Author Archive: Brett Owens

$500K can be enough money to retire on. Even as early as age 50!

The trick is to convert the pile of cash into cash flow that can pay the bills. I’m talking about $38,513.22 per year in dividend income on that nest egg, thanks to 8% average yields.

These are passive payouts that show up every quarter or, better yet, every month. Meanwhile, we keep that $500K nest egg intact. Or, better yet, grind that principal higher steadily and safely.

Got more in your retirement account? Cool—more monthly dividend income for you!

We’ll talk specific stocks, funds and yields in a moment.… Read more

Discounted closed-end funds (CEFs) are perhaps the sweetest dividend deals that Wall Street offers. I mean, where else can we find a 9.9% yield trading for 87 cents on the dollar?

By offers I mean overlooks! The spreadsheet jockeys can’t be bothered with Neuberger Berman Next Generation Connect (NBXG). Or its 9.9% dividend. Or its 13% discount to its net asset value (NAV).

Why not? NBXG only has a market cap of $957 million—too tiny a capital pool for the big fish to stash cash. So, these “index huggers” lazily pile into SPY instead.

We individual investors, on the other hand, can make a nice living (and retirement) in this cozy contrarian corner of the income market.… Read more

Interest rates are (finally!) set to fall. As they do, we’re going to bag bargain-priced 8%+ dividends from a pattern we can set our watches to at times like this.

I’m talking about the mainstream crowd’s habit of “reaching for yield” when Powell & Co. drop rates, eroding yields on CDs, Treasuries and the like.

As these investors go on the hunt for higher payouts, I expect them to flock to closed-end funds (CEFs), one of our favorite income plays, thanks to the 8%+ yields these funds kick out.

But of course, we need to make sure we’re front-running the crowd into the right CEFs: those with high, safe, and ideally monthly payouts, while sidestepping the many dogs out there.… Read more

Let’s talk about a “rich guy loophole” that you and I can take advantage of—and bank dividends up to 12.5%.

And no, I’m not going to ask for your most recent tax return or W2. These are perfectly legal “backdoor” divvies trading between $10 and $20 per share. A sweet setup by Congress has these payers yielding between 10.5% and 12.5%.

The secret is the business development company. BDCs provide capital to small and midsized businesses. These firms often invest alongside or after venture capital. They are “kinda sorta” like private equity firms, but available to everybody (as in, we don’t need a half million in liquid assets to invest).… Read more

One year ago, I wrote to you that it was time to buy bonds again. The “index huggers” who only know SPY thought we were nuts for talking fixed income.

The popular narrative at the time (which aged like boxed wine) was that interest rates would rocket to the moon in order to contain inflation. Or help the government fund its ballooning deficit. Or some line of reasoning.

When rates rise, bond prices fall. Hence, the prevailing vanilla sentiment was that bonds were for bums.

We original thinkers disagreed. We reasoned—correctly—that rates fall when recession fears grow. Period.… Read more

I recently had dinner with a friend who’s a small business owner, and he swears by ChatGPT. The tool is saving him time, effort and (to be blunt) future employee hiring.

A lot of people think AI is imploding—hence the selloff in tech stocks we saw following last week’s softer-than-expected jobs report.

But the truth is, AI is simply moving past the initial excitement we see with every new technology. As AI embeds itself in the apps and devices we use every day, it’ll boost productivity, just like it’s doing for my friend.

As that happens, we’ll want to make sure you have some AI exposure in our portfolios, especially as ChatGPT replaces more expensive humans, a trend that’s already in motion, as we can see from last week’s jobs report.… Read more

The index huggers are, rightfully, fretting about the only position they own, the S&P 500, which is heavy on Nvidia (NVDA). The soon-to-be-fallen angel is the third largest component of the index at 6.3%.

“America’s ticker” SPDR S&P 500 ETF (SPY) yields only 1.2% and trades for 22-times earnings. The S&P SmallCap 600, meanwhile, which nobody owns, trades for a more reasonable P/E of 16.

And select small caps even pay serious dividends. I’m talking about yields between 9.1% and 14.7%.

But are these value stocks? Or are they merely cheap for a reason? Let’s explore a group of five small caps paying big dividends.… Read more

Believe it or not, your favorite income strategist once had a multi-year stint as the head of human resources for a US-based software company.

It was, coincidentally, my last regular “day job” before I drifted into the world of stocks and startups.

When my old boss, our managing director, handed me the task of hiring our new employees, he gave me this piece of wisdom.

“I trust you to make the call. Just one thing…” he winked at me.

“The kids must be graduates from Berkeley, Cornell, MIT or Stanford.”

Gee, thanks boss. Like it was an easy task to convince a new graduate from an elite engineering school to skip the offer from Google to work with us.… Read more

We’ve all loved watching our dividend payers soar since the August 5 crash. (To be honest, we might have liked a bit more time to shop the bargains!).

But that’s investing. And I do have two pieces of good news on that front:

1. There are still some cheap—and growing—dividends on the table (we’ll name one below, as well as a “dividend dog” to dump right away if you own it).
2. This latest market bounce is broad based, as opposed to most of the last couple years, when tech was running the show: 

Good “Breadth” Bodes Well for More Gains

Here we can see the jump in the S&P 500 as a whole (in orange) versus its return on an equal-weight basis (in purple).… Read more

AI is in and energy is out. As usual. Which is just dandy for contrarian dividend investors like us.

Let’s talk about dividends up to 6.6% and stock prices that are dirt cheap. How cheap? Stocks trading for as little as half their sales!

The best time to buy energy is before the next supply shortage. I was just “upwind” of Hurricane Hone on the Big Island of Hawaii—‘tis the season for storms. Plus we have a volatile Middle East. And an economy that may get a bit of juice as the Federal Reserve begins to ease.

The 2020s, make no mistake, are a bullish decade for energy.… Read more