Author Archive: Brett Owens

Does a rising 10-year Treasury yield mean we should move on from municipal (muni) bonds? We’ll talk muni strategy in a moment. First, let’s pay homage to these tax-efficient payers.

Munis are superior to Treasuries two ways. First, they pay more. Even with the 10-year rate popping above 1.6% earlier this week, we can double or triple our dividends with munis. The iShares National Muni Bond ETF (MUB), for example, yields 2.1%, which is 30%+ better than the still-chintzy T-Bill.

Plus, munis have tax benefits. MUB is an easy-to-buy vehicle with a tax-advantaged payout that is higher than its stated 2.1% yield.… Read more

There’s a quiet shift happening in the market, and we’re going to tap it for some big, and growing, dividends, plus serious price upside, too.

Here’s what I mean: after tech ran the show all of last year, fanboy (and -girl) faves like Apple (AAPL), Microsoft (MSFT) and Tesla (TSLA) are cooling off, and other corners of the market are making a play for the lead role.

Big Tech Rolls Over …

Here’s more proof that a big shift is underway: all through last year, the S&P 500 as a whole powered higher. But if your portfolio is properly diversified, you know that this gain was a mirage.… Read more

These popular dividends were taken away in 2020. But rumors of a payout comeback are swirling, and the best time to buy these stocks may be right now.

Before America goes on a vacation binge, that is. See, these dividend payers will directly benefit from travelers being rereleased into the wild. We have been homebound for nearly a year now. (Sorry for the reminder!) But brighter days are ahead, and I know that my family is already booking out travel into 2022.

Should we pick up some hotel stocks while we’re online? After all, hotels will naturally benefit from our restlessness, as will their landlords—the real estate investment trusts (REITs) that were tossed aside this time last year.… Read more

My friends and I couldn’t have been more excited about our college commencement speaker. Fresh off an electrifying cameo in the 2003 comedy movie Old School, James Carville’s next act was Cornell University.

At 21 years old, we had no idea what Carville actually did for a living. (Answer: Political consultant.) And though he was an engaging and entertaining speaker, I don’t remember a single word the “Ragin’ Cajun” said. Too bad, because he has had some major wisdom to impart.

Ten years earlier, Carville made an observation that is more prescient now than ever. After watching bond investors rebuff President Clinton’s economic stimulus proposals because they demanded a higher interest rate for US Treasuries, Carville coined this gem:

“I used to think that if there was reincarnation, I wanted to come back as a president or the pope or as a .400 baseball hitter.

Today we’re going to bulk up our dividends—and position ourselves for some nice gains—with a group of stocks that pay us four ways as interest rates head skyward:

1. By paying a dividend;
2. By growing their dividend;
3. By repurchasing shares, and;
4. Through the pure profits they “bank” (hint!) as rates rise.

Let’s take that fourth point first, because as you likely know, the 10-year Treasury rate—which drives rates on everything from mortgages to car loans—is en fuego, having surged from 0.9% to more than 1.5% in less than two months.

Granted, a 1.5% Treasury rate would be considered low pre-pandemic. But now it has us choking on our morning coffee!… Read more

Anyone up for a 10.2% payout? One that is powered by profits that should actually rise alongside interest rates?

If so, I’ve got a three-letter acronym for us:

B-D-C.

Business development companies provide debt, equity and other financing to small and midsized companies, effectively acting as banks because banks often don’t want to take on that level of risk. And because they’re primarily investing in companies that aren’t on public markets, BDCs serve as de facto private equity investments—but ones that retail investors like us can get in on!

BDC structures are similar to real estate investment trusts (REITs). Both were created by Congress—REITs in 1960, BDCs in 1980.… Read more

On Sunday night, our old friend exclaimed to my wife and me: “How have you all been??”

It’d been, well, almost a year since we’d been to her bar. We had plenty to catch up on with our drink-slinging pal as we sipped and snacked. Back on the home front, our babysitter had recently resurfaced and appeared to have bedtime under control. It was nice to have a throwback evening, the type we all took for granted just 12 months ago.

In the interim, many income investors have, likewise, taken low long-term rates for granted. Not we contrarians, of course.… Read more

Stocks or bonds? Why choose when:

1. Stocks pay just 1.5%
2. Bonds pay just 1.3%, yet
3. There are little-known hybrid instruments yielding up to 7.9%!

These vehicles aren’t risky. They just happen to be favorites of Wall Street insiders who don’t want income investors like us crowding their favorite trades.

Unfortunately for them, we are not going to apologize for this article in advance. It’s time for us to discuss how to take the 1.5% yield from the S&P 500, the 1.3% yield from 10-year Treasuries—throw each in the trash—and instead type in the “convertible bond” tickers we’re not supposed to know about.… Read more

The S&P 500 is still levitating, and if you’re like me, you’re starting to feel like this bull run is on borrowed time.

It’s understandable. The economy is just now stumbling to its feet, yet interest rates are already creeping higher. I think you’ll agree that we need higher borrowing costs like we need a hole in the head!

Treasury Rates Bust Through the 1% Barrier

Sure, 1.2% is a historically low number, but bear in mind 1% is an important psychological barrier, and we’re already well beyond that—and once rates broke through it, you can see how quickly they took off.… Read more

High-yield bonds have never paid less. Which is too bad, because let’s be honest—dividends are the reason we income investors wade in “junk bond” waters in the first place.

Fortunately, by being selective rather than lamestream, we can double our existing high-yield bond dividends. Nothing fancy, either. We sell the unselective ETFs and buy the ones with proven bond investors at the helm.

Before starting, let me make one huge point. It is true that almost all actively managed equity mutual funds aren’t worth the management fees investors pay. But some actively-managed bond funds most definitely are worth it.

The ETFs we would be selling are the two most popular high-yield bond ETFs.… Read more