Articles

The 60/40 Portfolio is Now 53/47, Yields 7.2%

Brett Owens, Chief Investment Strategist
Updated: December 2, 2020

Is the 60/40 (stock/bond) portfolio now 100/0 in favor of stocks?

That’s been the subject of several financial headlines lately. The authors are suggesting that the traditional mix of 60% large-cap stocks and 40% safe bonds won’t generate enough money for us to retire on unless we’ve got a cool $10 million or so. And, they’ve got a point, with the S&P paying less than 2% and US Treasuries yielding under 1%.

But even a 100/0 portfolio won’t help you too much. Put it all in the popular SPY ETF, and we’re still under 2%! Plus, this “heart attack kid” can fluctuate by 1% or even 2% per day.… Read more

2 “Preferred” Dividends Paying 4X More Than Stocks (with big upside ahead)

Brett Owens, Chief Investment Strategist
Updated: December 1, 2020

With stocks breaking to all-time highs, we should emphasize security of the dividends we’re purchasing first and foremost. In previous months, it was a good time to be greedy. Now, with other investors in a fervor, let’s be careful.

The main thing we don’t want to do in a pricey market like this? Join the millions of “buy and hopers” out there. I call them that because they “buy” the typical S&P 500 stock and then “hope” for gains.

They’re sure not buying for the dividends: the popular names pay a poverty-level 1.6% income stream, on average.

With a lame yield like that, hoping for a jump in the share price is the only play you’ve got!… Read more

1 Amazing Dividend (Paying 6.9%) for 2021 (and 1 Loser Set to Plunge)

Michael Foster, Investment Strategist
Updated: November 30, 2020

There’s no doubt in my mind: five years from now we’ll look back at this time and say it was a golden opportunity to buy dividend stocks.

Those who bought in will be sitting on big gains (and income streams!). Those who sat on their hands will kick themselves.

I don’t want you to be in that latter group, which is why, in just a second, I’ll point you to a 6.9%-paying fund that’s perfectly positioned for serious gains in 2021 and beyond.

Dividends Back in Vogue

I know I don’t have to tell you that the dividend landscape has been bleak since March, with plenty of “sacred cow” dividend payers, like Disney (DIS) and Ford (F), dumping their payouts entirely.… Read more

17 Monthly Dividends That Pay $3,125 Per Month

Brett Owens, Chief Investment Strategist
Updated: November 27, 2020

Mortgage payments. Car payments. Cell-phone bills. Power bills. Water bills. Credit card bills.

Yuck. They’re the only downside to being retired!

These bills show up (or debit our accounts) every single month. That’s OK when we have a normal j-o-b that pays us every couple of weeks, or every month. But this regular bill gets really old when we retire.

Like you, I prefer to retire on dividends (and leave my nest egg alone). Problem is, most dividends are paid out every quarter, not every month.

So, dividend cash flow is (unfortunately) often out of sync with every-30-day expenses.

Some income investors build out complicated dividend calendars that get knocked out of whack whenever they ever have to sell certain stocks.… Read more

This 8% Dividend Is 10% Off (Thank Steve Mnuchin)

Michael Foster, Investment Strategist
Updated: November 26, 2020

Something shocking just happened: Treasury Secretary Steven Mnuchin cut off a $454-billion program the Federal Reserve uses to keep the bond market running.

A disaster, right?

You’d think so. After all, we’ve heard time and time again that the Fed will do whatever it takes to support the bond market through the crisis. Now a big source of cash needed to do that is gone.

The bond market’s response was even more surprising: crickets.

The junk bond–tracking SPDR Bloomberg Barclays High Yield Bond ETF (JNK) and iShares National Muni Bond ETF (MUB) held on to post-election gains after Mnuchin’s decision was announced.… Read more

1 Dumb Dividend Capture Strategy, 2 Better Income Ideas

Brett Owens, Chief Investment Strategist
Updated: November 25, 2020

Our beat here at Contrarian Outlook is dividends. We seek to collect them using proven income strategies.

Dividend stock investing isn’t easy, even though it looks so on the surface. (Find a high yield, and buy it!) We’ve all had our heart broken by one or more “disappearing” dividend payers in the past. These delinquents are the reason we place such a premium on dividend security.

One secure-looking strategy is (unfortunately) known as dividend capture. I don’t like the name because it sounds like something we should be interested in. I don’t like the approach itself because it doesn’t really work.… Read more

2 Stocks With 150%+ Dividend Growth (Buy Before 2021)

Brett Owens, Chief Investment Strategist
Updated: November 24, 2020

One of the most powerful stock-market indicators you’ll ever find is a simple one I call “relative strength.”

It means that stocks that outperform now will likely keep outperforming. And if you catch them just as they start their next leg up, you’ll line yourself up for big gains (and dividends!).

I’ve found relative strength to be a potent strategy when it comes to timing the purchases of dividend stocks. With many income investors fishing in the same pond for payouts, identifying yield plays before the herd turns their attention to a particular sector often results in extra profits.

Mid-Cap Stocks: The Perfect Buys for 2021

We’ve got a nice “relative strength” play setting up in mid-cap stocks (those with market caps between $2 billion and $10 billion).… Read more

5 Market Drivers to Give Us Big Gains (and Dividends) in 2021

Michael Foster, Investment Strategist
Updated: November 23, 2020

Stocks are up—and so are coronavirus cases. And right on cue, I’m hearing from plenty of investors asking if now is the time to sell and lock in their gains.

No way. It’s actually a good time for us contrarians to buy. Here are five reasons why I see stocks rallying into the end of the year—and rolling higher still as we move into 2021.

Market Driver No. 1: Rising House Prices 

When house prices rise, homeowners feel wealthier. And when people feel wealthier, they tend to buy stocks.

It’s true that big-city properties are struggling to hold their own, but homes in the suburbs and rural areas are appreciating at a rate we haven’t seen in years.… Read more

How to Beat the Market with Dividends Up to 11.7%

Brett Owens, Chief Investment Strategist
Updated: November 20, 2020

“I’m getting close to retirement,” my friend explained after a fun round of golf. (In 2020, any round of golf is a fun round). “And…” he continued.

“You’re looking to turn your nest egg into regular cash flow,” I jumped in.

Bingo.

Most retirees and soon-to-be retirees (wisely) focus on cash flow from dividends. Like my buddy, they don’t care about beating the market.

But, with some smart high-yield buys, it is actually possible to beat the market with cash payments alone. This may sound absurd in a world where, at least once a year, investors like you and me are treated to a slew of media reports pronouncing that for yet another year, fund managers couldn’t beat their benchmarks.… Read more

Here’s a “Goldilocks” Strategy for 7.2% Dividends and Upside in 2021

Michael Foster, Investment Strategist
Updated: November 19, 2020

There’s a dangerous dividend trap setting up out there. It’s easy to fall into, and if you make this mistake, you could do fatal damage to your nest egg—and income stream—in 2021.

It’s a classic error called “reaching for yield.” It happens when investors put too much weight on an investment’s current dividend yield without considering what’s behind that payout. More and more folks are making this blunder today.

I know what you’re thinking: “Michael, I can easily sidestep a mistake like that.” That’s easy to say, but it can be hard to resist when you’re confronted with, say, a 5% payout that seems safe at a time when income go-tos like Treasuries and stocks pay a meager 0.8% and 1.5%, respectively.… Read more