Author Archive: Brett Owens

Somehow, some way, the stock market continues to levitate higher. Yet I see very little that’s worth buying here.

We can’t argue with the tape. Markets will do their thing, while we must do ours. And today, it’s a good time to be cautious and prepare for the possibility of another sharp pullback. (The old “retest” of the lows that most investors expected until they were swept away by the allure of rising stock prices!)

Our dream shopping list, as we’ve discussed before, should contain some blue-chip dividend stocks. Nasty bear markets are the only time we can buy these names cheap!… Read more

Right now, millions of people are plowing cash into this market, gambling that the worst of the dividend cuts is behind us.

I hope you’re not one of them, because this “dividend trap” is likely to spring—and steal away the income (and value) these folks have spent years building!

Just look at the numbers: unemployment is likely over 20%. Consumer spending cratered 7.5% in March, before this mess even really got started. And now Uncle Sam is demanding that any company seeking government aid first send its payout to the scrapyard.

Meantime, even cash-rich companies are pulling in their horns, like the Walt Disney Co.… Read more

“It’s my money, and I want it now!”

That’s the rallying cry of everyday folks in commercials for J.G. Wentworth, a financial services firm that offers lump-sum cash payments for structured settlements, annuities, lottery payments and more. (If you’ve never seen one of these TV spots, I suggest you try one out. They’re so bad they’re good.)

Every income investor could (and probably should) take a cue from its motto. To quote another spot: “Show us the money!”

Monthly dividend stocks, of course, pay more often than any other income investment. Dividend checks coming in every 30 days are especially handy for retirees who have bills to pay.… Read more

“Brett, I didn’t sell (insert dividend stock here) in March. Should I hold my nose and sell now?”

If you sat on your hands during the March drop and subsequent bounce, you’re not alone. Many of your fellow income investors are still holding on to positions that they know they should probably sell, but haven’t yet. (I know this because I’ve heard this question from a number of you!)

Well, here’s the question I would ask you about the position:

“Is the business going to rebound to pre-pandemic levels any time soon?”

If the answer is “no” then why would you not sell the stock?… Read more

We’re almost three months into this crisis and three things are crystal clear:

1. Plenty of “household-name” dividend-payers are in big trouble—and not just the ones you see in the news. When the payout cuts come, the resulting share-price drops will crush the unwary.
2. Way too many people are clinging to blue chips yielding 2% or 3%. But is such a small payout worth it when you can lose that much in a single trading session?
3. We can’t trust any stated yield until we verify a company’s cash flow.

This may sound a bit alarmist, but imagine if I told you in January that by mid-May, Ford (F), General Motors (GM), Walt Disney (DIS) and Las Vegas Sands (LVS) would have all either eliminated or, in Disney’s case, delayed their dividends.… 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 2% average yield, the popular names simply don’t pay enough. You’d need to save $2 million just to generate $40,000 in yearly dividends. And let’s be honest: if you have that much cash, you may as well just live on your $2 mil—and forget about dividends entirely!

The rest of us 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.… Read more

“Not for individual resale.”

Ever see that label on a box of food, and scratch your head? Like who’s buying this big-mega bag of Chips Ahoy for the purpose of reselling the “individually packaged” helpings of cookies inside?

While you and I have better things to do than deconstruct groceries, we also have better ways to make money than deconstructing perfectly good bond funds.

My article about “preferred” shares a couple of weeks ago inspired a few questions. We’ve got a few adventurous income colleagues who are interested in unwrapping the perfectly good packaging we discussed. Let’s walk them back from this potential “Chips Ahoy moment” in a moment.… Read more

Bear markets can be painful, but they also create “once-in-a-decade” buying opportunities for dividend investors. For example, there are four big names yielding between 9.9% and 13.9% that are literally the leaders in their respective industries. (We’ll review them shortly.)

Bull markets simply don’t boast yields anywhere this high. And double-digit yields can drastically change a retirement game plan.

I’ve complained for years that, if you had a million bucks to plunk down on blue chips and bonds, you’d only be able to wring out about $20,000 to $30,000 in dividends and interest each year. But right now, you can take a nest egg half that size, and generate anywhere between $49,500 to $69,500 annually in dividend cash.… Read more

Mainstream financial channels have made a big deal out of the current relief rally (“Is it a ‘V-shaped’ recovery?” they comically muse). Whether it’s a V, W,  L, Nike swoosh or (my favorite) bathtub, the fact is that most stocks are still down on the mat.

(This is no surprise. The average bear market lasts 12 to 18 months. We are just beginning month three—yikes.)

The well-known S&P 500 always leads the headlines. Five hundred of America’s blue-chip firms, sounds like a pretty good sample size, no?

In 2020… no. The index is weighted by market cap, giving favor to Microsoft (MSFT), Apple (AAPL) and Amazon (AMZN)—its top three holdings—which have outperformed the market by a wide margin recently.… Read more

The S&P 500 index has been “relief rallying” like crazy, but to most income investors, this means nothing. The wider the basket of stocks, the rougher the year it has been. Let’s consider that (as I’m writing this):

• Year to date, the “big cap focused” S&P 500 is down “just” 12%. However,
• When we weight its 500 stocks equally, its return drops to 20% YTD. And,
• When we expand the universe to look at small cap stocks, we see the Russell 2000 is down a brutal 24% thus far in 2020:

Don’t Let the S&P 500 Fool You

Plus, we now face another problem: an income drought!… Read more