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Dividend-Paying Turnaround Investing Stocks

We here at The Turnaround Letter have always liked dividend paying stocks for three principal reasons:

First, if the stock stays flat for a while, you get paid something while you wait for it to move up.
Second, if the market goes down, stocks that pay dividends tend to go down less because their holders are not quite so anxious to sell them.
Third even though dividend rates may seem low, they add up to real money over time. If you hold a stock that has a 3% dividend yield for four years, the dividend adds 12% of incremental return. As a friend of ours likes to say, “That’s better than a poke in the nose.”

Recently, investors have been pouring into certain dividend paying stocks, particularly utilities and REITs as bond substitutes, since actual bond yields are so low. That has pushed the prices of these bond substitutes up quite a bit over the last year or two, and we think they may be vulnerable when interest rates finally do begin to rise.

MoneyShow.com's Steve Halpern recently interviewed me on this topic and the potential dangers of an uninformed investment strategy. Read or listen to the full article for my turnaround investing advice.

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Tupperware: Not a Good Fit as a Turnaround Stock

At first glance, the shares have decent appeal as a turnaround investment. Looking deeper, however, the fundamentals are not as strong and stable as they appear. Surplus cash flow is tight, a key driver is weakening, it is increasingly reliant on China and has other nagging issues. We don’t see the new CEO as a catalyst for change. Despite the “first glance appeal”, Tupperware isn’t a good fit as a turnaround stock. Read More.

Harnessing Activists to Help Find Turnaround Stocks

Activist investors often produce attractive returns for their clients; and you can still use their influence to help your position as a turnaround investor in two ways: Buy a position in a stock with the expectation that an activist will soon follow or buy after an activist takes a stake.

While one of the many dozens of activist funds might find their way to selecting your particular stock, this approach is likely to be frustrating and unrewarding. A better approach is to buy after the activist makes their move. Once an activist takes a stake in a company, how do you evaluate whether it is worthwhile to follow on? Admittedly, this is a bit of an art... Learn how you can harness the power of activist investors to find market-beating turnaround stocks.

Turnaround Letter Stock Pick Named Top Performer of 2017

What Last Year's Top Stock Pickers Are Buying in 2018

This Forbes write-up follows up on the recent Top Stock Tips report--naming The Turnaround Letter's Crocs recommendation the top performer of 2017: With 90% gains, CROX beat out 100 other investment ideas included in the report; and the stock continues to have value investing appeal, according to Putnam.

George notes, "We see additional upside for the stock in 2018 as management's efforts continue to bear fruit, though the gains will likely be more muted than we saw in 2017."

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