How to Make $500K Last Forever with Dividends

Brett Owens, Chief Investment Strategist
Updated: October 27, 2021

I saw this headline float across my Bloomberg Terminal recently…

There Are More 401(k) and IRA Millionaires Than Ever

(Disclosure and digression: My “Terminal” is Bloomberg.com on my phone. I can thank my long wait at the DMV for my California REAL ID for this story.)

Fidelity Investments—apparently happy to share its customer’s financial info anonymously—says it has more than 750,000 seven-figure 401(k) and IRA accounts.

A chunk of money is great, especially when we can leave it untouched and let it grow. That was no doubt the “secret” of 99%+ of these retirement millionaires. They socked away money for decades and rode the market higher.… Read more

These 2 “Recurring Revenue” Stocks Boast 5.5% Yields, 793% Payout Growth

Brett Owens, Chief Investment Strategist
Updated: October 26, 2021

Today we’re going to discuss the secret to double-digit annual returns every year, forever, with secure real estate investment trusts (REITs).

We income-seekers love REITs for a simple reason: high dividends! The typical REIT yields twice as much as the average S&P 500 stock. That’s mainly because these trusts receive reliable recurring revenue—they simply collect the checks that roll in every month, take out enough to maintain the buildings and then send the rest to us.

And some REIT dividends are true standouts in today’s low-yield world, like the 5.5% thrown off by warehouse landlord W.P. Carey (WPC).

WPC is a two-time winner in our Contrarian Income Report service’s portfolio, having returned a tidy 28% in dividends and gains in 12 months in its first tour and a steady 16% return in 14 months (and counting) in its second.… Read more

This Unusual “3-Buy” Portfolio Pays You $3,700 a Month (on Just $500K Invested)

Michael Foster, Investment Strategist
Updated: October 25, 2021

Today we’re going to build a portfolio that can make us totally financially independent with just $500K invested. And we’ll do it on dividends alone—without having to touch our principal.

Now I know that sounds outlandish in today’s low-yield world. Here’s how we’ll make it happen. (Hint: our plan involves three closed-end funds, or CEFs, paying dividends that dwarf the measly 1.3% you’d get from the typical S&P 500 stock.)

The Dividends-Only Retirement Portfolio

The principle behind retiring on $500,000 (or any amount, really) and being guaranteed of not outliving your nest egg is pretty simple: make sure the amount you’re taking out of your portfolio is less than what your portfolio earns you on a yearly basis.… Read more

3 Punchy Preferred Funds Yielding 6.2%-6.9%

Brett Owens, Chief Investment Strategist
Updated: October 22, 2021

Most income investors limit themselves to mere “common” dividends. But there’s no need for us to settle for 2% blue-chip yields when we can bank 6%+ payouts from the same companies.

Let’s use Bank of America (BAC) as our example. The stock should keep sailing as the 10-year Treasury rate grinds higher.

Common shares of BAC yield just 1.8% today. (This is what we receive when we type in “BAC” and hit the “Buy” button.) That’s not much. Fortunately, we can look past common dividends for higher yields without sacrificing safety.

Companies also can issue what’s referred to as “preferred stock.”… Read more

Reading the Earnings Tea Leaves to Double Our Dividends (and Grab 10%+ Gains)

Michael Foster, Investment Strategist
Updated: October 21, 2021

Stocks are pricey, but we closed-end fund (CEF) investors aren’t sweating it: we’ve got an edge that lets us buy at a discount, with dividends that are double—and sometimes triple—the typical S&P 500 payout!

That would be our ability to buy CEFs that trade at discounts to net asset value (NAV, or the value of their underlying portfolios). This simple move lets us “rewind the clock” and essentially buy the stocks our CEFs hold at levels we could a few months ago on the open market.

(And there are many bargain-priced CEFs to be had out there, including one trading at a 10% discount and paying more than double the average stock’s dividend—more on that below.)… Read more

These Tax-Free Bonds Turn a 4% Yield Into 7.5% (Here’s How)

Brett Owens, Chief Investment Strategist
Updated: October 20, 2021

The 10-year Treasury is storming past 1.6% yet again. Look out, high yield!

I kid because I love (income). And one-point-six just doesn’t do it for me. Plus, remember, this bounty does not escape the tax man. Any interest income we earn from Treasuries—no matter how sad—is subject to federal and state taxes.

So, if we’re multiplying a nest egg (let’s use $500K) by 1.6%, we must remember that the final answer is probably not $8,000 in annual income. Because if we’re raking in income from any other sources, we should lop off a chunk of this for taxes.

Interest Received is the official IRS tax term, for my fellow tax wonks.… Read more

3 Dividend Stocks to Play the Taper (for Fast 61%+ Gains)

Brett Owens, Chief Investment Strategist
Updated: October 19, 2021

Goldman Sachs says the Fed will start cutting its bond purchases next month—and that sets up some of our favorite dividend-payers for a quick 61% profit surge. (I’ll reveal the tickers we need to reap this “taper bonanza” in a moment.)

Wait. Why are we taking Goldman’s word here?

Because “Government Sachs” has the deepest DC connections of any bank: former Treasury Secretaries Henry Paulson and Steven Mnuchin are Goldman grads, among many other government bigwigs. When it comes to what’s happening at the Fed, I’d take Goldman’s opinion over that of Jay Powell himself!

A Boon for Dividend Investors

To get at how we’ll flip the taper into big dividends, let’s connect it to a figure we all watch closely: the yield on the 10-year Treasury note.… Read more

This Unloved Dividend Payer Soared 34% (It’s Just Getting Started)

Michael Foster, Investment Strategist
Updated: October 18, 2021

Let’s work this market pullback to grab ourselves a sweet 21% “double discount” on our favorite stocks. We’ll also get a dividend from blue chip firms that don’t even pay one!

The key is an off-the-radar closed-end fund (CEF) holding some of the biggest names on the market and trading at a totally undeserved 17% below its true value. And this one pays a rock-steady 3.1% dividend, too—double what the typical S&P 500 stock yields!

Before we put a name and ticker to this fund, let’s talk about the first part of the 21% double discount we’re going to tap today.… Read more

5 Stocks Averaging 12.3% in Yields: Too Good to Be True?

Brett Owens, Chief Investment Strategist
Updated: October 15, 2021

Many financial advisors doubt that we can retire comfortably on a million dollars, let alone $500K.

Let me outline our compelling dividend counterpoint—a five-stock portfolio with an average yield of 12.3%.

This generates more than $60,000 in annual income on a $500K portfolio, or a sweet $123,000 in dividends on that million-dollar nest egg. And, most importantly, this “retire on dividends” strategy leaves the principal untouched.

Contrary to popular opinion, we have a pool of dividend candidates. Let’s start with the 879 dividend-paying stocks that yield more than 3% and work our way up the chain:

Believe It Or Not, 50 US Stocks Yield 10%+

Note: U.S.-listedRead more

3 Ways to Cash in on the Coming Healthcare Boom (With Huge 6%+ Dividends)

Michael Foster, Investment Strategist
Updated: October 14, 2021

Most investors are ignoring a clear shot at 7%+ dividends double-digit price gains—year in and year out—in a sector everyone should be talking about, but isn’t.

That would be healthcare, which is riding a rocket of rising spending: according to the latest numbers from the Centers for Medicare & Medicaid Services, US health expenditures will soar 5.4% annually, on average, every year until 2028. (We’ll dive into three funds paying huge dividends up to 8.3% and poised to cash in on this wave in a moment.)

The thing about that 5.4% yearly increase is that it’s much bigger than projected US GDP growth of 4%.… Read more