Articles

Forget This “25X” Retirement Rule. Grab This 9.6%-Paying Fund Instead

Michael Foster, Investment Strategist
Updated: February 12, 2024

One of the worst investing mistakes you can make is blindly sticking to “rules of thumb” given out by so-called “experts.”

That goes double when you use these overly broad guidelines for the most important decision you can make: planning for your financial future.

Consider a recent article by Bankrate telling retirees to follow the “rule of 25,” which is as simple as it is deceptive. This piece tells us that you “should have 25 times the annual amount you plan to spend in retirement saved before you leave the workforce.”

That’s a lot of money! Take a look at the table below to match up how much you plan to spend in retirement (to make things easier, we’ll set inflation aside and use today’s dollars) with how much you’d need to save.… Read more

7 King-Sized Yields (up to 12.4%) That Wall Street Can’t Stand

Brett Owens, Chief Investment Strategist
Updated: February 9, 2024

When the Wall Street cheerleaders actually dislike a stock—well, that sure commands our contrarian attention.

Today we’ll cover one of my favorite traditions, which is fading the opinions of analysts. You know, the guys who typically slap a Buy rating on everything they see?

It sounds counterintuitive, but we don’t want Buy ratings on our stocks. Give us Holds and Sells and general apathy. Or, even better, disgust.

When every analyst rates a stock a Buy, it feels “safe” to purchase. But really, it’s anything but. With nobody left to upgrade, there is nothing to do but wait for the dreaded downgrade.… Read more

16 “All-American” Dividends Yielding Up to 18%

Michael Foster, Investment Strategist
Updated: February 8, 2024

Remember a decade or so back, when we heard over and over again that the coming decades would be all about China?

If you ignored that prediction and stuck with well-established US investments (especially dividend-paying US stocks and funds), you made a smart move. (We’ve done the same since we launched our CEF Insider service back in 2017.)

Our conviction continues to be that the USA is the best place to find top dividend payers—including our favorite high-yielding closed-end funds (CEFs).

I’ll give you 16 such US-focused CEFs to consider in a moment—as well as specific looks at two 17%+ (!)… Read more

Call a Cop! This Elite 11.8% Dividend is a Steal

Brett Owens, Chief Investment Strategist
Updated: February 7, 2024

Me: “Let’s find companies with lots of debt and buy them. And make a lot of money.”

You: “Wait, what?”

(Nod as always to the late, great Norm Macdonald.)

Hear me out. Last week, plain vanilla investors threw a midweek fit when Federal Reserve Chairman Jay Powell said something we contrarians assumed already: No rate cut coming in March.

The Fed decides the Fed funds rate. This often cues the two-year Treasury yield to follow. (Yes, sometimes, the two-year leads. As always in economics and relationships, it’s complicated.)

We can debate who leads who, but the key is that the Fed controls short-term rates, but the bond market determines long-term rates.… Read more

These Cheap 4%+ Yielders Are Riding Every Megatrend in the Book

Brett Owens, Chief Investment Strategist
Updated: February 6, 2024

If we can say one thing about the rest of 2024, it’s this: We’re looking at a stock-picker’s year here—and folks who try to play it with vanilla ETFs will have a tough time.

Just look at the state of play in front of us.

The Fed is trying to thread a needle, and if economic numbers come in too hot or too cold for Goldilocks, well, good luck holding something like the SPDR S&P 500 ETF Trust (SPY)!

In an environment like this, a good plan is to zig when the market zags.

To do so, we’re targeting stocks in the bargain bin with “recession-resistant” strengths such as steady revenue from clients who must buy their services no matter what.… Read more

2 Tech Funds With Huge Dividends (1 Is a Buy, 1 Is a “Wait and See”)

Michael Foster, Investment Strategist
Updated: February 5, 2024

You probably know the Don Henley song “Dirty Laundry.” It was one of my favorite tunes in the 1980s. A criticism of media sensationalism, the repetitive chorus rang in my ears when I was much younger than I am today:

“Kick ’em when they’re up,
Kick ’em when they’re down.”

This aptly describes the nightly news of the 1980s and the financial press of the 2020s.

In early 2022, for example, Business Insider kicked tech stocks as they were going down: “Rising interest rates and expectations of strong economic growth and inflation are all key factors in the sell-off” the site wrote then, mixing up the good (“strong economic growth”) with the bad (“inflation”).… Read more

Magnificent 7 Move Over: “Dividend 6” Yields Up to 8.3%

Brett Owens, Chief Investment Strategist
Updated: February 2, 2024

Magnificent Seven? Tired.

Dividend Six? Wired.

Plain vanilla investors fawn over chipmakers and AI stocks. They hope they can buy them high, and sell them higher.

Contrarian income investors like us? We focus on the companies that support the AI hype. The “pick and shovel” providers. A “Dividend Six” that plays on AI and pays $26,000 to $41,500 in dividends alone on a $500K stake.

With that we’ll say move over, Magnificent Seven—a term coined by Bank of America’s Michael Hartnett (and inspired by the classic Sturges Western) to describe the market’s predominant tech names.

Those stocks? Microsoft (MSFT), Apple (AAPL), Facebook parent Meta Platforms (META), Amazon.comRead more

Shootout at the AI Corral: This 11.7% Payer Is a Winner

Michael Foster, Investment Strategist
Updated: February 1, 2024

I first saw a spaghetti western last year and am still kicking myself for not watching one sooner—A Fistful of Dollars is a masterpiece.

I’m reminded of the movie’s title because a fistful of dollars is what a lot of investors got from the so-called “Magnificent Seven”—namely Alphabet (GOOGL), Amazon.com (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), NVIDIA Corp. (NVDA) and Tesla (TSLA)—last year.

These tech wonderkids were, of course, on a tear in 2023, jumping 75% on average and providing the bulk of the market’s gain.

The reason for that is pretty clear: artificial intelligence, which burst onto the public consciousness with the release of ChatGPT in November 2022.… Read more

This Bad Dividend Decision Pays Up to 76%: Be Careful

Brett Owens, Chief Investment Strategist
Updated: January 31, 2024

Ten years ago, the city athletics director wrote:

Hi Guys,
I need to place an order for championship softball shirts. It should say West Sacramento’s Summer 2014 C/D Division Champions. Bad Decisions.

Bad Decisions was our team name, a nod to our personnel. I mean that in the most endearing way possible, of course. A lineup filled with guys light on responsibility (at the time) who enjoyed the postgame rehydration process as much as the in-game competition:

With two kids, my postgame rituals are different these days. First, a trip out can only occur after our final YMCA basketball game on Saturdays—my third and final game to coach that day.… Read more

Let’s “Convert” Our Lame ETF Dividends Into Ironclad 8%+ Payouts

Brett Owens, Chief Investment Strategist
Updated: January 30, 2024

This market bounce is strangling the payouts on everybody’s favorite ETFs. But it’s also given us a sweet setup to grab another group of funds kicking out big dividends, to the tune of 9%+ yields.

Even better, many of these funds—wallflowers to “popular-kid” ETFs—were left off the invite list for the 2023 market party. That means they’re (still) cheap today.

I know a 9% payout has a lot of appeal to most folks, with Treasury yields now down to around 4%, not too far above inflation.

And if your cash is stuck in an ETF, you’re getting a lame payout, well, almost all the time, but especially if you buy now: the SPDR S&P 500 ETF Trust (SPY)—which, as the name says, holds the entire S&P 500 index—yields a sorry 1.4% as I write this.… Read more