Articles

There’s an obvious reason why we love closed-end funds (CEFs): the dividends!

CEFs’ payouts average around 7% as I write this, and there are plenty paying well into the double digits. One fund we’ll touch on below, for example, yields more than 16%. A payout like that gets you $2,000 a month in dividends on just $150,000 invested.

But, as we often discuss in my CEF Insider service, when picking CEFs, we always need to look past those big yields.

We also need to examine the discount to net asset value (NAV, or the value of the fund’s portfolio) because buying a CEF at an unusually wide discount can net us strong price upside as that discount bounces back to normal, pulling the price up with it.… Read more

Are the best things in life actually free? It depends how we handle the hidden costs.

Free coffee is good. At home, I drink one mega-cup per day. At fixed income conferences, I typically scale that “complimentary” consumption up to double-digits per day. (Hey, they’re just hotel cups.)

Free breakfast is usually better than just free caffeine. And open bar, of course, reigns supreme for your income strategist.

No doubt these freebies are baked into ticket costs, but I will gladly accept the bacon and beer challenge to get my money’s worth.

When readers write in to ask my thoughts on “risk free” yields on certain bonds, it’s time for us to talk.… Read more

With stocks grinding along near all-time highs, decent discounts (and decent dividend yields!) are thin on the ground. But if we look close enough, they are there.

The answer to this no-yield problem is simply going one step beyond the blue chips everyone buys. Our big dividends (at discounts) are lying there in a corner of the market that few serious investors pay attention to. That’s too bad for them, but great for contrarians like us.

I’m talking about closed-end funds (CEFs), which, as a group, yield around 7% on average as I write this.

And here’s the truly underappreciated thing about these high-paying funds: many of them own the big names of the S&P 500 anyway!… Read more

The once unthinkable has happened: AT&T (T), a Dividend Aristocrat that increased payouts for 30 years, said it will cut its payout nearly in half.

The move is especially infuriating because, as recently as April, we were hearing a lot about why the company would likely hike its payout in 2021, and management had stood by the dividend.

That’s now out the window—and the market’s not happy.

Dividend Cut Sends AT&T on a Wild Ride

It just goes to show you that even companies among the vaunted Dividend Aristocrats fall from grace from time to time. We all remember back in 2017, when another sacred cow, General Electric (GE), slashed its payout in half, as well.… Read more

Energy prices have rallied furiously, but they likely have further to go. Oil and gas prices last peaked around 2014 and sunk slowly until the black goo hit negative prices in the spring of last year.

A six-year bear market takes more than 13 months to unwind. Which is why energy dividend stocks remain quite attractive.

Oil and gas stocks are 4% yielding on average, which is nearly a full percentage point more than we can get out of real estate investment trusts (REITs) at the moment. And as I’ll show you in a moment, we can squeeze yields of between 5.0% and 9.2% from “Texas tea” if we know just where to look.… Read more

There’s a new closed-end fund (CEF) on the market, and it comes from one of the biggest CEF issuers in the space: BlackRock.

It’s big—with $4.5 billion in assets under management. You can tell that straight from the ticker symbol: BIGZ. The fund’s full name: the BlackRock Innovation and Growth Trust (BIGZ).

So we know it’s got heft—and it’s got BlackRock’s deep bench of talent behind it (remember that BlackRock is the world’s biggest investment firm, with $7 trillion under management). But does BIGZ have a place in your portfolio? That’s the question we’re going to tackle today.

BIGZ got its start in March, and it’s currently trading flat from its inception and trailing the tech-heavy NASDAQ, which is the best benchmark for the tech-heavy BIGZ.… Read more

No doubt, there is a lot to be worried about right now in the financial world. Fortunately, there is finally a lot of worrying happening.

We contrarians welcome unease. Broader discomfort means dividend deals.

Investor sentiment is at last falling back to earth after months in the clouds. Sometimes these emotional drops are drawn out. Or the breakup can be short and swift.

Last September and October, too-cheery bulls got splashed with cold water. Their wake-up call, fittingly, came just weeks after we chatted about their “over the top” sentiment. We specifically discussed the likelihood of a 10% pullback given the extreme levels of investor cheer.… Read more

“I have no clue what to do,” said a friend recently over backyard beers. “On the one hand, stocks are still rising. On the other, everything is pricey.”

I know you’re feeling my buddy’s pain—I get similar sentiments from readers of my Contrarian Income Report service all the time.

The last few weeks of wild swings sure don’t help. No doubt your finger has hovered over the buy button but you’ve hesitated, worrying you’re getting in at the top.

That’s understandable: no one wants to be the last buyer in a bull market!

Let the Market’s “Fear Indicator” Guide You to Big Gains (and Dividends)

The solution to this dilemma is a strategy only a contrarian could love—we’re going to navigate by the VIX—the market’s so-called “fear indicator.”… Read more

Manufacturing is as cyclical a business as there is, and it’s about to take off, driven by two vastly misunderstood factors:

1. An uptick in inflation, and
2. A big jump in stimulus spending

What most people don’t get is that these two trends are inextricably linked. And sitting right where they meet is a closed-end fund (CEF) trading for 88 cents on the dollar and just waiting to pay us a fat 5.3% dividend.

Let’s start by taking these trends one at a time.

Inflation: Likely Not as Hot as Most People Think

Let me start by saying that the breathless media coverage of inflation is focused entirely on how it will crimp stock market returns.… Read more

The Fed has crushed many retirements because bonds simply don’t yield enough. Heck, neither do most stocks thanks to the equity bubble they’ve inflated!

But we dividend-focused retirees have a four-letter secret at our portfolio’s disposal. I’m talking about yield machines that pay up to 8%. And thanks to a slow 2020, these stocks are still reasonably cheap. I’m talking:

R-E-I-T.

Real estate investment trusts (REITs) are a great source of yield. If you’re a regular reader, you’ll probably recall our reasons why REITs hold up well against inflation.

Today we’ll discuss some studies that support this “inflation-proof” position.

In theory, inflation should weigh on REITs much the way it does on many yield-bearing assets.… Read more