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Wall Street's ‘fear gauge' says there's nothing to fear

Wall Street's ‘fear gauge' says there's nothing to fear

CNBC3 days ago
The Street might have gotten another all-clear signal to keep buying. The Cboe Volatility Index (VIX) , known to many as Wall Street's fear gauge, had its lowest close of the year on Wednesday, ending the day at 14.49. That was its lowest closing level since late December. The VIX measure is calculated through the pricing of S & P 500 options. When the VIX is elevated, it signals investors expect the broader market to see wilder swings over the next 30 days. When it declines, it usually points to smoother sailing ahead for the market — which often sets up stocks for a move higher. .VIX YTD bar VIX year to date What's driving this latest move lower in the VIX? Expectations of Federal Reserve rate cuts have a lot to do with it. The CME Group's FedWatch tool points to a 96.5% chance that the central bank will cut its overnight rate next month. Traders are also pricing in two more rate cuts after that. That's not only assuaged investor concerns, as reflected by the VIX; it's also reawakened "animal spirits" on the Street. Goldman Sachs this week advised clients to buy call options on stocks with high retail participation, some of which can be categorized as "meme stocks." The presence of these animal spirits was also shown in Paramount Skydance . The stock on Wednesday had its best day ever, soaring 37%. There was no obvious catalyst for the move, yet the movie studio and CBS television parent had its biggest volume day since March 2021, with some 133.7 million shares traded. PSKY 5D mountain PSKY 5-day chart To be sure, contrarians will argue this is the calm before the storm. Before this week, the VIX hadn't closed below 15 since Feb. 14. The S & P 500 then closed at 6,144 on Feb. 19, a record at the time. What ensued in the weeks ahead was a sell-off that nearly knocked the benchmark index into a bear market. Andrew Brenner of NatAlliance Securities also noted that commodity trading advisors, or CTAs, who bet on broad market trends, are "at the 94% Percentile of being long equities." "With everyone near all in, who is left to buy?
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Key Points Brookfield Infrastructure Partners and MPLX offer high yields due in part to their tax complications. EPR Properties, Main Street Capital, and Realty Income pay monthly dividends. These companies all expect to continue increasing their high-yielding dividends in the future. 10 stocks we like better than Realty Income › With the market continuing its upward move this year, dividend yields have continued to fall. The S&P 500's yield is around 1.2%, near its lowest level in over two decades. However, several stocks still offer attractive dividend yields. Here are five high-quality dividend stocks with yields well over 5%. Brookfield Infrastructure Partners Brookfield Infrastructure Partners (NYSE: BIP) currently yields around 5.8%, which is higher than the yield of its economically equivalent corporate twin, Brookfield Infrastructure Corporation (NYSE: BIPC), at 4.4%. While both entities provide investors with access to Brookfield's global infrastructure assets, BIP offers a higher payout due to its partnership structure and because it sends investors a Schedule K-1 federal tax form, which can complicate tax returns. BIPC, in contrast, delivers a lower yield but issues a 1099-DIV, a simpler tax report for investors. The global infrastructure operator generates stable cash flow. About 85% of its funds from operations (FFO) comes from long-term contracts or regulated frameworks. Meanwhile, Brookfield pays out a conservative portion of its stable cash flow in dividends (60%-70%). It also has a solid investment-grade balance sheet. Those features give it the flexibility to continue investing in growing its business. Brookfield expects to deliver FFO per share growth of 10% or more, fueled by inflation-driven rate increases, expansion projects, and acquisitions. This easily supports its plan to provide annual dividend increases of 5% to 9% over the long term, further extending its 16-year growth streak. EPR Properties EPR Properties (NYSE: EPR) currently yields 6.7%. The real estate investment trust (REIT) pays its dividends monthly, making it highly attractive for those seeking a lucrative passive income stream. The REIT focuses on investing in experiential real estate such as movie theaters, eat & play venues, attractions, and fitness and wellness properties. It leases these properties back to operating tenants under long-term, primarily triple net agreements (NNN). Those leases provide it with predictable rental income to cover its high-yielding dividend. EPR Properties utilizes a combination of excess cash flow generated after paying dividends, noncore property sales, and balance sheet capacity to invest in additional experiential properties. It aims to invest between $200 million and $300 million annually in acquisitions, development projects, and redevelopments. This investment rate should grow its income per share by 3% to 4% annually, supporting a similar dividend growth rate. Main Street Capital Main Street Capital (NYSE: MAIN) is a business development company (BDC) with a rather unique dividend policy. It pays a monthly dividend set at a sustainable level, allowing investors to receive a recurring income stream they can count on. It has never decreased or suspended this payment. Instead, it has raised it by a cumulative 132% since going public in late 2007. Additionally, Main Street periodically pays a supplemental quarterly dividend. The company's most recent payments gave it a 6.6% yield. The BDC supports its dividend payments with a portfolio of debt and equity investments that generate interest and dividend income. The company sets its monthly dividend below its expected income to enhance durability. It also maintains an investment-grade credit rating. Main Street Capital uses its financial flexibility to make more income-generating investments, enabling it to steadily increase its monthly dividend and provide higher supplemental payments. MPLX MPLX (NYSE: MPLX) is a master limited partnership (MLP), similar in structure to Brookfield Infrastructure Partners. Like Brookfield, MPLX also sends a Schedule K-1 tax form to its investors, which affects tax reporting. The energy midstream company yields more than 7.5%. The MLP generates stable cash flow backed by long-term contracts and regulated rate structures. MPLX currently produces enough cash to cover its lucrative distribution by 1.5 times. That allows it to retain cash to fund expansion projects while maintaining its strong financial profile. It currently has a 3.1 times leverage ratio, well below the 4.0x range its stable cash flows can support. 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Realty Income has increased its dividend 131 times since its public market listing in 1994 (including the last 111 quarters in a row). That steady growth should continue as the REIT acquires more income-producing real estate. With one of the strongest financial profiles in the industry and $14 trillion of real estate suitable for net leases, Realty Income has plenty of room to continue expanding. Great high-yielding dividend stocks to buy for income These five companies have excellent dividend-paying track records. That's due in part to their stable and growing cash flows, as well as their strong financial profiles. With these strengths, they should be able to continue growing their high-yielding payouts well into the future. If you're looking to boost your income and build a solid foundation for your portfolio, these dividend stocks are great ones to consider buying and holding for the long term. Should you invest $1,000 in Realty Income right now? Before you buy stock in Realty Income, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Realty Income wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $668,155!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,106,071!* Now, it's worth noting Stock Advisor's total average return is 1,070% — a market-crushing outperformance compared to 184% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 13, 2025 Matt DiLallo has positions in Brookfield Infrastructure, Brookfield Infrastructure Partners, EPR Properties, Main Street Capital, and Realty Income. 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