Articles

The price-to-earnings (P/E) ratio has long held a lock on investors’ imaginations. So when it jumps to near 30, like it has in the last few weeks, they’re inclined to think stocks are pricey and pull back.

Now is not the time to do that.

Instead, we’re going to do what we always do at times like these: Look to a closed-end fund (CEF) that keeps us invested in stocks but gives us a hedge against a potential pullback. Three hedges, actually:

• The sale of covered call options, which generate extra cash for the fund, supporting the dividend it pays out to us.

Hedge fund veteran and Wall Street-approved suit Scott Bessent is likely the new Treasury secretary. That’s why this 11% dividend is a big winner.

Bessent will advocate for financial deregulation and increased lending. Easier and faster money. Which will be a boon for private equity and business development companies (BDCs).

Prior to Bessent’s appointment, the folks in Silicon Valley were already salivating over increased M&A: Big companies tossing money at startups and private firms raising piles of dough to get in on the action itself. That’s the rocket fuel that mints multi-millionaires and even billionaires.

This extra cash sloshing around will make inflation sticky.… Read more

We are drowning in post-election stock-market predictions, so let me go ahead and throw another one on the pile:

This new administration will hurt the returns of folks who simply buy an index fund like the SPDR S&P 500 ETF Trust (SPY) and call it a day.

I call SPY “America’s ticker” because, well, most Americans own it. If you’re reading this, there’s a good chance you do, too.

Now, I’m not going to judge (well, maybe I will, but just a little bit!).

Suffice it to say, the coming presidential term will usher in a true stock picker’s market—a time when prudent moves into, and out of, individual dividend payers will be key.… Read more

CEFs are renowned (by the few people who know about these high-income funds, of course!) for their outsized dividends—around 8%, on average, across the board as I write this.

But buying a CEF is not like buying a regular stock. When it comes to picking CEFs, we’ve got a whole bunch of different factors sitting in front of us that we need to weigh.

Sometimes CEFs Are Cheap for a Reason

There are, for example, some things that go beyond, say, past performance or discounts to net asset value (NAV, or the value of a fund’s portfolio—the main measure of a CEF’s value).… Read more

It’s hard to find a hater right now.

Wall Street fanboys analysts have Buy ratings on more than 75% of the S&P 500 at the moment.

Give us the Sells. That’s right. We contrarians are not afraid to dumpster dive for dividend value!

Today we’ll slam a six-pack of analyst pans yielding between 6.1% and 11.8%. We searched far and wide for these loathed names because, as I write, there are but two blue chips in the Sell bin:

2 Sells Out of 500… What are the Odds!

Source: S&P Global Market Intelligence

Sells are where the party is at.… Read more

Well, that was fast. As you no doubt know by now, stocks gave back their post-election bump nearly as fast as they took it. Now they’re more or less where they started pre-election.

There’s a story behind this “pop and drop” that showed me something we need to bear in mind more and more as we head into 2025 (and a new presidential term): The need to diversify our portfolios, not only within stocks but (especially, with more volatility likely) beyond them.

And that need for diversification goes for our holdings of high-yielding closed-end funds (CEFs), too.

Now, market veterans will no doubt be quick to say that these short-term moves are just noise, and in the long term it doesn’t really matter who is the president.… Read more

Six summers ago, Donald Trump lamented privately to Republican donors that he expected Jay Powell to be a “cheap money” Fed chair. To the President’s chagrin, Powell had recently raised interest rates. Thus, making money more expensive.

Most real estate guys like Trump are allergic to high rates. Back in 2018 they were certainly no bueno for his growth-focused agenda. The President told Fox Business the Fed was his “biggest threat.”

He even admitted to the Wall Street Journal he “maybe” regretted appointing Powell. Appointer’s remorse! Then came Trump’s biggest zinger of them all:

“The Fed is like a powerful golfer who can’t score because he has no touch—he can’t putt!”

Trump’s win cements what we’ve been saying for months: You can forget about a hard landing or a soft landing—This economy is headed for no landing at all.

In the last few weeks, I’ve started to see the mainstream media pick up on our thinking here. Nice to see they’re finally catching up!

We’ve got two “refined” trades on Trump 2.0 below (ranked in order of appeal). They’re both growing their dividends, and they’ve both been unfairly left behind in this year’s rally.

Before we get to them, let’s take a look at the post-election state of play so we can get a grip on exactly how we’re going to move ahead here.… Read more

If you have a wealth manager working for you, I have one simple piece of advice: Seriously consider moving on from them (or managing your investments yourself) if they recommend following the “60/40” rule.

It simply says that most people should invest 60% of their assets in stocks and 40% in government bonds for retirement.

In a moment, we’ll talk about one fund we’d have completely missed out on by following 60/40 ourselves—or by signing on with a wealth manager who does so. (And not to worry, this one is still available for us to tap into for a solid 5.5% dividend, with upside.)… Read more

Fifteen months ago, we contrarians started the bond bandwagon. It’s hard to believe now, but back then the financial suits hated fixed income. We faded their fears, bought bonds and benefited.

Now, however, I’m cautious on bonds. The 10-year Treasury yield has been on a tear since Jay Powell first cut the Fed Funds Rate.

Bond Vigilantes Scoff at Powell’s Rate Cuts

You can’t make this stuff up. On September 18, Powell cut rates by 50 basis points. However, this was only the “short end” of the yield curve. The 10-year yield meanwhile (the “long end”) popped from 3.7% to nearly 4.5% in a matter of weeks!… Read more