Author Archive: Brett Owens

What’s better than a 9.3% dividend stock? How about one that’s poised to pop as interest rates rise?

Business development companies, or BDCs for short, are overlooked by most income investors. That’s too bad for them because these dividend deals can be pretty sweet.

Especially when rates are rising.

BDCs cut loans to small businesses. Their inflation-friendly component comes from floating rate loans. BDCs that lend this way make more money when rates rise.

BDCs came to life in 1980 when Congress whipped up these tax-advantaged entities. Like the REITs we all love, BDCs are cleared by Uncle Sam for tax-free profits, provided they dish most of their green as dividends.… Read more

Here’s some advice you might be surprised to hear from an investment-newsletter writer: Do NOT buy stocks right now.

That is, unless you can answer an emphatic “yes!” to these three questions:

1. Are you investing for the long term?
2. Are you investing in stocks that are not only growing their dividends but accelerating that payout growth?
3. Are you only investing a small portion of your holdings (and ideally keeping the bulk in cash to ride out this storm)?

If you answered yes to all three, great! I’ll show you what you must demand in any dividend grower to ensure you’re locking in a safe payout while protecting yourself from today’s Fed-driven market panic.… Read more

The point of a bear market is to bring price-to-earnings (P/E) ratios back down to earth. Preferably into single digits.

I like P/Es under ten because it means that the company at least has a chance to pay us back within a decade. Give me a P/E of eight, a business I’m comfortable with and I’ll happily wait the eight years.

Bonus points if I can get paid to wait, which is where dividend stocks come in.

Thanks to this unfolding bear market, we finally have discounts in High Yieldland. We recently chatted about five cash flowing bargains, and here in just a minute, we’ll discuss another five.… Read more

We’ve been extolling cash in these pages since the start of this year. As the Federal Reserve prepared to pause its money printer, we contrarians booked profits and stacked dollar bills.

Long before the media began saying “bear market,” we recognized that a volatile 2022 was highly likely. We were ready for a decline.

As I write, our premium portfolios are all sitting on sizeable cash positions:

Yup. Plenty of capital ready to be deployed after the final “wash out” in the markets.

These comfortable cash seats have served us well. Bonds kicked off their worst start to a year since 1788 (per Nasdaq).… Read more

In the current environment, with more downside likely to come, one of the best things you and I can do is nothing.

… or at least, next to nothing.

I recently wrote about the virtues of a “no beta” portfolio—basically holding on to cash until it’s time to “back up the truck” at a major market bottom.

But I left the door open—”if you must buy, please promise me you’ll keep it low beta. It’s the next best option to low-beta cash”—and for good reason.

The Case for Low Beta

“Anyone who studies finance learns early on that risk and reward go hand in hand and that with higher expected returns come higher risks.… Read more

The yield on the 10-year Treasury has rallied near 3%. Yet there’s no way you and I are retiring off that pittance!

Hence the appeal of closed-end funds (CEFs), which regularly pay 7% or better. That’s the difference between a paltry income below $30,000 on a million buck nest egg or a respectable $70,000 annually.

And if you’re smart about your CEF purchases, you can even buy these funds at discounts and snare some price upside to boot!

With the markets in flux (to say the least), now is a good time to review the principles of successful CEF investing. They are more nuanced than classic stock picking because we’re analyzing managers, strategies and holdings versus simple businesses models.… Read more

Most folks dread checking their retirement accounts these days, but not us contrarian income-seekers. We’re coolly playing our “no-withdrawal” retirement strategy, paying our bills with 7% to 9% dividends—while leaving our pile of saved cash alone.

I know that sounds pretty sanguine—boastful, even—when the S&P 500 is down nearly 20%. But deep down, most people know that a “dividends-only” retirement really is the best way to go.

Trouble is, most folks don’t know how to get there. I’ll lay out a roadmap that could let you hang ’em up on dividends alone with as little as $500K saved a little further on.… Read more

Thanks to the market’s selloff, we finally have some dividend deals out there. In a moment, I’ll highlight a five-pack of sweet-paying dividend stocks (as in, 4.0% to 11.3% yields) that are cheap cash cows.

It’s important that we focus on value, cash flow and yield as we cherry pick the bargain bin. More pain is likely ahead for the broader markets.

Stocks have been a dumpster fire in 2022 because the Federal Reserve is turning off its money printer. The Fed’s balance sheet growth is flattening (already a problem for equities) and will shrink soon:

Fed “Taper” Big Problem for Stocks

Meanwhile, Russia’s war machine and China’s latest COVID fight have made an even bigger mess of global supply chains, further fueling already white-hot prices.… Read more

I remain a big fan of cash right now.

I know, I know. I’m not supposed to say this in a stock-focused column like this.

“But Brett,” I can hear the rebuttal. “We’ve been smartly selling the rips. My cash is burning a hole in my pocket.”

“And I’m here for the income. Shouldn’t I buy something?”

Not yet. We contrarians shouldn’t be in a hurry to time the bottom of the market.

There will be free and fast money on the other side of this bearish storm. Every correction eventually ends. For now, we buy lightly. And enjoy our comfortable seat.… Read more

These days, we contrarian income seekers are following a simple rule: “trade lightly.” Truth is, we saw this mess coming. It’s why we started lightening up our positions in my Contrarian Income Report service back in November.

In so doing, we’ve locked in some very nice returns, like 90% on chemical maker Chemours Co (CC); 44% on blue-chip-focused closed-end fund (CEF) Gabelli Dividend Trust (GDV); and 98% on the PIMCO Dynamic Income Fund (PDI—formerly PCI).

We didn’t sell any of these dividend payers because something was wrong with them—far from it!

They’d simply ridden Jay Powell’s cheap-money wave as far as they could.… Read more