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Immediately after President-Elect Donald Trump won his second term last week, the US dollar surged, while US Treasuries fell:

Election Sends Dollar Up, Treasuries Down in Early Trading

Both moves are opposite sides of the same coin: Investors believe Trump’s policies will be inflationary. The theory suggests this would happen for a couple of reasons:

1. The US government will spend more, and interest rates will rise higher than rates elsewhere in the world in response. That will attract foreign capital to America while making it less attractive for capital to leave the US.
2. All of that extra capital in America will boost economic activity and demand for the dollar.

As we income investors roll into Trump 2.0, it’s time for us to “flip the script” on the trades that have worked for us over the past two years. Things have the potential to get wild. Fortunes made; retirements lost.

Let’s re-calibrate to make sure we own the stocks that will benefit most from the Trump 2.0 presidency.

Yes, I emphasized equities intentionally. 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, the fixed income trade is a bit tired.… Read more

Look, I know what a pain it can be to track your dividends.

ChatGPT? It’s no help. When I asked if it could give me a hand, its top suggestion was that I use a spreadsheet!

I mean, I guess the offer to help set up formulas is appreciated. But this is still a pain to set up—with AI assistance or not.

Sure, your brokerage account might have a built-in dividend tracker, but it’s almost certainly only useful for any investments you hold with that particular broker.

But what if you hold investments in more than one account, or with more than one brokerage (as many of us do)?… Read more

I can’t tell you how many times I’ve mentioned closed-end funds (CEFs) to investors and been met with blank stares in return.

It’s too bad more people don’t know about these powerful income plays because …

1. CEFs let you diversify, not only within stocks but beyond them. Among the 500 or so CEFs out there are funds that own stocks, corporate bonds, municipal bonds, real estate investment trusts (REITs) and more.
2. CEFs often trade at discount to net asset value (NAV, or the value of their portfolios). This means we can buy shares of high-quality firms like Apple (AAPL) for less than market value.

It’s a party on Wall Street! While the suits fawn over the hot “Trump trade” stocks, we dividend investors are going to dumpster dive.

Hey, we have no shame. We’re talking about yields from 7.8% to 13.4%, paid monthly!

Why the bargains? Bonds have been bloodied since the Federal Reserve cut rates.

Wait, what? Let’s remember the Fed guides short-term rates. Long-term rates , on the other hand, march to the beat of their own drum:

20- and 30-Year Treasuries Above 4.5% Again

We could dip into bond exchange-traded funds (ETFs)—they’ll have the same tailwind at their back. But I prefer CEFs over bland ETFs for three very simple reasons:

1. They yield more.

At times like these, with the economic outlook uncertain and volatility likely, we want to be certain of one thing: We’re still in stocks (and stock-focused funds)! But of course, we want to make sure we’re tempering our risk, as well.

Because one thing we can be sure of is that any volatility, no matter if it’s tied to an election or any other outside event, will pass. The last thing we want is to be out of the market when it does. (And of course, we want to keep our dividends rolling in, especially in volatile times.)

That brings me to what I want to discuss today—two things, actually.… Read more

The Federal Reserve cut interest rates by an “historic” 50 basis points. Then, interest rates soared.

Wait. What?

The Federal Funds Rate is a target (technically a target range) that influences short-term rates in the economy. Money market funds, for example, pay interest based on this benchmark. They pay 0.5% less today than two months ago due to the Fed cut.

Long-term rates, on the other hand, are not controlled by the Fed. Not directly, at least. The global bond market is a cool $130 trillion. Far too large for anyone, even Uncle Sam, to control.

Hence the recent fixed-income paradox.… Read more

I know things feel pretty tense right now. But don’t be pulled into the trap of thinking everything is up in the air these days.

Truth is, there are always rock-solid trends out there that no one can change. I’m talking about sure things that outlast presidencies, wars, inflation, deflation, you name it.

One of my faves: soaring food demand, which is tied straight into global population growth—hands-down the most “baked in” (sorry, I couldn’t resist!) trend there is.

According to the UN, there will be 9.7 billion people on the planet in 2050, nearly 2 billion more than now. That means we’re going to need a lot more food.… Read more

With more volatility likely as we move past the election and into late 2024, retirement planning might not be top of mind for you right now.

I get it.

But with investing—income investing, especially—it’s critical to keep the long term in focus. And over the long term, the direction of the markets is up.

When we invest in closed-end funds (CEFs), we get an extra advantage: High income, which often comes our way monthly. The average CEF yields 8% now. That’s roughly the long-term average annualized price gain of the S&P 500, depending on the timeframe you look at, delivered to us in dividend cash every year.… Read more

Election. Recession. No landing. Social unrest. Election contest.

Low beta, anyone?

Today we’ll talk calm in a sea of manic. A six-pack of tranquil dividend payers yielding up to 8.9%.

How do we know they’re tranquil? Beta, baby.

A stock with a beta above 1 is considered more volatile than “the market.”

A stock with a beta below 1 is considered less volatile.

Let’s say a stock had a beta of 0.5. This means it’s half as volatile as the market. If a 30% bear market swipes, this safety stock only loses 15%.

It’s an inexact science—I wouldn’t build projections per se around current beta.… Read more