Safe Dividend Funds Up to 9.4% in the “Banking Fear” Bargain Bin

Brett Owens, Chief Investment Strategist
Updated: April 28, 2023

Select bank stocks may be cheap, but why settle for 2% to 3% yields?

Let’s really bang on the bargain bin and for dividends between 8.3% and 9.4%. These yields are available thanks to the current banking fears.

Fortunately, these payouts are more secure than vanilla investors appreciate. Hence, the dividend deal.

A Better Way to Play Banks

I wrote a few weeks ago about how mainstream investors are trying to time a bottom in banks.

Fair enough. Banks are extremely cheap right now by a well-known measure of long-term value: CAPE (cyclically adjusted price-to-earnings), which is the price divided not by the past year of earnings, but the past 10 years.… Read more

2 CEFs (Yielding Up to 9.9%) Set to Crush Stocks This Year

Michael Foster, Investment Strategist
Updated: April 27, 2023

If you’ve missed out on this market’s roughly 6% gain this year, don’t worry. There’s an easy way to grab that same 6%—and more–and do so in safe dividend cash.

The key, of course, is closed-end funds (CEFs), our favorite high-yield vehicles, specifically the 8%+ payouts these funds offer.

Before we get to a couple of high-yielding CEF tickers (yielding 8.8% and 10.2%), let’s dive into the market’s gain and go sector by sector, because it tells a clear story of how some investors have seen that 6% rise and some have seen even more (or less!).

First up, if you’re not holding a significant amount of tech, you’re likely already behind, as the sector, a laggard last year, is up 16% so far in 2023.… Read more

Beware This 13.8% and 14.8% Dividend Disaster Duo!

Brett Owens, Chief Investment Strategist
Updated: April 26, 2023

We’re heading towards the most telegraphed recession of all time. At least in recent memory.

So should we sell everything? Not exactly. Granted, recessions are usually bad for stocks. Vanilla investors who own nothing-but-ETFs are in a tough spot.

But since you’re reading this, I assume:

  1. You pick stocks better than a robotic ETF.
  2. You’re not scared of a stinkin’ recession. You’re here looking for high-yield exceptions to the “sell everything” rule.

I appreciate that about you, my fellow contrarian. If I thought rules applied to me, I would have made it past age 26 in Corporate America! This is why we get along so well.… Read more

Sell These 2 Popular Dividends “on the Rip” Buy These 2 Instead

Brett Owens, Chief Investment Strategist
Updated: April 25, 2023

I’m not going to lie to you: this market is headed for a fall. And if you’re caught holding the wrong dividend payers, you could be in for some serious losses indeed.

How serious? Well, the worst of the four stocks we’re going to delve into below—Cracker Barrel Old Country Store (CBRL)—plunged 26% last year, much further than the S&P 500. If you hold this one, or the other dangerous dividend we’ll discuss below, it’s time to cut your losses and get out now.

Cracker Barrel Plunged in ’22—a Sign of Things to Come?

But we’re not only going to sell today—we’re going on offense, too.… Read more

This 14%-Yielding “Junk” Fund Is Anything But

Michael Foster, Investment Strategist
Updated: April 24, 2023

We’ve got a sweet opportunity to grab a 14% dividend sitting in front of us, and we can thank the ongoing sale on bonds for this deal.

This double-digit payer—which has held that huge payout steady for years—holds junk bonds, or corporate debt that falls below the investment-grade line.

Isn’t there more risk here? Sure. But we’re well-compensated by the big yields junk bonds pay. Heck, even the yield on the benchmark SPDR Bloomberg High Yield Bond ETF (JNK) is a healthy 5.8% now.

But JNK really is for novice investors. When we go with CEFs like the one we’ll delve into in a moment, we can boost our payout by more than double, to 14%—and get paid monthly.Read more

A “Private Equity” Mini-Portfolio That Yields 10%-Plus

Brett Owens, Chief Investment Strategist
Updated: April 21, 2023

Private equity (PE) is a rich guy and gal favorite. PE firms find deals and deliver outsized dividends.

They don’t like dealing with common folk. So, PE shops typically set a minimum of a few hundred thousand dollars or so to invest.

But we contrarians have a better way! By tapping BDCs—or business development companies—we can toss as little as $20 into a PE payer.

Better yet, we can secure yields between 8.5% and 13.1%. We’ll discuss three examples today. Including one that is trading below book value!

If you’ve never heard of business development companies (BDCs), you’re not alone. There are only a few dozen publicly traded BDCs, and even the largest one would be a minnow in the S&P 500.… Read more

How We’ll Protect (and Grow) Our 8% Dividends for the Rest of 2023

Michael Foster, Investment Strategist
Updated: April 20, 2023

With the first quarter behind us, now is a good time to ask ourselves if stocks—and especially 8%+ yielding closed-end funds (CEFs)—are getting just a little ahead of themselves.

Let’s start with stocks, then we’ll get granular, looking at how CEFs (which usually lag stocks by a few weeks) are setting up as we move deeper into Q2.

Source: CNN

One glance at the CNN Fear and Greed index and you could be forgiven for thinking things are getting a bit too hot out there. This indicator— a useful indicator of investor sentiment—was pegged at extreme fear for most of 2022, so the reversal was inevitable.… Read more

This 4.8% “Toll Bridge” Dividend Has Big Upside

Brett Owens, Chief Investment Strategist
Updated: April 19, 2023

Worried about a recession? Two thoughts:

  1. I don’t blame you.
  2. Consider this recession-resistant REIT (real estate investment trust), poised to rally on an economic slump.

Why rally? Well, interest rates and REITs tend to seesaw. When rates rise, REITs fall. At least that’s the conventional wisdom.

In recessions, interest rates fall. Normally bullish for REITs—consider them a  “second-level” bet on a bond bounce.

REITs, after all, are the bond proxies of the stock world. Investors buy them for their yields. That’s why we like them here at Contrarian Outlook.

It’s part of the REIT special sauce. As long as they dish most of their profits (90%+) as dividends, they pay no corporate taxes.… Read more

This Unknown “Dividend Magnet” Is Growing Payouts 211%

Brett Owens, Chief Investment Strategist
Updated: April 18, 2023

There are plenty of stocks out there, right now, with payouts growing fast—heck, some of them give shareholders a “raise” every three months.

You won’t find these “Dividend Accelerators” among the big names of the Dow.

Many are real estate investment trusts (REITs)—“landlords” of everything from apartments to warehouses. And they’re not just dividend-growth machines; most throw off higher current yields than the typical S&P stock, too.

And I mean much higher: right now, the REIT benchmark Vanguard Real Estate ETF (VNQ) yields 4.1%. The typical S&P 500 name? A sorry 1.6%.

You can thank the Feds for that: they give REITs a pass on corporate taxes as long as they pay 90% of their income as dividends.… Read more

Inflation, Recession or Soft Landing? This 7.8% Dividend Doesn’t Care

Michael Foster, Investment Strategist
Updated: April 17, 2023

Inflation is falling—but is a recession next, or will we get that vaunted “soft landing” Jay Powell keeps talking about? Wouldn’t it be great if there was a dividend-payer built for either outcome?

Just such an income play exists—it’s called a covered-call closed-end fund (CEF). They’re smart buys now because they pay big dividends: the CEF we’ll break down today—the Nuveen Dow 30 Dynamic Overwrite Fund (DIAX)—yields a healthy 7.8%.

That not only gives us a high income stream, but it also increases our safety, as we’re getting the vast majority of our return in safe dividend cash.

That’s one part of DIAX’s appeal—especially if a recession is headed our way (more on that shortly).… Read more