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Here’s one thing most folks get wrong about dividend cuts: They can (and often do) set up terrific buying opportunities!

I know, I know. Before our customer-service inbox lights up here at Contrarian Outlook, let me be clear that we dividend investors hate payout cuts. No one wants to see their income stream and their investment take a hit, as scorned investors toss the stock.

But buying a dividend after a cut (or even before, under the right conditions) can be a winning move. It’s a setup that reminds me of the words of Howard Marks, the most successful investor no one has ever heard of (except Warren Buffett, who is a fan).… Read more

We’re a little more than halfway through the year now, so it’s a great time to check the state of play on our favorite high-yield plays: 8%+ paying closed-end funds (CEFs).

And what a half-year it’s been: CEFs have posted returns far bigger than most people expected back in January! And I see more gains ahead.

Source: CEF Insider

Truth is, the hundreds of CEFs tracked by my CEF Insider service are turning up some fascinating data, especially if we zoom into the CEF Insider Equity Sub-Index (in brown above), which has returned 12% year to date, as of this writing.… Read more

Let’s talk about monthly dividend payers today because, well, why waste our valuable time with stocks that only pay quarterly?

I selected five for our review. We’re talking sixty dividend payments per year from this group. The most generous stock dishes an elite 8.6% annually. (The “laggard” yields a respectable 6.5%.)

Why don’t more companies pay monthly? The answer is predictable and disappointing.

Wall Street runs on a quarterly system. US-listed companies are required by the SEC to provide quarterly financial updates. So, most management teams pay their dividends quarterly as part of this process.

Hence, we salute the suits in shining armor who make the extra effort to pay us every single month.… Read more

Few people pay much attention to the management team of a closed-end fund (CEF). But it’s becoming a much more critical factor driving CEF upside (and downside!), as well as these funds’ 8%+ dividend payouts.

I was reminded of this recently by a story that’s unfolding in the UK, where two asset-management firms are struggling a bit to hire CEOs. One is Scotland-based abrdn plc (SLFPF), whose shares have risen just 2.6% annually in the US on average over the last decade.

Compare that to a roughly 10% average year-to-date return enjoyed by the other major asset managers abrdn is competing with, and you get a good idea of what’s happening here: abrdn isn’t doing well enough to attract the best talent.… Read more

Who is paying a 27% premium for Guggenheim Strategic Opportunity Fund (GOF)?

Don’t get me wrong. GOF is a fine fund, delivering 9.8% yearly returns on its net asset value (NAV) since inception. But we are talking nosebleed valuation territory for GOF. It’s a dangerous purchase at these levels.

Bandwagoners buying today are unlikely to see 9.8% returns. Or anything close. Plus, they are exposing themselves to 27% downside risk because, as we’ll discuss in a minute, GOF eventually finds its way back to par.

How can a premium like this exist? GOF is a closed-end fund (CEF) with a fixed pool of shares.… Read more

There’s a clear pattern natural gas prices repeat time and time again. We’re going to pounce on it now—and grab ourselves a growing 7.4% payout as we do.

I’m talking about the “natty’s” $2 price floor. Every time it drops to that level (or below) it takes off. Check it out:

Natural Gas’s $2 “Trampoline Act”

It just goes to prove that the cure for low prices is low prices! To play this pattern, we want to buy after gas bottoms. Now is that time.

Think about it: We’re moving toward winter in North America (where temps are expected to be below those of last year’s “non-winter”).… Read more

What if I told you I’ve found a way to get $1,000 in dividends every single month—and you only need to invest $146,364 to get it?

There’s more, too, because this $1,000 monthly income stream comes from:

• Regular stocks: What I’m about to show you is based on stocks you likely hold now. I’m talking blue chips like NVIDIA (NVDA), Microsoft (MSFT) and Walmart (WMT). The key is to buy these stocks through a special vehicle called …

• A closed-end fund (CEF). These ridiculously overlooked funds hold the same assets as ultra-popular ETFs but yield a lot more—8.2% on average.

Which dividend is most likely to be hiked?

Usually, the brand-new payout.

Chief Financial Officers are a conservative bunch. A CFO will only agree to pay a dividend if they know they can:

1. Make the payment comfortably.
2. Hike the dividend repeatedly for years to come—with said comfort.

The hike part is important because rising dividends drive stock gains. I’m talking about hundreds or even thousands of percentage points in potential gains.

Let’s consider Apple (AAPL) and its inaugural dividend moment. In March 2012, the tech giant initiated a regular dividend of $2.65 per share. The payout was a catalyst for 12 subsequent years of moonshot performance.… Read more

At my CEF Insider service, we’ve been bullish on corporate bonds (especially corporate bond–focused closed-end funds yielding 8%+) for a long time now.

We remain so, because we’ve got a nice “goldilocks” setup for these funds right now:

1. The US economy, while not booming at a rate that makes everyone happy, has steadily improved since the pandemic, prompting inflation to slow but remain elevated.
2. The Federal Reserve, seeing this, is getting set to lower interest rates in late 2024, or possibly at some point next year.

These are both bullish signs for corporate bonds—and the closed-end funds that hold them. I’m sure I don’t have to tell you they were hit hard in 2022, resulting in an array of bargains.… Read more

Be honest. I won’t be mad, but just admit it.

You’ve got some SPY in your portfolio. So much in fact you’re probably trying to quickly change the subject from the SPDR S&P 500 ETF Trust (SPY).

I’m not mad. (I’m just disappointed—ha!) We refer to SPY as “America’s ticker for a reason.” It is everywhere.

And it’s OK. Really it is. Holding SPY has worked out this year. But we’re now at an inflection point—which is why we are having this conversation.

Only three stocks account for 21% of the S&P 500. Apple (AAPL), Nvidia (NVDA) and Microsoft (MSFT) determine the entire market’s moves!… Read more