Author Archive: Brett Owens

China’s financial grease fire has officially spread to American stocks. If your portfolio isn’t yet “China-proof” then you’d better protect yourself now. Sell your dividend-paying disasters and get your capital into issues that do pay yields but aren’t hooked on dragon dust.

I get it – you probably didn’t think good ol’ U.S dividend-paying stocks would get crushed like this. They do outperform the market over time, after all.

Problem is, not all stated yields can be taken “as is.” For example, the big oil and BDC dividend dogs that I warned you about last month are underperforming in an already-bad market.… Read more

Plenty of investors see telecom stocks like AT&T Corp. (T) and Verizon Communications (VZ) as cornerstones of any income portfolio. Heck, many even like Comcast (CMCSA) as a dividend-growth staple.

But do they really deserve that honor? And if so, which stock is best for you?

Below, we’ll zero in on a few crucial numbers that tell the tale.

But first, I should point out that none of these three tops my list of favorite dividend-payers now. That title goes to a company throwing off a safe 7.3% dividend yield I’ll tell you about a little further on.

That said, in a head-to-head matchup between AT&T and Verizon, I do have a clear favorite.… Read more

Most stocks that pay meaningful yields today do so because their stock prices are cheap. Their dividends are being paid from earnings that aren’t there.

Big oil is a big dividend trap. A low payout ratio – the percentage of earnings a company pays out to investors – is generally a good thing. Until that number turns negative, that is.

BP plc (BP) lost $2.49 per share over the last 12 months while stubbornly paying out $2.40 in dividends – for a big yet unsustainable current yield of 7.8%.

How’d it fill the gap? Almost $5 billion in additional long-term debt.… Read more

A great way to spot winning dividend-payers is to start with what I call the “Rodney Dangerfield stocks” — companies that get less respect from investors than they deserve.

Right now, I’m eyeing an underappreciated stock in the tech sector, of all places. It’s poised to turn in easy double-digit gains in its share price and dividend over the next five years.

This deal is available because “first-level investors” are missing the big picture. That’s the exact setup to look for when searching for a tech bargain. A cheap valuation isn’t enough, because a stock may very well be cheap for a reason (usually when its technology is obsolete, or heading that way).… Read more

Most “first-level investors” spent the holiday season dumping any and all fixed income holdings like expired eggnog. The Fed rate hike got in their heads, and in their panic they tossed some perfectly good funds in the return bin.

Many closed-end funds are now trading at double-digit discounts to their net asset values (NAVs). Doubleline Capital founder and famed bond guru Jeffrey Gundlach recently told CNBC that buying a fund trading at a 15-20% discount is “sort of a no-brainer.”

Reason being, you’re getting $1 worth of assets for just 80 or 85 cents. That’s free money for us calculated second-level thinkers.… Read more

The fat yields on business development companies (BDCs) just got even fatter.  Many annualized yields are now north of 10%, but that’s not thanks to a surge in payouts. Rather, it’s a byproduct of plummeting prices.

BDCs loan money to private companies. Many of the loans are floating rates, so the recent rate hike wasn’t the issue. Investors’ broader concern – and reason why many BDC stocks crashed by more than their annual dividend in a week’s time – is borrower risk.

Regular readers know we’ve been keeping an eye on the free-fall in high yield bonds. Of late, that’s accelerated.… Read more

If you want to double—or even triple—your dividend income overnight, there’s an easy way to do it: seek out companies that regularly pay special dividends.

Management usually announces these one-time payouts (which are always larger than regular quarterly dividends) after reporting a blowout quarter, or if they suddenly find themselves sitting on a ballooning cash pile. And with S&P 500 firms holding onto a combined $2.1-trillion stash, special dividends are becoming a lot more common these days.

They can instantly turn a company with a ho-hum dividend yield into an income investor’s dream.

Microsoft (MSFT) famously paid out a $3.00 special dividend in November 2004 that amounted to $32 billion from its long-term money pile.… Read more