Why 2020 Is Set To Be An Earnings Bonanza

  • 01/07/2020
  • Source: Forbes
  • by: Michael Foster
Why 2020 Is Set To Be An Earnings Bonanza
Think we’re stuck with pathetic dividends and sluggish growth in 2020?

I get it. Many folks I talk to see the coming year this way. Some are even selling stocks, in a doomed effort to “lock in” gains. The problem? What the heck do you do next?

Sitting in cash means watching helplessly as inflation erodes your nest egg. And dividends? Forget it! You’ll kiss those goodbye the moment you hit the “sell” button.

Here’s the good news: you’re not stuck between the pathetic sub-2% payout on regular stocks and the 0% you’ll get in cash. There’s a better way—one that pays you huge 6%+ dividends and regularly crushes stocks!

I’m talking about closed-end funds (CEFs). I’ll give you an example of one that yields 6.6% now and has outrun the S&P 500 since inception shortly.

First, let me tell you why there are good reasons to be optimistic about the markets this year.

Yes, the 30% gain in 2019 was the best one-year return for stocks since 2013, and that’s naturally raised fears that the other shoe is about to drop.

But there’s a missing side to this Chicken Little story: 2019’s run was largely due to the bear market of 2018, which left 2019 with an easier upward path. If you go back over the last two years, you’ll see that stocks are up about 12% annualized, which is a bit on the high end, but far from heady bullish territory.

As a result, my research indicates that we can expect something like a 12% return for 2020, too. It’s not just the continuation of that two-year trend driving my prediction here; there’s one more factor—one you don’t hear enough about: earnings.

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