Articles

I know that no one wants to talk about the 2020/2021 lockdowns anymore. But those dark days did do one critical thing for the high-yield corporate-bond market: made these so-called “junk bonds” too big to fail.

And investors are just starting to come around to that fact.

The takeaway is that we’ve got a nice opportunity to grab historically large, and stable, dividends from corporate-bond funds, including a closed-end fund (CEF) we’re going to focus on in this article: the PIMCO Dynamic Income Fund (PDI).

Long-time readers of my articles here on Contrarian Outlook, as well as my CEF Insider advisory, will recognize PDI.… Read more

Would you believe, my fellow contrarian, that most of our vanilla income friends settle for utility dividends that pay quarterly?

Ha!

Unfortunately (for them) that’s no typo. There are millions of investors just like them who are OK being paid every 90 days.

Yes, ninety!

Obviously, they don’t read highbrow publications like Contrarian Outlook, where we highlight monthly dividend payers. Today we’ll discuss two that pay 8.3% and 8.6% respectively.

With yields like these, we can actually retire on dividends. Take a chunk of money that we’ve saved up and convert it into regular cash flow. A million dollars, for example, can become $83,000 or $86,000 annually in dividend income.… Read more

Here’s a wild prediction for the rest of 2024: “sleepy” (but very high yielding) emerging-market bonds will clobber today’s high-flying AI stocks.

Sounds ridiculous, right?

Well, it’s one of those seemingly weird calls that’s absolutely on the table after the first Fed rate cut drops—a date that, if futures traders are right, will arrive as soon as June:

Interest Rates Are About to Pull a 180

Source: CME Group

Here’s where emerging-market bonds come in: When rates drop, the US dollar gets banged up—it always does. That will light a fire under EM bonds.

And given that the dollar has been en fuego for the past decade, the greenback’s drop could very well be swift.… Read more

If you watch cable TV or visit financial websites, you no doubt hear about “overpriced” stocks and funds all the time.

A pundit will jump on TV and say something like “Tech is overvalued.” So, by extension, a tech ETF like the Technology Select Sector SPDR Fund (XLK) is overpriced, right?

Not so—at least in a technical sense. An ETF like XLK can be overpriced, but ETFs rarely are.

A fund like XLK collects money from investors and socks it away in stocks. In XLK’s case, we’re talking about big-name techs like Microsoft (MSFT), NVIDIA (NVDA) and Apple (AAPL). But with ETFs, the price you pay tends to be close to how much it would cost to buy all of those stocks separately.… Read more

If they’re buying, we’re buying.

Or we’re at least considering it.

If there’s anything better than a big dividend, it’s one that is being gobbled up by the company’s own insiders. We’re talking about the officers, directors, and other members of the C-suite that are closer to the action than any analyst, reporter or investor could ever hope to be.

Most insiders are sitting on their hands right now. And who could blame them given the bubbly backdrop? But three management teams in particular are saying:

Our stock is cheap. Our dividend—up to 7.5%, by the way—is safe. We’re in with our own cash.… Read more

2024 may be remembered as the year the stock-market recovery “stuck.” While 2023 resuscitated stocks from their 2022 doldrums, it’s been 2024 that got the indices to hold above all-time highs.

Also, unlike 2023, this year’s gains are increasingly broad-based, with nine out of the 11 sectors of the S&P 500 up so far.

The biggest winner? The energy sector, which has been bolstered by particularly strong gains from Marathon Petroleum (MPC), Exxon Mobil (XOM) and Phillips 66 (PSX).

Energy Gains Across the Board

Is this an opportunity, especially for income-hungry investors? After all, energy stocks’ payouts can be massive, with pipelines offering yields well over 10% in many cases.… Read more

Last month, this company cut its dividend by 48%. Five days later, its ticker was booted out of the Dow Jones Industrial Average (DJIA).

Vanilla investors fled the stock. Nonconformists like us, on the other hand, started to pay attention.

When there’s nobody left to love a dividend dog, we consider adoption. The payout was slashed 48%. This stock is 71% off its all-time highs. The Dow doesn’t love it any longer.

Sign us up for the stock that sounds like an old-time country music song, “The Ticker That’s Lost Everything.” We’ll give the herd their Nvidia (NVDA) at 36-times sales.… Read more

I think we can all agree that interest-rate cuts are on the table now. Even Jay Powell says so!

That rare “straight talk” from mystery-man Jay has fueled a jump in bonds. But there are still some bargain “bond proxies” on the table waiting to be snapped up.

To be sure, Jay is still being cagey about when the first cut will drop. But futures traders think they’re on to him: they’re calling for at least three quarter-point cuts by the end of this year, as of this writing:

Source: CME Group

We can argue about whether or not that’s too aggressive.… Read more

Don’t believe the media’s latest line that stocks—and by extension 7%+ yielding closed-end funds (CEFs)—are oversold.

Far from it!

Truth is, stocks—and bonds and real estate, for that matter—are still oversold as a result of the 2022 market crash.

You can see that in action in the chart below, with the benchmark ETF for the S&P 500 (in purple) up 11.1% since the start of 2022, while corporate bonds (in orange) are basically flat. And real estate investment trusts (REITs)—in blue—are still in the tank, down about 16%.

Don’t Believe the Hype: All Our Favorite Assets Are Still Cheap

Fact is, those are all low numbers, even for stocks: the S&P 500 is up an annualized 5.4% over the last two years and change since the start of 2022, which marked the beginning of the market’s swan dive.… Read more

Bonds are back, baby. Let’s talk about three funds that pay—between 8.3% and 10.9%.

Plus, they are trading for less than the fair value of their parts. It’s free lunch time in Bondland.

Of course not all bond funds are created equal. ETFs serve their purpose, but closed-end funds (CEFs) are where the payout party is at. Value plus yield at the CEF café.

Most ETFs are tied to an index. Which means they are run by rules and robots. Boring.

CEFs tend to be actively managed, meaning “bond brains” are able to adjust their portfolio from defensive to offensive as the investing environment shifts.… Read more