Author Archive: Brett Owens

Everyone hates bonds right now. Perfect—let’s buy this nifty 9.5% payer while it’s discounted!

Why the sale? A bearish narrative, of course. In 2023, we have a narrative for everything, after all.

Last week, the Bank of Japan (BOJ) announced it is softening “yield control” efforts for 10-year Japanese government bonds (JGBs). Inflation is finally picking up in Japan, and the BOJ is still printing money to buy JGBs.

Ironic? Yes. But the BOJ, the money-printing addict, is finally admitting it has a problem. We can think of this as step two of a potential multi-step inflation recovery effort.… Read more

Few folks know it,  but there’s a comically ignored indicator that regularly hands out safe 8%+ dividends—plus payouts that surge double-digits.

I’m talking about insider buying.

When it comes to the buys and sells of the folks in corporate C-suites, Peter Lynch said it best: “Insiders may sell their shares for any number of reasons, but they buy them for only one: the think the price will rise.”

Far be it for me to “edit” Lynch, but I’d add one more thing: these ballers also think the dividend is safe.

Think about it for a second: dividend safety is priority No.… Read more

Is there still a chance to buy the bank dip? You bet—with nifty yields up to 9.4%!

We’re going to avoid the regional lenders, which pains me to say because I love banking with the small guys. But I’m not looking to own them as the economy slows down.

No, nothing personal, but I’ll take the banking behemoths. None of them yield 9.4%, of course, but we engineer these payouts easily via their preferred dividends.

Preferred stocks are often referred to as stock-bond “hybrids” given that they share some characteristics of each asset. A quick breakdown:

• They represent ownership in a company (like a stock)
• They typically don’t offer voting rights (like a bond)
• They pay dividends (like a stock)
• Their dividends are typically fixed at a certain level (like a bond)
• They can rise and decline based on the performance of the underlying company (like a stock)
• But they tend to be much more stable, trading around a “par value” like a bond)

Most noteworthy, for income fanatics like you and I, is that their dividends are plump.… Read more

You and I, my fellow contrarian, are old enough to remember when “I bonds”—US savings bonds designed to protect you from inflation—yielded 9.62%.

It was May 2022. Just 14 months ago!

Ah, the good ol’ days. Since then, Series I savings bond rates have tumbled to 4.3%.

Many readers wrote in with I bond questions earlier this year. The savings vehicles boasted a still sweet 6.89%. But they had two major limitations:

• I bonds tie up our money for a year.
• We can only invest $15,000 in them annually.

(The annual limit is $10,000 per person, plus an extra $5,000 per year if using a federal tax refund.… Read more

If I can give you just one piece of advice as we pass the midpoint of 2023, it’s this: do not trust your dividend income to ETFs!

Instead, look to the simple “payout-powered” strategy we’ll talk about in a second. As we’ll see, it generated a tidy 83% gain for readers of my Hidden Yields service in just over two years.

Now is the perfect time to put it to work again, with corporate earnings—and dividends—likely to rise next year after slumping a forecast 16% in 2023, according to a recent report from Morgan Stanley (MS). For 2024, the bank is calling for S&P profits to soar 23%, then tack on another 10% gain in 2025.… Read more

AI is popular. Emerging market bonds, needless to say, are not.

Which is perfect for us responsible contrarians striving to retire on dividends. The more neglected an asset, the better.

But what’s the catalyst for these big yields? I’m talking dividends between 6.5% and 12.1%, by the way.

That’s easy. When the buck gets banged up, these funds soar. And that is exactly what is playing out today.

The US dollar has been en fuego for the past decade. I know, it’s hard to believe given noise from the “demise of the dollar” crowd. But these guys have lost a lot of money betting against the buck.… Read more

I’m sure you probably know this—but it is usually a really bad idea to pay 43-times sales for a stock.

Note that I did not say earnings. I said sales. Revenues. The ol’ top line. Before everything.

Scott McNealy, the co-founder of Sun Microsystems, famously told investors it was insane to pay 10-times sales for Sun’s stock. Ten!

At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends.

 

That assumes I can get that by my shareholders. That assumes I have zero cost of goods… that assumes I have zero expenses… that assumes I pay no taxes… assumes zero R&D.

If the market dumpster fire we trudged through in 2022 taught us anything, it’s that we must swing our portfolios away from this:

We’re Swapping Share-Price “Flameouts” Like This…

That’s the chart of “America’s ticker”—the SPDR S&P 500 ETF Trust (SPY)—last year. I call SPY “America’s ticker” because it’s by far the most popular way to track the S&P 500, a staple in many folks’ portfolios.

But its popularity does not translate into safety. Just holding this simple index fund last year meant taking a 20% haircut—with plenty of heart palpitations along the way! And even with this year’s rebound, the S&P 500 is still 4% below its January 2022 levels as of this writing.… Read more

This retirement portfolio pays 12.4%. Which means, on a million-dollar stake, these stocks dish $124,000 in dividend income alone.

That’s fantastic, needless to say! But are these stocks safe enough to actually retire on?

After all, we’re not looking to collect a 12.4% yield and lose it in price. Heck, we’re not interested in losing capital at all. We want the 12.4% with stocks that are at least steady.

Most common stocks would be in trouble if they paid 12.4%. But these are business development companies (BDCs), which yield so much because they have a special carve out from Uncle Sam.… Read more

Sixty percent gains, needless to say, are nice!

They can be the difference between a comfortable retirement and, well, one where we’re a bit too concerned about losses.

A million dollars is plenty to retire on dividends. But isn’t $1,600,000 even better?

With a million, an 8% yielding portfolio dishes $80,000 per year in dividends. Nice.

But that 60%-higher portfolio pays $128,200. Even nicer.

Why am I teasing 60%? Because we have the best opportunity to bank big gains—from safe dividend stocks, no less!—since the fall of 2020.

The opportunity is here thanks to a form of “quiet QE” from the Federal Reserve.… Read more