Most Wall Street “suits” are allergic to dividend cuts. These spreadsheet jockeys sooooo lack imagination. They prefer linear trends—up and to the right.

Dividend growers model nicely. Payout “resets” (cuts!) do not. So, there is often a knee-jerk reaction from analysts to sell every divvie slash they see.

Same goes for most individual income investors. These vanilla beans sold BlackRock Health Sciences Term Trust (BMEZ) late last week when BlackRock sliced the dividends for three of its popular funds.

The weaker hands sold. Big payouts remain. As contrarians, we’re intrigued.

Dividend cuts, ironically, often mark the start of opportunity. Here’s what the knee-jerk sellers miss:

• Even after the trim, BMEZ still yields 9.2%.

While Wall Street chases NVIDIA (NVDA), the real AI dividend story is unfolding in the sleepy insurance sector. These “boring” firms are quietly leveraging AI tools to slash costs, grow premiums, and—best of all—dish us bigger dividends.

AI is spreading across the economy much faster than many expected. That means we need to move even faster to front-run that shift.

We’ve already been hard at it. In July, we talked about our favorite dividend payer to grab as AI reworks farming. Few people realize it, but “ag” has a long history of leveraging tech. It’s a big reason why productivity per farm worker has shot up 16X since 1948.… Read more

We’ve got a frankly, bizarre dynamic setting up in stocks right now.

Global stocks are clobbering their American cousins this year. But here’s the disconnect: This is happening even though US stocks are hitting all-time highs seemingly every day.

On the surface, it sounds like both of these can’t be true. But as we’ll see below, this setup makes total sense. We’ll also look at how we can play it for both offense—price upside, in other words—and defense (in the form of 8%+ dividends), too.

USA, USA, US … Wait a Minute …

Here we’re looking at the S&P 500, as measured by the SPDR S&P 500 ETF (SPY), in purple, compared to the Vanguard FTSE All-World Ex-US Index Fund (VEU), a good benchmark for global stocks (minus the US, as the name says), in orange.… Read more

Wall Street suits tend to avoid business development companies (BDCs). That’s a mistake. For us income seekers, these “Main Street bankers” can be the best dividend machines in the market.

Forget the “penny yields” most stocks pay. BDCs can dish divvies between 10.6% and 12.6%. Unlike vanilla blue chips, BDCs are mandated by Congress to flip us at least 90% of their taxable income.

In other words, the dividends are a “built in” feature.

Of course we don’t just close our eyes and buy any 12% payer. Some BDCs are dividend machines, others are disasters. Our job: separate the stars from the scrubs and only buy the cash cows.… Read more

We all know that stocks can rise on nothing but hype for long periods. But at the end of the day, it all comes back to one thing: profits! If they don’t rise, the stock will tank. It’s just a matter of time.

Consider the case of Peloton Interactive (PTON).

Pandemic Ends, Peloton Crashes

When the pandemic had everyone exercising indoors, speculators piled into the stock, hoping that soaring earnings would ignite the company’s value.

Peloton’s net income was deep in the red then. Fast-forward to today, and it’s still negative. The stock has, of course, dropped to reflect that.… Read more

Last Friday’s jobs report confirmed what we contrarians have been discussing for months now—thanks to AI, employers no longer need to hire more employees to grow.

Bosses simply need to implement AI tools to grow their businesses. The machines are a managerial dream. Once trained they are, in many cases, better, faster and cheaper than people.

Robots always report for work. They will grind all the time. And they are never sick or hungover!

Two years ago, my current software company engaged about 15 contractors in various capacities. Today, thanks to AI, we have only two-and-a-half. Yet even with only one-sixth the “manpower,” sales are climbing, and the bottom line has never looked better!… Read more

It’s a trap I see investors fall into all the time: pouncing on yields that are so high as to be, frankly, absurd. Case in point: the 89% (not a typo!) yielder we’re going to talk about today.

I get where the temptation of a payout like that comes from. Inflation is sticking around. The job market? Precarious, to say the least, with AI replacing humans at an accelerating pace. Another disappointing jobs report, released on Friday, sure doesn’t help here, either.

At a time like this, an 89% annualized payout sounds like a dream, especially if you’re looking to get to (and hopefully stay in!)… Read more

If anything taught me that buying real estate through stocks—or better yet high-yielding closed-end funds (CEFs)—is way better than brick-and-mortar, it was my experience renting my Manhattan apartment on Airbnb (ABNB).

If you’re reading this, you might feel the same way. Maybe you’ve had the same experience as the one I’m about to share.

It was about a decade ago, and it was, in short, a nightmare. It seemed like every time I turned around, there was a complaint that the place was too small, or someone had posted a bad review. Or I was staring down a pile of clean-up in the wake of careless renters.… Read more

Small companies are sneaky AI-friendly plays because they are implementing these tools faster than their larger competitors.

Expect to see these smaller firms become more efficient in the quarters ahead. Sales will continue to increase while headcounts will remain relatively flat as robots take up the slack—a boon to future profits.

Ironically, small caps are currently the cheapest sector on the board:

Broad-Market Forward P/Es:

• S&P 500: 22.2
• S&P MidCap 400: 16.2
• S&P SmallCap 600: 15.6

So, we turn our attention to a six pack of small but mighty dividend payers. Let’s start with a lender that yields “only” 15.7% per year and work our way up from there.… Read more

A market on a precipice.

That’s the vibe around stocks right now, and I’m guessing you’ve felt it, too. On the one hand, the S&P 500 is up 14% in the past year, a very solid performance (and for the record, I see more gains ahead).

Yet volatility has returned, and it feels like we could be on the verge of another selloff. So what do we do right now?

We’re going to look at a closed-end fund (CEF) that profits from short-term volatility. In fact, this one harnesses the energy that choppy markets throw off and “converts” it to a hefty dividend stream.… Read more