Articles

These Tax-Free 5% Dividends Clobber Bonds (and Stocks, Too)

Michael Foster, Investment Strategist
Updated: February 26, 2024

If you’re like me, you’re starting to collect your tax documents with a certain sense of dread.

It’s understandable as another April draws nearer. But there is a ray of light in the tax-season gloom for us—it comes in the form of municipal bonds, which can boost our income and minimize our future tax burden, too.

“Muni” bonds offer big yields these days, thanks to the Fed’s interest-rate hikes over the last couple years. That’s doubly valuable now because these yields are federally tax-free for almost all American investors.

That means if you’re in the highest tax bracket, you could buy 5%-yielding muni bonds and end up with the equivalent of an 8.3% yield from taxable assets like stocks or corporate bonds.… Read more

Bond Bargain Alert: 3 Secure Funds Yielding 8% to 9%

Brett Owens, Chief Investment Strategist
Updated: February 23, 2024

Bond bargain alert! Three secure funds yielding 8% to 9% are for sale on the discount rack.

Thanks to a two-year run of rising interest rates, these bond-like investments are cheap. I don’t expect this to be the case for long, with rates ready to relax.

These hybrid vehicles are part-stock, part-bond. They prioritize yield over price gains, which is just fine for us income-focused investors.

These “preferred” stocks share some elements of common stocks (the normal shares of companies that most of us own). We buy preferreds on a stock exchange. They represent ownership in a company. And they can move higher and lower in price.… Read more

This 8.3% Dividend Is Cheap (And Will Rise on Overblown Rate Fears)

Michael Foster, Investment Strategist
Updated: February 22, 2024

Since last week, markets have been hamstrung by the fear that inflation is going to hang around. So we (naturally!) are going to make a contrarian play on this overdone worry.

How? By picking up high-yielding closed-end funds (CEFs) focusing on real estate—particularly real estate investment trusts (REITs). Many of these are discounted now.

I’ll show you why this timely move is our route to locking in a steady (and monthly paid) 8.3% dividend in just a moment

First, let’s break down the so-called “bad” inflation number that came out last week, because there are some quirks about it that are easy to overlook.… Read more

1,188 Bonds You Must Sell Now!

Brett Owens, Chief Investment Strategist
Updated: February 21, 2024

Be careful how you buy your bonds. The most popular tickers have four “fatal flaws” that’ll doom you to underperformance at best, or at worst leave you hanging in the event of a market meltdown!

Let’s pick on the widely followed and owned iShares iBoxx High Yield Corporate Bond ETF (HYG) as an example. It has attracted nearly $17 billion in assets because:

  1. It’s convenient and as easy to buy as a stock.
  2. It’s diversified (for better or worse, as we’ll see shortly) with 1,188 individual holdings.
  3. It pays well, at 6% today.

The accessibility of funds like HYG appears cute and comfortable enough.… Read more

2 Big Dividends (Yielding 10%+) Soaring on the AI Megatrend

Brett Owens, Chief Investment Strategist
Updated: February 20, 2024

If you’re a dyed-in-the wool dividend investor (like me!), you’ve likely taken a look at the big gains folks are reaping on AI stocks … and resigned yourself to missing out on the whole thing.

After all, most AI stocks, like Alphabet (GOOGL) and NVIDIA (NVDA), yield 0% (or close to it!). And we simply demand a dividend before we buy anything.

The good news is we don’t have to miss out—instead, we’re going to go one floor up from the “first-level” options that most folks buy to the “penthouse” of AI investments: tech-focused closed-end funds (CEFs)!

The beauty of CEFs is that by going with these high-yield funds (8%+ payouts are run-of-the-mill in CEF-land), we don’t have to sell the blue chips we currently own!… Read more

This Discounted 3-Fund Portfolio Crushes Stocks, Pays 7.7% in Cash

Michael Foster, Investment Strategist
Updated: February 19, 2024

At my CEF Insider service, I regularly write about the most effective ways to get big dividends—often double-digit yields—from closed-end funds (CEFs) holding some of the world’s best stocks.

I’m talking about companies like Microsoft (MSFT), Apple (AAPL) and Visa (V) here—three common holdings among equity CEFs.

But you can’t just dial up any of these high-yielding funds (CEFs typically yield north of 7%) and call it a day. To get the most out of your CEF investments, you need to invest a bit of time and effort.

Well, how about this: I’ll save you the work and show you a simple three fund portfolio you can create today that gets you a 7.7% income stream and the confidence to hold these funds for decades to come.… Read more

The Bears Are Betting Against These 6.9%-21.4% Dividends. Should We?

Brett Owens, Chief Investment Strategist
Updated: February 16, 2024

These unloved stocks yield between 6.9% and 21.4%. These are big dividends, but not the main reason we are discussing this ignored five today.

Each of these names is so unliked by the Wall Street suits that they have serious upside potential.

How could that be?

These shares are heavily sold short.

Short selling is a way to bet against a stock. To do so, one must borrow the shares and sell them today. In hopes of buying back at a lower price tomorrow.

What happens if the stock goes up tomorrow? And rises the next day? And so on?… Read more

Yes, You CAN Beat the Market. These 7%+ Dividends Do It All the Time

Michael Foster, Investment Strategist
Updated: February 15, 2024

Don’t fall into the trap of thinking you can’t beat the market. It’s total nonsense—and that goes double if you look outside stocks, to other assets.

Consider preferred stocks for example—they’re “bond-stock” hybrids that trade on an exchange, like stocks. But like bonds, they trade around a par value.

The best part is the income. Our favorite way to buy preferreds—through actively managed (we’ll come back to that in a second) closed-end funds (CEFs)—gets us yields of 7%+.

And select preferred-stock CEFs trade below their net asset value (NAV, or the value of their portfolios) today—with some of those discounts reaching well into double-digits.… Read more

Back Up the Truck for This 7.6% Yield and 425% Dividend Grower

Brett Owens, Chief Investment Strategist
Updated: February 14, 2024

Happy Valentine’s Day, my dear contrarian. On this day of love and (let’s be honest) fake affection, we are going to take a pass on the Hallmark holiday and focus on something more profitable.

Disgust.

Natural gas did it again! It fell below $2 per million BTUs. These washout levels typically represent a floor for nat gas prices.

Every time it drops below this $2 linoleum level, the price eventually pops and tests the ceiling. Now that we have this ideal setup again, let’s back up the truck!

Death, taxes and the cyclical nature of natural gas are the only three things we contrarians can be certain about!… Read more

3 Cheap Dividends “Spring-Loaded” to Surge When Rates Drop

Brett Owens, Chief Investment Strategist
Updated: February 13, 2024

Look, we’re going to get a slowdown here in America this year—two years’ worth of rate hikes are going to hit home. Fact.

So I’m going to suggest we do something you might find a little bit weird: buy US stocks. But not any US stocks—and certainly not “dividend-dud” ETFs like the ever-popular SPDR S&P 500 ETF Trust (SPY)!

No way.

Instead we’re shopping in the small(er) cap aisle, for stocks in the midcap range kicking out surging dividends. We love these overlooked US-based dividend plays now because:

They’re cheap: while SPY has soared 19% in the last year, midcaps have treaded water, with the Vanguard Mid Cap ETF (VO)—in orange below—up just 4%.… Read more