Author Archive: Brett Owens

Look, we’re going to get a slowdown here in America this year—two years’ worth of rate hikes are going to hit home. Fact.

So I’m going to suggest we do something you might find a little bit weird: buy US stocks. But not any US stocks—and certainly not “dividend-dud” ETFs like the ever-popular SPDR S&P 500 ETF Trust (SPY)!

No way.

Instead we’re shopping in the small(er) cap aisle, for stocks in the midcap range kicking out surging dividends. We love these overlooked US-based dividend plays now because:

They’re cheap: while SPY has soared 19% in the last year, midcaps have treaded water, with the Vanguard Mid Cap ETF (VO)—in orange below—up just 4%.… Read more

When the Wall Street cheerleaders actually dislike a stock—well, that sure commands our contrarian attention.

Today we’ll cover one of my favorite traditions, which is fading the opinions of analysts. You know, the guys who typically slap a Buy rating on everything they see?

It sounds counterintuitive, but we don’t want Buy ratings on our stocks. Give us Holds and Sells and general apathy. Or, even better, disgust.

When every analyst rates a stock a Buy, it feels “safe” to purchase. But really, it’s anything but. With nobody left to upgrade, there is nothing to do but wait for the dreaded downgrade.… Read more

Me: “Let’s find companies with lots of debt and buy them. And make a lot of money.”

You: “Wait, what?”

(Nod as always to the late, great Norm Macdonald.)

Hear me out. Last week, plain vanilla investors threw a midweek fit when Federal Reserve Chairman Jay Powell said something we contrarians assumed already: No rate cut coming in March.

The Fed decides the Fed funds rate. This often cues the two-year Treasury yield to follow. (Yes, sometimes, the two-year leads. As always in economics and relationships, it’s complicated.)

We can debate who leads who, but the key is that the Fed controls short-term rates, but the bond market determines long-term rates.… Read more

If we can say one thing about the rest of 2024, it’s this: We’re looking at a stock-picker’s year here—and folks who try to play it with vanilla ETFs will have a tough time.

Just look at the state of play in front of us.

The Fed is trying to thread a needle, and if economic numbers come in too hot or too cold for Goldilocks, well, good luck holding something like the SPDR S&P 500 ETF Trust (SPY)!

In an environment like this, a good plan is to zig when the market zags.

To do so, we’re targeting stocks in the bargain bin with “recession-resistant” strengths such as steady revenue from clients who must buy their services no matter what.… Read more

Magnificent Seven? Tired.

Dividend Six? Wired.

Plain vanilla investors fawn over chipmakers and AI stocks. They hope they can buy them high, and sell them higher.

Contrarian income investors like us? We focus on the companies that support the AI hype. The “pick and shovel” providers. A “Dividend Six” that plays on AI and pays $26,000 to $41,500 in dividends alone on a $500K stake.

With that we’ll say move over, Magnificent Seven—a term coined by Bank of America’s Michael Hartnett (and inspired by the classic Sturges Western) to describe the market’s predominant tech names.

Those stocks? Microsoft (MSFT), Apple (AAPL), Facebook parent Meta Platforms (META), Amazon.com… Read more

Ten years ago, the city athletics director wrote:

Hi Guys,
I need to place an order for championship softball shirts. It should say West Sacramento’s Summer 2014 C/D Division Champions. Bad Decisions.

Bad Decisions was our team name, a nod to our personnel. I mean that in the most endearing way possible, of course. A lineup filled with guys light on responsibility (at the time) who enjoyed the postgame rehydration process as much as the in-game competition:

With two kids, my postgame rituals are different these days. First, a trip out can only occur after our final YMCA basketball game on Saturdays—my third and final game to coach that day.… Read more

This market bounce is strangling the payouts on everybody’s favorite ETFs. But it’s also given us a sweet setup to grab another group of funds kicking out big dividends, to the tune of 9%+ yields.

Even better, many of these funds—wallflowers to “popular-kid” ETFs—were left off the invite list for the 2023 market party. That means they’re (still) cheap today.

I know a 9% payout has a lot of appeal to most folks, with Treasury yields now down to around 4%, not too far above inflation.

And if your cash is stuck in an ETF, you’re getting a lame payout, well, almost all the time, but especially if you buy now: the SPDR S&P 500 ETF Trust (SPY)—which, as the name says, holds the entire S&P 500 index—yields a sorry 1.4% as I write this.… Read more

Today we’ll discuss five monthly dividends with yields between 7.3% and 16.7%. But let’s be careful—market participants are showing signs of greed right now.

Source: CNN

Monthly dividend stocks can help settle down a seasick portfolio. First, they pay every 30 days. What a concept! Their payments line up with our bills. Brilliant.

Quarterly payers aren’t as nice. Let’s look at a $500,000 portfolio split evenly among a group of five mega-cap dividend payers. This is a set of wildly popular blue chips you can find in the top 10 or top 20 holdings of just about every major large-cap fund—and despite this, they deliver a downright miserly sub-1% yield!… Read more

“You want a shot?”

My single friend Roy is always looking for a whiskey partner. I winced. In a past life, I’d be in.

“I can’t,” was my excuse, grimacing and nodding at my nine-year-old daughter who accompanied me to our local watering hole for a late lunch and playoff football.

Responsibility makes us evolve. Usually, hopefully for the better. Some of the evolutions are obvious. Stay responsible while you’re parenting. Don’t buy stocks when everybody else loves them.

In my younger whiskey days, “investing” was all about action. Give me that new stock idea. The monthly pick. Be in it to win it.… Read more

Three weeks into 2024 and here’s the state of play: rates have fallen and likely headed lower. That’s going to light a fire under our favorite dividend payers.

It already has!

Think back three months, to mid-October. Back then, 10-year Treasury yields sat at just under 5%. Now they sit at 4.1%—a 19% drop! It’s been great for our dividend payers, as income-hungry folks start to look for other options.

That shift has just started, and it’s got plenty more room to run.

Consider the 8.5%-paying Cohen & Steers Infrastructure Fund (UTF), a closed-end fund (CEF) that’s a classic dividend play, holding shares of “recession-resistant” utilities like NextEra Energy (NEE) and Southern Company (SO).… Read more