Investing

A logo of the Exxon Mobil Corp is seen at the Rio Oil and Gas Expo and Conference in Rio de Janeiro, Brazil September 24, 2018.
Sergio Moraes | Reuters

Dividend-paying stocks are looking even more attractive as investors grapple with a spike in bond yields and a tumultuous stock market.
With that in mind, here are five attractive dividend stocks, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.

Exxon Mobil

First on this week’s list is dividend aristocrat Exxon Mobil (XOM). The energy giant offers a yield of 3.4%. The company’s dividend hike of 3.4% last year marked the 40th consecutive year of annual dividend growth. Exxon’s dividends are backed by solid earnings and cash flows.
In the second quarter, the company distributed $8 billion to shareholders through share repurchases of $4.3 billion and dividends of $3.7 billion. It generated free cash flow of $5 billion in the June quarter.
Mizuho analyst Nitin Kumar reiterated a buy rating on Exxon with a price target of $139 after attending the company’s Product Solutions Spotlight event. The analyst said that the company is on track to meet its target of boosting its product solutions earnings by $10 billion by 2027 compared to $6 billion reported in 2019.
“With 1H23 annualized earnings at $11.5 billion, the company is halfway through that target, with most of the benefit to date from cost reductions,” noted Kumar.
He expects key strategic projects that have recently commenced, like Beaumont crude expansion and chemical expansions at Baytown, and major projects planned for 2024 to 2027, such as the Singapore Resid upgrade project, to help Exxon deliver most of the targeted improvement in earnings by 2027.

Kumar ranks No.67 among more than 8,500 analysts tracked by TipRanks. His ratings have been profitable 71% of the time, with each delivering a return of 19.8%, on average. (See Exxon Insider Trading Activity on TipRanks)

Coterra Energy

Kumar is also bullish on Coterra Energy (CTRA), an oil and gas exploration and production company with major operations in the Permian Basin, Marcellus Shale and Anadarko Basin. Earlier this year, the company increased its annual base dividend by 33% to 80 cents per share.
The company’s shareholder return strategy is to distribute 50% of its free cash flow via base dividends, share repurchases and variable dividends. CTRA realigned its return strategy for 2023 to give importance to buybacks over variable dividends. In the first six months of 2023, it paid $303 million through dividends and made share repurchases worth $325 million, with the total shareholder return representing 94% of free cash flow.
Last month, Kumar hosted investor meetings with CTRA’s management and said the key takeaway was that the company is confident about delivering solid returns on investment in most commodity price scenarios. In particular, management highlighted the flexibility and optionality of CTRA’s asset base and capital allocation strategy.
“In our opinion, the common thread between their choices is the potential to outperform the three-year (2023-25) plan that calls for ~5%+ oil growth for ~$2.0-2.1bn of total capex – either through less capex or more volumes – but without a degradation of capital efficiencies,” said Kumar.
Calling CTRA his top pick, Kumar reiterated a buy rating on the stock with a price target of $42. (See Coterra Financial Statements on TipRanks)

Brookfield Infrastructure Partners

Next on this week’s dividend list is Brookfield Infrastructure (BIP), which operates assets in the utilities, transport, midstream, and data sectors. BIP paid a quarterly dividend of $0.3825 per unit on Sept. 29, which reflects a 6% year-over-year increase in its distribution. The company offers a dividend yield of 5.5%.
At an investor day event held last month, management discussed its goal to deliver more than 12% growth in funds from its operations per unit as part of its 1- to 3-year outlook.
RBC Capital analyst Robert Kwan, who ranks 194th out of over 8,500 analysts tracked on TipRanks, noted that the company’s targeted FFO/unit growth is expected to be partially driven by its significant organic capital backlog, mainly in the data center business.
The analyst also thinks that given the capital constraints in the current backdrop due to a slowdown in fundraising activity, an entity like Brookfield has the potential to enhance returns by investing capital above its 12% to 15% equity internal rate of return (IRR) target range.   
“We believe that the unit price weakness is an attractive entry point based on a 5% current distribution yield with potential for double-digit underlying FFO/unit growth,” said Kwan.
Kwan reaffirmed a buy rating on BIP stock with a price target of $45. His ratings have been profitable 64% of the time, with each delivering an average return of 10.8%. (See BIP Stock Chart on TipRanks)

American Electric Power

Another RBC Capital analyst, Shelby Tucker, is bullish on utility stock American Electric Power (AEP). On Oct. 2, the company named Charles E. Zebula as its new chief financial officer and reaffirmed its 2023 operating earnings outlook of $5.19 to $5.39 per share and long-term operating earnings growth rate of 6% to 7%.
AEP paid a quarterly dividend of 83 cents per share on Sept. 8, its 453rd consecutive quarterly cash dividend. It offers a dividend yield of 4.6%.
Recently, Tucker lowered the price target for AEP to $90 from $103 to reflect a high interest environment but reiterated a buy rating. The analyst said that the stock remains one of the firm’s top picks in 2023 and one of the best-in-class utilities.
The analyst thinks that AEP’s $40 billion regulated capital spending plan, focusing on transmission deployment, offers strong resiliency against a challenging macro backdrop and cost inflation. Tucker also expects the company to benefit from the incentives under the Inflation Reduction Act.  
“We believe AEP deserves a slight premium on valuations from rapid decarbonization of its generation fleet and robust investments in regulated renewable,” the analyst said.
Tucker holds the 367th position among more than 8,500 analysts on TipRanks. Moreover, 61% of his ratings have been profitable, with each generating an average return of 8.1%. (See AEP Blogger Opinions & Sentiment on TipRanks) 

Darden Restaurants

Darden Restaurants (DRI), the owner of Olive Garden and other popular brands, delivered better-than-anticipated fiscal first-quarter results, despite the pullback in consumer spending affecting the company’s fine dining segment.   
The company paid $159 million in dividends and deployed about $143 million toward share repurchases in the fiscal first quarter. With a quarterly dividend of $1.31 per share (annualized dividend of $5.24), DRI stock’s dividend yield is 3.7%.       
Following the results, JPMorgan analyst John Ivankoe reiterated a buy rating on DRI stock but lowered the price target to $174 from $176.
The analyst noted that the company’s same-store sales growth of 5% surpassed his estimate of 4.4%, with its Olive Garden and LongHorn Steakhouse chains offsetting the softness in fine dining. Also, DRI’s same-store sales growth outperformed the industry average of 0.9%.       
“Finally, the 10%+ TSR [total shareholder return] (EPS + annual dividend yield) remains intact for F24/25,” said Ivankoe.  
Ivankoe holds the 854th position among more than 8,500 analysts tracked on TipRanks. Moreover, 60% of his ratings have been profitable, with each generating an average return of 7.1%. (See DRI Hedge Fund Trading Activity on TipRanks) More

Debt Collective co-founder Astra Taylor’s new book explores why we all feel so insecure these days, regardless of our economic standing.
“Even people who crawl their way to the middle class or upper middle class feel like they can never get a break or rest,” Taylor said.

Astra Taylor
Courtesy: Astra Taylor

Early on in Astra Taylor’s new book, “The Age of Insecurity: Coming Together as Things Fall Apart,” she tells a story set in the Brooklyn café where her sister worked until recently. On a quiet day, one of the baristas was talking with a regular customer, a specialist in medieval history, when her phone rang. It was her boss. He ordered the barista to stop chatting with the customer. There were at least eight security cameras placed throughout the small café, and the boss had been watching a livestream from his laptop.
The security cameras were there, at least in part, to make the workers feel insecure about holding on to their jobs, Taylor writes. “Even when all they wanted to do was show a bit of kindness and community to a local eccentric, the workers were perpetually worried about being fired.”

More from Personal Finance:Here’s what happens to Social Security benefits after you dieAs student loan bills resume, how economy may be shakenHow Congress may fix looming Social Security benefit shortfall
Taylor doesn’t end the story there. She also tries to understand what might be propelling the boss of the café to be so vigilant in the first place. She lists some of the consequences of owning a failing business: potentially owing thousands in employee benefits, and being unable to make good on your contractual promise. She writes that bosses “aren’t acting in a vacuum.” This is the topic of her book — the fact that wherever we fall on the economic ladder, we’re all spurred on by insecurity.
“We can see the degree to which unnecessary suffering is widespread even among those who appear to be ‘winning’ according to the logic of the capitalist game,” Taylor writes.
Taylor is a writer, documentary filmmaker and organizer. In 2014, she co-founded the Debt Collective, a union for debtors, which has become among the most influential groups pushing for student loan forgiveness. Her latest book began as Massey Lectures, a series of talks aired by the Canadian Broadcasting Corp. Former speakers include the author Margaret Atwood and linguist Noam Chomsky.

The interview has been edited and condensed for clarity.

‘There is existential insecurity’

Annie Nova: You write that a certain sense of insecurity is intrinsic to being human. But how is the insecurity so much of us feel today not necessary or inevitable?
Astra Taylor: I think there is existential insecurity. We’re insecure creatures. We’re vulnerable. What I call “manufactured insecurity” is something that exploits those vulnerabilities.
AN: Why do we think it can be so hard for us to talk about or face our insecurities?
AT: People are encouraged to hide their vulnerability, and to pull themselves up by their bootstraps. I’ve learned from organizing that economic issues are always emotional issues, and politics issues are always psychological. Today, the right wing is really speaking to people’s insecurities but not in a way that’s honest or makes them feel solidarity with other people who are vulnerable. Instead, it does so in a way that makes people want to push even more vulnerable people to the margins. Authoritarian politics is all about denying vulnerability.

Arrows pointing outwards

“The Age of Insecurity Coming Together as Things Fall Apart.” by author Astra Taylor
Courtesy: Astra Taylor

AN: How would being more honest about our own vulnerabilities help?
AT: I wrote in the book that all sorts of bad things can happen to us. You can get cancer. There could be another pandemic. I was speaking abstractly at the time. And then the next thing I know, my husband got cancer. That experience just drove home the whole theme of the book, which is that we’re vulnerable. You never know when you’re going to be the one needing a hand. And so are we going to structure society to bail each other out when tough times come? Or are we going to continue further on this path where we leave everybody to sink or swim?
AN: Do you mind me asking how your husband is doing?
AT: He’s doing fine now. He got two CT scans and he’s clear. Luckily, we had health insurance. Working with the Debt Collective, I see how lucky we were that we didn’t have to take on a lot of medical debt. It was a classic American situation at the hospital. They told us, “You can pay in cash now and get a 20% discount.”
AN: I’m really glad to hear he’s OK. Whenever I do a story about people getting debt forgiveness, I’ll get comments from people who are upset or angry that others got that relief. Why do you think this is?
AT: I love that question, and it’s kind of what motivated this book. I was wondering why there is this constant sense of scarcity. There’s something about the current political and economic climate that just makes people have this scarcity mindset. We’re so afraid of becoming more insecure. We’re all so worried about the future, that we’re just tending to our own little corner. And when we see other people get ahead, we assume it means less for us. But that doesn’t have to be the case.

‘Security is all about the future’

AN: You write a lot about how the ways we try to seek financial security can ultimately backfire on us. How so?
AT: You know we’re told that the way to have security in old age is by managing to save money and put it into our retirement accounts. But those retirement accounts are not the guaranteed pensions of the past. They’re pegged to the market, and the market is incredibly unstable. And there are terrible things we’re investing in. For example, investments in fossil fuels are undermining the planet’s health. Investments in tech companies can undermine labor rights. This is why even people who crawl their way to the middle class or upper middle class feel like they can never get a break or rest, because security is all about the future — and many of these systems are inherently unstable.
AN: How are people’s insecurities reframed more positively at the Debt Collective?
AT: We invite people to talk honestly about their financial struggles, their hardship and their shame. And we actually process our emotions collectively, and realize we’re all in this boat together. We’re all in this insecure and sinking boat! What if we banded together? What if we tried to bail each other out? What if we demanded policies that made us more secure? And what if we understood our insecurity as strength? More

Amazon’s “Prime Big Deal Days” kicks off Oct. 10.
But the best deals may not be exclusive to Amazon; other retailers are launching their own holiday sales this month, as well.
Here’s a look at some of the biggest sales events happening now.

Amazon’s Prime Big Deal Days, kicks off Oct. 10, but competitor sales are already underway.
This year, other big-name retailers are getting a head start by launching their own holiday sales earlier than ever, according to Katie Roberts, consumer analyst with DealNews.com. Consider it “the kickoff to Black Friday season,” she said.

Here’s a look at some of biggest sales events happening now.

Amazon’s Prime Big Deal Days sale: What’s in store

When Amazon’s sale kicks off Oct. 10, expect to find the best discounts on Amazon products, such as the Kindle e-readers, Echo Show smart home hubs, Fire tablets and Fire TVs, according to consumer-savings expert Andrea Woroch.
Already, Amazon has said the Fire 50-inch 4K Smart TV with hands-free Alexa would be 60% off and some Echo devices would be discounted by 55%.
Beyond Amazon’s own brands, deals include 60% off Blink smart home security; half off earbuds, speakers and headphones from Sony and Bose; a Philips air fryer marked down 46%; and other discounts from Dyson, Barbie, SharkNinja, iRobot and Peloton.
More from Personal Finance:Holiday shoppers are getting an early jump on the seasonHoliday shoppers are bracing for financial strainBuy holiday airfare in October

Unlike July’s Prime Day, Amazon is featuring more gift suggestions this month — with deals on well-known brands, such as Hasbro, Lego, Squishmallows and Sony — rather than back-to-school supplies.
New deals will drop as often as every five minutes. You can set up deal alert notifications on Amazon or through your Alexa device so you’ll know when the price changes. Prime members can also sign up for invite-only deals on the items that typically sell out fast.
When a deal is live, add it to your cart immediately. Once a sale item is in your cart, you’ll have 15 minutes to decide whether to complete the purchase.
But first, you must be an Amazon Prime member. You can sign up for a month-to-month membership or a 30-day free trial. College students can try Prime Student with a six-month trial.

Target, Walmart and others kick off early sales

Target’s “Circle Week” runs through Oct. 7, with daily deals across all categories including furniture, electronics, beauty, apparel, toys and sporting goods.
Walmart is holding a “Holiday Kickoff” event from Oct. 9 to 12, which will start before and end after Amazon’s sale and include discounts on top gifts and electronics, home, toys and clothing.
Best Buy is hosting a 48-hour flash sale on Oct. 10 and 11 followed by another sales event from Oct. 20 to 22 with more deals on video games and accessories. Members who spend $500 in October will receive a $50 reward certificate to use on Best Buy purchases in December.
Kohls has its “Don’t-Miss Deals” through Oct. 8, with an extra 20% off already reduced merchandise. 
Macy’s “Fab Fall” savings event is underway, with markdowns up to 60% plus an additional 20% off with the coupon code “fall.”

With sales starting earlier, retailers are hoping to lure shoppers with promotions well ahead of Black Friday and Cyber Monday, as households become increasingly concerned about stretching their dollars over the holidays.
In fact, many consumers have already started their holiday gift buying, studies show — and this year, half of shoppers plan to begin their holiday shopping by Halloween, according to a recent Bankrate report.
Holiday shoppers who start saving early for year-end purchases set themselves up for financial success, experts say.

How to get the best deals on holiday gifts

A worker delivers Amazon packages in San Francisco on Oct. 5, 2022. Amazon’s Prime Early Access Sale is on through Oct. 12 to boost sales among cost-conscious consumers who are expected to start their holiday shopping even earlier this year.
Bloomberg | Bloomberg | Getty Images

To maximize your holiday savings, start price tracking now. 
Woroch recommends creating a wish list and then using a price-tracking browser extension such as Honey, Camelcamelcamel or Keepa to watch for price changes and get price-drop alerts for the items you want.
For extra savings, use a free rewards app like Fetch to earn gift cards to Amazon, Target and Walmart or apply coupon codes at check out and earn cash back through deal sites like CouponCabin.com.
Then, curb the tendency to overspend by tracking your gift list and budget using the Santa’s Bag app, Woroch advised, which lets you enter the total you want to spend per person to keep you out of debt.
Subscribe to CNBC on YouTube. More

The Supreme Court will soon hear a case that could have sweeping effects on the U.S. tax code, including corporate revenue and future wealth tax proposals.
Depending on the scope of the rule, it could affect the future taxation of so-called pass-through entities, such as partnerships, limited liability corporations and S-corporations.
“You’ve got to pay attention to the way the rules are going to impact your business, especially if you’re doing things in a cross-border context,” said Daniel Bunn, president and CEO of the Tax Foundation.

The Supreme Court in Washington, D.C.
Celal Gunes | Anadolu Agency | Getty Images

As the Supreme Court starts a new term, experts are closely watching a case that could have sweeping effects on the U.S. tax code, including corporate revenue and future wealth tax proposals.
This summer, the high court agreed to hear Moore v. United States, a case involving a Washington couple with a controlling interest — more than 10% investment — in KisanKraft, a profitable India-based farming corporation.

The plaintiffs are fighting taxes on earnings that weren’t distributed to them by arguing about the definition of income, which could have broader implications, according to policy experts.
“This could have the biggest fiscal policy effects of any court decision in the modern era,” said Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy, who recently co-authored a report on the case.
More from Personal Finance:The job market is strong — but workers don’t think soHouse Republicans push IRS for answers ERC pauseBiden cancels $9 billion in student debt for 125,000 borrowers
The case challenges a levy, known as “deemed repatriation,” enacted via the Republicans’ 2017 tax overhaul. Designed as a transition tax, the legislation required a one-time levy on earnings and profits accumulated in foreign entities after 1986.
While the 16th Amendment outlines the legal definition of income, the Moore case questions whether individuals must “realize” or receive profits before incurring taxes. It’s an issue that has been raised during past federal billionaire tax debates and could affect future proposals.

Ruling could affect pass-through businesses

Depending on how the court decides this case, there could be either small ripples or a major effect on the tax code, according to Daniel Bunn, president and CEO of the Tax Foundation, who recently wrote about the topic.
If the court decides the Moores incurred a tax on unrealized income and says the levy is unconstitutional, it could affect the future taxation of so-called pass-through entities, such as partnerships, limited liability corporations and S-corporations, he said. 

“You’ve got to pay attention to the way the rules are going to impact your business, especially if you’re doing things in a cross-border context,” Bunn said.
There’s also the potential for a “substantial impact” on federal revenue, which could influence future tax policy, Bunn said. If deemed repatriation were fully struck down for corporate and noncorporate taxpayers, the Tax Foundation estimates a $346 billion federal revenue reduction over the next decade.
However, with a decision not expected until 2024, it’s difficult to predict how the Supreme Court may rule on this case. “There’s a lot of uncertainty about the scope of this thing,” Gardner added. More

Social Security’s funds may run out in the next decade, which could lead to benefit cuts of 20% or more.
Traditionally, Congress has fixed those shortfalls by raising taxes, cutting benefits or a combination of both.
Now one lawmakers is pushing another potential solution to create a new separate fund that would invest in stocks on the program’s behalf.

Wand_prapan | Istock | Getty Images

The trust funds that Social Security relies on to pay benefits are “rapidly heading to zero,” according to the Center for Retirement Research at Boston College.
Those funds, which are typically invested in Treasury securities, are projected to run out in 2034, at which point just 80% of benefits may be payable.

As that date draws closer, that has prompted more discussion as to whether that money should also be invested in stocks.
“Theoretically, yes,” said Anqi Chen, senior research economist and assistant director of savings research at the Center for Retirement Research, which recently published research addressing the question.
More from Personal Finance:Here’s what happens to Social Security benefits after you dieAs student loan bills resume, how economy may be shakenHow Congress may fix looming Social Security benefit shortfall
But the real-world answer is not necessarily clear-cut, Chen and other experts say.
The problem is whether the funds, which are already running low, may be able to come up with the money to invest in stocks while also paying the benefits it owes.

Those benefit obligations are growing as baby boomers age, with 10,000 individuals turning 65 every day.
There were 53 million Social Security beneficiaries in 2010, the year before baby boomers started turning 65, according to the Peter G. Peterson Foundation in New York, which focuses on fiscal and economic challenges facing the U.S.

This ‘big idea’ fix would rely on stocks

Sen. Bill Cassidy, R-La., has put forward another “big idea” fix that calls for investing money in stocks on the program’s behalf.
The proposal calls for raising $1.5 trillion that would be put in a separate fund and invested in stocks.
No Social Security trust fund dollars would be included in the plan. Instead, the separate $1.5 trillion investment fund may come from either borrowing the money, raising the funds from other parts of the budget or by selling government assets.
The investment would be held in escrow for 70 years, which would allow the funds to grow.

It always will have enough revenue coming in from the investments to pay scheduled benefits.

Sen. Bill Cassidy
Republican U.S. senator from Louisiana

Over time, the investment fund would get a higher return than the returns on Treasury notes, ranging from 1% to 4%, which may not beat inflation, Cassidy noted at a recent AARP forum of the future of Social Security.
Ultimately, 75% of Social Security’s deficit may be covered by the strategy, while it would be up to lawmakers to come up with a strategy to make up the difference.
“Never again will we worry about a Social Security shortfall,” Cassidy said at the AARP event. “It always will have enough revenue coming in from the investments to pay scheduled benefits.”

How government retirement funds use equities
1. Cassidy’s plan takes inspiration from other countries, including Canada:

The Canada Pension Plan, with about $570 billion in Canadian dollars, changed its investment approach in 1997 in response to the need for higher payroll contributions due to longer life expectancies, lower birth rates and lower real wage growth, according to the Center for Retirement Research. The plan raised payroll contributions and began investing some funds in equities. Now its portfolio includes a variety of investments, including stocks, bonds, real estate, infrastructure projects and private equity. The fund, which invests in Canada and globally, has had a 10% annualized net return over the past 10 years.

2. Certain U.S. programs have also implemented investments that incorporate stocks:

In the 1990s, the U.S. Railroad Retirement System moved to invest in equities after its trust fund grew to four times annual spending, according to the Center for Retirement Research. The portfolio, now with around $27 billion in net assets, includes stocks, real estate, private equity and private debt.
The Federal Thrift Savings Plan, with about $800 billion in assets, was created in 1986 and includes passive investments through index funds. Congress must approve the investments it can offer.

Financial industry experts who have evaluated the plan have said the return expectations are conservative and would have a negligible effect on the equity market, according to Molly Block, a spokeswoman for Cassidy.

Why experts are cautious

zimmytws | iStock | Getty Images

While it would be up to Congress to approve any changes to Social Security’s investment strategy, experts question the inevitable risks.
Generally, one of the prerequisites for investing Social Security in stocks is having the money to do it. In the 1990s and 2000s, when the idea was previously discussed, the trust funds had more money available to invest, according to Chen.
Now, there may have to be a tax increase to not only shore up Social Security’s current funding shortfall, but also provide additional funds to be invested in equities.
“Theoretically, yes that could work,” Chen said. “But that seems politically very difficult.”

Borrowing money to invest in stocks for retirement is a risky move, regardless of whether it’s in an individual’s 401(k) plan or a government retirement plan, noted Andrew Biggs, senior fellow at the American Enterprise Institute.
“It’s basically taking a bet on stocks versus bonds,” Biggs said. “It’s not smart for an individual to do it, and we’re doing it on an economy-wide basis.”
Moreover, while a 4% or 5% risk premium can make a big difference over a 30-to-50-year time horizon, there’s no guarantee those terms won’t change along the way, which could interfere with Social Security as a guaranteed government program, noted David Blanchett, managing director and head of retirement research at PGIM DC Solutions.
“It’s just not realistic to expect that things wouldn’t change in the interim,” Blanchett said. “I’m incredibly apprehensive about the idea of investing Social Security type benefits in public equity funds.” More

As colleges are being forced to rethink their policies in the wake of the Supreme Court’s ruling against affirmative action, more schools are also choosing to end legacy preferences, adding uncertainty to the process.
Heightened uncertainty is driving students to cast a wider net, according to Christopher Rim, president and CEO of college consulting firm Command Education.
Rather than apply to a greater number of schools, find schools that are a better fit, experts say.

Brian Snyder | Reuters

With competition at an all-time high and admissions practices increasingly unclear, it’s not an easy time for college applicants.
As colleges are being forced to rethink their policies in the wake of the Supreme Court’s ruling against affirmative action, more schools are also choosing to end legacy preferences, adding uncertainty to the process.

“There’s a true perception that the process is getting more and more unpredictable,” said Eric Greenberg, president of Greenberg Educational Group, a New York-based consulting firm.
More from Personal Finance:Should you apply early to college?Strategy could shave thousands off college costsPublic colleges aren’t as cheap as you’d think
Heightened uncertainty is driving students to cast a wider net, according to Christopher Rim, president and CEO of college consulting firm Command Education.
To boost their chances of getting in somewhere, Rim now sees high school seniors apply to as many as 20 schools. But that comes at a cost: Each application can be $60 to $100 to submit, depending on the school.
After adding up the fees associated with submitting that many college applications, along with ACT and SAT test reports, “at the bare minimum, you are spending $1,200 to $2,000 on application fees,” Rim said.

It’s understandable that college hopefuls want to hedge their bets, said Robert Franek, editor in chief of The Princeton Review. “At the upper tier, students are seeing their friends not get in and that’s crushing.”
However, “20 is far too many,” he added.
Still, students are applying to more schools to try to get a leg up, no matter the cost.
“We are seeing a large increase in the number of applications students are submitting,” Greenberg noted. Students apply to twice as many schools as they did a decade ago, he said. “People are saying ‘the more schools, the better.'”

There’s a true perception that the process is getting more and more unpredictable.

Eric Greenberg
president of Greenberg Educational Group

Roughly 40% of students are applying to 10 or more schools, up from 37% last year, according to Jenzabar/Spark451’s recent college-bound student survey, a trend also driven by the growing number of colleges that are now “test-optional,” which means students don’t need certain SAT or ACT scores to apply.
As a result, a small group of universities, including many in the Ivy League, are experiencing a record-breaking increase in applications, according to a separate report by the Common Application.
The greater number of applications is further fueling historically low acceptance rates at many top colleges.

Application volume spikes despite hefty fees

Ariel Skelley | Digitalvision | Getty Images

Application volume jumped 30% for the 2022-23 academic year compared to the 2019-20 school year, the Common Application found.
At the same time, more students were eligible for a fee waiver, although not all requested one.
Students can apply for the fee waiver but don’t always bother, Rim said. “This is valuable time during their senior year that they could be using on their applications.” Many colleges also offer a college-specific fee waiver, and SAT or ACT testing fees can be waived on a case-by-case basis.

A better approach to college applications

Piling on more applications doesn’t better the odds if students and their families are too focused on institutions with acceptance rates below 10%, Rim cautioned. “That’s not really how this works.”
Rather than applying to a slew of similar schools, which may all yield the same slim chance of success, the key is to identify a core list of different types of institutions with a balance of “safety” schools, “targets” and “reaches,” Greenberg said.

Since admissions tend to be less predictable now, focusing on a more balanced list of schools at the outset “is most likely to lead to the desired result,” he advised.
Further, finding a selection of schools based on which are the right fit for you in terms of cost, academics, campus life and other factors is also likely to make you a more attractive candidate to the admissions office, Franek said. “Applying to a list that’s truly a best fit for you is always going to be of value.”
Subscribe to CNBC on YouTube. More

President Joe Biden announced on Wednesday that he’d approve $9 billion in student loan forgiveness for 125,000 Americans.
The relief is a result of his administration’s fixes to number of programs, including the income-driven repayment plans and Public Service Loan Forgiveness.

President Joe Biden holds a Cabinet meeting at the White House on Oct. 2, 2023.
Kevin Dietsch | Getty Images

President Joe Biden announced on Wednesday that he’d approve $9 billion in student loan forgiveness for 125,000 Americans.
The relief is a result of his administration’s fixes to number of programs, including the income-driven repayment plans and Public Service Loan Forgiveness.

More than $5 billion of the aid will go to 53,000 borrowers who’ve worked in public service for a decade or more; $2.8 billion of the forgiveness is for 51,000 borrowers enrolled in income-driven repayment plans; and another $1.2 billion of the cancellation will go to 22,000 borrowers with disabilities.
This is breaking news. Please check back for updates. More

Mortgage payments have become significantly less affordable for homebuyers, according to the Consumer Financial Protection Bureau.
Nearly a quarter of refinance applications were rejected in 2022 — up sharply from 14.2% in 2021.
oXYGen Financial CEO Ted Jenkin recommended that consumers focus on their debt-to-income ratio.

Prospective buyers attend an open house at a home for sale in Larchmont, New York, on Jan. 22, 2023.
Tiffany Hagler-Geard | Bloomberg | Getty Images

As high home prices and interest rates push up monthly mortgage payments, it’s harder for many consumers to even get a mortgage in the first place.
Last year, lenders denied loan applications due to “insufficient income” more often than any other point since records began in 2018, according to a new report from the Consumer Financial Protection Bureau.

Overall, 9.1% of home purchase applications among all applicants were denied in 2022, the consumer watchdog agency reported, higher than 8.3% in 2021 but a marginal decrease from 9.3% in 2020. Refinance applications were more frequently rejected, at a rate of 24.7% in 2022 — up sharply from 14.2% in 2021.
Insufficient income represented more than 50% of of denials for Asian American applicants, 45% for Black and Hispanic applicants, and approximately 40% for white applicants — up from below 40% for each of these groups in 2018.
More from Personal Finance:How return of student loan payments could shake the economyLatino student borrowers face extra challenges as payments restart60% still living paycheck to paycheck as inflation hits workers’ wages
The CFPB also reported that the average cost of a monthly mortgage payment increased 46%, to $2,045 in December 2022, from $1,400 during December 2021. Given the rising cost of payments and mortgage rates — both of which have responded to the Federal Reserve’s rate hikes — “none” of the recent trends in income-based denials should “be a surprise,” said certified financial planner Barry Glassman, founder and president of Glassman Wealth Services in McLean, Virginia.
“In most cases, income did not increase at the pace of average mortgage payments,” said Glassman, who is a member of CNBC’s FA Council.

‘People are feeling squeezed on all sides’

The higher rates of income-based mortgage denials are not only attributable to higher mortgage rates, but also higher home prices, Bankrate senior industry analyst Ted Rossman said.
“It’s really a double whammy, especially for first time buyers who don’t have any equity that they can trade in,” he said.
It doesn’t help that consumers have been taking on more debt as inflation puts pressure on their budgets.

Rossman added that lenders are looking for applicants’ housing costs to make up no more than 28% of their gross income. Lenders often use a guideline called the 28/36 rule, which looks at how much of your income housing expenses and other debt take up. Ideally, your mortgage, property taxes and insurance should represent less than 28% of gross monthly income, and total debt — including your mortgage, credit cards and auto loans — shouldn’t exceed 36%.
To gauge how much house you can afford before you apply for a mortgage, focus on “three big letters” — DTI, or debt-to-income ratio, said CFP Ted Jenkin, the CEO of oXYGen Financial in Atlanta.
If your overall monthly debt, including auto loan, student loan and mortgage payments, totals more than 40% of your total income, you have a greater chance of being denied. If that’s the case, you may need to adjust your housing expectations, said Jenkin, who is also a member of CNBC’s FA Council.

DTI ratios are currently higher than 40% among Hispanic and white applicants, according to the CFPB.
Lenders also look at applicants’ credit scores, and the CFPB data points to that as another potential trouble area. The median credit score of applicants for loan refinances is now lower than the median credit score of applicants for home purchase loans, reversing a recent trend, the CFPB reported.
“I think people are feeling squeezed on all sides,” Rossman said. “And from a credit scoring standpoint, too, that’s another big part of this whole discussion.”

Consumers should monitor their credit scores and take steps to keep them in top shape. The FICO scoring model used by many lenders runs from 300 to 850, and the higher the better. Depending on the lender, you might need a score of at least 600, or as much as 660, to qualify for a loan, and a 760 or better to get the best-available rate.
“The difference between a 575 FICO score and a 675 FICO score could be as much as 1% on your mortgage rate,” Jenkin said.
That higher rate means a bigger monthly mortgage payment, he said, “and that could put you into the category of having insufficient income.” More