Author Archive: Brett Owens

The “yield curve” has inverted—and that could be terrible news for your dividends!

But don’t worry: there’s a “pullback-proof” way to keep your income and your nest egg secure—no matter if there’s stock-market fire behind all this yield-curve smoke.

Below I’ll reveal three stocks perfectly positioned for whatever lies ahead: if the market tanks, they’ll likely trade flat, thanks to their cheap valuations (and sturdy dividends).

And if it all turns out to be hype and the market keeps rolling higher? They’re poised to skyrocket while handing you a 7.1% average payout (with one of these stealth buys even throwing off an amazing 9.3% yield!).… Read more

Sometimes investors forget that dividends are funded by actual cash flows.

Consider General Electric (GE), whose outsized yield tempted investors to mistakenly buy shares in this “blue chip” as disaster was unfolding. The stock losses started well before the actual dividend cut and continued on from there:

(Accounting) Imagination at Work

This focus on yield rather than cash happens too often. It’s what prompted me to warn readers about the sky-high yield of Frontier Communications (FTR) a year ahead of its 2017 cut:

A Broken Telecom (and Broken Dividend)

The “not enough cash” problem also prompted me to sound the alarm on L Brands (LB) several times ahead of its 50% dividend cut in late 2018.… Read more

“Hey Brett… you joined two partnerships last year?”

What? I didn’t. Or I thought I didn’t. In reality, I did–by buying shares in not one but two master limited partnerships (MLPs).

One of them was Enterprise Products Partners (EPD) and while I can’t recall the other, I can vividly the annoyed look on my accountant’s face like it was yesterday.

Master limited partnerships (MLPs) are required to issue you a K-1 package at the end of the tax year. These are generally headaches for the person who does your taxes (whether it’s you, or a professional).

That year my accountant calmly but sternly asked me to stop buying MLPs in my personal portfolio.… Read more

Most dividend investors understandably love the idea of an 8% No Withdrawal Portfolio. It’s a simple yet “game changing” idea that you don’t hear much from mainstream pundits and advisors.

Find stocks that pay 7%, 8% or more and you can retire comfortably, living off dividend checks while your initial capital stays intact (or even appreciates).

Now this strategy is a bit more complicated than simply finding 8% yields and buying them. Granted the recent stock market pullback has benefited investors like us because we can snag more dividends for our dollar. Yields are higher overall, and that’s a good thing.… Read more

Today, the 10-year Treasury pays just 2.4%. Put a million bucks in T-Bills and you’re banking $24,000 per year. Barely above poverty levels!

Hence the appeal of closed-end funds (CEFs), which often pay 8% or better. That’s the difference between a paltry minimum-wage income of $24,000 on a million saved or a respectable $80,000 annually.

And if you’re smart about your CEF purchases, you can even buy these funds at discounts and snare some price upside to boot!

The market’s fast run-up since January 1 has made cheap CEFs just a bit harder to find. And some CEFs have become so pricey that, if you hold them, you should consider selling before their premiums fall to earth.… Read more

The yield curve is now “inverted.” This warning has preceded “seven of four” recent bear markets (more on this in a moment). Time to be safe and sell everything?

Before we stash cash in the mattress, let’s review the actual facts. Fundamental Capital’s Troy Bombardia, one of my favorite historical finance quants, has run the numbers on what happens to the S&P 500 when the 10-year “long” yield dives below the three-month rate:

• In 1966, 1973, 2000 and 2006, an inverted yield curve indeed preceded a big stock market pullback (usually by a year or two).

• Meanwhile in 1978, 1980 and 1989 it didn’t mean much.

Don’t become complacent with your dividends! Your portfolio and your income are at the whim of Fed Chair Jerome Powell—now more than ever.

I realize he’s acting like a “good boy” at the moment. But what if JP decides to go rogue again and exercise his independence? A surprise rate hike would be catastrophic to many income portfolios.

That means you need to “Fed-proof” your nest egg and your dividends. Today we’ll discuss four funds paying dividends up to 10.7% that do just that.

These four closed-end funds (CEFs) have been left for dead in this market rally. That makes them great “Fed insurance”: they’re cheap, so they’ve got built-in upside if the rally goes into overtime.… Read more

Almost every corner of the market is overpriced today. That includes dividend stocks, which cost too much and yield too little.

The S&P 500 is at multi-year highs in almost every valuation metric: P/E, P/B, P/S … you name it. And a lot of that froth is coming from traditional income sectors. Yardeni Research’s latest sector study shows that utility stocks, for instance, trade at 18 times estimates, at the very high end of its 10-year range. The sector’s typically high yields, meanwhile, have dried up to a mere 3%.

Hey! Where’d the Dividends Go?

The real estate industry is getting pricey, too, with the iShares U.S.… Read more

Many retirees like the idea of a “50/50” portfolio that’s half bonds and half stocks. There’s even research that shows withdrawal rates of 3% and 4% may be safer with this mix than they’d be with 100% stocks.

That’s all well and good but doesn’t concern me much. I’m a “No Withdrawal” guy. I spent many late nights in college working up Monte Carlo simulations, where we’d run scenarios 50,000 times to figure out the optimal placement of, say, ambulances in a city to minimize the average response time to an emergency. This type of fancy modeling can work well when you’re able to use the law of large numbers to map the likelihood of every possible situation.… Read more

Don’t be fooled: imitating the picks of famous stock pickers is a road to retirement ruin.

I get it: gurus like Warren Buffett, Dan Loeb and Ken Fisher are the cream of the crop.

Too bad the big cash wads these guys toss around limit them to the lamest dividend investments. And you can bet almost all of them are missing out on one stock that’s paying a lucky group of investors an incredible 32% dividend!

Let’s dive straight into why following the pros’ lead is a big mistake. Then I’ll give you three ridiculously cheap stocks to grab for massive dividends—before their prices take off into the stratosphere.… Read more