Articles

Let’s go ahead and build ourselves an “instant” income portfolio throwing off a rich 8.8% yield. A yield like that, after all, could put a dividends-only retirement within our reach. Or at the very least help you scale back your day job and make up the difference with dividend payouts.

This, of course, is the essence of financial freedom, and my favorite high-yield assets, closed-end funds (CEFs), are our best play here. When we build our retirement with CEFs, we get to hold the top stocks, bonds and other assets, like publicly traded real estate investment trusts (REITs), out there.… Read more

Let’s talk about the cheapest dividend payers in the world. With respect to cold hard cash flow.

We contrarians are too savvy for P/E ratios. We know that earnings are accounting creations. “Profits” are all fugayzi.

Free cash flow (FCF), on the other hand, is what it is. The cash a company brings in, minus capital expenditures. This cash can be reinvested in the business or, better yet, paid out to income investors like us.

We like companies that dish dividends because their businesses are running on relative autopilot. They needn’t plow every dollar they raise back in. Which is great—more yield for us.… Read more

We’re facing a “2016-like” moment in bonds these days, meaning anyone who buys now has a shot at locking in 10%+ dividends for decades—and a shot at price upside, too.

I mention 2016 now because, back then, something truly unusual happened: interest rates on bonds jumped in a short period of time, driving the payouts on high-yield corporate bonds to nearly 10% at their peak:

Rates Drop, Soar, Drop, Soar Again

As you can see above, anyone who bought a high-yield bond in 2016 locked in a 10% cash flow. Many of these bonds continued paying out interest without a hitch, even through the pandemic, a time when yields spiked again, giving investors another chance to buy bonds at another huge interest rate.… Read more

Everyone hates bonds right now. Perfect—let’s buy this nifty 9.5% payer while it’s discounted!

Why the sale? A bearish narrative, of course. In 2023, we have a narrative for everything, after all.

Last week, the Bank of Japan (BOJ) announced it is softening “yield control” efforts for 10-year Japanese government bonds (JGBs). Inflation is finally picking up in Japan, and the BOJ is still printing money to buy JGBs.

Ironic? Yes. But the BOJ, the money-printing addict, is finally admitting it has a problem. We can think of this as step two of a potential multi-step inflation recovery effort.… Read more

Few folks know it,  but there’s a comically ignored indicator that regularly hands out safe 8%+ dividends—plus payouts that surge double-digits.

I’m talking about insider buying.

When it comes to the buys and sells of the folks in corporate C-suites, Peter Lynch said it best: “Insiders may sell their shares for any number of reasons, but they buy them for only one: the think the price will rise.”

Far be it for me to “edit” Lynch, but I’d add one more thing: these ballers also think the dividend is safe.

Think about it for a second: dividend safety is priority No.… Read more

Don’t listen to the bubble worrywarts: even with the 2023 bounce, stocks are well off their late 2021 peak. In other words, they’re still cheap!

Stock Rebound Still Has Room to Run

We can get in even cheaper through discounted closed-end funds. Consider two leading equity CEFs, the Liberty All-Star Growth Fund (ASG) and the Eaton Vance Tax-Managed Diversified Equity Fund (ETY), which yield 7.8% and 8.2%, respectively.

Both deal in blue chips like Visa (V), Amazon.com (AMZN) and Microsoft (MSFT). ASG also adds some lesser-known midcaps for extra growth (hence the “growth” in the name), such as property manager FirstService Corp.… Read more

Is there still a chance to buy the bank dip? You bet—with nifty yields up to 9.4%!

We’re going to avoid the regional lenders, which pains me to say because I love banking with the small guys. But I’m not looking to own them as the economy slows down.

No, nothing personal, but I’ll take the banking behemoths. None of them yield 9.4%, of course, but we engineer these payouts easily via their preferred dividends.

Preferred stocks are often referred to as stock-bond “hybrids” given that they share some characteristics of each asset. A quick breakdown:

• They represent ownership in a company (like a stock)
• They typically don’t offer voting rights (like a bond)
• They pay dividends (like a stock)
• Their dividends are typically fixed at a certain level (like a bond)
• They can rise and decline based on the performance of the underlying company (like a stock)
• But they tend to be much more stable, trading around a “par value” like a bond)

Most noteworthy, for income fanatics like you and I, is that their dividends are plump.… Read more

Does the name William Bengen ring a bell? If not, don’t worry. Many people haven’t heard of him. But he’s likely to have a major influence on your financial situation (if he hasn’t already).

Bengen is the (now retired) financial advisor who came up with the so-called “4% rule,” which is seductive due to its simplicity: it says you can safely withdraw up to 4% of your assets in retirement without having to worry about running out of money.

Obviously, such a vague rule has critics, with most of them suggesting 4% is too lenient. Most of these folks are financial advisors who take fees to manage people’s money, so they definitely have an incentive to keep their clients working and investing!… Read more

You and I, my fellow contrarian, are old enough to remember when “I bonds”—US savings bonds designed to protect you from inflation—yielded 9.62%.

It was May 2022. Just 14 months ago!

Ah, the good ol’ days. Since then, Series I savings bond rates have tumbled to 4.3%.

Many readers wrote in with I bond questions earlier this year. The savings vehicles boasted a still sweet 6.89%. But they had two major limitations:

• I bonds tie up our money for a year.
• We can only invest $15,000 in them annually.

(The annual limit is $10,000 per person, plus an extra $5,000 per year if using a federal tax refund.… Read more

If I can give you just one piece of advice as we pass the midpoint of 2023, it’s this: do not trust your dividend income to ETFs!

Instead, look to the simple “payout-powered” strategy we’ll talk about in a second. As we’ll see, it generated a tidy 83% gain for readers of my Hidden Yields service in just over two years.

Now is the perfect time to put it to work again, with corporate earnings—and dividends—likely to rise next year after slumping a forecast 16% in 2023, according to a recent report from Morgan Stanley (MS). For 2024, the bank is calling for S&P profits to soar 23%, then tack on another 10% gain in 2025.… Read more