Author Archive: Brett Owens

In recent weeks, we’ve discussed proven strategies for protecting and growing our nest egg (and dividends) in this crisis. These are the times when fortunes are made and big income streams are built. However, we must be extra careful about our purchases, with plenty of “payout landmines” suddenly spread around the market.

In last Tuesday’s article, for example, we covered the most powerful indicator of dividend safety: the payout ratio, specifically dividends as a percentage of free cash flow (FCF). Unlike net income, which can be manipulated, FCF is the clearest picture of the cash a firm is generating.

That makes the FCF payout ratio the perfect one-step test to run on your holdings.… Read more

These 39 stocks are supposed to hike their dividends soon. How many of these raises are still going to happen?

The first-quarter earnings season is approaching, and that typically means a weekly flow of companies announcing upgrades to their regular payouts. Indeed, I’m about to show you 39 stocks, yielding up to 47.9%, that are on the schedule and expected to deliver dividend raises over the next couple of months.

However the sudden bear market has thrown a gigantic monkey wrench into this quarter’s dividend routine. Dividends are dropping like flies.

• Ford (F), which I warned about, has suspended its dividend.

1929, 2008 and, now, 2020.

We’ve only seen this level of “selling pressure” three times since 1900. A limited sample size, sure, but we’re in ominous company. Anything and everything has been dumped in a panic liquidation to raise cash.

We saw a similar “global margin call” in late 2008. A year’s worth of selling crescendoed into a financial crisis grand finale that would eventually conclude in March 2009.

The good news then? If you held tight or, better yet, bought through the panic, you eventually did quite well. Let’s take the worst day of that year. On October 15, 2008, the S&P 500 slid 9% in one day.… Read more

Nearly every retirement portfolio on the planet is reeling from the coronavirus fallout. Recoveries are going to vary widely, however, depending on the safety of the dividends in each basket.

If your income stream is safe, then you’re well ahead of the game. When stock prices recover (and they will, as every bear market eventually gives way to a new bull), your portfolio is going to bounce right back. Assuming the payouts didn’t miss a beat, then you can rest assured you’ve got an uninterrupted income stream between now and then.

The bad news, however, is that cuts to dividend payouts have already started, with Ford (F) suspending its payout last Thursday.… Read more

A trio of reliable monthly dividend payers has been swept up in the pandemic panic. They could be the dirt-cheap buys that have dividend investors kicking themselves this time next year for not “backing up the truck” and buying every monthly paying share in sight.

These closed-end funds (CEFs) as a whole are far smaller than their mutual and exchange-traded brethren, and they’re about as sexy as a doorstop, so they go completely ignored by traditional financial media. But a couple dozen of these have exhibited some downright admirable performance while the rest of the market is tanking around them.

Better still?… Read more

Last Thursday was the sixth-worst day on record for the S&P 500 (according to information from Nasdaq Dorsey Wright). Was. It’s already down to seventh place (yikes).

On Monday, it was quickly eclipsed by the third-worst day ever for the S&P 500 on record. Even in 2008, we didn’t have a single down day as severe as either of these days.

In fact, we’ve only had selling pressure this intense happen twice in the post-World War II era. The first was the October crash in 1987, and the most recent was in the fall of 2008.

Believe it or not (and most did not at the time), both were actually buying opportunities.… Read more

Beware of Wall Street “wisdom” now more than ever. Especially when it comes to the most commonly quoted maxim for retirement: it’s based on a rule that was never designed for times like these!

Enter the “Dividend Death Spiral”

I’m talking about the so-called “4% rule,” which says you should sell 4% of your nest egg every year in retirement.

Sounds simple, right?

Trouble is, it slashes your income stream and caps your upside in one go! It’s especially dangerous advice to follow in a downturn like the one we’re experiencing.

Let’s say, for example, you owned $200,000 worth of Johnson & Johnson (JNJ) shares, which pay $3.80 in dividends on an annualized basis, for a 2.9% yield.… Read more

The stock market is in a full-blown panic, which means it’s time for us contrarian income seekers to go shopping.

Few firms have been spared from the “flash-bear” we are experiencing. It may be an ominous sign for the rest of 2020, too. So, if you are worried about the rest of the year, but you still need income from your investments, let’s consider some steady payers that are typically more stable than the broader market.

After all, when the markets begin to function properly again–and they will, no matter how shaky things seem at the moment–these are the types of dividend payers that we want in our portfolio (at cheap prices, too).… Read more

We named our income investing website Contrarian Outlook for times like these. When the rest of the world is selling everything, we are sorting through their hastily discarded dividend bargains.

Sales like this don’t happen every year. In fact, the last blue-light special actually began to wind down the last time I reminded readers to “keep calm and 8% on.” It was December 26, 2018, and the stock market had just plunged nearly 20%.

Fear was rampant, which meant it was time for us contrarians to be greedy. Or, at minimum, not panic.

I don’t take the responsibility of being your Chief Investment Strategist lightly.… Read more

I don’t know why you’d try to cobble together an income stream with miserly ETFs when, thanks to this selloff, we’ve got a huge sale on closed-end funds (CEFs) throwing off life-changing 7%+ payouts.

Why are CEFs a great deal now?

In short, the coronavirus scare has caused a “panic disconnect” between many of these funds’ share prices and the value of the assets in their portfolios, known as the net asset value, or NAV.

These discounts are a quirk that only exists with CEFs, and they make our plan simple: buy when discounts are particularly wide, then ride these markdowns higher as they evaporate—pulling the fund’s market price up with them.… Read more