, he said, are his fellow teammates that get a hefty check, while ‘wealthy’ are the owners who sign those checks. No matter how you define those words, the essence of what he is trying to convey is the power of being in charge of your own destiny. One of the best ways to achieve that is to understand that money is a resource and that it can be put to work for you. That’s why I like high-yield income stocks that distribute most of their earnings to shareholders. In fact, REITs and BDCs are incentivized to do so, as they don’t have to pay federal income taxes at the corporate level so long as they distribute at least 90% of their taxable earnings to shareholders.
This article is based on 100 top sustainable companies as determined by Calvert Research and Management’s annual review of more than 230 Environmental, Social and Governance [ESG] performance indicators, such as workplace diversity, data security, and greenhouse-gas emissions, as reported in the February 21, 2025 edition of Barron’s weekly.
The equities (SPY) are subject to direct consequences of higher tariffs that could hamper their growth, leading to a further repricing on the downside. For bonds (BND) the situation is not better. The second-order effects from the tariffs are inflationary (just as remilitarization, deglobalization and near-shoring). The inflation risk coupled with huge fiscal deficits increase both the credit and term premiums. Namely, the bonds exhibit relatively tight correlations with the equities, which is not good for portfolio protection.
Since the beginning of Q1-22, more sublease space has entered the real estate market, which has put downward pressure on rents. That’s primarily due to higher interest rates as the Biotech sector is an interest-rate-sensitive sector, with its capital-intensive, long-dated assets. The primary capital source for the Biotech space is venture capital (‘VC’), and over the last two years, that form of capital has shifted substantially. There has been a “flight to quality” in larger $100 M+ deals, and much slower for the smaller, early-stage biotech firms.
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