Articles

Let’s talk about five big payouts that are so flimsy, they’re just asking for the ultimate sign of dividend disrespect:

Paying money to short them.

It’s one thing to turn down a decent yield in today’s 2% world. It’s another to be willing to pay the dividend in order to bet against the stock!

Yet here are five firms with archaic business models (some are so-2015) that their cash flow streams will soon dry up. And when the cash evaporates, so will the dividend.

Which is why I may short some or all of these shares in the weeks ahead after this piece publishes.… Read more

By now you probably either invest in closed-end funds (CEFs) or have heard more folks talking about them.

There’s a good reason why: dividends!

With 10-Year Treasuries yielding barely 1% and your typical S&P 500 stock paying even less—just 1.7%—there’s a very good chance none of the folks you know are clocking dividends that can even beat inflation, let alone provide a decent income stream!

So when an investment comes along throwing off yields of 7%, 9% … even 11%, people take notice.

In a moment, I’ll show you exactly why these outsized yields exist—and how to grab a slice of this cash for yourself.… Read more

Most people are chasing big dividend payers right now in this “2% world” we live in. Meanwhile, a small group of “hidden yield” stocks are quietly handing smart investors growing income streams PLUS annual returns of 12%, 17.3%, or more.

Let’s talk about how to find these stocks, and bank 12% returns or better every single year, by following a simple two-step formula.

See, everyone wants dividend stocks with good current yields. It’s easy to scan a newspaper or financial website and pick out the stocks that are paying 3%, 4%, 8% or whatever number you might consider “good.”

Yet that’s NOT the right way to pick dividend stocks.… Read more

Most “first-level investors” believe that investing is an either-or proposition. A stock or fund can deliver eye-popping yield … or it can deliver breakneck growth. But not both.

That’s simply not true. We’ll prove that today by highlighting three stocks yielding 6% to 9% with 20% price upside to boot.

Remember, total returns are made up of dividends and price appreciation. The latter, price gains, are driven by some combination of:

1. Dividend raises (which inspire investors to pay more for the stock or fund), and/or
2. A climb towards fair value (a closing of the discount window in a closed-end fund’s (CEF’s) case, or a higher multiple on FFO for a REIT).

With stocks looking choppy—and toppy—and more chaos flowing out of DC seemingly every day, you may be pondering taking some money off the table these days.

I have one word for you.

Don’t.

Because as I wrote on August 10, US companies are killing it on the earnings front, and that great-news story is getting completely lost in the breathless coverage of Trump’s latest tweet and saber rattling from North Korea.

At times like these, it’s best to remember the words of the world’s most successful investor, Warren Buffett: “Be fearful when others are greedy and greedy when others are fearful.”… Read more

Closed-end fund (CEF) investors are going crazy again. This time, they’re grossly overpaying.

Today we’ll discuss five incredibly popular funds that are not likely to become more celebrated, and should be sold immediately.

Yes, first-level income hounds can be as greedy as they are fearful. In January 2016, they wanted nothing to do with CEFs. Exactly when many funds were about to embark on an 18-month tear!

Yet today, they’re willing to pay $1.49 for just $1 in assets. This is a recipe to lose money. Or at best, see your portfolio trade sideways.

This Discount/Premium as Margin of Safety (or Lack Thereof)

CEFs, unlike their mutual fund cousins, have fixed share counts.… Read more

After months of grinding higher, stocks have taken a bit of a breather. And one obscure corner of the market went lower still.

I know I don’t have to tell you that when that happens, contrarians like us are set up for some nice gains, so long as we don’t let emotion cloud our judgment.

And there are indeed some nice gains on tap with 3 cheap funds I’ll tell you about shortly. They’re all closed-end funds, a special kind of investment that throws off eye-popping dividend yields (one of the 3 CEFs I’ll show you yields a hefty 9.3% now!).… Read more

The desperate hunt for yield is getting way out of hand—and it’s setting up a terrific buying opportunity for you and me.

How out of hand?

Consider that some investors are so income starved they’re piling into sovereign bonds from Iraq—a country that’s still a war zone!

The latest issuance of five-year bonds by the Iraqi government was slated for $1 billion. But investors spied the 7% yield on offer here and crashed the doors, racking up nearly $7 billion in orders.

It’s sad, and totally unnecessary.

A Secure Portfolio With a Life-Changing 8% Yield

The worst thing is, in their scramble for income, the herd is charging right past yields that are even bigger—and far safer—here in the U.S.A.,… Read more

Don’t take any stated yields for granted these days! The financial news has been flooded with dividend cuts lately, with Teva Pharmaceutical (TEVA) and Mattel (MAT) taking the hatchet to their payouts, and telecom Windstream (WIN) dropping its dividend too.

It’s dangerous to buy headline yields – or even supposedly “safe” blue chips with more modest dividends – without looking at the profits funding these payouts. Companies with high payout ratios (how much in earnings, funds from operations and other measures a company pays out in the form of dividends) are a twofold risk:

1. High payout ratios can lead to a slowing in dividend growth, which means your payout is increasingly likely to fall behind inflation.