Yellen Just Slapped a “Buy” Rating on These 8% Yields

Brett Owens, Chief Investment Strategist
Updated: March 22, 2017

As recently as last week, many high quality closed-end funds (CEFs) were being neglected thanks to the headline worry that higher rates would hurt them.

That nonsense stopped abruptly when Fed chair Janet Yellen basically slapped a “Buy” rating on the entire sector! Her dovish outlook was taken as a cue that CEF investors could breathe easy and, once again, collect their 8% yields in peace.

This cue was unnecessary. For starters, anyone who mistook Yellen’s Fed as hawkish was, well, mistaken. And has been for years.

Also, higher rates don’t really hurt CEFs.

The theory scares people because it sounds true. Closed-ends have the benefit of borrowing money at Libor to lever up their returns. Libor is tied closely to the Fed funds rate. So, the thinking goes, higher Fed rates will end the “cheap money” party that benefits CEFs. …
Read more

Buy These 3 REITs While They’re Still Ridiculously Cheap

Michael Foster, Senior Analyst
Updated: March 22, 2017

There’s no way around it: the S&P 500 now has a P/E ratio of more than 26 going into the first earnings season of 2017, and even the “safest” bets are starting to look scary.

Unless we see massive profit growth all around, there’s a real risk this bull market is going to stutter—or worse.

So where do you go for value? It’s getting harder than ever, but there is one corner of the market that got way ahead of the S&P 500 and has since taken a step back. I’m talking about real estate investment trusts (REITs).

And now, there are three REITs that combined provide over 9% in income with over 200% average dividend coverage. That means they could double their payouts and …
Read more

3 BDCs Paying up to 11.8%: 1 to Buy, 2 to Sell

Brett Owens, Chief Investment Strategist
Updated: March 21, 2017

The Federal Reserve just dropped the first of three potential interest-rate bombs on Wall Street – a quarter-rate hike that was supposed to send rate-sensitive assets scurrying. Instead, blue-chip dividend stocks, MLPs, REITs – almost everything headed higher, including the trio of heavy-yielding business development companies (BDCs) I want to show you today.

Investors often look at interest rates and dividend-yielding stocks as a water-and-oil relationship. You know the drill. If interest rates go up, and Treasuries and other bonds begin to yield more in response, they’ll look more attractive versus similar (and even slightly higher-yielding) dividend stocks.

After all, as secure as even the bluest, chippiest blue-chip stocks might seem, they pale in comparison to the full faith and credit of the United States government. …
Read more

My No. 1 Rule for Safe 8% Yields and 15% Upside in CEFs

Brett Owens, Chief Investment Strategist
Updated: March 20, 2017

Thinking of avoiding closed-end funds, now that we’ve got another Fed rate hike in the books?

It’s easy to see why, with the “smart money”—traders betting through the Fed funds futures market—expecting another hike just three months from now. In all, the market’s calling for three hikes this year, and so is Janet Yellen.

One Down, Two to Go?

But if you let that scare you away from high-yield sectors like CEFs, real estate investment trusts and preferred shares, you’ll miss out on some serious income.

In a moment, I’ll show you how to pick the CEFs with the most upside, along with the high payouts these funds are known for.

First, here’s why I’m pounding the table on them now. …
Read more

14 Funds That Crush Vanguard and Yield up to 11.9%

Michael Foster, Senior Analyst
Updated: March 17, 2017

Vanguard is killing it. They’re now the biggest money manager in the world, with a whopping $4 trillion in assets under management.

It’s a feel-good story for a lot of investors, since the low-fee index fund juggernaut has marketed itself as the humble alternative to the high-rolling Wall Streeters who have become the target of public ire since the global financial crisis.

The feel-good story is simple. Vanguard has low overhead, pays its executives relatively modestly and passes those savings on to investors. Because of lower fees, the investors win; because of economies of scale, Vanguard wins; and because of the efficient-market hypothesis, which says hot-shot analysts can’t consistently outperform the stock market in the long run, the only people who don’t win are those evil banksters. …
Read more

It’s the Best Time to Buy These REITs Since 2009

Brett Owens, Chief Investment Strategist
Updated: March 15, 2017

There hasn’t been a better time to buy real estate investment trusts (REITs) since July 2009. That was the last time this “simple signal” flashed B-U-Y.

Investors who bought on this signal then have enjoyed 223% returns since. And those gains didn’t require any fancy stock picking – just a one-click purchase of the Vanguard REIT ETF (VNQ).

The signal? VNQ itself paying 5%:

Highest REIT Yields Since the Financial Crisis

Most income hounds get it wrong. They pile into REITs when their yields are low because they are desperate for any positive income stream. That’s a bad idea because there are only two ways REITs can pay you:

  1. With today’s dividend, and
  2. With tomorrow’s (hopefully higher) payout. …
    Read more

3 MLP’s Paying 6% – With No Tax Nonsense

Brett Owens, Chief Investment Strategist
Updated: March 15, 2017

Master limited partnerships (MLPs) are among the most frustrating sources of yield out there. Yes, it’s common for MLPs to yield in the high single digits and even low double digits, and yes, they enjoy a number of tax benefits. But they also come with a ton of tax hassles, including dealing with K-1s for every one in your portfolio – unless, of course, you invest in one of the three high-yielding MLP funds I’m about to show you.

A quick refresher on the sector…

MLPs must derive a minimum of 90% of cash flows from commodities, natural resources or real estate, which is why most of the MLPs you see out there are related to energy pipelines and storage. They enjoy certain tax advantages as long as they pay most of their earnings out as distributions to shareholders, so they typically throw off extremely juicy yields. …
Read more

This “Hidden” Bull Market Is Just Getting Started

Michael Foster, Senior Analyst
Updated: March 14, 2017

Plenty of investors buy corporate bonds because they think they’re safe investments.

That makes sense. After all, you do get your principal back at maturity. But corporates still have plenty of risks—particularly now, with interest rates arcing higher.

That’s why I’m recommending another asset class that’s set to deliver even higher yields and fatter capital gains—with much less to fear from interest rates. More on that in a moment.

First, let’s unpack these ideas one by one, starting with why so many investors just can’t kick their corporate-bond habit: corporates tend to offer higher yields than stocks while giving you exposure to the same companies.

For instance, let’s say you want to add to your portfolio’s financial sleeve, and you’re considering JP Morgan Chase & Co.
Read more

Here’s How I Invest My Own Retirement Cash

Brett Owens, Chief Investment Strategist
Updated: March 13, 2017

It’s a question I get a lot, both from members of my Contrarian Income Report service and folks who drop by our ContrarianOutlook website:

How do you invest your own nest egg?

I’ll answer it in just a moment.

I was reminded of this question again last week, when I was looking at the returns of the Vanguard Dividend Appreciation ETF (VIG)—and thinking about how dead simple it would be to beat the fund’s return over the long haul.

All it would take is the slightest bit of research.

Big on Hype, Short on Performance

VIG is one of the best cases I’ve seen of an investment taking an inherent advantage and getting nothing out of it.

The fund tracks the NASDAQ US Dividend Achievers Select Index, which includes 184 companies that have raised their payouts annually for at least 10 years. …
Read more

The 2 Worst Dividend Aristocrats to Buy Now

Michael Foster, Senior Analyst
Updated: March 10, 2017

In a crazy bull market like this, you may feel like it’s impossible to lose.

That’s a dangerous feeling. Because there are a few loser stocks out there—although admittedly there are far more winners than losers.

Still, if you’re holding on to one of the big loser stocks right now, you can’t be blamed for feeling bad about it. How can you be losing money when the S&P 500 is up a whopping 18% from a year ago?

You might even be thinking about giving up on stocks. You might think the market is rigged and there’s no way for anyone off of Wall Street to compete.

That, too, is dangerous thinking.

Wall Street isn’t rigged. If it is, why have so many hedge funds lost billions in the last few years and underperformed index funds? …
Read more