Articles

2 Stealth Fund Buys for 6.7%+ Yields and Quick 15% Gains

Michael Foster, Investment Strategist
Updated: March 28, 2017

We might be at the start of a correction. This doesn’t mean it’s time to sell, but it does mean it’s time to be really, really choosy.

Just look at financial stocks. I’ve been closely following this sector and timing buys and sells for myself based on the market’s irrational overreactions to news.

That means I recommended buying financials in August 2016, then recommended avoiding the sector at the end of last month. Here’s what’s happened since then:

Financials Drop, Utilities Jump

So financials have underperformed everything else. But it’s still too early to jump into the sector, since it’s still up 21% over the past year.

I’m not the only one who feels this way about financial stocks. …
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3 Big-Name Stocks With Dangerous Dividends

Brett Owens, Chief Investment Strategist
Updated: March 27, 2017

Today I’m bringing you a round of good news … and a round of bad news.

The good? So far, this year’s been better than last for dividend hounds (like us) hoping to dodge a nasty payout cut.

According to Standard & Poor’s, 85 American companies cut their payouts in January and February. That’s still a big number, but it’s down sharply from 119 in the first two months of 2016.

That’s partly because we’re another year out from the oil crash, and the first two months of 2016 saw some big cuts in the sector. ConocoPhillips (COP), for example, dropped its first cut in 25 years—to the tune of 67%—on shareholders, while Precision Drilling (PD) tossed its payout entirely.

The bad news? Just because the goo is hanging in just below $50 a barrel and the number of cutters is down doesn’t mean we’re out of the woods. …
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Better Than Cash: 8% Payouts “Hedged” Against a Market Pullback

Brett Owens, Chief Investment Strategist
Updated: March 25, 2017

If you’re worried about a pullback, I don’t blame you. But don’t sit in cash and earn nothing when you can hedge your portfolio AND collect yields up to 8%.

Let’s talk about a couple of funds that use a well-worn options tactic – writing “covered calls” – that can generate generous yields typically between 7% and 9%. Conveniently, you never have to deal with the complications of options contracts – these funds do all the work for you!

But, why covered calls, and why now?

Covered calls are an options strategy in which you sell call option contracts against stocks you hold. Selling the call options generates income, called a “premium.” From there, a couple things can happen. If your stock reaches the strike price of the call option, you’re obligated to sell your shares to the call buyer (but you still keep the premium). …
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5 Can’t-Miss Dividend Hikes Coming This Spring

Brett Owens, Chief Investment Strategist
Updated: March 24, 2017

“If you’re not growing, you’re dying” is a well-worn phrase slathered all over the business and investment world, for good reason: It’s true. And it strikes a particularly loud chord when it comes to dividend investing. If your retirement portfolio is full of stocks that are paying the same dividend they did years ago, then, you’re certainly losing the war with inflation, and your nest egg probably isn’t performing to its full potential.

But if your retirement portfolio is stuffed full of companies like the five dividend growers I’ll share with you today, then you’ll stay ahead of the pack, year after year.

The easiest way to understand the importance of dividend growth is to simply look at inflation. Let’s say you bought something for $1 in 2016. …
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Yellen Just Slapped a “Buy” Rating on These 8% Yields

Brett Owens, Chief Investment Strategist
Updated: March 22, 2017

As recently as last week, many high quality closed-end funds (CEFs) were being neglected thanks to the headline worry that higher rates would hurt them.

That nonsense stopped abruptly when Fed chair Janet Yellen basically slapped a “Buy” rating on the entire sector! Her dovish outlook was taken as a cue that CEF investors could breathe easy and, once again, collect their 8% yields in peace.

This cue was unnecessary. For starters, anyone who mistook Yellen’s Fed as hawkish was, well, mistaken. And has been for years.

Also, higher rates don’t really hurt CEFs.

The theory scares people because it sounds true. Closed-ends have the benefit of borrowing money at Libor to lever up their returns. Libor is tied closely to the Fed funds rate. So, the thinking goes, higher Fed rates will end the “cheap money” party that benefits CEFs. …
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Buy These 3 REITs While They’re Still Ridiculously Cheap

Michael Foster, Investment Strategist
Updated: March 22, 2017

There’s no way around it: the S&P 500 now has a P/E ratio of more than 26 going into the first earnings season of 2017, and even the “safest” bets are starting to look scary.

Unless we see massive profit growth all around, there’s a real risk this bull market is going to stutter—or worse.

So where do you go for value? It’s getting harder than ever, but there is one corner of the market that got way ahead of the S&P 500 and has since taken a step back. I’m talking about real estate investment trusts (REITs).

And now, there are three REITs that combined provide over 9% in income with over 200% average dividend coverage. That means they could double their payouts and …
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3 BDCs Paying up to 11.8%: 1 to Buy, 2 to Sell

Brett Owens, Chief Investment Strategist
Updated: March 21, 2017

The Federal Reserve just dropped the first of three potential interest-rate bombs on Wall Street – a quarter-rate hike that was supposed to send rate-sensitive assets scurrying. Instead, blue-chip dividend stocks, MLPs, REITs – almost everything headed higher, including the trio of heavy-yielding business development companies (BDCs) I want to show you today.

Investors often look at interest rates and dividend-yielding stocks as a water-and-oil relationship. You know the drill. If interest rates go up, and Treasuries and other bonds begin to yield more in response, they’ll look more attractive versus similar (and even slightly higher-yielding) dividend stocks.

After all, as secure as even the bluest, chippiest blue-chip stocks might seem, they pale in comparison to the full faith and credit of the United States government. …
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My No. 1 Rule for Safe 8% Yields and 15% Upside in CEFs

Brett Owens, Chief Investment Strategist
Updated: March 20, 2017

Thinking of avoiding closed-end funds, now that we’ve got another Fed rate hike in the books?

It’s easy to see why, with the “smart money”—traders betting through the Fed funds futures market—expecting another hike just three months from now. In all, the market’s calling for three hikes this year, and so is Janet Yellen.

One Down, Two to Go?

But if you let that scare you away from high-yield sectors like CEFs, real estate investment trusts and preferred shares, you’ll miss out on some serious income.

In a moment, I’ll show you how to pick the CEFs with the most upside, along with the high payouts these funds are known for.

First, here’s why I’m pounding the table on them now. …
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14 Funds That Crush Vanguard and Yield up to 11.9%

Michael Foster, Investment Strategist
Updated: March 17, 2017

Vanguard is killing it. They’re now the biggest money manager in the world, with a whopping $4 trillion in assets under management.

It’s a feel-good story for a lot of investors, since the low-fee index fund juggernaut has marketed itself as the humble alternative to the high-rolling Wall Streeters who have become the target of public ire since the global financial crisis.

The feel-good story is simple. Vanguard has low overhead, pays its executives relatively modestly and passes those savings on to investors. Because of lower fees, the investors win; because of economies of scale, Vanguard wins; and because of the efficient-market hypothesis, which says hot-shot analysts can’t consistently outperform the stock market in the long run, the only people who don’t win are those evil banksters. …
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It’s the Best Time to Buy These REITs Since 2009

Brett Owens, Chief Investment Strategist
Updated: March 15, 2017

There hasn’t been a better time to buy real estate investment trusts (REITs) since July 2009. That was the last time this “simple signal” flashed B-U-Y.

Investors who bought on this signal then have enjoyed 223% returns since. And those gains didn’t require any fancy stock picking – just a one-click purchase of the Vanguard REIT ETF (VNQ).

The signal? VNQ itself paying 5%:

Highest REIT Yields Since the Financial Crisis

Most income hounds get it wrong. They pile into REITs when their yields are low because they are desperate for any positive income stream. That’s a bad idea because there are only two ways REITs can pay you:

  1. With today’s dividend, and
  2. With tomorrow’s (hopefully higher) payout. …
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