Robo-advisor Betterment has told investors using its direct cryptocurrency investing service that they have a month to convert those investments into ETFs.

The decision to shutter the two-year-old crypto investing platform, which New York-based Betterment announced to platform users via email on Oct. 16, is seen as a sign of things to come that will likely benefit the crypto ETF space.

“Now that the ETFs are here, Betterment can jettison all that and replace the allocation with a far superior offering,” said Ric Edelman, founder of the Digital Assets Council of Financial Professionals and a member of the etf.com advisory board.

Citing the contrast between Bitcoin ETFs with fees as low as 12 basis points and the 1% investors are charged by the Betterment platform that was linked to Gemini, Edelman said, “It’s a win-win.”

“Clients save money, gain improved convenience and better abilities for portfolio rebalancing, and the company gets to eliminate a cumbersome and expensive internal operations function,” he said. “And those crypto bros who want to keep their positions can do so by working directly with Gemini.”

Betterment Nods Toward Crypto ETFs

Betterment declined to comment for this story, but a spokesperson did confirm the accuracy of a report by RiaBiz.com.

The story didn’t say that Betterment had recommended a particular crypto fund for clients.

Tyrone Ross, chief executive of 401 Financial and Turnqey Labs, said Betterment’s decision to offer access to crypto currency models was innovative and important two years ago, but since the Securities and Exchange Commission this year approved Bitcoin and Ethereum ETFs, that picture has changed.

“I’m a fan of holding the underlying directly, but for most investors who are not crypto savvy, the best choice is investing through an ETF,” said Ross, who added that he would never advise a sophisticated crypto investor to use a crypto ETF.

“I abhor everything about the crypto ETFs,” he said. “There’s the fees, the fact there is no direct ownership, it doesn’t solve a lot of the issue advisors still have in the crypto space, and it’s just a money grab by ETF issuers.”

That said, Ross expects to see more platforms go the Betterment route of offering access to crypto ETF model portfolios, which he sees as a boon for those ETFs.

“I think you’ll see a lot of platforms that were using companies like Gemini start to move over to ETFs,” he said.

Edelman sees a similar evolution.

“Betterment is not just helping its clients and itself, it’s showing all advisory firms how easy this is to do,” he added. “There’s truly no reason anymore for RIAs not to offer bitcoin and Ethereum to their clients.”

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Meanwhile, Chris King, founder of the crypto separate account platform Eaglebrook, sees a future where crypto ETFs and direct ownership in crypto become strategies that advisors turn to when customizing client portfolios.

“As crypto continues to evolve as standard portfolio allocations, we expect advisors to utilize crypto ETFs and crypto SMAs based on which best suits their clients’ particular needs,” he said.

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If you’re approaching or entering retirement — and, really, even if you’re far from retirement — consider including a big bunch of dividend-paying stocks in your portfolio. You can expect healthy and growing companies that pay dividends to increase in value over time and to generate cash for you regularly. Their dividend payouts will tend to increase over time, too.

Retirees can use that cash to help support themselves, and pre-retirees might just reinvest those dividends into more shares of stock. (Some good brokerages offer to reinvest your dividends for you automatically.)

Why dividends?

Don’t underestimate the power of dividends. After all, the fact that a company has committed to paying a dividend means that it has grown to a point where management is confident that earnings will support such a payout. Dividend payers tend to outperform non-payers, too.

Check out the numbers for S&P 500 companies below, from a Hartford Funds report:

Data source: Ned Davis Research and Hartford Funds.

How to invest in dividend payers easily

One of the best — and easiest — ways to invest in dividend-paying stocks is to do so via exchange-traded funds (ETFs). An ETF is a fund — which often tracks a particular index — that trades like a stock.

Below are seven dividend-focused ETFs to consider, plus a simple S&P 500 index fund for comparison purposes — and also because it’s a darn fine ETF for anyone to consider.

Data source: Morningstar.com, as of Oct. 15, 2024.

Each ETF, in a nutshell

You’ll notice that some of the funds sport hefty dividend yields, while others feature some terrific long-term growth rates over the past five and 10 years. In investing, there’s generally a trade-off between growth and income. Here’s a little more about each of these index funds and the index that each tracks:

• iShares Preferred & Income Securities ETF: This tracks the ICE Exchange-Listed Preferred & Hybrid Securities Index, which includes a group of U.S. dollar-denominated preferred securities, hybrid securities, and convertible preferred securities. Note that preferred stocks tend to not increase in value much and their dividends aren’t usually big growers, either — but they do tend to feature generous payouts.

• Schwab U.S. Dividend Equity ETF: This ETF tracks the Dow Jones U.S. Dividend 100 Index of high-dividend-yielding U.S. stocks that have consistently paid dividends. The ETF’s biggest holdings recently were Home Depot, BlackRock, and Cisco Systems.

• iShares US Real Estate ETF: This ETF tracks the Dow Jones U.S. Real Estate Capped Index and encompasses many real estate investment trusts (REITs) — companies that own many properties and earn income by renting them out. This ETF’s top holdings recently included Prologis, American Tower, and Equinix. Respectively, they specialize in warehouses, telecommunications towers, and digital infrastructure, among other things.

• Vanguard High Dividend Yield ETF: This ETF tracks the FTSE High Dividend Yield Index and focuses on domestic stocks with high dividend yields (excluding REITs). Its recent top holdings included Broadcom, JPMorgan Chase, and ExxonMobil.

• SPDR S&P Dividend ETF: This ETF tracks the S&P High Yield Dividend Aristocrats Index, which encompasses companies that have paid dividends for at least 20 years and that meet certain criteria tied to liquidity and size. (The term Dividend Aristocrats® is a registered trademark of Standard & Poor’s Financial Services LLC.) Its top holdings recently included Realty Income, Kenvue, and IBM.

• iShares Core Dividend Growth ETF: This ETF tracks an index of U.S. stocks with a history of consistently growing dividends. Its top holdings recently were ExxonMobil, Apple, and Microsoft.

• Vanguard Dividend Appreciation ETF: This ETF tracks the S&P US Dividend Growers Index, which features companies that have increased their payouts for at least 10 consecutive years. The top holdings recently were Microsoft, Apple, and Broadcom.

• Vanguard S&P 500 ETF: This ETF, which tracks the S&P 500, is here for comparison purposes. It, too, features a dividend yield, but it also includes plenty of non-dividend payers. While the dividend yield isn’t very big, the fund makes up for that with a solid track record of growth. (Note that despite the returns in the table above, the long-term average annual gain of the stock market is closer to 10% than 16%.)

So consider any or all of these ETFs for your long-term portfolio, whether you’re in or approaching retirement or have decades to go before retiring.

Don’t miss this second chance at a potentially lucrative opportunity

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 $21,285!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $44,456!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $411,959!*

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 14, 2024

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Selena Maranjian has positions in American Tower, Apple, Broadcom, Microsoft, Realty Income, and Schwab U.S. Dividend Equity ETF. The Motley Fool has positions in and recommends American Tower, Apple, Cisco Systems, Equinix, Home Depot, JPMorgan Chase, Kenvue, Microsoft, Prologis, Realty Income, Vanguard Dividend Appreciation ETF, Vanguard S&P 500 ETF, and Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF. The Motley Fool recommends Broadcom and International Business Machines and recommends the following options: long January 2026 $13 calls on Kenvue, long January 2026 $180 calls on American Tower, long January 2026 $395 calls on Microsoft, long January 2026 $90 calls on Prologis, short January 2026 $185 calls on American Tower, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

These 8 Index ETFs Are a Retiree’s Best Friend was originally published by The Motley Fool

Autozone and O’Reilly are the two giants in the car-parts retail space. These two companies have market capitalizations of $53 billion and $71 billion, respectively. By comparison, Advance Auto Parts (NYSE: AAP) is tiny with its market cap of just $2.4 billion. But this value disparity is somewhat surprising.

Advance has almost 4,800 locations, while Autozone has nearly 7,400 and O’Reilly has around 6,200. So the latter two are bigger, but not by the margin that the market valuations would suggest.

For its part, Advance has problems that can’t be sugarcoated. But it’s working to fix them. And it’s about to get a $1.2 billion payday to help fund its turnaround, which is an unbelievable amount for a company with such a low valuation.

How is Advance getting a big payday?

On top of its namesake retail chain, Advance also owns other businesses, namely Carquest and Worldpac. Last year, the company hired CEO Shane O’Kelly, who’s trying to restructure the business. This restructuring includes selling the Worldpac business.

In August, Advance reached a deal to sell Worldpac for $1.5 billion. Taking transaction expenses into account, the company will net about $1.2 billion — half of its current market cap. The deal is expected to close in the fourth quarter.

Advance says that Worldpac has generated $2.1 billion in trailing-12-month revenue and has earned $100 million in earnings before interest, taxes, depreciation, and amortization (EBITDA). This means that Advance sold it for 0.7 times its sales and 15 times its EBITDA.

That’s more than a fair sales price. For perspective, Advance stock trades at 0.2 times sales and at about 7 times EBITDA. So the sales price for Worldpac represents a significant premium to where Advance stock itself trades today.

How Advance’s windfall can help

O’Kelly says that selling Worldpac gives Advance more “financial flexibility” as it navigates the changes it needs to make. And to be sure, the changes are going to be substantial.

They need to be, considering how poorly Advance has performed relative to its peers. Take one metric: the operating-profit margin. For the past decade, both Autozone and O’Reilly have had operating margins mostly between 18% and 20%. By comparison, Advance has averaged an operating margin of about 6%, and it’s fallen even lower than that lately.

Advance hired O’Kelly to fix this profitability problem. The new CEO is a supply chain expert and quickly realized that Advance is struggling with profitability because of its inefficient supply chain infrastructure.

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A multiyear supply chain transformation is already underway for Advance, and I’m optimistic that this will completely transform returns for shareholders.

Consider that if Advance can squeeze a 10% margin from its business — still half of what its peers have — it can generate close to $1 billion in annual profits. After all, even after selling Worldpac, Advance still generates over $9 billion in annual sales. And if the stock is valued at 10 times its operating profit, then shares could quadruple in value in this scenario.

Therefore, restructuring the supply chain is crucial for Advance and its shareholders. But it’s costly, and the company’s balance sheet isn’t the greatest. It has almost $1.8 billion in long-term debt and less than $500 million in cash and equivalents. To be clear, it’s not in danger of running out of liquidity anytime soon. But this is an unattractive net-debt position nonetheless.

Selling Worldpac will even out Advance’s balance sheet and give it just a little more breathing room. And this breathing room will allow management to make the business decisions that will set it up best for long-term success.

This is why I couldn’t be more optimistic about Advance stock now that it’s selling Worldpac. And if the turnaround is successful, the stock is trading at quite the bargain valuation today.

Should you invest $1,000 in Advance Auto Parts right now?

Before you buy stock in Advance Auto Parts, 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 Advance Auto Parts 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 $845,679!*

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 14, 2024

Jon Quast has positions in Advance Auto Parts. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

This $2.4 Billion Company Is About to Get a $1.2 Billion Payday. Here’s Why I Couldn’t Be More Optimistic was originally published by The Motley Fool

I viewed utilities as boring investments for much of my life. The closer I get to retirement, though, the more I realize the truth of the statement, “Boring is beautiful.”

My portfolio now includes several utility stocks. And I recently added another: UGI Corporation (NYSE: UGI). Why did I buy shares of UGI? Three key reasons rank at the top of the list.

1. A resilient business

The last thing I want to invest in these days is a company that could go under because of a bad move or two. UGI isn’t that kind of company because its business is highly resilient.

UGI owns AmeriGas, the largest retail propane distributor in the U.S. It operates natural gas utilities serving customers in Pennsylvania, Maryland, and West Virginia.

The company’s electric utility serves customers in Pennsylvania, and its Energy Services subsidiary operates natural gas pipelines and natural gas storage facilities. UGI also owns a liquified petroleum gas (LPG) distribution unit that serves several European countries.

The company has been in business for 142 years. It expects to deliver average long-term earnings-per-share growth of between 4% and 6%.

Sure, AmeriGas’ earnings have been highly volatile. Last year, Fitch lowered its outlook on the business to negative from stable.

However, UGI is committed to stabilizing AmeriGas by controlling costs and strengthening its balance sheet. Those efforts seem to be bearing fruit, based on the company’s solid fiscal 2024 third-quarter results.

2. An impressive dividend

I’d be lying if I said UGI’s dividend wasn’t an important part of my decision to buy the stock. Its forward dividend yield is an ultra-high 5.95%. Its payout ratio also stands at a reasonable level of 47.8%.

UGI has paid a dividend for 140 consecutive years, and that’s not a typo. The utility company first paid a dividend way back in 1884 and hasn’t missed a beat since. Few dividend stocks have such a reliable track record.

Over the last 10 years, UGI has increased its dividend by a compound annual growth rate of 6%. Granted, the company won’t give shareholders a dividend hike this year and doesn’t expect to do so in fiscal 2025 or 2026, either, as it focuses on strengthening its balance sheet. However, UGI plans to return to increasing its dividend payout by roughly 4% per year in fiscal 2027 and beyond.

3. An attractive valuation

UGI’s share price has trended mainly downward over the last three years. Its AmeriGas challenges served as a primary culprit behind this disappointing performance. However, there’s a positive side effect of the stock’s decline — an attractive valuation.

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Zacks Equity Research gives UGI a grade of “A” on valuation, and the stock trades at only 8x forward earnings. That’s less than half the average forward price-to-earnings ratio of 18.8 for the S&P 500 utilities sector.

I might view UGI as a value trap if I didn’t think its future looked brighter than its recent past, but that’s not the case as the company’s financials are improving. It expects to deliver reliable earnings growth going forward.

Plus one bonus

Some investors like to “bet on the jockey and not the horse.” My take is that if the horse is fast enough, it doesn’t matter much who the jockey is. That said, I want solid, capable management in charge of the companies in which I invest.

It was a nice bonus, therefore, when UGI named Bob Flexon as its new CEO, effective Nov. 1, 2024. Flexon served as UGI’s CFO for roughly six months in 2011 and was CEO of power company Dynegy from July 2011 to April 2018. He’s also been CEO of engineering and construction contractor Foster Wheeler and CFO and COO of NRG Energy.

I didn’t load up on UGI stock because Flexon is taking the helm of the company, but he exemplifies the kind of leadership I like to see. With Flexon as CEO, I expect UGI will deliver the steadiness that investors want.

Should you invest $1,000 in UGI right now?

Before you buy stock in UGI, 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 UGI 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 $839,122!*

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 14, 2024

Keith Speights has positions in UGI. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why I Just Bought This Ultra-High-Yield Dividend Stock was originally published by The Motley Fool

As almost every investor knows by now, artificial intelligence (AI) has been driving the current bull market since its start in 2023.

The launch of OpenAI’s ChatGPT has set off a new arms race in the industry, and generative AI technology could be as transformative as the internet. While stocks with exposure to artificial intelligence, like the semiconductor sector, have generally done well, some stocks have done better than others.

Nvidia, for example, just set another all-time high on soaring demand for its new Blackwell platform, but not every AI stock has kept up with the Nasdaq Composite, which nearly set an all-time high earlier this week. In fact, ASML (NASDAQ: ASML) is now down 34% from its peak earlier this year after the industry bellwether gave a disappointing forecast in its third-quarter earnings report on Tuesday. The stock fell 16.3% on the news.

Why ASML stock just went on sale

ASML occupies a unique position in the semiconductor industry as the only maker of extreme ultraviolet (EUV) lithography machines, which are used to make the most advanced, smallest-node chips.

Investors have been looking forward to a recovery in ASML’s business after an earlier slowdown due to macrochallenges like high interest rates and inflation.

ASML is expected to benefit from the expansion of chip fabs around the world as governments and industries prepare for the AI era. The U.S., for example, is planning to invest tens of billions of dollars through the CHIPS Act to build foundries, and Taiwan Semiconductor, the world’s biggest foundry operator, is looking to diversify away from Taiwan and move closer to its customers.

While that should be a tailwind for ASML, the company just told customers that recovery would take longer than expected. Citing weakness in both the logic and memory segments, which make up two of its three business segments, CEO Christophe Fouquet said, “It now appears the recovery is more gradual than previously expected.” He also noted customer cautiousness.

ASML dialed back the 2025 revenue forecast it gave at its 2022 Investor Day from 30 billion euros to 40 billion euros ($33 billion dollars to $43 billion dollars) to 30 billion euros to 35 billion euros ($33 billion dollars to $38 billion dollars). Not surprisingly, investors were disappointed with the news.

Why it’s a buying opportunity

Companies tend to give disappointing earnings reports and forecasts for one of two reasons: Either there are challenging market conditions at the macrolevel or sector level, or the company itself isn’t executing well and is falling behind the competition.

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ASML’s case looks to be safely in the first category. While there’s plenty of excitement about AI, which management nodded to, there are still some challenges in the legacy-chip business, reflected in key customers like Intel and Samsung, both of which are struggling.

Samsung is reportedly delaying mass production at a fab in Texas due to weak yields in its 3-nanometer process, and Intel just announced a massive restructuring, calling into question its foundry expansion. In recent quarters, half of ASML company’s revenue has also come from China, where the economy has been weak since the end of the pandemic.

For comparison, a good recent example of a company that struggled with similar headwinds was Alphabet as digital advertising slowed in 2022 on fears of a recession, as you can see from the chart below.

As you can see, revenue growth dropped to just 1% in 2022’s Q4, but if you had bought the stock then, you’d be up more than 80% now.

ASML retains a significant competitive advantage as the only producer of EUV lithography machines, and it should eventually benefit from the coming boom in chip production due to AI.

Even with its dialed-down guidance, the company is still calling for 16.1% growth at the midpoint and expects expanding gross margins and operating margins.

As profits recover, the stock looks like a good bet to bounce back now that the weak forecast is priced in. With its unique EUV technology, strong margins, and ramping AI demand, ASML looks like a great bet to be a winner over the long term.

Don’t miss this second chance at a potentially lucrative opportunity

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 $21,285!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $44,456!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $411,959!*

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 14, 2024

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: short November 2024 $24 calls on Intel. The Motley Fool has a disclosure policy.

Down 34%, This AI Stock Is a No-Brainer Buy Stock Right Now was originally published by The Motley Fool