Last Friday’s jobs report confirmed what we contrarians have been discussing for months now—thanks to AI, employers no longer need to hire more employees to grow.
Bosses simply need to implement AI tools to grow their businesses. The machines are a managerial dream. Once trained they are, in many cases, better, faster and cheaper than people.
Robots always report for work. They will grind all the time. And they are never sick or hungover!
Two years ago, my current software company engaged about 15 contractors in various capacities. Today, thanks to AI, we have only two-and-a-half. Yet even with only one-sixth the “manpower,” sales are climbing, and the bottom line has never looked better!
This “growth without headcount” revolution is happening throughout the economy. The US added only 22,000 new jobs in August and 107,000 jobs over the last four months. Meanwhile, it’s estimated that 100,000 fresh gigs are needed every month to keep up with population growth—which means we are 70,000 short per month of that target.
Bad news for job seekers (such as new college grads) but bullish for business owners.
This is the reason that small businesses are increasingly cheerful. The rise of machines solves a tough business problem—hiring and managing employees. No wonder the Small Business Optimism Index just hit a five-month high.
Let’s talk about an 11% dividend that is directly benefiting.
FS Credit Opportunities (FSCO) is a small-business lender quietly cashing in on this generational shift. The team at FS Credit rewarded investors with another 5.1% dividend raise earlier this summer. FSCO now yields 11%, paid monthly!
The firm benefits from an uptick in M&A under Trump 2.0. As a business development company in a “fund wrapper,” FSCO presents us with the best of all possible worlds—a reliable income strategy via value-based lending that gets dished to us as a generous monthly dividend.
We were “early adopters” of FSCO in my Contrarian Income Report, and we have been rewarded with 24% gains in just 11 months. We bought the fund at a 10% discount to its net asset value, a deal that was “too good to be true” as this fund now trades at fair value. Still, it is tough to argue with a fair price for a secure 11% monthly dividend.
FSCO’s Fat Monthly Dividend
Small company bosses aren’t the only ones trimming their human payrolls. Big companies are also going big on AI. Microsoft (MSFT) laid off 15,000 employees a few months back. Yet Microsoft isn’t downsizing. It’s upsizing efficiency by rolling out robot-powered sales, marketing and support teams.
Meanwhile, if you need to get a hold of a person at Amazon (AMZN) about your latest package, good luck. CEO Andy Jassy openly acknowledged that Amazon’s workforce will shrink over the next few years. Today is likely “peak human headcount” for the online retailer because it has found a way to grow without hiring.
We are seeing these patterns all over the “Magnificent 7”— tech companies are eating their own AI dogfood to replace expensive humans with cheaper machines. Profits are booming.
Global X S&P 500 Covered Call ETF (XYLD) is a savvy dividend play on this megatrend. XYLD holds a substantial 40% tech allocation, capturing the automation-driven profitability boom.
XYLD implements a covered call strategy that buys stocks and then sells (“writes”) call options to other investors. XYLD owners earn income from the premiums collected, paid upfront.
It’s a lucrative payout boost: XYLD dishes a 9.7% dividend, payable each month. The fund’s showered us with 31% annualized gains since we added it to the CIR portfolio in April, and more profits are likely as the Mag 7 continues to impress.
So, we have booming corporate profits alongside a sleepy jobs market. The latter means the Federal Reserve will almost certainly cut short-term interest rates.
Long rates are on the way down, too. Partly as a reaction to unemployment numbers, but really thanks to major “help” from the US Treasury.
The Treasury is dusting off its bond buyback machine to keep a lid on long rates. Here’s how it works. The Treasury raises cash in the short end (by selling more lower-yielding bills, two years or less) and uses those funds to repurchase longer-dated notes and bonds (“retiring” their higher yields and higher cost to Treasury) in the secondary market.
It’s a recycling program for Uncle Sam’s outstanding debt. The effect of these Treasury buybacks? Even fewer long-duration bonds are available to investors.
Treasury Secretary Bessent doesn’t even have to announce a formal cap on the 10-year yield. He simply pulls supply out of the market, which causes long-dated yields to drift down (with more demand, Seller Sam can “name his price”—he doesn’t have to pay higher yields to attract lenders).
Result? The 10-year Treasury yield has dropped to 4% from 4.8% this year.
Treasury bond prices and interest rates have an inverse relationship. Thus, 11.3%-yielding iShares 20+ Year Treasury Bond BuyWrite Strategy ETF (TLTW) has a rock-solid floor beneath it.
TLTW buys the iShares 20+ Year Treasury Bond ETF (TLT) and then writes covered calls on its shares for extra income. There are many covered call funds for stocks, but TLTW is unique in using this strategy to boost bond yields. With the US Treasury having TLT’s back, TLTW’s assets are well supported while they generate its big monthly dividend.
My favorite monthly dividends to buy right now average 9%+ per year. This includes three more monthly dividend superstars paying up to 11.1%. Ready to retire on these fat payouts? Click here for my full September 2025 briefing on monthly dividends.