Is it time for us contrarians to “buy the dip” in bank stocks?

We’re drowning in big bank-scare headlines. Silicon Valley Bank (SIVB) knuckled under in days, Signature Bank (SBNY) wasn’t too far behind, and across the pond, Credit Suisse (CS) needed a buyout bailout from rival UBS (UBS).

The next bank run, however, won’t be with the big boys. Too big to fail, baby. Here, we’ll find not only government help but also secure yields of up to 5.1%—trading at a discount, no less.

Why the big guys? Well let me show you. Last week, my software firm received this email from one of our vendors:

“Brett, Just wanted to give you our new banking details.

Once folks get a taste of closed-end funds (CEFs), they typically rave about one thing: the dividends! Yields of 7% and up are common with CEFs, and they often come your way monthly.

We also love the fact that even though CEFs are a small corner of the market (with only about 500 or so out there), we can build a diversified portfolio with them: there are CEFs that hold US and international stocks, bonds, real estate—even private equity. You name it.

This broad range gets us around a problem most income-seekers face: being forced to stake significant sums in one, or a handful of, stocks just to get big payouts.… Read more

Federal Reserve Chairman Jay Powell is scared. First, it was UK pension funds. Now, the entire banking system has liquidity issues.

Fourteen years of quantitative easing is a tough habit to break! We are one year into the Fed’s attempt to tighten monetary conditions.

Should we buy bargains? Or sell now and go shopping later?

Fellow contrarians want to know! Our Contrarian Outlook customer service line has been hot. Today, we’ll put on our short-term thinking caps and discuss your dividend trading questions.

Q: Do you see any good buys among the regional banks where the “baby got thrown out with the SVB bathwater?”… Read more

We’re going to ride this Silicon Valley Bank (SIVB) fiasco to big dividend payouts—I’m talking yields up to 12.6%!—and quick upside, too.

I’ll walk you through exactly what we’re going to do below. Then I’ll name two unloved (for now!) dividends we’ll target.

We’re Not Dropping a Quarter Into GameStop II

One thing we’re not going to do is sell anything short—even though, as Bloomberg recently told us, the “shorts” cleaned up on SVB. All in, they pocketed $2 billion as “tech bros’” fav bank froze, then crashed.

We contrarian dividend players tip our hats to these daring degenerates. They rolled the dice and things broke their way.… Read more

We’ve got some superb dividends sitting in front of us in CEFs right now—as I write this, these funds yield an incredible 7.9%, on average!

That’s way more than Treasuries (especially after their yields were pummeled last week). And far more than the 1.3% dribbled out by the typical S&P 500 stock.

Best of all, many CEFs hold the same stocks you likely hold now—including household names like Apple (AAPL) and Microsoft (MSFT). So you likely won’t have to ditch your current holdings to get into these funds.

Those high dividends, as you can likely imagine, get a lot of attention from investors—so much so that some may be tempted to try a technique known as “dividend capture” with CEFs.… Read more

Insiders may sell their shares for a variety of reasons. Usually, because they need the cash.

But execs who know “what’s up” with their company better than anyone only buy with one purpose in mind.

They believe their stock price is going higher. Or, if it’s a dividend stock, at least it is not going down anytime soon!

We’re going to highlight dividends up to 15.8% (yes, that’s no typo) with recent insider buying. This is especially notable these days because:

• Vanilla investors are worried this is 2008, Part Deux.
• Inflation is still running hot.
• And stocks have been going down for 15 months and counting.

The Silicon Valley Bank (SIVB) mess has demonstrated exactly why we need to invest in closed-end funds (CEFs): these funds yield 8.1% on average, giving us an income stream that can get us through market volatility, like we’re seeing now.

In fact, the SIVB failure shows one of the often-underappreciated aspects of CEFs: when you hold a diversified portfolio of these funds, you’re getting exposure to thousands of stocks, bonds, REITs and many other asset classes.

So even if you have an SIVB hidden in there somewhere, it will have little—and likely no—impact on your overall returns. (And subscribers to my CEF Insider service don’t need to worry—none of our funds have exposure to SIVB, and none have exposure to regional banks suffering from the contagion.)… Read more

Generally, recessions are bullish for bonds. Which makes this 4% bond yield a “best recession bet.”

Why are we talking bonds when, over the past 18 months, they have all been crushed? Well, that’s the reason. The cure for poor bond performance is the high yields that are now staring us in the face. We look forward, not backward.

If you took our cue and used cash under your mattress as a bond proxy lately, then you are sitting pretty. Because now, we finally have attractive fixed-income yields!

Granted, safety is the key here. Remember, we are picking an economic slowdown as our catalyst.… Read more

Right now we’ve got a terrific setup happening in Treasuries—and we’re going to use it to “flip” the near-4% yield the 10-year pays into a gaudy 7.9%+, paid monthly, to boot.

And there’s more: we’re going to give ourselves a rare “double discount” on our bond buys.

We’ll do it by taking already-discounted bonds (thanks to Jay Powell’s Dirty Harry act on rates) and applying a second discount by purchasing through two closed-end funds (CEFs) we’ll talk about in a bit.

The window to use this strategy is now open. Take a look at this chart to see what I’m getting at here:

The 10-Year Rate Bounces Off Its 4% Ceiling (Again)

Over the past 15 years, the yield on the 10-year has zoomed higher plenty of times, until it smacks into the 4% “ceiling.”… Read more

Not many people realize this, but there’s an easy way to build a reliable 10% dividend stream (with price upside) that crushes anything stocks—or an index fund—could pay you.

I know that’s a bold claim. Truth is, ETFs are practically a religion for many folks. And it’s true that many active fund managers do fail to beat the index in stocks in any given year.

But there are also quite a few who do beat the index. Plus, many of them do it by offering a much bigger yield than the 1.8% your typical S&P 500 index fund, like the Vanguard S&P 500 ETF (VOO), yields.… Read more