Author Archive: Brett Owens

I’m hearing a lot from subscribers who are worried about rising rates. I get it. If you’re watching the financial news, it’s all they are talking about. And if you watch your portfolio (too?) closely, you see that the prices of your bond funds are declining.

Which, like, defeats the point of bonds. We’re here for the yield and not to give back our dividends via capital losses.

Bond prices fall as rates rise because, even if the bonds a fund owns are perfectly fine (paying their coupons on schedule), the value declines. Who wants to buy an old bond paying 3% if newer bonds pay more?… Read more

We contrarians love it when the crowd mislabels a stock and tosses it overboard. We really love it when this happens to the same stock twice!

Today we’re going to look at a perfect example: an 8.3%-paying closed-end fund (CEF) most people treat as a bond proxy. But it’s much more than that.

That’s strike one for the mainstream crowd. And it’s the first part of our setup here.

Next, when investors aren’t slapping that label on this fund, they’re mistakenly referring to it as a utility fund.

Strike two!

When a situation like this crops up, we essentially get a deal on top of a deal.… Read more

If you like dividends, check out the discounted cash flows currently available in REIT land. Real estate investment trusts (REITs) have hit the skids in recent months as investors have panicked about the Federal Reserve raising rates. Their worries bring value to us, and today we’re going to highlight five REITs yielding 5.3% to 12.3%.

Now, we income investors are fans of REITs because they pay out most of the profits to us as dividends. Congress created this business structure decades ago, and it included a mandate for dividends—REITs, in exchange for significant federal tax advantages, must dole out at least 90% of their taxable income as distributions back to us.… Read more

“If winning isn’t supposed to matter, then why are they introducing a playoff system?”

I shook my head in disbelief as I whispered this unfolding “riddle” to my coaching buddy in the chair next to me. We were at the YMCA fall basketball meeting, sweating it out in the preschool room. (Where was the air conditioning on this sultry September evening?)

The YMCA regional manager, notorious for talking for an hour about the exact same thing to kick off every season, had something new. And to be honest, the “ruling” made no sense to me.

Playoffs? We’re talkin’ about…playoffs?… Read more

In one corner of the income market, a “rubber band” is stretched about as far as it can go.

When it snaps back, I expect it to catapult the prices of a select group of 10%+ payers much higher from here.

Those 10%+ payers are bond-focused closed-end funds (CEFs). This latest bond panic has blown out their discounts to levels not seen in four years. That’s dropped their prices. And because yields and prices move in opposite directions, a buy today gets us “starter yields” up to 13% here.

That’s our window—it’s exactly where our corporate-bond CEFs are now.

Here’s the thing, though.… Read more

Don’t look now, but crude oil is back over $100 a barrel. Prices are on fire, rising 20% since July, and the Strait of Hormuz is still shut. Diesel fuel, the transportation fossil fuel of record, sits at a record $6.23 per gallon.

WTI: Up, Up and Away

Now, betting on geopolitical outcomes is a dicey game, so placing a bet on the crisis extending or world peace breaking out is tricky. The sure bet is looking at five closed-end funds (CEFs) paying 8.5% on average. Four of these five funds have had an impressive run, and they now trade at narrower discounts than their five-year norms, so we’re watching.… Read more

“How’s your hip?” my wife asked. The emphasis on hip was bearish for me as I limped from, well, you’ll see.

My gait had been good (dare I say normal?) for the last 10 days. She justifiably wondered what was up.

“The jog,” I mumbled. And shrugged.

“He cleared you to jog?”

Really, he did! Sort of. “Yes,” I replied confidently. “He said yesterday it was probably OK.”

I had just completed a three-week round of shots to calm down my hip osteoarthritis, but these treatments tend to rile up the joint before helping. So, my jog was… premature.

I had to admit: “I went a little fast.… Read more

One of our favorite pipeline plays—Enbridge (ENB)—has taken a tumble. It’s set up a sweet buying opportunity.

We can thank rising rates (with an “assist” from overdone trade war fears!) for this opening.

Here’s the state of play with this one, which I’ve nicknamed the “natty” king because, despite its Canadian domicile, it ships 20% of the natural gas consumed in the US.

• The stock yields a gaudy 5.6%.
• Enbridge is a “toll booth” on North American energy consumption, collecting fixed rates for the use of its pipelines and storage facilities, no matter what oil and gas prices do.

Rate hikes are back on the table. For most investors, that’s bad news. But for shareholders in one high-yielding corner of the market, it could be the best thing that’s happened all year.

Own bonds? New issues get more attractive, so your existing ones lose value. Own stocks? Higher rates raise borrowing costs and make bonds more competitive with dividends. Neither is a great setup.

But business development companies (BDCs) have a more complicated relationship with interest rates. In fact, these high-single- and double-digit yielders could get a much-needed spark if Warsh & Co. green-light the first rate hike since 2023.… Read more

Let’s discuss an investor who banks a $34,533 dividend check on the first of every month. From one fund alone!

Think you can survive on $34,000 in passive income per month, too? From just one position?

Of course you do. And right now, you and I can buy this monthly payer for a better price than the big shot! (Who, by the way, keeps working long days—not what many of us would do with a $34K monthly paycheck!)

I’m talking about Emmanuel “Manny” Roman, the CEO of PIMCO. Yes, that PIMCO, the most famous bond shop in the world. It was the old home of Bond King Bill Gross, who has since been deposed.… Read more