Author Archive: Brett Owens

The Fed has finally cut rates, and if the “dot plot” is any indication, it won’t be the last. This is fuel for real estate investment trusts (REITs)—they thrive when borrowing costs fall and their fat dividends shine next to shrinking bond yields.

Today we can lock in payouts between 6% and 13% from landlords set to surge as Powell’s long-awaited pivot plays out.

Why do REITs rally as rates fall? These stocks act as “bond proxies” that move alongside bonds and opposite rates. Here is a major REIT ETF plotted against the 10-year Treasury yield. As you can see, when the important rate zigs, the REIT benchmark zags:

REITs Zig When Rates Zag

Rate cuts don’t always hit the 10-year overnight.… Read more

When DoubleLine CIO Jeffrey Gundlach speaks, we yield hounds listen.

Right now, the “Bond God” has gold on the brain. We’re dialed in, because his latest utterances are pointing the way to a sweet 7.4%-paying “gold-dividend twofer” for us.

I’m talking about a play for price upside in the near term, followed by big monthly dividends (yes, 7.4%, and maybe more) when the “discount trigger” we’ll talk about in a sec kicks in.

The Bond God Calls ’Em Like He Sees ’Em

The Bond God is a dyed-in-the-wool contrarian who holds a special place in our hearts because, well, he’s often right.… Read more

Artificial intelligence is supposed to be graceful, just code humming in the cloud. Yet it’s anything but lightweight. AI is an energy hog.

Every time a chatbot like ChatGPT spits out an answer, it pulls from enormous racks of servers running in data centers. Those servers draw electricity on the scale of small cities.

Over the past few years, AI has been a tech story. With increasing adoption, however, it is about to evolve into a power story.

AI can’t happen without natural gas. Renewables are growing for sure but most new data centers are still tied to gas-fired plants.… Read more

Most Wall Street “suits” are allergic to dividend cuts. These spreadsheet jockeys sooooo lack imagination. They prefer linear trends—up and to the right.

Dividend growers model nicely. Payout “resets” (cuts!) do not. So, there is often a knee-jerk reaction from analysts to sell every divvie slash they see.

Same goes for most individual income investors. These vanilla beans sold BlackRock Health Sciences Term Trust (BMEZ) late last week when BlackRock sliced the dividends for three of its popular funds.

The weaker hands sold. Big payouts remain. As contrarians, we’re intrigued.

Dividend cuts, ironically, often mark the start of opportunity. Here’s what the knee-jerk sellers miss:

• Even after the trim, BMEZ still yields 9.2%.

While Wall Street chases NVIDIA (NVDA), the real AI dividend story is unfolding in the sleepy insurance sector. These “boring” firms are quietly leveraging AI tools to slash costs, grow premiums, and—best of all—dish us bigger dividends.

AI is spreading across the economy much faster than many expected. That means we need to move even faster to front-run that shift.

We’ve already been hard at it. In July, we talked about our favorite dividend payer to grab as AI reworks farming. Few people realize it, but “ag” has a long history of leveraging tech. It’s a big reason why productivity per farm worker has shot up 16X since 1948.… Read more

Wall Street suits tend to avoid business development companies (BDCs). That’s a mistake. For us income seekers, these “Main Street bankers” can be the best dividend machines in the market.

Forget the “penny yields” most stocks pay. BDCs can dish divvies between 10.6% and 12.6%. Unlike vanilla blue chips, BDCs are mandated by Congress to flip us at least 90% of their taxable income.

In other words, the dividends are a “built in” feature.

Of course we don’t just close our eyes and buy any 12% payer. Some BDCs are dividend machines, others are disasters. Our job: separate the stars from the scrubs and only buy the cash cows.… Read more

Last Friday’s jobs report confirmed what we contrarians have been discussing for months now—thanks to AI, employers no longer need to hire more employees to grow.

Bosses simply need to implement AI tools to grow their businesses. The machines are a managerial dream. Once trained they are, in many cases, better, faster and cheaper than people.

Robots always report for work. They will grind all the time. And they are never sick or hungover!

Two years ago, my current software company engaged about 15 contractors in various capacities. Today, thanks to AI, we have only two-and-a-half. Yet even with only one-sixth the “manpower,” sales are climbing, and the bottom line has never looked better!… Read more

It’s a trap I see investors fall into all the time: pouncing on yields that are so high as to be, frankly, absurd. Case in point: the 89% (not a typo!) yielder we’re going to talk about today.

I get where the temptation of a payout like that comes from. Inflation is sticking around. The job market? Precarious, to say the least, with AI replacing humans at an accelerating pace. Another disappointing jobs report, released on Friday, sure doesn’t help here, either.

At a time like this, an 89% annualized payout sounds like a dream, especially if you’re looking to get to (and hopefully stay in!)… Read more

Small companies are sneaky AI-friendly plays because they are implementing these tools faster than their larger competitors.

Expect to see these smaller firms become more efficient in the quarters ahead. Sales will continue to increase while headcounts will remain relatively flat as robots take up the slack—a boon to future profits.

Ironically, small caps are currently the cheapest sector on the board:

Broad-Market Forward P/Es:

• S&P 500: 22.2
• S&P MidCap 400: 16.2
• S&P SmallCap 600: 15.6

So, we turn our attention to a six pack of small but mighty dividend payers. Let’s start with a lender that yields “only” 15.7% per year and work our way up from there.… Read more