Author Archive: Brett Owens

Long-term interest rates have awoken. The trend toward higher Treasury yields is likely just getting started, which makes 2021 an “inflection year” for us income investors.

And what better way to celebrate the paradigm shift than to buy dividend payers that are likely to double (or better!) in the months and years ahead?

Sure, some fixed-income plays are going to be punished. That’s a topic for another time. Today, we should focus on shareholder-yield darlings that see their profits increase in an outsized manner when interest rates climb.

I’m talking about stocks that will shower us with:

• Current yields today,
• Dividend raises tomorrow,
• Generous stock buybacks, and (most importantly)
• Share prices that will climb dramatically.

As Wall Street loses its mind over a long bond that pays a lousy 1%, we level-headed income investors are going to stay calm. And 7.7% on.

Yes, we “prefer” (hint, hint) dividends that are 7X the weak 1% yield the wonks are clamoring about. I’ll get to the specifics on these retirement makers—which we can buy as easily as common stocks—in a moment. First, let’s appreciate their dividend grandeur.

The Fed is content to sit on a near-zero benchmark rate until at least next year if not 2023. Compounding the problem is that yields on traditional blue chips, while always insufficient, are a downright mockery right now—the 1.55% current yield on the S&P 500 is its lowest point in 15 years.… Read more

This time last week, we talked about my favorite dividend stock for 2021. The stock yielded 6% as recently as June, but it (deservedly) gained a following among income investors in recent months.

These newcomers bid its price up (again, deservedly). In doing so, its yield shrank below 4%, and I recently found myself apologizing to my Contrarian Income Report subscribers for discussing a stock that paid so little by our admittedly lofty standards.

Well, I’m glad I brought it up to them and to you in these pages last week, because Synovus (SNV) soared 11% over the next three days.… Read more

Let’s start 2021 with a proven strategy for grabbing two growing income streams in one buy. Plus, we’ll nicely set ourselves up to bank double-digit price gains to boot.

The strategy? Simple: we’re buying dividend-paying stocks poised to spin off one of their businesses into a brand-new dividend-paying stock. When that happens, we wind up with two or more quarterly dividends where there used to be just one.

Two other things you should know: our “new” dividend(s) will likely grow faster than our original payout! And we won’t have to do anything to get this extra cash.

I’ll give you a telltale sign to look for as we move to front-run the next “dividend split” in a moment.… Read more

For income investors, dividend strategies don’t come any easier than the “Dogs of the Dow.”

But does this simple technique still work?

We’ll look at the 2021 Dogs, and their attached dividends (and prospects) in a moment. Their yields aren’t too shabby, averaging 4.1% in a 1% world! First, let’s review the mechanics of the popular contrarian strategy:

• Step 1: After the final trading day of the year, we identify the 10 highest-yielding stocks in the Dow.
• Step 2: We buy all 10 in equal amounts.

That’s it. In just a couple of quick steps, executed just once every year, we can put together a mini-portfolio of 10 blue-chip stocks that typically out-yield the S&P 500, and currently offer 2.5 times more dividends than the broad market index.… Read more

A reader recently wrote in to ask:

Brett, if you could only invest in one ticker over the next year, what would it be?

I’d buy a stock backed by three financial trends that are likely to gain more attention in the months ahead. Definitely the type of firm that is due to dominate the “narrative” in 2021.

Don’t worry, this won’t simply be a story stock. Because it’s me, we’re also requiring value and, most importantly, yield with our storytelling.

So let’s start spinning the yarn. We’ll begin with Fed Chair Jay Powell and his prolific printing machine.

2021 Narrative #1: Money Printing

Powell has put on quite the show of late.… Read more

2020 is finally in the books, and many REITs (real estate investment trusts) remain in the bargain bin. Is it time to buy these generous dividend payers and bet on a 2021 rebound?

Savvy contrarians that we are, we’re focusing on REITs because they are the one part of the market that was left behind as everyone rushed back into stocks in the back half of 2020.

Normally, REITs more or less track the blue-chip index, but when COVID-19 crushed these landlords’ tenants, that changed in a big way: investors sold REITs—and they’re still on the mat.

REITs Fall Behind

That orange line is the price return of the benchmark Vanguard Real Estate ETF (VNQ), which yields 4% today—a massive payout in today’s zero-point-nothing interest-rate world.… Read more

If you’re not yet as filthy rich as you hoped you’d be by now, don’t worry—we still have plenty of time to get you there.

And I’m not talking about investing your “growth capital” into risky fly-by-night names in hopes of buying high and selling higher. We can scale our money more securely—and just as spectacularly—by purchasing sound dividend payers that happen to be growing their payouts rapidly. Here’s why.

There are three—and only three—ways a company’s stock can pay us:

1. A cash dividend.
2. A dividend hike.
3. By repurchasing its own shares.

Everyone loves the dividend, but investors usually don’t give enough love to the dividend hike.… Read more

Can we income seekers safely get back into REITs (real estate investment trusts) next year?

With the yield on the S&P 500 about to drop to a sad 1.5% (thanks, Tesla (TSLA) addition), renewed REIT-hope sure would be nice! The landlord industry index Vanguard Real Estate ETF (VNQ) pays 3.5%. That’s a dividend oasis in this zero-point-nothing world.

Once upon a time, VNQ performed in-line or better than the blue-chip index. It was a pretty good deal, as you could double your dividend and keep up with the Joneses’ portfolio with less heartburn.

Then, April 2020 came along, tenants stopped paying rents, and REITs-at-large got crushed:

A Good REIT Run While It Lasted

Does the fork-in-the-road above represent a paradigm shift or relative value?… Read more

If you’re making buy decisions based on the daily gyrations of the S&P 500, you’re setting yourself up for big losses—and costing yourself a shot at big dividends, too.

Why? For starters, at a 1.6% average yield, the popular names simply don’t pay enough. You’d need to save $2.5 million just to generate $40,000 in yearly dividends!

We need a better option—one that lets us save a reasonable amount of money (I’m talking $500,000 to $600,000 here) and still generate meaningful income.

I’ll give you two of my best contrarian strategies for doing that in a moment. First, let me show you why it pays to be patient right now, even though many folks are rushing to buy stocks, with the S&P 500 up 14% as I write this.… Read more