Author Archive: Brett Owens

Wall Street’s supposedly elite group of stocks that have increased their annual payouts every year for at least a quarter-century – the “Dividend Aristocrats” – are peddled by advisers and pundits alike as supreme plays for income portfolios. And sure, a select few of them are. We’ll discuss two later today.

But a whole lot more of them are simply “dead money.”

The ProShares S&P 500 Dividend Aristocrats ETF (NOBL), which invests in the whole lot of dividend royalty, yields 1.9% as I write this. Even a million dollars parked in this fund is generating less than $20,000 in investment income annually.… Read more

Let’s talk about five big payouts that are so flimsy, they’re just asking for the ultimate sign of dividend disrespect:

Paying money to short them.

It’s one thing to turn down a decent yield in today’s 2% world. It’s another to be willing to pay the dividend in order to bet against the stock!

Yet here are five firms with archaic business models (some are so-2015) that their cash flow streams will soon dry up. And when the cash evaporates, so will the dividend.

Which is why I may short some or all of these shares in the weeks ahead after this piece publishes.… Read more

Most people are chasing big dividend payers right now in this “2% world” we live in. Meanwhile, a small group of “hidden yield” stocks are quietly handing smart investors growing income streams PLUS annual returns of 12%, 17.3%, or more.

Let’s talk about how to find these stocks, and bank 12% returns or better every single year, by following a simple two-step formula.

See, everyone wants dividend stocks with good current yields. It’s easy to scan a newspaper or financial website and pick out the stocks that are paying 3%, 4%, 8% or whatever number you might consider “good.”

Yet that’s NOT the right way to pick dividend stocks.… Read more

Most “first-level investors” believe that investing is an either-or proposition. A stock or fund can deliver eye-popping yield … or it can deliver breakneck growth. But not both.

That’s simply not true. We’ll prove that today by highlighting three stocks yielding 6% to 9% with 20% price upside to boot.

Remember, total returns are made up of dividends and price appreciation. The latter, price gains, are driven by some combination of:

1. Dividend raises (which inspire investors to pay more for the stock or fund), and/or
2. A climb towards fair value (a closing of the discount window in a closed-end fund’s (CEF’s) case, or a higher multiple on FFO for a REIT).

Closed-end fund (CEF) investors are going crazy again. This time, they’re grossly overpaying.

Today we’ll discuss five incredibly popular funds that are not likely to become more celebrated, and should be sold immediately.

Yes, first-level income hounds can be as greedy as they are fearful. In January 2016, they wanted nothing to do with CEFs. Exactly when many funds were about to embark on an 18-month tear!

Yet today, they’re willing to pay $1.49 for just $1 in assets. This is a recipe to lose money. Or at best, see your portfolio trade sideways.

This Discount/Premium as Margin of Safety (or Lack Thereof)

CEFs, unlike their mutual fund cousins, have fixed share counts.… Read more

The desperate hunt for yield is getting way out of hand—and it’s setting up a terrific buying opportunity for you and me.

How out of hand?

Consider that some investors are so income starved they’re piling into sovereign bonds from Iraq—a country that’s still a war zone!

The latest issuance of five-year bonds by the Iraqi government was slated for $1 billion. But investors spied the 7% yield on offer here and crashed the doors, racking up nearly $7 billion in orders.

It’s sad, and totally unnecessary.

A Secure Portfolio With a Life-Changing 8% Yield

The worst thing is, in their scramble for income, the herd is charging right past yields that are even bigger—and far safer—here in the U.S.A.,… Read more

Don’t take any stated yields for granted these days! The financial news has been flooded with dividend cuts lately, with Teva Pharmaceutical (TEVA) and Mattel (MAT) taking the hatchet to their payouts, and telecom Windstream (WIN) dropping its dividend too.

It’s dangerous to buy headline yields – or even supposedly “safe” blue chips with more modest dividends – without looking at the profits funding these payouts. Companies with high payout ratios (how much in earnings, funds from operations and other measures a company pays out in the form of dividends) are a twofold risk:

1. High payout ratios can lead to a slowing in dividend growth, which means your payout is increasingly likely to fall behind inflation.

Don’t take any dividends for granted today. Business disruption is accelerating as entire industries are being eaten alive.

Uber and Lyft? Killed cabs.

Amazon (AMZN)? It’s crushing retail, and starving their REIT landlords right before our very eyes.

And soon, they might team up to offer more same day deliveries – and make more rivals obsolete!

These types of disturbances have added a new layer to contrarian investing. Before, it was as simple as buying stocks when they were out-of-favor and holding them until they became back in vogue. The “Dogs of the Dow” strategy, for example, usually beat the market by banking the highest blue chip dividend yields – a sign that the tide was ready to turn back in the dogs favor.… Read more